<PAGE> 1
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UNITED STATES
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
SEPTEMBER 30, 1997
Commission File Number
0-17187
- --------------------------------------------------------------------------------
LOGIC DEVICES INCORPORATED
(Exact name of registrant as specified in its charter)
- --------------------------------------------------------------------------------
CALIFORNIA 94-2893789
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1320 ORLEANS DRIVE, SUNNYVALE, CALIFORNIA 94089
(Address of principal executive offices)
(Zip Code)
(408) 542-5400
(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 [ ]
Indicate the number of shares outstanding of the issuer's classes of
common stock, as of the latest practicable date. On November 7, 1997, 6,121,750
shares of Common Stock, without par value, were outstanding.
================================================================================
1 of 18 pages
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LOGIC DEVICES INCORPORATED
INDEX
<TABLE>
<CAPTION>
Page Number
-----------
<S> <C> <C>
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1997 3
and December 31, 1996
Consolidated Statements of Income for the three 4
months ended September 30, 1997 and 1996
Consolidated Statements of Income for the nine 5
months ended September 30, 1997 and 1996
Consolidated Statements of Cash Flows for the 6
nine months ended September 30, 1997 and 1996
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of 9
Financial Condition and Results of Operations
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
------- --------------------------------
Signatures 15
Exhibit 11 16
Exhibit 27 18
</TABLE>
2 of 18 pages
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
LOGIC DEVICES INCORPORATED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 365,700 $ 670,900
Accounts receivable, net of allowance 5,656,800 4,368,300
Inventories 12,752,700 13,928,900
Prepaid expenses 1,030,500 922,600
Income tax receivable -- 789,800
Deferred income taxes 920,900 920,900
------------ ------------
Total current assets 20,726,600 21,601,400
Equipment and leasehold improvements, net 4,781,000 4,204,300
Other assets 820,600 694,300
------------ ------------
$ 26,328,200 $ 26,500,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank borrowings 3,275,000 2,000,000
Current portion of long-term obligations 561,900 561,900
Accounts payable 306,900 1,074,600
Accrued expenses 301,000 531,800
Income taxes payable -- --
------------ ------------
Total current liabilities 4,444,800 4,168,300
Long-term obligations 744,900 786,600
Deferred income taxes 419,500 419,500
------------ ------------
Total liabilities 5,609,200 5,374,400
Shareholders' equity:
Common stock 17,341,900 17,341,900
Shareholder receivables (307,500) (307,500)
Retained earnings 3,684,600 4,091,200
------------ ------------
Total shareholders' equity 20,719,000 21,125,600
------------ ------------
$ 26,328,200 $ 26,500,000
============ ============
</TABLE>
3 of 18 pages
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LOGIC DEVICES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Three months ended September 30, 1997 and 1996
(unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Net revenues $ 3,181,900 $ 3,389,700
Cost of sales 1,935,400 1,847,600
----------- -----------
Gross margin 1,246,500 1,542,100
Operating expenses:
Research and development 391,300 436,300
Selling, general and administrative 790,300 949,400
----------- -----------
Operating expenses 1,181,600 1,385,700
----------- -----------
Income from operations 64,900 156,400
Other income (expense), net (61,100) 4,700
----------- -----------
Income before taxes 3,800 161,100
Income taxes 1,300 65,800
----------- -----------
Net income $ 2,500 $ 95,300
=========== ===========
Net income per common share $ 0.00 $ 0.02
=========== ===========
Weighted average common share equivalents 6,438,750 6,221,750
outstanding
</TABLE>
4 of 18 pages
<PAGE> 5
LOGIC DEVICES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Nine Months ended September 30, 1997 and 1996
(unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Net revenues $ 9,006,400 $10,494,700
Cost of sales 5,730,000 5,622,300
----------- -----------
Gross margin 3,276,400 4,872,400
Operating expenses:
Research and development 1,147,700 1,231,100
Selling, general and administrative 2,613,100 2,970,500
----------- -----------
Operating expenses 3,760,800 4,201,600
----------- -----------
Income from operations (484,400) 670,800
Other income (expense), net (188,900) 73,300
----------- -----------
Income before taxes (673,300) 744,100
Income taxes (266,700) 294,300
----------- -----------
Net income $ (406,600) $ 449,800
=========== ===========
Net income per common share $ (0.06) $ 0.07
=========== ===========
Weighted average common share equivalents 6,366,416 6,221,750
outstanding
</TABLE>
5 of 18 pages
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LOGIC DEVICES INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1997 and 1996
(unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ (406,600) $ 449,800
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 996,500 766,600
Change in operating assets and liabilities:
Accounts receivable, net (1,288,500) 638,500
Inventories 1,176,200 (3,625,100)
Prepaid expenses (107,900) (314,400)
Accounts payable (767,700) (150,900)
Accrued expenses (230,800) 54,200
Income taxes payable 789,800 (819,000)
----------- -----------
Net cash (used in) provided by operating 161,000 (3,000,300)
activities
Cash flows from investing activities:
Capital expenditures (1,344,600) (1,139,500)
Net increase in other assets (354,900) (105,000)
----------- -----------
Net cash (used in) investing activities (1,699,500) (1,244,500)
Cash flows from financing activities:
Bank borrowing, net 1,275,000 1,000,000
Repayment of notes payable and long-term debt (41,700) (82,900)
Proceeds from exercise of warrants -- 258,900
Proceeds from exercise of employee stock options -- 8,100
----------- -----------
Net cash provided by 1,233,300 1,184,100
----------- -----------
financing activities
Net (decrease) increase in cash and cash equivalents (305,200) (3,060,700)
Cash and cash equivalents at beginning of
period $ 670,900 $ 4,378,500
----------- -----------
Cash and cash equivalents at end of period $ 365,700 $ 1,317,800
=========== ===========
</TABLE>
6 of 18 pages
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LOGIC DEVICES INCORPORATED
Notes to Consolidated Financial Statements
September 30, 1997 and December 31, 1996
(unaudited)
(A) Basis of Presentation
The accompanying unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to present fairly
the financial position, results of operations and cash flows for the periods
indicated.
The accompanying unaudited interim financial statements have been
prepared in accordance with the instructions for Form 10-Q and therefore do not
include all information and footnotes necessary for a complete presentation of
the financial position, results of operations, and cash flows, in conformity
with generally accepted accounting principles. The Company has filed audited
financial statements which include all information and footnotes necessary for
such a presentation of the financial position, results of operations, and cash
flows for the years ended December 31, 1996 and 1995, with the Securities and
Exchange Commission. It is suggested that the accompanying unaudited interim
financial statements be read in conjunction with the aforementioned audited
financial statements. The unaudited interim financial statements contain all
normal and recurring entries. The results of operations for the interim period
ended September 30, 1997 are not necessarily indicative of the results to be
expected for the full year.
(B) Inventories
A summary of inventories follows:
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
------------- ------------
<S> <C> <C>
Raw materials $ 3,228,700 $ 3,165,400
Work-in-process 5,707,000 6,744,900
Finished goods 3,817,000 4,018,600
------------- ------------
$ 12,752,700 $ 13,928,900
============ ============
</TABLE>
Based on forecasted 1998 sales levels, the Company has on hand
inventories aggregating approximately twelve months of sales.
7 of 18 pages
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LOGIC DEVICES INCORPORATED
Notes to Consolidated Financial Statements
September 30, 1997 and December 31, 1996
(unaudited)
(C) Debt Financing
On June 16, 1997, the Company renewed its $6,000,000 revolving line of
credit with Sanwa Bank extending the maturity to May 31, 1998. The line of
credit bears interest at the bank's reference rate (8.50% at September 30,
1997). The line of credit is secured by the assets of the Company and requires
the Company to maintain a minimum tangible net worth of $19,000,000, a maximum
ratio of debt to tangible net worth of not more than 0.50 to 1.00, a minimum
current ratio of not less than 2.00 to 1.00, a minimum quick ratio of not less
than 1.00 to 1.00 increasing to 1.35 to 1.00 at September 30, 1997 and
increasing again to 1.50 to 1.00 at December 31, 1997 and thereafter, and
profitability of at least $1.00 for each fiscal quarter. As of September 30,
1997 the Company was in compliance with all covenants. As of September 30, 1997,
the Company had $2,725,000 available under the revolving line of credit.
Under the terms of its line of credit facility, the Company is precluded
from paying any cash dividends without the consent of the lender even if the
Company is in compliance with all of the financial covenants but is allowed to
pay stock dividends whether or not there was any other covenant violation.
Regardless of any such restrictions in its bank loan agreements, the Company
does not intend to pay cash dividends in the near future and anticipates
reinvesting its cash flow back into operations.
8 of 18 pages
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
LOGIC DEVICES INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Revenues
Net revenues decreased by 7%, from $3,389,700 for the three months ended
September 30, 1996 to $3,181,900 for the three months ended September 30, 1997.
