U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended June 30, 1997
Commission file number 0-12914
WASTEMASTERS, INC.
------------------
(Name of Small Business Issuer in Its Charter)
Maryland 52-1507818
- ------------------------ ---------------------------------
(State of Incorporation) (IRS Employer Identification No.)
1360 Beverly Road, Suite 305, McLean, Virginia 22101
----------------------------------------------------
(Address of Principal Executive Offices)
(703) 448-9200
-------------------------
Issuer's Telephone Number
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days. Yes x No
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 30,244,712 shares of Common
Stock ($.01 par value) as of July 31, 1997.
Transitional small business disclosure format: Yes No x
--- ---
<PAGE>
WASTEMASTERS, INC.
Quarterly Report on Form 10-QSB for the
Quarterly Period Ending June 30, 1997
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
Consolidated Statements of Operations: Three Months
Ended June 30, 1997 and 1996; Six months Ended
June 30, 1997 and 1996
Consolidated Balance Sheets: June 30, 1997 and
December 31, 1996
Consolidated Statements of Cash Flows: Six months
ended June 30, 1997 and 1996
Notes to Consolidated Financial Statements:
June 30, 1997
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
ii
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED).
WASTEMASTERS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- ----------------
1997 1996 1997 1996
---- ---- ---- ----
<S><C>
REVENUES:
Sales $ 62,558 $ 948,786 $ 223,856 $ 2,800,603
Fees and other - 6,720 - 7,587
Interest income - 2,388 - 2,388
----------- ----------- ----------- -----------
62,558 957,894 223,856 2,810,578
----------- ----------- ----------- -----------
EXPENSES:
Costs of Sales 60,995 740,112 228,813 2,756,786
Selling, General and
Administrative 1,159,783 1,656,680 2,304,756 3,122,567
Interest Expense 102,750 421,396 212,550 426,366
----------- ----------- ----------- -----------
1,323,528 2,818,188 2,746,119 6,305,719
Loss Before Income
Taxes, and Extraordinary
Item (1,260,970) (1,860,294) (2,522,263) (3,495,141)
Income Tax Expense - - - -
----------- ----------- ----------- -----------
NET LOSS BEFORE
EXTRAORDINARY ITEM (1,260,970) (1,860,294) (2,522,263) (3,495,141)
Extraordinary item:
Gain from disposal of
asset, net of tax - 1,214,582 - 1,214,582
----------- ----------- ----------- -----------
NET LOSS (1,260,970) (645,712) (2,522,263) $(2,280,559)
=========== =========== =========== ===========
Loss per share:
Primary:
Loss before extraordinary
item $ (.04) $ (.14) $ (.09) $ (.26)
Extraordinary item - .09 - .09
----------- ----------- ----------- -----------
Net loss $ (.04) $ (.05) $ (.09) $ (.17)
=========== =========== =========== ===========
Weighted Average
Number of Shares
Outstanding 28,678,734 13,288,889 26,830,916 13,301,636
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE>
WASTEMASTERS, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS June 30, December 31,
1997 1996
----------- -------------
Current assets
Cash $ 0 $ 0
Accounts receivable, net of
allowance for doubtful accounts 64,812 108,733
----------- -----------
Total current assets 64,812 108,733
Property, machinery and
equipment, at cost, net of
accumulated depreciation, 52,109 62,531
Construction in Progress 1,511,865 1,511,865
Land 1,029,500 1,029,500
----------- -----------
2,593,474 2,603,896
Other assets:
Deferred loan costs, net 650,461 1,262,127
Excess of costs over net assets
acquired, net 12,880,227 13,047,493
Deposits and other assets 1,387 1,387
----------- -----------
13,532,075 14,311,007
----------- -----------
$16,190,361 $17,023,636
=========== ===========
The accompanying notes are an integral part of these statements.
2
<PAGE>
WASTEMASTERS, INC.
