<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE
SECURITIES ACT OF 1934.
For the quarterly period ended June 30, 1998.
| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT.
For the transition period from to
---------------- -------------------
Commission file number: 0-16919
-------
Wavemat Inc.
- - --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 38-2512387
- - --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
44191 Plymouth Oaks Blvd, Ste. 100, Plymouth, Michigan 48170
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(313) 454-0020
- - --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes x No
----- -----
As of July 30, 1998, the registrant had 16,165,068 shares of its Common
Stock, $.01 par value outstanding.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WAVEMAT INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
OPERATING REVENUE:
Microwave processing system sales $59,807 $45,177 $61,223 $113,594
Contract research and development
- affiliate - 50,000 124,400 50,000
---------- ---------- ---------- ----------
Total operating revenue 59,807 95,177 185,623 163,594
---------- ---------- ---------- ----------
OPERATING COSTS AND EXPENSES:
Cost of sales 52,108 58,598 77,547 93,942
Research and development 14,570 28,357 104,667 41,473
Selling, general and administrative 101,486 145,888 192,626 297,663
Royalty expense - affiliate 4,298 2,550 4,298 5,583
---------- ---------- ---------- ----------
Total operating costs and expenses 172,462 235,393 379,138 438,661
---------- ---------- ---------- ----------
Operating loss (112,655) (140,216) (193,515) (275,067)
OTHER INCOME (EXPENSE):
Miscellaneous Income 102,100 2,137 104,200 3,397
Interest income 21 9 37 39
Interest expense (3,024) 1,362 (3,961) 606
Interest expense - affiliate (24,534) (49,067) (54,122) (94,565)
---------- ---------- ---------- ----------
Other expense and income, net 74,563 (45,559) 46,154 (90,523)
---------- ---------- ---------- ----------
NET LOSS ($38,092) ($185,775) ($147,361) ($365,590)
========== ========== ========== ==========
NET LOSS PER SHARE OF
COMMON STOCK ($0.00) ($0.02) ($0.01) ($0.04)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 12,986,013 10,182,125 15,722,825 10,182,125
========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 3
WAVEMAT INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
--------------------------------------------
1998 1997
----------- -----------
<S> <C> <C>
CASH, BEGINNING OF PERIOD $ --- $ ---
CASH FLOWS FROM OPERATING ACTIVITIES: ----------- -----------
Net loss (147,361) (365,590)
Adjustments to reconcile net loss
to net cash provided by (used in) operating
activities:
Depreciation and amortization 24,174 24,910
Changes in current assets and liabilities:
Accounts receivable 39,281 (5,103)
Inventory 55,157 (34,530)
Prepaid expenses (50) (5,212)
Bank overdraft (7,134) (80,564)
Accounts payable (2,213) 99,075
Accounts payable - affiliate 5,342 4,753
Accrued liabilities (79,400) 144,842
Customer deposits (5,320) (27,399)
Customer deposits - affiliate (74,400) ---
----------- ----------
Net cash used by operating activities (191,924) (244,818)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment and leasehold
improvements 234 (9,990)
Increase in deferred patent costs --- (13,292)
----------- ----------
Net cash provided (used) in investing activities 234 (23,282)
CASH FLOWS FROM FINANCING ACTIVITIES:
Short-term borrowings --- 125,000
Short-term borrowings - affiliate 25,070 143,100
Issuance of common stock - affiliate 166,620 ---
----------- ----------
Net cash used in financing activities 191,690 268,100
----------- ----------
INCREASE (DECREASE) IN CASH --- ---
----------- ----------
CASH, END OF PERIOD $ --- $ ---
=========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest payments $ 686 $ ---
=========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
WAVEMAT INC.