The decrease in revenues for the period was the result of lower sales volumes
for the Company's DSP products. Shipments of the Company's DSP products were
down from the 1996 period as a result of a small backlog of orders in the 1997
period. Revenues generated from the Company's SRAM products increased during the
1997 period.
Net revenues decreased by 17%, from $10,494,700 for the nine month
period ended September 30, 1996 to $9,006,400 for the nine months ended
September 30, 1997. The decrease in revenues for the nine month period was the
result of lower sales volume for the Company's DSP products. Revenues from the
Company's SRAM products have increased significantly in the 1997 period. The
lower sales volume for the 1997 period has been the result of a lower backlog of
orders for the period due to a very weak order rate experienced since the last
half of 1996 and early 1997.
Expenses
Cost of sales increased 5% from $1,847,600 or 55% of net revenues for
the three months ended September 30, 1996 to $1,935,400 or 61% of net revenues
for the same period in 1997. Gross profit decreased 24%, from $1,542,100 in the
former period to $1,246,500 in the latter period. The decrease in gross profit
is the result of lower revenues for the period combined with higher cost of
goods sold which included increases in inventory reserves. As a percentage of
net revenues, gross profit decreased from 45% for the three months ended
September 30, 1996 to 39% for the three months ended September 30, 1997.
Cost of sales increased 2% from $5,622,300 or 54% of net revenues for
the nine months ended September 30, 1996 to $5,730,000 or 64% of net revenues
for the same period in 1997. Gross profit decreased 49% from $4,872,400 in the
former period to $3,276,400 in the latter period. This was the result of the
lower sales volume for the period combined with a lower profit margins
experienced on the Company's SRAM products, and higher cost of goods sold which
included increases in inventory reserves.
9 of 18 pages
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Research and development ("R & D") expenses for the three months ended
September 30, 1997, were $391,300, a decrease from $436,300 for the same period
in 1996. For the nine month period, research and development expenses were
$1,147,700 for 1997, decreasing from $1,231,100 for 1996. As a percentage of net
revenues, R & D expenses were 12% for the three months ended September 30, 1997,
compared to 13% for 1996. For the nine months ended September 30, 1997, R & D
expenses as a percentage of net sales were 13% compared to 12% for 1996. In both
the 1996 and 1997 periods the Company dramatically increased its product
development efforts. In 1996, the Company invested heavily in new design tools,
development software, and additional personnel to increase and accelerate new
product development for 1997. The Company also invested new product tooling at
foundry sources to increase the Company's product offerings and diversify
foundry sources. Even though the Company had slightly more R&D costs in the
first half of 1996 than 1997, the Company has increased its new product output
in 1997. Where in 1996, R&D expenses largely consisted of costs associated with
the setup and training of personnel on new design tools hardware and software,
1997 expenses have been cost associated with additional employees and product
development. The Company intends to continue to make substantial investments in
product R & D.
Selling, general and administrative ("S,G & A") expenses were $790,300
for the three months ended September 30, 1997, a decrease from $949,400 for the
same period in 1996. For the nine months ended September 30, 1997, S, G & A
expenses were $2,613,100, decreasing from $2,970,500 for the same period in
1996. As a percentage of net sales, selling, general and administrative expenses
were 25% for the three months ended September 30, 1997 compared to 28% in 1996.
As a percentage of net sales, selling, general and administrative expenses were
29% for the nine months of 1997 compared to 28% in 1996. S,G & A expenses have
decreased as a result of lower sales commission expense due to the lower sales
volume and consolidated sales network. The Company has reduced the number of its
commissioned outside sales representative organizations and now services those
areas with the Company's direct sales force. The Company, however, has increased
its sales and marketing efforts substantially. The Company intends to continue
to expand these efforts in the future.
Net operating income decreased to $64,900 or 2% of net revenues for the
three months ended September 30, 1997 versus income of $156,400 or 5% of net
revenues for the same period in 1996. For the nine month period ended September
30, 1997 the Company had a net operating loss of $484,400 or negative 5% of net
revenues versus a net income of $670,800 or 6% of net revenues for the same
period in 1996.
For the three month period in 1996, the Company earned $4,700 in Other
Income from interest on cash invested versus Other Expense of $61,100 in 1997
which consisted of interest expense on outstanding debt. For the nine month
period in 1996, the Company earned $73,300 in Other Income from interest on cash
invested versus Other Expense
10 of 18 pages
<PAGE> 11
of $188,900 in 1997 which consisted largely of interest expense on outstanding
debt.
