SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
- - - - - - - - -
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarter ended December 31, 1998
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ---- to -----.
Commission File Number 1-10492
EPITOPE, INC.
(Exact name of registrant as specified in its charter)
OREGON NO. 93-0779127
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8505 SW Creekside Place
Beaverton, Oregon 97008-7108
(Address of principal executive offices) (Zip code)
(503) 641-6115
(Registrant's telephone number, including area code)
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 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 [ ]
Number of shares of Common Stock, no par value, outstanding as of December 31,
1998: 13,613,795
<PAGE>
================================================================================
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 FIRST QUARTER ENDED DECEMBER 31, 1998
Commission File Number 1-10492
EPITOPE, INC.
Incorporated in IRS Employer
the State of Oregon Identification No. 93-0779127
8505 SW Creekside Place
Beaverton, Oregon 97008-7108
(503) 641-6115
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 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 [ ]
Number of shares of Common Stock, no par value, outstanding as of December
31, 1998: 13,613,795
================================================================================
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
Page No.
--------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<S> <C>
Condensed Consolidated Balance Sheets at December 31, 1998 (unaudited)
and September 30, 1998................................................. 3
Condensed Consolidated Statements of Operations (unaudited)
for the three months ended December 31, 1998 and 1997.................. 4
Condensed Consolidated Statements of Changes in Shareholders' Equity
(unaudited) for the three months ended December 31, 1998............... 5
Condensed Consolidated Statements of Cash Flows(unaudited)
for the three months ended December 31, 1998 and 1997.................. 6
Notes to Condensed Consolidated Financial Statements (unaudited)........... 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ................................................. 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.............. 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS...................................................... 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................... 12
</TABLE>
2
<PAGE>
EPITOPE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
12/31/98 9/30/98
(Unaudited)
ASSETS
Current assets
<S> <C> <C>
Cash and cash equivalents.............................................. $ 537,640 $ 1,164,275
Marketable securities.................................................. 4,495,302 4,455,044
Trade accounts receivable, net ........................................ 1,126,529 1,519,652
Other receivables...................................................... 40,242 47,818
Inventories (Note 2) .................................................. 1,384,711 1,092,577
Prepaid expenses....................................................... 268,342 313,941
------------ -------------
7,852,766 8,593,307
Property and equipment, net............................................ 865,263 819,095
Patents and proprietary technology, net ............................... 598,638 596,169
Other assets and deposits.............................................. 331,770 348,733
------------ -------------
$ 9,648,437 $ 10,357,304
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable....................................................... $ 408,395 $ 566,894
Salaries, benefits and other accrued liabilities....................... 1,403,890 1,516,395
------------ -------------
1,812,285 2,083,289
Commitments and contingencies.......................................... - -
Shareholders' equity (Note 4)
Contributed capital.................................................... 111,581,688 111,319,573
Accumulated deficit.................................................... $(103,745,536) (103,045,558)
-------------- --------------
7,836,152 8,274,015
$ 9,648,437 $ 10,357,304
</TABLE>
3
<PAGE>
EPITOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
THREE MONTHS ENDED DECEMBER 31 1998 1997
Revenues
<S> <C> <C>
Product sales.......................................................... 2,244,410 $ 1,591,442
Grants and contracts................................................... 59 11,381
------------ ------------
2,244,469 1,602,823
Costs and expenses
Product costs.......................................................... 829,446 655,769
Research and development costs......................................... 702,114 679,847
Selling, general and administrative expenses........................... 1,471,859 1,318,012
------------ ------------
3,003,419 2,653,628
Loss from operations .................................................. (758,950) (1,050,805)
Other income (expense), net
Interest income........................................................ 65,235 114,895
Interest expense....................................................... (342) (7,673)
Other, net............................................................. (5,921) (11,753)
------------ --------------