STATEMENT OF FINANCIAL POSITION
(Unaudited)
<TABLE>
<CAPTION>
ASSETS JUNE 30,
1998
-----------
<S> <C>
CURRENT ASSETS:
Accounts receivable $ 7,048
Inventory 49,274
Prepaid expenses 4,733
-----------
Total current assets 61,055
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net of accumulated
depreciation and amortization of $584,854 92,454
LICENSE AGREEMENT, net of accumulated amortization
of $22,225 14,047
PURCHASED TECHNOLOGY, net of accumulated amortization
of $121,875 203,125
DEFERRED PATENT COSTS -affiliate 192,209
OTHER ASSETS 18,504
-----------
Total assets $ 581,394
===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Bank overdraft $ 3,572
Short-term borrowings - affiliate 909,997
Accounts payable 331,538
Accounts payable - affiliate 4,370
Accrued liabilities 434,384
Customer deposits 3,493
Customer deposits - affiliate 3,243
-----------
Total current liabilities 1,690,597
SHAREHOLDERS' DEFICIT:
Preferred stock, $.10 par value, 1,000,000 shares authorized and
4,000 shares ($399,600 aggregate liquidation preference)
issued and outstanding 400,000
Common stock, $.01 par value, 20,000,000 shares authorized and
16,165,068 shares issued and outstanding 161,651
Additional paid-in capital 5,633,124
Accumulated deficit (7,303,978)
-----------
Shareholders' deficit (1,109,203)
-----------
Total liabilities and shareholders' deficit $ 581,394
===========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
WAVEMAT, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(1) GENERAL
Except as the context otherwise indicates the term the "Company" refers to
Wavemat Inc.
In the opinion of management, all adjustments (consisting primarily of
normal recurring accruals) considered necessary for a fair presentation
have been included. For further information, refer to the financial
statements and footnotes thereto included in the Company's Annual Report on
Form 10-KSB for the year ended December 31,1997.
(2) DETAILS TO STATEMENTS OF FINANCIAL POSITION
Inventory consisted of the following:
<TABLE>
<CAPTION>
June 30, 1998
-------------
<S> <C>
Raw materials 37,354
Work-in-process 11,920
----------
$ 49,274
==========
</TABLE>
A summary of Accrued Liabilities follows:
<TABLE>
<CAPTION>
June 30, 1998
-------------
<S> <C>
Accrued legal & audit $ 39,013
Accrued Interest-affiliate 24,899
Royalties - affiliate 37,713
Commissions 79,950
Accrued Payroll 139,129
Deferred compensation 56,354
Other 57,326
--------
$434,384
========
</TABLE>
(3) RESEARCH AND DEVELOPMENT
During the first quarter of 1998, the Company entered into a Research and
development agreement with Michigan State University ("MSU"). As of June
30, 1998, the Company had recognized $124,400 in revenue and $76,514 in
related resarch and development expense.
(4) SHORT TERM BORROWINGS
On February 19, 1998, the Company entered into a $32,070 personal line of
credit arrangement with Monis Schuster
5
<PAGE> 6
WAVEMAT, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
(Chairman of the Board and Chief Executive of Wavemat, and Vice President
and Secretary of Venture Funding, Ltd., an affiliate of the Company), with
such credit line carrying an interest rate on outstanding balances of ten
percent. This line of credit is secured pursuant to a guarantee agreement
between Monis Schuster, a significant shareholder of the Company, and the
assignment of a Wavemat Inc. account receivable from Michigan State
University. The Company had drawn $32,070 against this line of credit and
had accrued $685 of interest pertaining to this obligation. This obligation
was extinguished by the Company on May 6, 1998.
On April 22, 1998, Growth Funding, Ltd., paid $100,000 of indebtedness owed
by the Company to its landlord due to the Company's inability to pay such
debt in whole and allowed the Company to recognize income.
(5) SHORT TERM BORROWINGS - AFFILIATE
On January 4, 1995, the Company entered into a line of credit
arrangement evidenced by a promissory note with Growth. The amounts
borrowed pursuant to this line of credit are payable on demand. The Company
has drawn $753,422 on this line of credit as of June 30, 1998. The
applicable interest rate is 2 percentage points above the prime rate of a
major bank with such interest rates ranging from 10.25 percent per annum to
11.00 percent per annum for the period from January 4, 1995 through June
30, 1998. In December, 1997, $578,745 of this revolving line of credit
obligation was written off of Wavemat's book by Growth because of the
Company's continuing inability to extinguish this debt. On March 31, 1998,
$166,650 of accrued interest relating to the above note was extinguished as
a result of the exercise of a 1,300,000 and 2,000,000 stock warrant(s) to
purchase common stock by Growth. (See note 6 to the financial statements).
In addition, on March 31, 1998 $127,098 of the remaining accrued interest
relating to the above note was included in a contribution of capital to the
Company. (See note 6 to the financial statements).