As a result of the foregoing, net income for the three months ended
September 30, 1997 was $2,500 or compared to net income of $95,300 or 3% of net
revenues for the same period in 1996. For the nine months ended September 30,
1997, there was a net loss of $406,600 or a negative 5% of net revenues compared
to net income of $449,800 or 4% of net revenues for the same period in 1996.
Liquidity and Capital Resources
Cash Flows
For the nine months ended September 30, 1997, the Company had after-tax
cash earnings (net income/loss less non-cash depreciation and amortization
charges) of $589,900 and $1,216,400 for the 1996 period. Although the Company
has historically relied on after-tax earnings as the Company's primary source of
financing for working capital needs and for capital expenditures, the Company
used bank borrowing during the 1997 period.
During the 1997 period, after-tax cash earnings of $589,900 and
increases in bank borrowings of $1,275,000 and decreases in inventories of
$1,176,200, funded increases in account receivables of $1,288,500, decreases in
accounts payable of $767,700, and deceases in accrued and prepaid expenses of
$230,800 which resulted in net cash provided by operations of $161,000 versus
net cash used of $3,000,300 in 1996. The Company invested $1,699,500 in capital
expenditures and other assets during the period consisting largely of
capitalized product tooling and development assets. The Company received an
income tax refund of $350,000 in the second quarter of 1997 and will receive an
additional refund of $703,000 in the fourth quarter of 1997.
For the first nine months of 1996, the Company used $3,000,300 in cash
flow from operating activities. This use of cash was the result of increases in
inventories of $3,625,100 and payment of income taxes due of $819,000, offset by
after-tax cash earnings generated of $1,216,400 (net income plus depreciation
and amortization) and cash of $638,500 provided from accounts receivables. The
Company invested $1,244,500 in capital expenditures and other assets for
research and development tools and new product tooling during the nine month
period of 1996. The Company received proceeds of $267,000 from the exercise of
certain warrants and employee stock options. The result was a net use of cash
for the nine months of 1996 of $3,060,700.
Working Capital
The Company's investment in inventories and accounts receivable has been
significant and will continue to be significant in the future. Over prior
periods, the Company, as a nature of its business, has maintained these levels
of inventories and accounts receivable.
11 of 18 pages
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The Company relies on third party suppliers for raw materials and as a
result maintains substantial inventory levels to protect against disruption in
supplies. The Company has historically maintained inventory turn over of
approximately 225 days to 360 days, since 1990. The low point in inventory
levels came in 1992 and 1993 when the Company had supply disruptions from one of
its major suppliers.
The Company looks at its inventories in relationship to its sales which
have ranged from 140 days to 325 days within the periods between 1996 and 1990.
This inventory to sales ratio is a more stable measure of inventory levels,
versus the traditional inventory turnover measure because, at the times when the
Company is experiencing supply disruptions, and therefore lower inventory
levels, the Company is also experiencing increased costs of goods due to
inefficiencies in its operations stemming from sporadic deliveries which skews
the numerator and denominator in different directions for inventory turns
calculations. The lowest days on hand of inventory to sales has been experienced
when the Company has had supply disruptions as in 1992 and 1993.
The Company provides reserves for any product material that is over one
year old with no back-log or sales activity, and reserves for future
obsolescence. The Company also takes physical inventory write-downs for
obsolescence.
The Company's accounts receivable level has been consistently correlated
to the Company's previous quarter revenue level. Because of the Company's
customer scheduled backlog requirements, up to 80% of the quarterly revenues are
shipped in the last month of the quarter. This has the effect of placing a large
portion of the quarterly shipments reflected in accounts receivable still not
yet due per the Company's net 30 day terms. This, combined with the fact that
the Company's distributor customers (which make up 52 to 55% of the Company
revenues) generally pay 90 days and beyond, results in the accounts receivable
balance at the end of the quarterly period being at its highest point for the
period. This has been consistent over prior periods.
Although current levels of inventory and accounts receivable impact the
Company's liquidity, the Company believes that it is a cost of doing business
given the Company's fabless operation. The Company is in the process of
diversifying its supplier base to reduce the risk of supply disruption. However,
this will require a significant investment in product development to tooling
with new suppliers. The Company believes that as it expands its customer base it
will be able to even out the flow of its shipments within its quarterly
reporting periods.
