SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 1998
Commission File No. 0-19566
EARTH SEARCH SCIENCES, INCORPORATED
(Exact Name of Registrant as Specified in its Charter)
Utah 87-0437723
(State or other Jurisdiction of (IRS Employer ID)
Incorporation or Organization)
502 North 3rd Street, #8 McCall, Idaho 83638
(Address of Principal Executive Offices, Including Zip Code)
Registrant's telephone number, including area code: (208) 634-7080
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days. Yes X No
The number of shares outstanding of each of the registrant's classes of common
stock, as of the close of the period, covered by this report 90,395,931 shares.
The registrant has only one class of common stock.
<PAGE>
EARTH SEARCH SCIENCES, INC.
FORM 10-Q
(Unaudited)
QUARTER ENDED DECEMBER 31, 1998
PART I
FINANCIAL INFORMATION
TABLE OF CONTENTS
Item 1. Consolidated Financial Statements Page
Consolidated Balance Sheet
as of December 31, 1998 and March 31, 1998. 3
Consolidated Statement of Operations for the
Three Months Ended December 31, 1998 and 1997. 4
Consolidated Statement of Cash Flows for the
Three Months Ended December 31, 1998 and 1997. 5
Selected Notes to Consolidated Financial
Statements. 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-9
PART II
OTHER INFORMATION REQUIRED
Item 1. Legal Proceedings 9
Item 2. Changes in Securities 9
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters of a Vote of
Security Holders 9
Item 5. Other information 9
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE>
EARTH SEARCH SCIENCES, INC
(A Development Stage Company)
Consolidated Balance Sheet
<TABLE>
<CAPTION>
December 31, March 31,
1998 1998
------------ ---------
<S> <C> <C>
Assets
Current assets:
Cash $ 31,257 $ 42,600
Accounts Receivable 214,764 -
Prepaid & deposits 715,814 675,648
------------- -------------
Total current assets 718,248 961,835
Property and equipment 3,979,179 3,920,953
Other long-term assets 183,225 183,225
------------- -------------
Total assets $ 5,066,013 $ 4,880,652
============= =============
Liabilities, Redeemable Common Stock and
Nonredeemable Shareholders' Deficit
Current liabilities:
Notes payable $ 78,399 $ 89,080
Accounts payable 671,332 674,881
Accrued payroll taxes - 18,449
Accrued interest 290,667 281,750
Payable to Probe 1 Joint Venture 500,000 500,000
Unearned revenue 160,063 40,000
Cash advances and deposits 430,000 -
------------- -------------
Total current liabilities 2,134,010 1,600,611
Long-term liabilities:
Shareholder loans 177,350 104,090
Capital lease obligation 2,393,379 2,029,410
Deferred officers' compensation 1,629,782 1,387,461
Minority interests 2,248,000 2,247,000
------------- -------------
Total liabilities 8,582,521 7,368,572
------------- -------------
Redeemable common stock 517,845 517,845
------------- -------------
Nonredeemable shareholders' equity:
Series A preferred stock; 200,000 shares
authorized, issued and outstanding at March 31, 1998 1,000,000 1,000,000
Common stock, $.001 par value;
200,000,000 shares authorized 88,669 84,792
Additional paid-in capital 10,452,865 9,827,644
Common stock subscribed - 165,000
Deficit accumulated during the development stage (15,575,887) (14,083,201)
------------- -------------
(4,034,353) (3,005,765)
------------- --------------
Total liabilities, redeemable common stock and
nonredeemable shareholders' deficit $ 5,066,013 $ 4,880,652
============= =============
</TABLE>
<PAGE>
EARTH SEARCH SCIENCES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Nine Months
Ended December 30, Ended December 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Revenue 173,252 $ - 636,906 $ -
Cost of Services provided (154,895) - (433,527) -
----------------- ----------------- ----------------- -----------------
Gross margin 18,357 203,379
Expenses:
Exploration - 38,210 - 333,691
Depreciation 6,649 7,500 19,511 22,500
General and Administrative 315,289 456,373 1,030,656 1,655,021
----------------- ----------------- ----------------- -----------------
321,938 502,083 1,050,167 2,011,212
Loss from operations 303,581 (502,083) (846,788) (2,011,212)
Interest income
Interest expense (161,211) (254,466) (513,438) (597,379)
Other income (expense) (195,840) (17,442) (178,537)
----------------- ----------------- ----------------- -----------------
Net Loss (464,792) (952,398) (1,377,668) (2,787,128)
Minority Interest in losses of
consolidated subsidiaries - - - -
----------------- ----------------- ----------------- -----------------
Extraordinary item (Debt
Extinguishment loss) - - (115,023) (1,000,000)
----------------- ----------------- -----------------
Net Loss (464,792) (952,389) (1,492,691) (3,787,128)
================= ================= ================= =================
</TABLE>
<PAGE>
EARTH SEARCH SCIENCES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months
Ended Demceber 31,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net lncome $ (1,492,691) $ (3,787,128)
