<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES ACT OF
1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transaction period from _____________ to __________________.
Commission File Number 0-27706
XECOM CORP.
(Exact Name of Registrant as Specified in its Charter)
Nevada 33-0664567
(State of Incorporation) I.R.S. Employer Identification No.
69-730 Highway 111, Suite 101, Rancho Mirage, California 92270
(Address of Principal Executive Office) Zip Code
Registrant's telephone number, including area code: (619) 202-1555
______________________________________________________________
(Former Name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities 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
requirements for the past 90 days.
Yes X No____
The number of shares of stock of the registrant, par value .0001, outstanding as
of September 10, 1996, was 8,854,892 shares of common stock; 1,200,000 Series A
Preferred Shares; 4,156,000 Series B Preferred Shares; and 800,000 Series C
Preferred Shares outstanding.
<PAGE> 2
FORM 10-QSB REPORT INDEX
<TABLE>
<CAPTION>
Form 10-QSB and Item No. Page
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<S> <C>
PART 1 --Financial Information(1/)
Item 1. Financial Statements
Consolidated Balance Sheet -- Assets as of June 30, 1996
(Unaudited).....................................................................................1
Consolidated Balance Sheet -- Liabilities and Shareholders' Equity
as of June 30, 1996 (Unaudited).................................................................2
Consolidated Statements of Operations for the three months and six months ended
June 30, 1996 and 1995 (Unaudited)..............................................................3
Consolidated Statement of Shareholders' Equity for the six months ended June 30,
1996 (Unaudited)................................................................................4
Consolidated Statements of Cash Flows for the six months ended June 30, 1996 and
1995 (Unaudited)................................................................................5
Notes to Consolidated Financial Statements (Unaudited)..........................................7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations......................................................................................8
PART II--OTHER INFORMATION
Item 1. Legal Proceedings..............................................................................12
Item 3. Defaults Upon Senior Securities................................................................12
Item 6. Exhibits and Reports on Form 8-K...............................................................13
</TABLE>
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(1/) The accompanying financial statements are not covered by an independent
Certified Public Accountants Report.
-i-
<PAGE> 3
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
XECOM CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
(Unaudited)
ASSETS
CURRENT ASSETS
<TABLE>
<S> <C>
Cash $ 228,500
Accounts receivable, less allowance for
doubtful accounts of $42,970 932,599
Due to affiliates 194,592
Other receivables 220,704
Investments, available-for-sale 438,099
-----------
TOTAL CURRENT ASSETS 2,014,494
PROPERTY AND EQUIPMENT, net 14,795,420
GOODWILL AND INTANGIBLE ASSETS, net 3,295,889
PREPAID CONSULTING FEE 1,500,000
OTHER ASSETS 184,262
-----------
TOTAL ASSETS $21,790,065
===========
</TABLE>
(See Notes to Consolidated Financial Statements)
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<PAGE> 4
XECOM CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996
(Unaudited)
<TABLE>
<S> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 3,834,729
Accrued liabilities 648,753
Dividends Payable 283,800
Customer advance 17,278
Related party debt -- current portion 1,956,242
Capital lease obligations -- current portion 725,659
Note payable 4,678,590
------------
TOTAL CURRENT LIABILITIES 12,145,051
RELATED PARTY DEBT, net of current portion 74,000
CAPITAL LEASE OBLIGATIONS, net of current portion 5,049,310
MINORITY INTEREST 323,720
------------
TOTAL LIABILITIES 17,592,081
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, $.0001 par value, 100,000,000 shares
authorized 8,394,892 shares issued and outstanding 839
Preferred stock, $.0001 par value, 50,000,000 shares
authorized, 6,131,000 shares issued and outstanding 613
Additional paid in capital 8,913,667
Unrealized loss on securities available-for-sale (562,400)
Retained deficit (4,154,735)
------------
TOTAL SHAREHOLDERS' EQUITY 4,197,984
------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 21,790,065
============
</TABLE>
(See Notes to Consolidated Financial Statements)
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<PAGE> 5
XECOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For Three Month For Six Month
Period Ended June 30 Period Ended June 30
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 1,379,064 $ 1,447,252 $ 2,831,716 $ 2,948,061
COST OF SALES 1,171,529 1,263,921 2,342,097 2,316,012
----------- ----------- ----------- -----------
Gross Profit 207,535 183,331 489,619 632,049
OPERATING EXPENSES
Selling, general and administrative expenses 633,495 443,703 1,299,294 870,772
Depreciation and amortization 274,723 64,290 428,195 116,242
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 908,218 507,993 1,727,489 987,014