On April 15, 1998, an additional $244,953 of this revolving line of credit
was extinguished related to a private placement of common stock (See Note 6
to the financial statements). On June 30, 1998, the Company had accrued
$20,743 of additional interest relating to the above remaining line of
credit.
On December 3, 1996, the Company entered into a $25,000 line
6
<PAGE> 7
WAVEMAT, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
of credit arrangement evidenced by a promissory note with Growth. The
amounts borrowed pursuant to the line of credit are payable by the Company
on demand. The Company had drawn $25,000 on this line of credit in 1996.
The applicable interest rate is at 2 percentage points above the prime rate
of a major bank with such interest rate ranging from 10.25 percent per
annum to 10.50 percent per annum for the period from December 3, 1996
through June 30, 1998. On March 31, 1998 $3,528 of accrued interest
relating to the above note was included in a contribution of capital to the
Company. (See note 6 to the financial statements). On June 30, 1998, the
Company had accrued $664 of additional interest relating to the above
obligation.
On December 20, 1996, the Company entered into $3,500 line of credit
arrangement evidenced by a promissory note with Growth. The amounts
borrowed pursuant to the line of credit are payable by the Company on
demand. The Company had utilized $3,500 of the line of credit in 1996. The
applicable interest rate is at 2 percentage points above the prime rate of
a major bank with such interest rate ranging from 10.25 percent per annum
to 10.50 percent per annum for the period from December 20, 1996 through
June 30, 1998. On March 31, 1998 accrued interest of $474 relating to the
above note was included in a contribution of capital to the Company. (See
note 6 to the financial statements). On June 30, 1998, the Company had
accrued $93 of additional interest relating to the above obligation.
On January 9, 1997, the Company entered into a $3,500 line of credit
arrangement evidenced by a promissory note with Growth. The amounts
borrowed pursuant to the line of credit are payable by the Company on
demand. The Company had utilized $3,500 of the line of credit by March 31,
1997. The applicable interest rate is at 2 percentage points above the
prime rate of a major bank with such interest rate ranging from 10.25
percent per annum to 10.50 percent per annum for June 30, 1998, accrued
interest of $455 relating to the above note was included in a contribution
of capital to the Company. (See note 6 to the financial statements). On
June 30, 1998, the Company had accrued $93 of additional interest relating
to the above obligation.
On August 18, 1994, the Company issued a Convertible Debenture
("Debenture") to Growth, for the principal amount of $724,575 with the
interest accruing on the outstanding balance at a rate of 2 percent above
the prime rate of a major bank with such rate ranging from 9.75 percent per
annum to 11.00 percent per annum for the period from August
7
<PAGE> 8
WAVEMAT, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
18, 1994 through June 30,1998. The Debenture amount of $724,575 represents
amounts owed by the Company to Venture in relation to a promissory
note ($125,000), plus related accrued interest ($23,603), deferred
compensation ($261,139), accrued royalties ($212,591), and other
miscellaneous liabilities ($102,242). The Debenture has an exercise price
of $.5630 per share of common stock.
On October 27, 1995, by resolution of the Board of Directors, the exercise
price of the Debenture issued to Growth on August 18, 1994 was reduced from
$.5630 to $.1563 per share of common stock, the average of the bid-ask
price of the Company's common stock on that date in consideration for
financing and contributions of capital provided to the Company during 1995.
On the same date, $600,000 of the debt owed Growth under the Debenture was
converted to 3,838,772 shares of the Company's common stock. There remains
a balance due of $124,574 under the Convertible Debenture.
On March 31, 1998 by resolution of the Board of Directors, the exercise
price was reduced from $.1563 per share of common stock, to $.0505 per
share of common stock, the average of the bid-ask price of the Company's
common stock on that date in consideration for additional financings and
contribution of capital provided to the Company.
On March 31, 1998, accrued interest of $52,254 related to the above was
included in a contribution of capital to the Company. (See note 6 to the
financial statements). On June 30, 1998, the Company had accrued $3,306 of
additional interest relating to the above obligation.