Adjustments to reconcile net loss to net cash
(used in) operating activities:
Issuance of common stock for services
and interest expense 185,592 256,490
Extraordinary items 115,023 1,000,000
Depreciation 207,011 22,500
Amortization of lease discount 363,970 283,826
Changes in assets and liabilities:
Accounts receivable (214,764) -
Prepaid assets and deposits (40,166) (30,000)
Accounts payable 3,549 142,850
Accured liabilities (9,532) -
Unearned revenue 120,063 -
Deferred officers compensation 242,321 (155,500)
-------------------- -------------------
Net cash (used in) provided by operating activities (519,624) (2,266,962)
Cash flows used for investing activates:
Capital expenditures (47,298) (10,704)
Advance deposits 430,000 310,000
-------------------- -------------------
Net cash provided by investing activities 382,702 299,296
-------------------- -------------------
Cash flows from financing activities:
Proceeds from notes payable - 500,000
Repayment of notes payable (10,681) (40,000)
Shareholder loans 191,500 100,000
Repayment of shareholder loans (118,240) -
Issuance of common stock 63,000 156,000
Proceeds from Probe 1 joint venture - 1,200,000
-------------------- -------------------
Net cash provided from financing activities 125,579 1,916,000
-------------------- -------------------
Net increase (decrease) in cash (11,343) (51,666)
Cash at beginning of period 42,600 51,666
-------------------
Cash at end of period $ 31,257 $ -
==================== ===================
</TABLE>
<PAGE>
EARTH SEARCH SCIENCES, INC.
A Development Stage Company
SELECTED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998 (unaudited)
CONDENSED FINANCIAL STATEMENTS
The consolidated statement of financial position as of December 31,
1998, and the consolidated statements of operations and cash flow for the three
and nine months ended December 31, 1998, and 1997, have been prepared by the
Company without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) have been made that are necessary to
present fairly the financial position, results of operation, and cash flows at
December 31, 1998 and 1997.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principals have been condensed or omitted. It is suggested that these financial
statements and notes thereto be read together with the financial statements and
notes thereto in the Company's form 10-K for the year ended March 31, 1998. The
results of operation for the three months ended December 31, 1998 are not
necessarily indicative of the operating results to be expected for the full
fiscal year.
REVENUE
The Company recognized $173,252 in revenue during the third quarter for remote
sensing services performed.
- --------------------------------------------------------------------------------
Comparison of Current Quarter's Revenues With Two Previous Quarters
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
$250,000 $213,384 $173,252
6/30/98 9/30/98 12/31/98
- --------------------------------------------------------------------------------
NOTES AND ACCOUNTS PAYABLE
The Company obtained interim working capital by issuing promissory
notes with rights of conversion. The terms of these debt instruments are for an
initial period of ninety days but renewable every ninety days for one year, and
bear interest at 12.5% to 12.99%. Holders of the notes have the right to convert
the loan amount plus interest into restricted shares of the Company's common
stock, subject to the terms in the promissory notes. The Company continues to
raise funds to finance its business operations. Accounts payables grew from
$671,332 at the beginning of the fiscal year to $674,881 at the end of the third
quarter.
PROBE 1 JOINT VENTURE
Effective June 3, 1997, the Company formed a new company, ESSI Probe 1
LC, to acquire the second Probe 1 instrument manufactured by Integrated
Spectronics Pty Ltd of Australia. The new company is a joint venture managed by
Earth Search Sciences and owned 50 percent by Earth Search Sciences. Earth
Search Sciences contributed certain instrument rights $500,000 and a promise to
pay an additional $500,000 upon the completion and delivery of the instrument,
and 50 percent by two shareholders, who contributed $1,000,000 million for their
interest in the company. Under the terms of the joint venture arrangement, Earth
Search Sciences will use the Probe 1 instrument for the identification and
exploitation of minerals as well as environmental remediation and other
projects. The joint venture hopes to receive certain royalties on minerals
discovered and exploited through use of the instrument, as well as other fees
paid by third parties for data gathered by the instrument. This instrument is
scheduled for delivery during fiscal 1999. As ESSI controls the joint venture
pursuant to the terms of the joint venture agreement, the joint venture has been
consolidated into the Company's financial statements.