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (700,683) (324,662) (1,237,870) (354,965)
OTHER INCOME (EXPENSES)
Minority interests in consolidated subsidiaries 5,112 10,202 13,545 7,885
Interest expense (199,073) (51,607) (289,042) (106,456)
Other expenses (2,675) (43,161) (3,338) (42,866)
----------- ----------- ----------- -----------
TOTAL OTHER EXPENSES, NET (196,636) (84,566) (278,835) (141,437)
----------- ----------- ----------- -----------
LOSS BEFORE INCOME TAXES (897,319) (409,228) (1,516,705) (496,402)
Income taxes -- -- -- --
NET LOSS $ (897,319) $ (409,228) $(1,516,705) $ (496,402)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE $ (.11) $ (1,169) $ (.18) $ (1,418)
=========== =========== =========== ===========
AVERAGE COMMON SHARES OUTSTANDING 8,328,958 350 8,253,518 350
=========== =========== =========== ===========
</TABLE>
(See Notes to Consolidated Financial Statements)
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<PAGE> 6
XECOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Common Stock Preferred Stock
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Amounts Shares Amounts Additional Unrealized Loss Retained Total
Paid in on Securities Deficit Shareholders
Capital Available for Equity
Sale
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance - Jan
1, 1996 7,939,892 $794 5,537,000 $554 $ 7,337,291 $ (562,400) $(2,354,230) $ 4,422,009
- ------------------------------------------------------------------------------------------------------------------------------------
Shares Issued
from Private
Placements 455,000 45 594,000 59 1,176,376 -- -- 1,176,480
- ------------------------------------------------------------------------------------------------------------------------------------
Proceeds from
Stock
Subscription -- -- -- -- 400,000 -- -- 400,000
- ------------------------------------------------------------------------------------------------------------------------------------
Dividends on
Preferred Stock -- -- -- -- -- -- (283,800) (283,800)
- ------------------------------------------------------------------------------------------------------------------------------------
Net Loss for
for the Six
Months
Ended June 30,
1996 -- -- -- -- -- -- (1,516,705) (1,516,705)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance - June
30, 1996 8,394,892 $839 6,131,000 $613 $ 8,913,667 $ (562,400) $(4,154,735) $ 4,197,984
====================================================================================================================================
</TABLE>
(See Notes to Consolidated Financial Statements)
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<PAGE> 7
XECOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR THE
SIX MONTHS ENDED
JUNE 30
-------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(1,516,705) $ (496,402)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 426,880 116,242
Compensation expense on issuance of Preferred Stock 120,000 --
Minority interest in subsidiary earnings (13,545) (7,885)
Changes in operating assets and liabilities:
Accounts receivable (92,691) (554,311)
Due from affiliates (129,159) 55,392
Other receivables (141,581) --
Other assets (107,016) (434,158)
Accounts payable (330,170) 423,869
Accrued liabilities 326,330 63,264
Customer advances (32,722) --
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (1,490,379) (833,989)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (115,440) (125,571)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (115,440) (125,571)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from related party debt 255,000 456,500
Payments on related party debt -- (157,948)
Proceeds from stock subscription 400,000 --
Payments under capital lease obligations (111,944) (60,251)
Proceeds from capital contribution -- 419,000
Proceeds from issuance of preferred stock 594,000 --
Proceeds from issuance of common stock 582,480 --
Payments to Minority Interest in Partnerships (26,426) --
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,693,110 657,301
----------- -----------
NET INCREASE (DECREASE) IN CASH 87,291 (302,259)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 141,209 314,352
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 228,500 $ 12,093
=========== ===========
</TABLE>
(See Notes to Consolidated Financial Statements)
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<PAGE> 8
XECOM CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Supplemental Cash Flow Information
Supplemental disclosures of cash flow information for the six months
ended June 30, 1996 and 1995, are summarized as follows:
<TABLE>
<CAPTION>
1996 1995
------ ------
<S> <C> <C>
Cash paid for interest
income taxes
Interest $ 101,366 $ 41,623
Income taxes -- --
Noncash investing and financing activities:
Assets acquired by capital lease $4,836,865 --
Assets acquired on credit 6,523,125 --
Accrued Dividends 283,800 --
</TABLE>
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<PAGE> 9
XECOM CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
Xecom Corp. (the "Company") has elected to omit substantially all footnotes to
the Consolidated Financial Statements for the three and six months ended June
30, 1996, since there have been no material changes to the information
previously reported by the Company in its Form 10-SB filing which became
effective on August 6, 1996.