58,972 95,469
Net loss............................................................... $ (699,978) $ (955,336)
Basic and diluted net loss per share................................... $ (0.05) $ (0.07)
Weighted average number of shares outstanding ......................... 13,594,798 $ 13,454,403
</TABLE>
4
<PAGE>
EPITOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C>
BALANCES AT SEPTEMBER 30, 1998................. 13,577,319 $ 111,319,573 $(103,045,558) $ 8,274,015
Common stock issued upon
exercise of options.......................... 30,576 154,103 - 154,103
Common stock issued under Employee
Stock Purchase Plan.......................... 2,066 8,245 - 8,245
Common stock issued as matching
savings plan contributions................... 3,834 22,525 - 22,525
Compensation expense for
stock option grants.......................... - 77,242 - 77,242
Net loss for the year.......................... - - (699,978) (699,978)
---------- ------------- ------------- --------------
BALANCES AT DECEMBER 31, 1998 (UNAUDITED)...... 13,613,795 $ 111,581,688 $(103,745,536) $ 7,836,152
</TABLE>
5
<PAGE>
EPITOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
THREE MONTHS ENDED DECEMBER 31 1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss............................................................... $ (699,978) $ (955,336)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization.......................................... 151,546 178,207
Loss on disposition of assets.......................................... 5,927 -
(Increase) decrease in accounts receivable and other receivables....... 400,699 (811,631)
Increase in inventories................................................ (292,134) (34,874)
(Increase) decrease in prepaid expenses................................ 45,599 (7,790)
(Decrease) increase in accounts payable and accrued liabilities ....... (271,004) 655,608
Common stock issued as compensation for services....................... - 24,160
Compensation expense for stock option grants and
deferred salary increases........................................... 77,242 113,056
Other, net ............................................................ 24,860 14,800
-------------- -------------
Net cash used in operating activities.................................. (557,243) (823,800)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in marketable securities.................................... (1,499,587) (3,907,727)
Proceeds from sale of marketable securities............................ 1,459,329 5,673,063
Additions to property and equipment.................................... (154,979) (13,150)
Expenditures for patents and proprietary technology.................... (51,131) (29,443)
Investment in affiliated companies..................................... (7,897) 18,945
-------------- -------------
Net cash provided by (used in) investing activities.................... (254,265) 1,741,688
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock................................. 184,873 -
Advances in connection with spin-off................................... - (2,129,291)
-------------- -------------
Net cash provided by (used in) financing activities.................... 184,873 (2,129,291)
Net decrease in cash and cash equivalents.............................. (626,635) (1,211,403)
Cash and cash equivalents at beginning of period....................... 1,164,275 1,934,480
-------------- -------------
Cash and cash equivalents at end of period............................. $ 537,640 $ 723,077
</TABLE>
6
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 THE COMPANY
Epitope, Inc. (Epitope or the Company), is an Oregon corporation incorporated in
1981. Epitope develops and markets oral specimen collection kits and related
diagnostic tests primarily for the detection of the Human Immunodeficiency Virus
(HIV), the cause of Acquired Immune Deficiency Syndrome (AIDS), and for the
detection of other medical conditions and analytes, including drugs of abuse.
Epitope's lead product, the patented OraSure(R) collection device, is used as
part of an oral specimen diagnostic system. The Company markets the device in
the United States and certain foreign countries for use in screening life
insurance applicants and for public health use, and plans to begin marketing for
drugs-of-abuse testing in 1999. Epitope also markets HIV-1 Western blot
confirmatory test kits used to confirm positive results of initial screening
tests for HIV-1 infection.
The interim condensed consolidated financial statements included herein are
unaudited; however, in the opinion of the Company, the interim data include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the results of operations for the interim periods. These
condensed consolidated financial statements should be read in conjunction with
the financial statements and notes thereto included in the Company's 1998 Annual
Report on Form 10-K. Results of operations for the periods ended December 31,
1998 are not necessarily indicative of the results of operations expected for
the full fiscal year.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. The accompanying financial statements include the
accounts of the Company and its wholly owned subsidiaries. All significant
intercompany balances and transactions have been eliminated.