(6) SHAREHOLDER'S DEFICIT
On August 9, 1994, pursuant to a resolution of the Company's Board of
Directors, a warrant was issued by the Company to Venture, a significant
shareholder of the Company, for the purchase of 1,300,000 shares of the
Company's common stock at an exercise price of $.5313 per share. This
warrant could be exercised at any time and from time to time during the
five year period from August 9, 1994 to August 9, 1999. On October 27,
1995, the Company's Board of Directors, by resolution, reduced the exercise
price of the warrant to $.1563 per share of common stock, the average of
the bid-ask price of the Company's common stock on that date. The issuance
of the warrant and reduction in the exercise price were in consideration
for providing financing to the
8
<PAGE> 9
WAVEMAT, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Company. On March 31, 1998, pursuant to a resolution of the Company's Board
of Director's, the exercise price of the warrant was reduced to $.0505 per
share of stock, the average of the bid-ask price of the Company's common
stock on that date. On March 31, 1998 this warrant was exercised by Venture
in consideration of financing and contributions of capital made to the
Company. On the same date, $65,650 of accrued interest related to a line of
credit entered into on January 4, 1985 with Growth was extinguished.
On October 27, 1995, a warrant was issued by the Company to Growth
Funding, Ltd., a wholly owned subsidiary of Venture Funding, Ltd., for the
purchase of 2,000,000 shares of the Company's common stock at an exercise
price of $.1563 per share. This warrant may be exercised at any time, and
from time to time during the five year period from October 27, 1995 to
October 27, 2000. This warrant was issued in consideration for Growth
providing financing to the Company.
On March 31, 1998, pursuant to a resolution of the Company's Board of
Director's, the exercise price of the warrant was reduced to $.0505 per
share of stock, the average of the bid-ask price of the Company's common
stock on that date. On March 31, 1998 this warrant was exercised by Growth
in consideration of financing and contributions of capital made to the
Company. On the same date, $101,000 of accrued interest related to a line
of credit entered into on January 4, 1985 with Growth was extinguished.
On March 31, 1998, Venture agreed to make a contribution of capital to the
Company amounting to $604,176. This $604,176 represented amounts owed by
the Company to Venture, in relation to accumulated interest due of $344,663
on promissory notes entered into with Growth (see note 4), accounts payable
due to Growth on March 31, 1998 of $67,374 and deferred management wages
owed to Growth of $192,139 on March 31, 1997. (See note 4 to the financial
statements).
On April 15, 1998, the Company issued and transferred 2,682,943 shares of
it's common stock, $.01 par value at $.0913 per share under a private
placement to Balckshaw Limited. The private placment was transferred for
investment and not for distribution. The proceeds of this placement were
used to extinguish debt obligations entered into by the Company with Growth
Funding, Ltd. (See note 6 to the financial statements).
(7) COMMITMENTS AND CONTINGENCIES
GOING CONCERN
9
<PAGE> 10
WAVEMAT, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
The Company has incurred operating losses and generated cash flow deficits
from operating activities since inception, therefore, the Company's ability
to continue as a going concern is contingent upon its ability to raise
additional funds to support its activities.
The Company is relying on sales of its microwave processing systems to
provide additional working capital. The Company is also continuously
evaluating acquisitions of technologies and/or entities owning such
technologies which are compatible to the Company's business strategies with
the intention of increasing the Company's revenue generating capabilities.
In addition, the Company is continuing to seek capital from various sources
of funding such as additional term loans, lines of credit, corporate
partners and sales of equity securities. However, there is no assurance
that the required amount of additional funds can be raised.
10
<PAGE> 11
WAVEMAT, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
THE THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO THE THREE MONTHS
AND SIX MONTHS ENDED JUNE 30,1997
Operating loss declined significantly during the 1998 three and six month
periods.
The operating loss decline during the 1998 periods were primarily attributable
to lower cost of sales, and selling, general and administrative expenses and to
a lesser extent, research and development activities during the three month
period. A decline in cost of sales was attributable to improved utilized
capacity. Decreased research and development activities for the quarter ended
June 30, 1998 was attributable to lower non-sponsored research and
development activities. Research and development activities for the six month
period increased as a result of higher sponsored research and development
activities in relation to an affiliate research and development agreement. The
decrease in selling, general and administrative expenses reflect a cost
containment program, which involved significant consulting and salary
reductions, Royalty expenses increased for the quarter, because of higher
microwave processing system sales, and decreased for the six month period due
to a decline in microwave processing sales to which royalties relate.
Net loss decreased significantly for the three and six month period as a result
of the recognition of income as a result of Growth Funding, Ltd., payment of an
indebtedness to the Company's landlord and significantly lower interest expense
affiliate attributable to prior debt extinguishment on April 15,1998 and
December 31, 1997 which resulted in significantly lower borrowing costs. (See
notes 4, 5 and 6 to the financial statements).