2. Unaudited Information
The information furnished herein was taken from the books and records of the
Company without audit. However, such information reflects all adjustments which
are, in the opinion of management, necessary to properly reflect the results of
the interim period presented. The information presented is not necessarily
indicative of the results from operations expected for the full fiscal year.
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<PAGE> 10
XECOM CORP. AND SUBSIDIARIES
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996, COMPARED WITH THE SIX MONTHS ENDED JUNE 30,
1995.
The following discussion of the Company's financial condition as of June 30,
1996 and results of operations for the six months ended June 30, 1996 and 1995,
should be read in conjunction with the consolidated financial statements and
notes appearing elsewhere in this Form 10-QSB.
The Company has limited operating history in its present business. The Company
conducted substantially no business prior to September, 1995.
On September 8, 1995, the Company exchanged shares of restricted common stock
and "to be issued" preferred stock of the Company for 70% of the outstanding
common stock of SelecTel Corporation. For financial statement purposes, the
transaction has been recorded under the Purchase Method, per Accounting
Principal Board Opinion 16. (APB 16). "Accounting for Business Combinations,"
and as a reverse capitalization of the Company due to the fact that SelecTel
Corporation provides substantially all of the historic and ongoing operations.
On December 12, 1995, the Company exchanged the restricted common stock of the
Company for 100% of the outstanding common stock of Select Switch Systems, Inc.
For financial statement purposes, the transaction has been recorded under the
"Pooling of Interest" Method per APB 16.
The June 30, 1996 balance sheet and statement of operations and cash flows for
the period ending June 30, 1996 and 1995, reflect the consolidation of the
subsidiaries.
BUSINESS STRUCTURE
The Company provides facilities management services on an integrated basis to
institutional telephone users in the U.S. Military, hotels, hospitals, colleges
and universities, and other major markets. Services include installation and
maintenance of related telecommunications - based equipment, and products and
services such as long distance, data network and facsimile services.
In September, 1995, the Company acquired 70% of SelecTel Corporation through the
issuance of 1,000,000 shares of restricted common stock, 1,000,000 shares of the
Company's "to be issued" 10% Series B, preferred stock and an $1,500,000, 9%
demand promissory note convertible into 1,200,000 shares of 11% of Series A, and
700,000 shares of Series B preferred stock at the note holder's option. As of
December 31, 1995, the demand note conversion option had been exercised.
SelecTel Corporation was established in 1988, and has clients in 35 states, and
17 international countries. SelecTel is a nationwide telecommunication facility
management and integrated AT&T data and long distance service provider. As a
value added AT&T network services provider, the Company provides a single source
service for the provisioning and management of a client's telecommunications
services and equipment.
The Company sold SelecTel to Teletek, Inc. on August 14, 1996 for approximately
$1,500,000 in cash, common stock in Teletek and Promissory Notes.
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<PAGE> 11
XECOM CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Six months ended June 30, 1996, compared with the six months ended June 30, 1995
BUSINESS STRUCTURE (continued)
In December, 1995, the Company acquired 100% of the outstanding capital stock of
Select Switch Systems, Inc., in exchange for 940,000 shares of restricted common
stock.
Select Switch Systems, Inc. provides a variety of telecommunications systems and
services to colleges and university dormitories and United States Army
installations.
Since its inception in 1990, Select Switch Systems, Inc. has primarily
concentrated on developing the small college and university segment of
residential multi-tenant development market. At small colleges and universities,
the Company contracts with the school for the exclusive right to provide local
dial tone and long distance service at the school's dormitories for a ten year
period. In addition, if requested, the Company will install cabling to provide
data transmission and cable television to tenants.