<TABLE>
Inventories. Inventory components are summarized as follows: 12/31/98 9/30/98
(Unaudited)
<S> <C> <C>
Raw materials.......................................................... $ 359,709 $ 238,916
Work-in-process ....................................................... 627,083 627,503
Finished goods ........................................................ 383,464 211,703
Supplies .............................................................. 14,455 14,455
----------- -----------
$ 1,384,711 $ 1,092,577
</TABLE>
Net Loss Per Share. Basic and diluted loss per share has been computed using the
weighted average number of shares of common stock and potential common stock
outstanding during the period. Potential common stock consists of the number of
shares issuable upon exercise of outstanding warrants, and options less the
number of shares assumed to have been purchased for the treasury with the
proceeds from such exercise. Potential common stock is excluded from the
computation if its effect is anti-dilutive. Basic and diluted net income (loss)
per share are the same for the years ended December 31, 1998 and 1997. On
December 31, 1998 and 1997 the weighted average shares outstanding were
13,594,798 and 13,454,403, respectively. Shares of potential common stock on
December 31, 1998 and 1997, respectively of 6,385,245 and 5,863,930 were not
included in the calculation of diluted loss per share as they were
anti-dilutive.
Statement of Cash Flows. Cash paid for interest approximated interest expense in
the quarters ended December 31, 1998 and 1997. No cash was paid for income taxes
in fiscal 1998 or 1997. Compensation expense amounted to $77,242 and $113,056 in
the first quarter of fiscal 1998 and 1997, respectively, related to the issuance
of compensatory equity securities, which also represent non-cash transactions.
Management Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
relating to assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could vary from these
estimates.
7
<PAGE>
NOTE 3 SEGMENT INFORMATION - SFAS NO. 131
Effective for fiscal year 1999, the Company adopted Statement of Financial
Accounting Standards No. 131 "Disclosures about Segments of an Enterprise and
Related Information" (SFAS No. 131). The adoption of SFAS No. 131 is not
expected to have a material impact on the results of operations or shareholders'
equity for any periods presented.
Geographic Areas. The Company's products are all included in the medical
products industry segment. See Note 1 for a description of the Company's
business. The Company's products are sold principally in the United States,
Canada, Asia and Latin America.
IN THOUSANDS
<TABLE>
FOR THE THREE MONTHS ENDED REVENUES IDENTIFIABLE ASSETS
DECEMBER 31, 1998 1997 1998 1997
<S> <C> <C> <C> <C>
United States..................................... $2,142 $1,375 $9,648 $11,161
Canada............................................ - 184 - -
Asia.............................................. 97 9 - -
Latin America..................................... 3 - - -
Europe............................................ - 35 - -
Other............................................. 2 - - -
------ ------ ------ -------
$2,244 $1,603 $9,648 $11,161
</TABLE>
Customer Concentration. In the first quarter of fiscal 1999 four customers
accounted for over 69 percent of product revenues as compared to 74 percent for
the same quarter of fiscal 1998. The Company believes that its relationship with
each of these customers is strong and believes that they will purchase
comparable or increasing volumes of the Company's products for the foreseeable
future. There can be no assurance, however, that sales to these customers will
not decrease or that these customers will not choose to replace the Company's
products with those of competitors. The loss of any of these customers or a
significant decrease in the volume of products purchased by them would have a
material adverse effect on the Company.
NOTE 4 SUBSEQUENT EVENTS
A&W lawsuit. On January 19, 1999, the U.S. District Court for the Southern
District California dismissed with prejudice the claims by the Company's former
subsidiary Andrew and Williamson Sales, Co. (A&W) against two former officers of
the Company and an officer of Agritope (Case No. 98 CV 0666 TW (CGA)). The
court's decision was based on a settlement agreement signed by A&W in May 1997.
The Company has filed an action in Oregon state court (Multnomah County Circuit
Court Civ. No. 9810-07537) against A&W for breaching the settlement agreement
and is seeking as damages the Company's costs of defending the California
action.
Stock option exercises. Subsequent to December 31, 1998 the Company received
nearly $1.9 million in cash from the exercise of options to purchase 410,544
shares of common stock.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Statements below regarding future events or performance are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The Company's actual results could be quite different from those
expressed or implied by the forward-looking statements. Statements in this Form
10-Q about future sales levels or other future events or performance are
forward-looking statements. Factors that could affect results include the extent
of future use of oral testing and OraSure in the insurance industry or other key
markets; ability of the Company to develop product distribution channels;
development of competing products; changes in federal or state law or
regulations; and loss of key personnel. These and other factors are discussed
more fully in the Company's Annual Report on Form 10-K in Items 1 and 7 and
under "Year 2000 Readiness" below. Although forward-looking statements help to
provide complete information about the Company, readers should keep in mind that
forward-looking statements are much less reliable than historical information.