FINANCIAL CONDITION
JUNE 30, 1998 COMPARED TO DECEMBER 31, 1997
The Company continued to have difficulty meeting its cash requirements and
obligations during the six months of 1998. Deferred compensation costs of the
Company amounted to $56,354 as of June 30, 1998. The Company was also in arrears
pertaining to other obligations in the amount of $161,800 as of June 30, 1998.
11
<PAGE> 12
WAVEMAT, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
Obligations which the Company met during the six months of 1998 were satisfied
through sales of the Company's microwave processing systems and contracted
research and development activities, customer deposits, lines of credit and
short-term borrowings.
As indicated in Note 6 to the Financial Statements, the Company has incurred
operating losses and generated cash flow deficits from operating activities
since its inception, therefore, the Company's ability to continue as a going
concern is contingent upon its ability to raise additional funds to support its
activities. At June 30, 1998, the Company had a negative working capital
position of $1,629,542 compared to a negative working capital position of
$2,496,450 at December 31, 1997.
The Company is attempting to generate working capital through the sale of its
microwave processing systems and through its contract research and development
activities. As of June 30, 1998, the Company had no backlog of open sales
orders, net, of customer deposits. Subject to various qualifications and
assuming no change in delivery dates or in the shipment of orders in the normal
course of business, management expects, although there can be no assurance, to
ship all of the above mentioned backlog and collect the applicable cash proceeds
during 1998.
The Company must increase its backlog of open sales orders substantially and
obtain additional product development assistance to adequately support its
activities. The Company is continuously evaluating acquisitions of technologies
and/or entities owning such technologies which are compatible to the Company's
business strategies with the intention of increasing the Company's revenue
generating capabilities. In addition, the Company is continuing to seek funding
from various other sources such as additional term loans, lines of credit,
corporate partners and equity financing. However, there is no assurance that the
required amount of additional funds can be raised.
The Company is working to resolve the potential impact of the year 2000 on the
ability of the Company's computerized information systems to accurately process
information that may be date-sensitive. Any of the Company's programs that
recognize a date using "00" as the year 1900 rather than the year 2000 could
result in errors or system failures. The Company utilizes a number of computer
programs across its entire operation. The Company has not completed its
assessment, but currently believes that costs of addressing this issue will not
have a material
12
<PAGE> 13
WAVEMAT, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
adverse impact on the Company's financial position. However, if the Company and
third parties upon which it relies are unable to address this issue in a timely
manner, it could result in a material financial risk to the Company. In order to
assure that this does not occur, the Company plans to devote all resources
required to resolve any significant year 2000 issues in a timely manner.
ITEM 5.
On August 4, 1998, Raymond F. Decker resigned as a director of the Company to
devote more time to other business interests.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - Ex. 27 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K have been filed during the
Quarter ended June 30, 1998.
13
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
WAVEMAT INC.
REGISTRANT
Date: August 19, 1998 BY: /s/ Monis Schuster
-------------------------------
Monis Schuster, Chairman of the
Board and Chief Executive Officer
(Principal Operating Officer)
Date: August 19, 1998 BY: /s/ Sharon K. Zitnik
------------------------------
Sharon K. Zitnik, Vice President
Treasurer, Secretary and Chief Financial
Officer (Principal Financial Officer)
14
<PAGE> 15
Exhibit Index
-------------
<TABLE>
<CAPTION>
Exhibit No. Description
- - ----------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 7,048
<ALLOWANCES> 0
<INVENTORY> 49,274
<CURRENT-ASSETS> 61,055
<PP&E> 677,309
<DEPRECIATION> 584,854
<TOTAL-ASSETS> 581,394
<CURRENT-LIABILITIES> 1,690,597
<BONDS> 0
161,651
0
<COMMON> 400,000
<OTHER-SE> (1,670,854)
<TOTAL-LIABILITY-AND-EQUITY> 581,394
<SALES> 185,623
<TOTAL-REVENUES> 185,623
<CGS> 77,547
<TOTAL-COSTS> 379,138
<OTHER-EXPENSES> 46,154
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,083
<INCOME-PRETAX> (147,361)
<INCOME-TAX> 0
<INCOME-CONTINUING> (147,361)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (147,361)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