CONSOLIDATED BALANCE SHEETS - CONTINUED
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, December 31,
1997 1996
------------ -------------
Current Liabilities:
Cash drawn in excess of available balances $ 608 $ 24,329
Current maturities of long-term debt 8,551,349 9,190,149
Accounts payable and accrued
liabilities 4,377,298 3,604,815
Due to officers and directors 344,904 304,904
Due to Atlantic Coast Demolition 271,090 271,090
------------ ------------
Total current liabilities 13,545,249 13,395,287
Long-term debt 0 0
Deferred expenses:
Accrued environmental and landfill costs 313,002 313,002
------------ ------------
Total liabilities 13,858,251 13,708,289
Stockholders' Equity
Preferred stock, $.01 par value;
5,000,000 shares authorized; - -
none issued
Common Stock, $.01 par value;
35,000,000 shares authorized;
21,437,363 shares issued and
outstanding for the year ended
December 31, 1996; - 213,174
30,511,712 shares issued and
outstanding for the period ended
June 30, 1997 305,117 -
Additional capital 29,105,921 27,658,640
Accumulated deficit (27,078,928) (24,556,667)
------------ ------------
Total stockholders' equity 2,332,110 3,315,347
------------ ------------
$ 16,190,361 $ 17,023,636
============ ============
The accompanying notes are an integral part of these statements.
3
<PAGE>
WASTEMASTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1997 1996
---- ----
<S><C>
Increase (decrease) in cash
Cash flows from operating activities
Net loss $(2,522,263) (2,280,559)
Adjustments to reconcile net (loss)
earnings to net cash provided by
operating activities:
Depreciation and amortization 789,352 477,221
Stock issued in lieu of cash payment 1,539,224 -
Changes in assets and liabilities
Accounts receivable 43,921 (192,247)
Inventory and prepaid expenses - (19,830)
Bond issuance costs, net - 3,959,775
Other assets - (78,648)
Accounts payable and accrued
liabilities (4,867,493)
Deferred income 748,566 (46,540)
----------- ------------
Net cash provided by (used in)
operating activities (598,800) (3,048,321)
----------- ------------
Cash flows from investing activities
Purchase of property, plant & equipment - (3,242,240)
Disposal of property, plant &
equipment, net - 32,860,394
Business acquisitions - 7,209,358
----------- ------------
Net cash provided by (used in)
investing activities - 22,408,796
----------- ------------
Cash flows from financing activities
Repayment of loans (638,800) (34,221,717)
Proceeds from issuance of stock - 12,111,902
Proceeds from loans 40,000 364,654
Proceeds from convertible debentures, net - 3,165,000
----------- ------------
Net cash provided by (used in)
financing activities (598,800) (18,580,161)
----------- ------------
Net increase (decrease) in cash
and short-term investments - (780,314)
Cash and short-term investments
at beginning of period - 47,327
----------- ------------
Cash and short-term investments
at end of period $ - $ 827,641
=========== ============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
WASTEMASTERS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(Unaudited)
Six Months Ended June 30,
--------------------------------------
1997 1996
---- ----
SUPPLEMENTAL DISCLOSURE OF
CASH FLOW INFORMATION
---------------------
Cash paid during the period
for interest $ 40,000 $ 60,277
SUPPLEMENTAL DISCLOSURE OF
NONCASH TRANSACTIONS
--------------------
Common stock issued in
exchange for services $ 1,539,224 $ 3,629,207
Conversion of debentures $ 638,800 $ -
The accompanying notes are an integral part of these statements.
5
<PAGE>
WASTEMASTERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1997
(Unaudited)
NOTE A - SUMMARY OF ACCOUNTING POLICIES
- ---------------------------------------
General
-------
The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to Form 10-QSB, and
therefore, do not include all the information necessary for a fair presentation
of financial position, results of operations and cash flows in conformity with
generally accepted accounting principles.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the six month period ended June 30, 1997 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1997. The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 1996.
Consolidated Statements
-----------------------
The consolidated financial statements include the accounts of
WasteMasters, Inc. and its wholly owned subsidiaries, F&E Resource Systems
Technology for Baltimore, Inc. (FERST for Baltimore, Inc.), FERST for St.
Mary's, Inc., FERST O&M, Inc., and Chemical Road Investments, Inc., WasteMasters
of South Carolina, Inc., Trantex, Inc., WasteMasters of Georgia, Inc.
WasteMasters of New York, Inc. and WasteMasters of Pennsylvania, Inc. as well as
the accounts of Baltimore FERST Limited Partnership (the "Partnership") in which
FERST's subsidiary, FERST for Baltimore, Inc., is a general partner
(collectively "the Company"). Significant intercompany transactions have been
eliminated in consolidation.