<PAGE>
CAPITAL LEASE OBLIGATIONS
On June 10, 1997, the Company completed a sale/leaseback for its
first airborne hyperspectral scanner "Probe 1". The instrument was sold for its
cost of $2,500,000. The terms of the leaseback are as follows: 1) the Company
will lease Probe 1 for $250,000 per year bearing interest of prime plus 2% for
three years; 2) at anytime during the above lease period but no later than April
10, 2000, the Company must repurchase the instrument for $3,500,000 net of any
lease payments; 3) at anytime prior to the repurchase, the lessor may convert
the remaining obligation into shares of Quasar Resources, Inc. common stock at a
conversion rate of 40% of the stock's then fair market value. In the event
Quasar is not the operator at the time of exercise of the option, the lessee
shall substitute comparable equity securities or other rights subject to
reasonable approval of lessor; 4) the Company issued to the lessor 1,000,000
unregistered shares of the Company's common stock and warrants to purchase an
additional 1,000,000 unregistered shares of the Company's common stock at an
exercise price of $2 per share; and 5) the lessor will receive certain royalty
rights to revenues generated from mineral sites identified by the instrument. In
January 1998, the Company settled the $2,200,000 note plus accrued interest of
$142,000 by issuing 8,076,800 restricted shares of the Company's common stock
and a warrant to purchase 1,000,000 restricted shares of the Company's common
stock at an exercise price of $2 per share. No value was assigned to the
warrant.
On January 5, 1998, 1,725,000 restricted shares of the Company's
common stock were issued in lieu of the first two lease payments due on April
10, 1998 and 1999. As further consideration, the Company agreed to issue an
additional 1,000,000 restricted shares of the Company's common stock to retire
the warrant issued in conjunction with the sale/leaseback transaction mentioned
above. These shares were not issued as of March 31, 1998; the value of these
shares were shown as commons stock subscribed in the Company's financial
statements at March 31, 1998 and were issued in the first quarter of fiscal
1999. The Company recognized an extraordinary loss of $165,000 (basis and
diluted loss per share of $0.002) from the debt extinguishment during the forth
quarter of fiscal 1998 as a result of the settlement of the lease payments.
During the first quarter of fiscal 1999, an additional 547,727
shares were issued to the lessor in relation to the two years of lease payments.
According to the agreement, the Company was to issue 1,000,000 free trading
shares however, in the forth quarter of fiscal 1998, the Company issued the
lessor restricted shares in lieu of free trading shares. It was agreed in the
first quarter of fiscal 1999 to compensate for the discounted value of the
restricted shares, the additional 547,727 shares were issued. The value of these
additional shares issued does not reduce the capital lease obligation further,
but rather, represents the costs of extinguishing the initial two years of the
probe lease commitment. Accordingly, the $115,023 value of this transaction is
recorded as an extraordinary item loss of extinguishment of debt.
ISSUANCE OF STOCK
During the three months ended December 31, 1998, the Company issued
900,233 shares for services rendered.
LOSS PER COMMON SHARE
The Company experienced a net loss during the third quarter of
$(464,792), or $(0.0048) per common shares on a fully diluted basis. The
Company has experienced a net loss for the first three quarters of this fiscal
year of $(1,492,6910), or $(0..153) per common share. This compares with a loss
of $(3,787,128) for the first three quarters of fiscal 1998.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Material Changes in Financial Condition
During the quarter ended December 31, 1998, the Company recognized
$636,906 in revenue, an increase of $173,252. However, the Company's obligations
increased. The large operating payables and short-txerm notes create a
substantial working capital deficiency.
Results of Operations
The Company has now had three consecutive quarters of revenue
generation, with increasing revenue in each quarter. However, because of the
Company's large accounts payable backlog, the Company has not been able to
generate and real cash flow from this revenue stream.
During the quarter ending December 31, 1998, Earth Search initiated
work on its EOCAP contract with NASA to map Yellowstone National Park. Earth
Search is a subcontractor to Yellowstone Ecosystems Studies (Y.E.S.). Earth
Search management attended a kick-off meeting following contract award for
purposes of planning the upcoming mission to map riparian habitat. NASA reported
previously that its high altitude mapping in prior years indicated the potential
for utilizing hyperspectral imagery to distinguish between various tree species
and vegetation types important in the food chain of Yellowstone's wildlife.