Financing
On June 16, 1997, the Company renewed its $6,000,000 revolving line of
credit with Sanwa Bank extending the maturity to May 31, 1998. The line of
credit bears interest at the bank's reference rate (8.50% at September 30,
1997). The line of credit is secured by the
12 of 18 pages
<PAGE> 13
assets of the Company and requires the Company to maintain a minimum tangible
net worth of $19,000,000, a maximum ratio of debt to tangible net worth of not
more than 0.50 to 1.00, a minimum current ratio of not less than 2.00 to 1.00, a
minimum quick ratio of not less than 1.00 to 1.00 increasing to 1.35 to 1.00 at
September 30, 1997 and increasing again to 1.50 to 1.00 at December 31, 1997 and
thereafter, and profitability of at least $1.00 for each fiscal quarter. As of
September 30, 1997 the Company was in compliance with all covenants. As of
September 30, 1997, the Company had $2,725,000 available under the revolving
line of credit.
Under the terms of its line of credit facility, the Company is precluded
from paying any cash dividends without the consent of the lender even if the
Company is in compliance with all of the financial covenants but is allowed to
pay stock dividends whether or not there was any other covenant violation.
Regardless of any such restrictions in its bank loan agreements, the Company
does not intend to pay cash dividends in the near future and anticipates
reinvesting its cash flow back into operations.
While the Company will continue to evaluate debt and equity financing
opportunities, it believes its financing arrangements and cash flow generated
from operations provide a sufficient base of liquidity for funding operations
and capital needs to support the Company's operations.
13 of 18 pages
<PAGE> 14
PART II - OTHER INFORMATION
LOGIC DEVICES INCORPORATED
Item 6. Exhibits and Reports on Form 8-K.
(a) (1) Exhibit 11 - Computation of Earnings Per Common Share
(2) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter for
which this report is filed.
14 of 18 pages
<PAGE> 15
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.
Logic Devices Incorporated
(Registrant)
Date: November 13, 1997 By /s/ WILLIAM J. VOLZ
---------------------------- ----------------------------------
William J. Volz
President and Principal
Executive Officer
Date: November 13, 1997 By /s/ TODD J. ASHFORD
---------------------------- ----------------------------------
Todd J. Ashford
Chief Financial Officer and
Principal Financial and
Accounting Officer
15 of 18 pages
<PAGE> 16
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
</TABLE>
16 of 18 pages
<PAGE> 1
EXHIBIT 11
LOGIC DEVICES INCORPORATED
Computation of Earnings per Common Share
(unaudited)
Three months ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Weighted average shares of common stock
outstanding 6,121,750 6,121,750
Dilutive effect of common stock options
and stock warrants 317,000 100,000
---------- ----------
Weighted average common and
common share equivalents 6,438,750 6,221,750
========== ==========
Net income $ 2,500 $ 95,300
========== ==========
Net income per common
share equivalent $ .00 $ .02
========== ==========
</TABLE>
16 of 18 pages
<PAGE> 2
EXHIBIT 11
LOGIC DEVICES INCORPORATED
Computation of Earnings per Common Share
(unaudited)
Nine months ended September 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Weighted average shares of common stock
outstanding 6,121,750 6,121,750
Dilutive effect of common stock options
and stock warrants 244,666 100,000
----------- -----------
Weighted average common and
common share equivalents 6,366,416 6,221,750
=========== ===========
Net income $ (406,600) $ 449,800
=========== ===========
Net income per common
share equivalent $ (0.06) $ .07
=========== ===========
</TABLE>
17 of 18 pages
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 365,700
<SECURITIES> 0
<RECEIVABLES> 5,656,800
<ALLOWANCES> 0
<INVENTORY> 12,752,700
<CURRENT-ASSETS> 20,726,600
<PP&E> 14,192,600
<DEPRECIATION> 9,411,600
<TOTAL-ASSETS> 26,328,200
<CURRENT-LIABILITIES> 4,444,800
<BONDS> 0
0
0
<COMMON> 17,341,900
<OTHER-SE> (307,500)
<TOTAL-LIABILITY-AND-EQUITY> 26,328,200
<SALES> 9,006,400
<TOTAL-REVENUES> 9,006,400
<CGS> 5,730,000
<TOTAL-COSTS> 9,490,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 31,500
<INTEREST-EXPENSE> 196,000
<INCOME-PRETAX> (673,300)
<INCOME-TAX> (266,700)
<INCOME-CONTINUING> (406,600)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (406,600)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