Readers are cautioned not to place undue reliance on the forward-looking
statements.
RESULTS OF OPERATIONS
The table below shows the amount (in thousands) and percentage of Epitope's
total revenue contributed by each of its principal products and by grants and
contracts.
<TABLE>
THREE MONTHS ENDED DECEMBER 31 1998 1997
Product Sales
<S> <C> <C> <C> <C>
Oral specimen collection devices.................................. $1,519 68% $1,126 70%
Western blot HIV confirmatory tests............................... 666 30 461 29
Other product sales............................................... 59 2 5 -
------ --- ------ ---
2,244 100% 1,592 99%
Grants and contracts................................................. - - 11 1
------ --- ------ ---
$2,244 100% $1,603 100%
</TABLE>
Revenues. Total product sales increased by $653,000 or 41 percent in the current
quarter as compared to the first quarter of fiscal 1998. This increase was
primarily a result of expanded sales volume of Epitope's lead product, the
OraSure oral specimen collection device, which increased by $393,000 or 35
percent in the current quarter as compared to a decrease of $770,000 or 41
percent in the first quarter of 1998. Total product sales revenues decreased
from the fourth quarter of fiscal 1998 by $1.0 million as a result of the
seasonality of the life insurance testing market.
OraSure device and Other product sales into the public health markets in the
quarter ended December 31, 1998 totaled $574,000 or 26 percent of product sales
as compared to $354,000 or 22 percent in the same period of fiscal 1998. The
life insurance testing market in the first quarter of fiscal 1999 contributed
$902,000 or 40 percent of total product sales for the period as compared to
$727,000 or 46 percent in the first quarter of fiscal 1998. Sales into
international markets in the current quarter were $102,000 or 4 percent of
product sales as compared to $49,000 or 3 percent of product sales in the same
quarter of fiscal 1998.
Sales of the Company's Western blot HIV confirmatory test increased by $205,000
or 44 percent in the current quarter as compared to an increase of $2,000 or 0.4
percent in the first quarter of 1998.
Fiscal year sales are anticipated to rise in 1999, compared to fiscal year 1998.
However, sales may be affected by economic factors and seasonality of certain
market segments. Expectations for future sales are based primarily on forecasts
provided to the Company by individual customers rather than firm orders, as many
of the customers in the public health and international markets do not have
contractual arrangements with the Company.
Grant and contract revenues decreased by $11,000 or 100 percent in the current
quarter as compared to a decrease of $271,000 or 96 percent in the first quarter
of fiscal 1998. Discussions are under way with potential partners who may
provide R&D funding to the Company. In addition, grant applications for
additional funding are in process.
Gross Margin on product sales was 63 percent in the first quarter of fiscal 1999
compared to 59 percent in the comparable period of fiscal 1998. The improvement
in gross margin is attributable to increases in inventories and increased sales
and production volumes for the OraSure device which resulted in lower per unit
costs and to the shift in
9
<PAGE>
product mix towards the OraSure device which carries a higher gross margin than
does the western blot HIV confirmatory test.
Research and Development Expenses. Research and development expenses increased
by $22,000 or 3 percent in the current quarter as compared to last year's first
quarter. R&D expenses for fiscal 1999 should be near the 1998 level, unless
funding for additional R&D projects is forthcoming from potential new partners
or from research grants.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the first quarter of fiscal 1999 increased by
$154,000 or 12 percent as compared to last year's first quarter. The increase in
1999 was primarily a result of increased spending on advertising and promotion
to support expansion in all markets.
Year 2000 Readiness. The Company has completed its review of its internal
systems and devices. A plan is now in place to upgrade or replace systems and
devices that are non-compliant in the ordinary course of business (as part of a
regular ongoing upgrade program) during fiscal 1999. Many vendors, suppliers,
and customers, the interruption of whose businesses would have a material effect
on the Company, have responded to inquiries regarding Year 2000 (Y2K) compliance
and the Company is in the process of developing a detailed, systematic
contingency plan. The Company has not incurred any material costs to date and
does not anticipate incurring any material costs to resolve issues relating to
the Y2K problem internally. Such costs will be funded by cash flows from
operations or available cash and cash equivalents.