Earth Search will collect imagery at lower altitudes which means higher
resolution imagery can be collected. It is anticipated that with the increased
resolution obtained utilizing the Earth Search Probe 1 technology that
Yellowstone's scientists responsible for tracking seasonal variability of plant
species and, hence, food supplies will be able to gain increased insight into
environmental conditions affecting the health and well being of the Park's
wildlife. The ability of the Probe 1 technology to differentiate between tree
and plant species suggests a new and more economical method for characterizing
habitat.
During the quarter ending December 31, 1998, Earth Search increased its
contract backlog through the award of government contracts. The work will be
assigned to Earth Search as tasks and is projected to provide contract backlog
for a period of five years. While the projected period of performance of the
contracts has been specified, because of the task order nature of the work, the
precise revenue amounts the company will recognize cannot be quantified at this
time. Financial results will be reported on a quarterly basis. The awards are
significant in that they represent a new customer base for Earth Search. Earth
Search now has commercial and government work. Earth Search expects to increase
its technical staffing level as a result of the awards. Work to date has been
confined to scooping studies. Actual flying is not scheduled to commence until
the April through August time frame when vegetation growing seasons produce more
robust vegetation than currently found among winter habitats.
Additional activities during the quarter ending December 31, 1998
included the preparation of proposals for mapping three geographic regions of
the globe. One of these regions was flown during the quarter ending and
preliminary data were of sufficient interest to the client to trigger a revisit
to the area(s) of interest. The Company anticipates that increased mapping
workload will be recognized during March through September 1999. To date, Earth
Search has received client directives to prepare work plans and budgets for one
of the three new areas in question. These directives are in addition to the
ongoing mapping assignments in South America which are projected to run through
April of 1999. The Company is also awaiting the directive to prepare a work plan
for the second geographic area. The third area for which Earth Search is
proposing to map will require funding from the host country, and perhaps World
Bank financing. The start date for the third geographical area is contingent
upon funding. There has been no contract award to date and there is no
definitive start date. In regard to area three, Earth Search management is in
negotiations at the Ministry level and is pleased by the co-operation the
Company has received to date from the U.S. State Department which is offering
public domain assistance to U.S. industry seeking to work abroad.
<PAGE>
Availability of capital continues to be an issue. Earth Search
management has prepared strategic planning documents addressing its capital
requirements both for the near and long term. Earth Search's near term or
short-term obligations include raising of capital to complete the manufacture
and delivery of its second instrument, Probe 1-2. The Company owes a balance of
$500,000 on the second Probe. The Company is prepared to subordinate contract
mapping profits, as necessary to satisfy short term borrowing requirements.
Successful financing of the short-term capital requirements may necessitate
collateralization using natural resource royalties negotiated between the
Company and its major mining client, Noranda.
During the quarter ended December 31, 1998, Earth Search management has
prepared strategic options for the long-term growth of the Company. These
options include steps necessary to raise funds for both acquisitions,
construction of additional instruments, and capital to sustain the Company's
expanding operations. Also of paramount importance to Earth Search management
and its Board of Directors are options for improving the current capital
structure of the Company.
The Company has completed mapping assignments in Australia, Mexico, and
Canada in partial fulfillment of its contractual obligations to Noranda to map
for natural resources on a global scale. In addition to the revenues and fees
the Company has invoiced for these services, the Company references its SEC
filing of its Noranda contract in which it was previously disclosed that the
Company may receive either net smelter royalties or net profits interest on
properties not previously owned or controlled by Noranda upon which a discovery
should occur as the result of using the Company's Probe 1 technology to locate
the mineral resource. To date, gigabyte quantities of imagery have been
collected by Earth Search. These data tapes are being processed and the imagery
is being examined for the presence of mineral properties exhibiting the
qualifications necessary to establish them for candidacy as "Royalty
Properties". While no royal properties have been recorded at this time, the
Company is operating on two continents targeted by the mining industry as
exhibiting significant mineral potential. A substantial backlog of collected
imagery from these two continents exists, and the evaluation process continues
to move forward. As the Company has moved from point A to point B in fulfillment
of its Noranda mapping contract, it has enjoyed during the quarter, added
mapping assignments from new customers from emerging growth areas, including
hydrocarbon exploration, and environmental damage assessments, land use planning
and weed species identification from an airborne platform using hyperspectal
imagery from its Probe 1 instrument. These additional revenues have enabled the
Company to recognize improvements over the previous quarter as it emerges from a
development stage company into an emerging growth business entity.
During the second quarter of fiscal 1999, the Company collected
hyperspectal data and delivered a report to NASA/Techlink, and Turner
Enterprises. The project completed was to collect data specific to the
restocking of the West Slope Cutthroat Trout (endangered species) and riparian
issues.