NOTE B - DISPOSITIONS
- ---------------------
On May 17, 1996, the Partnership's Baltimore recycling and compost
facility was sold at foreclosure. Assets disposed of include the facility,
improvements, bond issuance costs and land. The net book value of the assets
sold was approximately $40,780,800. The Partnership filed a voluntary petition
under Chapter 11 of the U.S. Bankruptcy Code to retire any remaining
non-recourse secured and unsecured liabilities related to the facility in the
approximate amount of $42,000,000.
On April 12, 1996, FERST O & M, Inc. (a wholly-owned subsidiary of the
Company) filed a voluntary petition under Chapter 7 of the U.S. Bankruptcy Code.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1997 AND 1996
The following discussion should be read in conjunction with the
Company's Consolidated Financial Statements and Notes thereto, included
elsewhere within this Report.
6
<PAGE>
INTRODUCTION
- ------------
Management's immediate objective is to secure sufficient working
capital in order to continue as a going concern. Once financing has been secured
and the Company's operation stabilized, management plans to develop
Company-owned processing facilities and to arrange alliances or management
contracts with independent waste processors, waste transporters, and waste
generators to produce waste revenues for the Company's landfills.
If the Company is not successful in obtaining adequate financing, the
Company may consider other alternatives, including the sale of its assets.
The core Company focus is developing it existing landfills. Subject to
adequate financing, the Company plans to embark on expansions and Sub-title D
permitting of the landfills, while developing processing capability upstream to
supply the facilities.
There can be no assurance that management will be successful in
obtaining, financing and implementing its plan of operation for the Company.
Subtitle D permits are necessary to achieve full potential of all the Company's
landfill sites, and it is uncertain whether the Company will be successful in
obtaining the permits.
GENERAL
- -------
During the six months of 1997, the Company operated and received
revenues principally from two facilities-Rye Creek Landfill in Kirksville,
Missouri and the Appleton Sanitary Landfill in Allendale, South Carolina.
On May 17, 1996, the Company's Baltimore FERST Limited Partnership, a
recycling and composting facility, was sold at foreclosure. Assets sold include
the facility, improvements, bond issuance costs and the land of he Baltimore
FERST limited Partnership. The net book value of the assets sold was
approximately $40,780,000. The Company retired non-recourse secured and
unsecured liabilities related to the facility in the amount of $42,000,000.
On April 12, 1996, FERST O & M, Inc.(a wholly-owned subsidiary of the
Company) and the entity responsible for managing the Baltimore recycling and
compost facility, filed a voluntary petition under Chapter 7 of the U.S.
Bankruptcy Code.
RESULTS OF OPERATIONS
- ---------------------
The Company's revenues decreased by $895,336 to $62,558 for the second
quarter of 1997, from $957,894 during the same period in 1996. The decrease is a
result of discontinuing the operation of the New York City C&D transfer station.
The Company's revenues decreased by 92% to $223,856 for the first six
months of 1997, from $2,810,578 during the same period in 1996. The decrease in
revenues is a result of the effects of the disposal of the Company's Baltimore
Recycling and Compost facility in May 1996 and the discontinuance of operations
of New York City C & D transfer station in February, 1997 and the corresponding
loss of revenues from those facilities.
Expenses decreased by 53% or $1,494,660 for the second quarter of 1997
compared to the same period in 1996. Expenses as a percentage of revenues were
2,133% in the current second quarter compared to 294.1% for the prior year
second quarter. Cost of sales decreased by $679,117 for the second quarter of
1997. Selling, general and administrative expenses decreased by $496,897 for the
second quarter of 1997. The decrease is due to reduced management and
7
<PAGE>
staff compensation and professional fees. Interest expense decreased 75.6%, or
$318,646 to $102,750 for the second quarter of 1997 compared to the second
quarter of 1996. The decrease reflects the extinguishment of the debt related to
the Company's Baltimore facility.
Expenses decreased by 56.4% or $3,559,600 for the first six months of
1997 compared to the same period in 1996. Expenses as a percentage of revenues
were 1,231% in the first six months compared to 224.3% for the first six months
of 1996. Cost of sales decreased by $2,527,976 for the first six months of 1997.