At the current time, the Company anticipates that all essential products and
internal systems and equipment are now, or will be timely made, Y2K compliant.
This belief is based on the progress to date and the assessed degree of
difficulty associated with the remaining phases to achieve Y2K readiness, the
representations made by vendors and, where possible, by testing. Significant
uncertainty exists, however, concerning the effects of the Y2K problem,
primarily with regards to assurances made by the Company's key or significant
vendors, suppliers, and customers. In addition, Epitope has not investigated Y2K
compliance of third parties that are either not critical or significant to the
Company's operations or are not currently vendors, suppliers, or customers of
the Company. Any failure of the Company or its vendors, suppliers, customers, or
any third party governmental or business entities to be Y2K compliant could
materially affect the business, results of operations, financial conditions and
prospects of Epitope, the impact of which cannot be quantified at this time.
This section captioned "Year 2000 Readiness" as well as other statements in this
report relating to Y2K issues are "Year 2000 Readiness Disclosures" pursuant to
the Year 2000 Information and Readiness Disclosure Act.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
(IN THOUSANDS) 12/31/98 9/30/98
<S> <C> <C>
Cash and cash equivalents.............................................. $ 538 $ 1,164
Marketable securities.................................................. 4,495 4,455
Working capital........................................................ 6,040 6,510
</TABLE>
Net cash flows used in operating activities decreased by $267,000 compared to
the same quarter in fiscal 1998. The total of cash and cash equivalents plus
marketable securities decreased by $586,000 during the quarter due primarily to
the need to fund operating activities.
Proceeds from current assets, primarily the collection of accounts receivable,
represented the primary sources of funds for meeting the Company's requirements
for operations, working capital and business expansion in the current quarter.
The Company received proceeds of $185,000 from the exercise of warrants and
options to purchase common stock in the quarter. Subsequent to December 31, 1998
the Company received nearly $1.9 million in cash from the exercise of options to
purchase shares of common stock influenced by an increase in the market price of
the Company's common stock.
10
<PAGE>
The Company anticipates that it will continue to need funds to support ongoing
research and development projects, to provide additional manufacturing capacity,
and to increase working capital to support growth. The Company believes that its
operating liquidity requirements for the foreseeable future can be met by
existing resources, including marketable securities and cash generated by
operations. The Company may also receive funds through the exercise of
outstanding stock options and warrants as well as research grants. However,
there are no assurances that additional funding from these sources will be
available.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company does not hold material amounts of derivative financial instruments,
other financial instruments, or derivative commodity instruments, and
accordingly has no material market risk to report under this item.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Note 4 to the Condensed Consolidated Financial Statements included in Part
I, Item 1 of this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibits are listed on the attached exhibit index following the signature page
of this report.
(b) Reports on Form 8-K
None.
12
<PAGE>
SIGNATURES
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 thereunto duly authorized.
EPITOPE, INC.
February 9, 1999 /S/CHARLES E. BERGERON
Date Charles E. Bergeron
Chief Financial Officer
(Principal Financial Officer)
February 9, 1999 /S/THEODORE R. GWIN
Date Theodore R. Gwin
Controller
(Principal Accounting Officer)
13
<PAGE>
EXHIBIT INDEX
27. Financial Data Schedule
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated financial statements included herein and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 537,640
<SECURITIES> 4,495,302
<RECEIVABLES> 1,227,692
<ALLOWANCES> 60,921
<INVENTORY> 1,384,711
<CURRENT-ASSETS> 7,852,766
<PP&E> 5,503,939
<DEPRECIATION> 4,638,676
<TOTAL-ASSETS> 9,648,437
<CURRENT-LIABILITIES> 1,812,285
<BONDS> 0
0
0
<COMMON> 111,581,688
<OTHER-SE> (103,745,536)
<TOTAL-LIABILITY-AND-EQUITY> 9,648,437
<SALES> 2,244,410
<TOTAL-REVENUES> 2,244,469
<CGS> 829,446
<TOTAL-COSTS> 3,003,419
<OTHER-EXPENSES> (58,972)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (699,978)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (699,978)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