During the second quarter of fiscal 1999, the Company collected
hyperspectral data for the Geosat Committee. The Geosat Committee is funded from
contributions by major U.S. resource companies. The Committee is operated by the
University of Texas at El Paso and the Director is Dr. Rebecca Dodge. The
project completed for the Geosat's "Hyperspectral Group Shoot 1998" provided
Probe 1 hyperspectral imagery to the oil and mineral exploration, environmental
assessment, and agriculture end-user community, for an evaluation by these
communities of its applications potential.
The Company teamed with the University of Idaho on a joint proposal to
the Farm Bureau and won a contract to overfly the Snake River Basin (Hell's
Canyon) and during the second quarter of fiscal 1999, the Company collected
hyperspectral data for the control and eradication of noxious weed intrusion.
The test results are being published. Initial results provide a positive
indication that airborne hyperspectral imagery is a useful tool for control of
weeds, as well as providing information regarding economic indicators as they
pertain to forecasting crop yield.
<PAGE>
Several proposals have been developed to partner with private industry,
universities and state and Federal agencies to develop, package and deliver
competitive advanced technology products and services. This approach provides
solutions to critical environmental, agriculture, forestry, fisheries &
ecological issues. Defense and national security issues are also being addressed
in the proposal phase.
During the fiscal year ended March 31, 1998, Earth Search Sciences,
Inc. signed a funding agreement with Swancorp Equities Inc. to provide over $15
million in funding. The funding agreement contemplates Swancorp in assisting
Earth Search in obtaining $5 million of capital in a direct private placement
with a potential additional $5 million through the exercise of attached
warrants. Swancorp is prepared to assist Earth Search through a combination of
shares and warrants offered in a private placement with varying exercise prices.
To date, Swancorp has positioned Earth Search in front of ten potential funding
sources. IBK Capital has also been engaged and has introduced Earth Search to an
investment group that the Company is in serious negotiations with at the present
time. Earth Search management has presented the Company's plans for use of
proceeds, along with the anticipated returns on investment that can reasonably
be expected from the addition of a second instrument to the Company's fleet. As
proposed, Earth Search expects to recognize additional revenues beginning late
in the third quarter of 1998 as the result of providing additional services with
the second instrument. The Company is encouraged by its bookings for June
through August and hopes that the trend will continue into the next fiscal year.
As the sun angle degrades during the fall and winter months, the Canadian
mapping conditions degrade and logistics dictate the need to move south to the
United States and South America in order to take advantage of better sun angle
and stable weather which are prerequisites for hyperspectral imaging.
Year 2000
The Company's plan is to address its significant Year 2000 issues prior to
being affected by them. Should the Company identify significant risks related to
its Year 2000 readiness or its progress deviates from the anticipated timeline,
the Company will develop contingency plans as deemed necessary at that time. The
Company is also in the process of reviewing and replacing, where necessary, its
other automated communications and manufacturing systems. The Company estimates
that it will also substantially complete this phase by the second quarter of
1999. The Probe is Year 2000 compliant, and the Company is seeking confirmation
that its material suppliers and vendors are or will be Year 2000 compliant. The
Company has incurred $15,000 for Year 2000 compliance thus far and expects to
incur an additional $10,000 to complete the project.
Outlook
The Company's outlook contains forward-looking statements. These
statements are not intended to nor should it be interpreted to constitute a
prediction of future events
<PAGE>
PART II
OTHER INFORMATION REQUIRED
Item 1. Legal Proceeding None
Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a Vote
of Security Holder None
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned.
EARTH SEARCH SCIENCES, INC.
Date: February 15, 1999 /s/ John W. Peel
John W. Peel
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS OF THE
COMPANY'S UNAUDITED FORM 10-Q, WHICH IS ATTACHED, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000752634
<NAME> EARTH SEARCH SCIENCES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-30-1999
<PERIOD-START> OCT-1-1998
<PERIOD-END> DEC-31-1998
<CASH> 31,257
<SECURITIES> 0
<RECEIVABLES> 214,764
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 961,835
<PP&E> 3,920,953
<DEPRECIATION> 207,011
<TOTAL-ASSETS> 5,066,013
<CURRENT-LIABILITIES> 2,134,010
<BONDS> 0
0
1,000,000
<COMMON> 90,395,931
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,066,013
<SALES> 636,906
<TOTAL-REVENUES> 636,906
<CGS> 0
<TOTAL-COSTS> (846,788)
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (513,438)
<INCOME-PRETAX> (1,492,691)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,492,691)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,492,691)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