This decrease is a result of the Company disposing of the Baltimore facility and
discontinuing operating a New York City C & D transfer station after the
facility was idle for most of 1995 and the costs of operating the. Selling,
general and administrative expenses decreased $817,811 or 26.2% from the first
six months of 1996. The decrease is a result of reduced management compensation,
clerical salaries, and professional fees. Interest expense decreased 50.1%, or
$213,816 to $212,550 for the first six months of 1997 compared to the first six
months of 1996. The decrease reflects the extinguishment of the debt related to
the disposal of the Baltimore facility.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's balance sheet at June 30, 1997 reflects a working
capital deficit of $13,480,437 as compared to a deficit of $13,286,554 at
December 31, 1996.
The Company's ratio of indebtedness to equity of 5.94 at June 30,
1997 remained relatively unchanged from 4.13 at December 31, 1996.
During the first six months of 1997, the Company's working capital
deficiency increased $193,883. Accounts receivable decreased $43,921 as a result
of the contraction of the Company's business operations.
The Company will require financing in order to meet its working capital
needs and complete its planned improvements necessary to the Company's landfills
to make the assets fully operational. The Company has sought and continues to
seek financing in the form of equity and debt in order to make the necessary
improvements and provide working capital. There are no assurances the Company
will be successful in raising the funds required.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As previously reported, on February 29, 1996, Baltimore FERST limited
Partnership (the "Partnership"), which owned the Company's Baltimore composting
and recycling facility, filed a voluntary petition under Chapter 11 of the
United States Bankruptcy Code in the U.S. Bankruptcy Court in Baltimore,
Maryland. On April 25, 1996, the Bankruptcy Court granted the motion of the
holder of the senior lien on the facility to modify the bankruptcy stay to allow
it to proceed with a foreclosure sale of the facility. The Company first
reported on the proceeding in Item 3 of its Annual Report on Form 10-KSB for the
year ended December 31, 1995.
After the Company exhausted all of its legal remedies to stay the
foreclosure sale, the Baltimore facility was sold at foreclosure on May 17, 1996
to Browning-Ferris Industries, Inc. The foreclosure sale was ratified by the
Circuit Court for Baltimore City, Maryland on June 27, 1996.
On April 12, 1996, FERST O & M , Inc. filed a voluntary bankruptcy
petition under Chapter 7 of the United States Bankruptcy Code. The filing stayed
all actions against FERST O & M, Inc.
8
<PAGE>
The Partnership is involved in extensive litigation with PWT Waste
Solutions, Inc. ("PWT"), the facility's construction contractor. The contractor
claims to be due approximately $1.5 million from retainage claimed by the
Partnership when the contractor failed to comply with various performance tests,
timely completion, and numerous warranty claims. The Partnership is claiming
liquidated damages far in excess of the retainage. Subsequently, the contractor
expanded the lawsuit to include Credit Suisse, Chrysler, and the parent company.
Management does not believe the lawsuit will adversely affect the Company.
On June 4, 1996, Michael Reis and Lawrence Katz filed a complaint in
the United States District Court for the District of New Jersey. The Complaint
seeks unspecified damages based on a purported contract between the Plaintiffs
and the Company for a financing placement and corporate development fee. The
Company believes the complaint is completely without merit and intends to
vigorously defend its position.
On June 28, 1996, the Company instituted a Complaint for Declaratory
Relief in the United States District Court for the Southern District of New York
against Diversified Investors Services of North America, Inc. in response to a
demand by Diversified for issuance of warrants for 500,000 shares of the
Company's stock. Diversified claims it is entitled to the warrants by virtue of
having obtaining certain financing for the Company as required by a December 8,
1994 contract between Diversified and the Company. The filing of a counterclaim
by Diversified for the warrants is anticipated.
On May 8, 1997, the Company was advised by the seller of the land
contract purchase agreement for the landfill in Allendale County, South Carolina
that the Company was in default under the terms of the contract. In July, 1997,
the seller sued in the Court of Common Pleas Allendale County, South Carolina to
terminate on the land contract. Unless the Company obtains the funds necessary
to cure the default, the agreement to purchase Appleton Sanitary Landfill will
be voided.
On July, 11, 1997 the Company entered into an agreement with WMI
Investors, Inc. (WMI), a private investment group, whereby WMI has agreed to
provide a $1,000,000 credit line to the Company to meet the Company's working
capital requirements. The Loan Agreement, which is subject to certain
conditions, grants WMI a warrant to purchase 49% of the Company's outstanding
common stock at an exercise price equal to the bid price of the Company's common
stock on July 11, 1997, as well as 100,000 shares of newly issued preferred
stock with voting rights superior to holders of the Company's common stock.