Recently, Select Switch was awarded a ten-year exclusive contract by the Army
and Air Force Exchange Services ("AFFES"), through the prime contractor, Sprint
Communications Company L.P. ("Sprint"), to install, maintain and operate a
turnkey residential barracks telephone service, including, if requested, wiring
for cable television, at 30 Army installations throughout the United States.
These bases comprise over 80,000 residents. In addition, the opportunity exists
for the subcontract to be expanded to cover an additional 40 Army and Air Force
installations totaling approximately 160,000 residents.
The Company is responsible for all costs and expenses associated with operating
and maintaining the telecommunications equipment installed at the school and
Army Bases. The telecommunications equipment remains the property of the
Company.
RESULTS OF OPERATION
For the six months ended June 30, 1996, the Company had a loss from operations
of $1,237,870 and a net loss of $1,516,705 ($0.18 per share) as compared to a
loss from operations of $354,964 and a net loss of $496,402 (($1418 per share)
for the same period in 1995.
The change in the elements of revenues and expenses in 1996 as compared to 1995
reflect the Company's expansion into installing and maintaining telephone
switching equipment and voice mail systems, including cabling at the colleges
and universities and Army and Air Force installations throughout the United
States.
For the six months ended June 30, 1996, the Company's gross profit was $489,261
or 17.3%, as compared to $632,049 or 21% in 1995. The Company anticipates that
the gross margin in 1996 will increase as the Company signs up subscribers and
provides enhanced services in the collegiate and Army-Air Force programs.
Selling, general and administrative expense for 1996 amounted to $1,299,294, or
46% of net sales, as compared to $870,772, or 30% of net sales in 1995.
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<PAGE> 12
XECOM CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Six months ended June 30, 1996, compared with the six months ended June 30, 1995
RESULTS OF OPERATION (continued)
General administrative expenses in 1996 included compensation and related
payroll taxes of approximately $616,770, professional fees of $287,759 and rent,
insurance and related office expenses of $394,765. For the 1995 six month
period, operating expenses consisted of compensation and related expenses of
approximately $470,615, professional fees of $104,402 and rent, insurance and
related office expenses of $295,755.
LIQUIDITY AND CAPITAL RESOURCES
For the six months ended June 30, 1996, the Company utilized $1,490,379 in
operating activities, utilized $115,440 investing activities and generated
$1,693,110 in financing activities. This represents an increase of $87,291 in
cash since December 31, 1995. The funds utilized in operating activities were
attributable primarily to the $1,516,705 net loss for the period.
In September, 1995, the Company acquired 70% of SelecTel Corporation through the
issuance of 1,000,000 shares of restricted common stock, 1,000,000 shares of 10%
Series B preferred stock and a $1,500,000, 9% demand promissory note convertible
into 1,200,000 shares of 11% Series A and 700,000 shares of Series B preferred
stock at the note holder's option. As of December 31, 1995, the demand note
conversion option had been exercised.
In December, 1995, the Company acquired 100% of the outstanding capital stock of
Select Switch Systems, Inc., in exchange for 940,000 shares of restricted common
stock.
The utilization of funds from investing activities was primarily attributable to
the purchase of telephone switching and cabling equipment and installation costs
associated with the college and university and Army base installations.
The Company generated $1,693,110 from financing activities during 1996. This was
attributable primarily to the proceeds from the issuance of preferred and common
stock which totaled $594,000 and $982,480 respectively, and proceeds of $255,000
from related party debt.
For the six months ended June 30, 1995, the Company utilized $833,989 in
operating activities and $125,571 from investing activities and generated
$657,301 from financing activities. The utilization in operating activities was
primarily attributable to the net loss of $496,402. The utilization of funds
from investing activities was attributable to the purchase and installation
costs of telephone switching and cabling, associated with the college and
university program. The Company received proceeds of $456,500 from related party
debt and contributed capital of $419,000.
Where the Company provides long term telecommunications services to the colleges
and universities and to AAFES, the Company installs state of the art Fujitsu
Business Communications Systems, Inc. telecommunications equipment. The Company
has available from 75% up to 100% lease financing from Fujitsu, through the CIT
Group for all installation costs and equipment at the colleges and universities
and AAFES installations.