In connection with the WMI Loan Agreement, the Company elected the
following Directors to the Company's Board of Directors-David Erlich,
Christopher Brody and Alan Silverstein. Subject to certain regulatory
requirements Paul Williamson and W. Julius Basham have tendered their
resignations as members of the Company's Board of Directors.
On July 18, 1997, Continental Technologies Corporation of Georgia, a
wholly-owned subsidiary of Continental Investment Corporation filed a lawsuit
against the Company in the State Court of Georgia attempting to enforce a Sales
Agreement with the Company. As a part of the lawsuit, Continental obtained a
temporary restraining order enjoining the Company from consummating the WMI Loan
Agreement including, but not limited to, providing funding to the Company and
the election of Messrs. Erlich, Brody and Silverstien to the Company's Board.
The temporary restraining order, unless extended, expires August 18, 1997.
9
<PAGE>
The Continental Sales Agreement, which called for the sale of or option
to purchase substantially all of the Company's assets, was never approved by the
Company's Directors, nor was requisite a vote of the Company's shareholders
obtained.
The Company believes the suit is without merit and intends to
vigorously defend its position.
In July, 1997, Harold Solomon, former employee and consultant to the
Company and Mary Solomon, filed a complaint in the Circuit Court for Broward
County Florida. The Complaint seeks damages based on a breach of contract
between the Plaintiff and the Company for services rendered. The Company
believes the complaint is completely without merit and intends to vigorously
defend its position.
On July 14, 1997, Waste Management of Cambridge, Inc. filed a complaint
in the United States District Court for the Eastern District of Pennsylvania.
The complaint seeks payment for access to its landfill for disposal of various
products. The amount of he unpaid invoices for services total $69,800.
On July 30, 1997 157 Old Solomon's Isl. Road. Corp. filed a
complaint in the District Court of Maryland for Anne Arundel County of $20,000
plus costs. The complaint seeks damages resulting from a breach of contract.
In June, 1997, Herzog Contracting Corp. filed a complaint in Buchannon
County, Missouri. The complaint seeks payment for car-topper services in the
amount of $31,000.
In June, 1997, Rickel & Associates, Inc. filed a complaint in the
Southern District of New York. The complaint seeks payment for financial
advisory and placement services. The amount of the complaint is $2,750,000.
There are numerous other claims and pending legal proceedings involving
creditors claims. Although the ultimate disposition of legal proceedings cannot
be predicted with certainty, it is the present opinion of the Company's
management that the outcome of any of these claims which is pending or
threatened, either individually or on a combined basis, will not have a material
adverse effect on the consolidated financial condition of the Company, but could
materially effect consolidated results of operations in a given period.
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
On July 14, 1997, the Company removed Richard Masters as the Company's
President, Chief Executive Officer, and Member of the Executive Committee. The
Company's acting Chief Financial Officer, Peter Stefanou was named interim
President and Chief Executive Officer.
10
<PAGE>
On August 4, 1997, the Company was advised that Continental Investment
Corporation acquired from Infinity Investors, Ltd. and is the holder of all of
the Company's convertible debt, totally approximately $3,162,000.
As of June 30, 1997, the Company is and continues to be in default
under the terms of the mortgage loan secured by the Company's Kirksville,
Missouri landfill. The Company is also in default under the terms of the Land
Purchase Contract for the purchase of the Company's Allendale, South Carolina
landfill. In addition, the Company is and continues to be in default under the
terms of the convertible debenture due in 1998.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WASTEMASTERS, INC.
August 19, 1997 By: /s/
- --------------------- ---------------------------
Date Peter Stefanou
Interim President and Chief
Executive Officer (Dully
Authorized Officer and
Principal Accounting and
Financial Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 64,812
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 64,812
<PP&E> 2,593,474
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,190,361
<CURRENT-LIABILITIES> 13,545,249
<BONDS> 0
0
0
<COMMON> 305,117
<OTHER-SE> 2,026,993
<TOTAL-LIABILITY-AND-EQUITY> 16,190,361
<SALES> 223,856
<TOTAL-REVENUES> 223,856
<CGS> 228,813
<TOTAL-COSTS> 228,813
<OTHER-EXPENSES> 2,304,756
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 212,550
<INCOME-PRETAX> (2,522,263)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,522,263)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,522,263)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