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<PAGE> 13
XECOM CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Six months ended June 30, 1996, compared with the six months ended June 30, 1995
LIQUIDITY AND CAPITAL RESOURCES (continued)
In addition, the Company intends to pursue outside financing as a vehicle to
meet its working capital requirements. Although this pursuit may include loan
negotiations with lending institutions, the Company has not established any
sources of working capital financing. Where Fujitsu does not provide lease
financing, the Company must fund the project through revenues generated from
operations, other outside financing or proceeds from private equity or debt
security offerings. The Company's cash requirements have been, and will continue
to be, significant. In the event that these plans change or costs of operations
prove greater than anticipated, the Company could be required to modify its
operations or seek additional financing sooner than anticipated. However, there
can be no assurance that additional financing will be available to the Company.
The Company generated proceeds of $1,576,480 through the issuance of restricted
preferred and common stock. Where possible, the Company may issue the Company's
restricted securities in consideration for services or debt. As of December 31,
1995, a $1,500,000 demand promissory note was converted into 1,200,000 shares of
Series "A" 11% preferred stock, and 700,000 shares of Series "B" 10% preferred
stock. In lieu of monthly payments totaling $1,620,000, the Company issued
1,620,000 shares of Series "B" preferred stock to an investment banking company
for services to be rendered pursuant to a contract.
On August 14, 1996, the Company sold it's 70% interest in SelecTel for
approximately $1.5 million in cash, common stock and promissory notes.
IMPACT OF INFLATION
The Company does not believe that inflation has had a material adverse effect on
revenues or income during the past periods.
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<PAGE> 14
XECOM CORP. AND SUBSIDIARIES
Part II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is a defendant in an Adversary Proceeding brought on October 30,
1995 by American Telephone & Data, Inc. ("AT&D"), as Debtor- in-Possession in
Chapter 11 Bankruptcy Action filed September 9, 1995, by AT&D in the in the U.S.
Bankruptcy Court in Santa Ana, California. The principal issue in the Adversary
Proceeding is whether the statutory foreclosure and private sale of SelecTel
Corporation's stock by a director, stockholder and creditor of the Company to an
unrelated third party of the collateral (a stock certificate representing 100%
of the capital stock of SelecTel) securing a delinquent AT&D promissory note,
constituted a preferential and, therefore, a voidable transfer of AT&D assets
under the Bankruptcy Laws. Advice from counsel indicates that the legal claims
in the Adversary Proceedings are to vigorously defended and all information to
date reveals that the Company maintains a reasonable probability of success in
defeating the claims.
Item 3. DEFAULTS UPON SENIOR SECURITIES
The registrant is currently in default on Related Party Indebtedness (current
portion totaling $1,956,242). This amount is currently in dispute. Further the
registrant paid no dividends, and is not in arrears in the payment of dividends
for the quarter ended June 30, 1996.
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<PAGE> 15
XECOM CORP. AND SUBSIDIARIES
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports On Form 8-K
The registrant did not file a report on Form 8-K during the
quarter ended June 30, 1996.
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<PAGE> 16
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-QSB to be signed on its behalf
by the undersigned thereunto duly authorized.
XECOM CORP.
By:/s/ JOSEPH C. VIGLIAROLO
---------------------------
Joseph C. Vigliarolo
President
Date: September 10, 1996
-14-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 228,500
<SECURITIES> 438,099
<RECEIVABLES> 1,390,865
<ALLOWANCES> 42,970
<INVENTORY> 0
<CURRENT-ASSETS> 2,014,494
<PP&E> 15,527,437
<DEPRECIATION> 732,017
<TOTAL-ASSETS> 21,790,065
<CURRENT-LIABILITIES> 12,145,051
<BONDS> 0
0
613
<COMMON> 839
<OTHER-SE> 8,913,667
<TOTAL-LIABILITY-AND-EQUITY> 21,790,065
<SALES> 0
<TOTAL-REVENUES> 2,831,716
<CGS> 0
<TOTAL-COSTS> 2,342,097
<OTHER-EXPENSES> 1,727,489
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 289,042
<INCOME-PRETAX> (1,516,705)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,516,705)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,516,705)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> 0
</TABLE>
