U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the quarterly period ended August 31, 1997
[ ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission File Number: 0-16354
EXTEN INDUSTRIES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 52-1412493
(State or other jurisdiction (IRS Employer
of incorporation or organization) identification No.)
9625 Black Mountain Road, Suite 218, San Diego, California, 92126
(Address of principal executive offices)
(619) 578-9784
(Issuer's telephone number)
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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 33,986,457 as of
August 31, 1997 Common Stock, $0.01 Par Value
<PAGE> 1
Exten Industries, Inc.
Form 10-QSB
Table of Contents
Part I:
Financial Information Page
Item 1:
Condensed Consolidated Balance Sheets as of August 31, 1997
unaudited) and November 30, 1996 3
Condensed Consolidated Statements of Operations (unaudited) for
the Nine and Three Months Ended August 31, 1997
and August 31, 1996 4
Condensed Consolidated Statements of Cash Flows (unaudited) for
the Nine Months Ended August 31, 1997 and August 31, 1996 5
Notes to Condensed Consolidated Financial Statements (unaudited) 6
Item 1a: Factors Which May Affect Future Results 10
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations
Overview 14
Results of Operations 16
Liquidity and Capital Resources 18
Part II: Other Information
Item 1: Legal Proceedings 19
Item 2: Changes in Securities 19
Item 3: Defaults Upon Senior Securities 19
Item 4: Submission of Matters to a Vote of Security Holders 19
Item 5:Other Information 19
Item 6(a):Exhibits 19
Item 6(b): Reports on Form 8-K 19
SIGNATURES
<PAGE> 2
EXTEN INDUSTRIES, INC.
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF AUGUST 31, 1997 AND NOVEMBER 30, 1996
<TABLE>
August 31,1997 November 30, 1996
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 322 $ 579
Prepaid Expenses 33,217 25,000
------ ------
TOTAL CURRENT ASSETS 33,539 25,579
PROPERTY AND EQUIPMENT, net - -
OTHER ASSETS
Real Estate Held For Sale 47,200 47,200
Deferred Offering Costs 5,000 -
Patent Costs 36,726 -
Intangibles, net 5,003 5,214
------ ------
TOTAL OTHER ASSETS 89,426 82,414
------ ------
$ 122,965 $ 107,993
======= =======
LIABILITIES AND STOCKHOLDER'S
EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Accounts Payable $ 126,590 $ 171,016
Accrued Expenses 46,245 176,861
Due to Officer 23,487 -
Notes Payable, Current 325,984 646,484
------ ------
TOTAL CURRENT LIABILITIES 522,306 994,361
------ ------
NOTE PAYABLE (net of current portion) 145,000 -
------ ------
TOTAL LIABILITIES 667,306 994,361
------ ------
STOCKHOLDERS DEFICIT
Common Stock, $0.01 par value;
50,000,000 shares authorized;
35,953,192 & 29,762,432 issued &
outstanding, respectively 359,532 297,624
Additional Paid-in Capital 9,095,749 8,799,993
Preferred Stock, $0.01 par,
1,000,000 shares authorized,
Series C, 143 shares issued &
outstanding, respectively
Accumulated Deficit (9,999,623) (9,983,986)
------ ------
TOTAL STOCKHOLDERS' DEFICIENCY (544,341) (886,368)
------ ------
$ 122,965 $ 107,993
======= =======
</TABLE>
<F1>
The accompanying notes are integral part of these financial statements
[FN]
<PAGE> 3
EXTEN INDUSTRIES, INC.
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE
NINE MONTHS AND THREE MONTHS ENDED AUGUST 31, 1997 AND AUGUST 31, 1996
<TABLE>
Nine Months Ended Three Months Ended
August August August August
31, 31, 31, 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUE
Sales - - - -
Royalties - - - -
------- ------- ------- -------
Total Revenue - - - -
------- ------- ------- -------
OPERATING EXPENSES
General & Administrative 245,103 235,165 90,049 47,326
Consulting Fee Expense 45,350 363,030 32,850 110,717
Depreciation and Amortization 35,214 146 11,736 -
Interest, net 14,312 281 5,793 -
------- -------- ------- -------
Total Operating Expenses 339,979 598,622 140,428 158,043
------- -------- ------- -------
Net Operating Loss Before
Extraordinary Item (339,979) (598,622) (140,428) (158,043)
Extraordinary Item- Gain
Loss) On Extinguishment Of Debt 325,142 (264,000) 42,142 -
------- -------- ------- -------
Net Operating Income
Loss) Before Income Taxes (14,837) (862,622) (98,286) (158,043)
------- -------- ------- -------
Provision for Income Taxes 800 800 - -
------- -------- ------- -------
Net Income (Loss) (15,637) (863,422) (98,286) (158,043)
------- -------- ------- -------
Net Operating Loss Before
Extraordinary Item per
Average Common Share (0.01) (0.03) (0.01) (0.01)
Extraordinary Item 0.01 (0.02) 0.01 (0.02)
------- ------- ------- -------
Net Income (Loss) per
Average Common Share 0.00 (0.05) 0.00 (0.03)
------- ------- ------- -------
Weighted Average Common
Share Outstanding 30,912,032 15,618,164 31,620,192 15,539,275
</TABLE>
<F2>
The accompanying notes are integral part of these financial statements
[FN]
<PAGE> 4
EXTEN INDUSTRIES, INC.
PART I - FINANCIAL INFORMATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED AUGUST 31, 1997 AND AUGUST 31, 1996
<TABLE>
Nine months Ended
August 31, August 31,
1997 1996
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $(15,637) $(863,422)
Adjustments to Reconcile
Net Income (Loss) to Net Cash Provided By
Used In)Operating Activities
Depreciation and Amortization 35,214 146
Issuance of Common
Stock for Services 357,664 225,386
Other Non-Cash Items - -
Extinguishment of Debt (325,142) 264,000
(Increase) Decrease in:
Accounts Receivable - (78)
Prepaid Expense (8,217) 25,321
Other Assets (42,226) 112,175
Increase (Decrease) in:
Accounts Payable (44,426) 67,195
Accrued Expenses (125,974) (42,173)
------- -------
NET CASH USED IN OPERATING ACTIVITIES (168,744) (211,450)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Advances from Officer 23,487 -
Receipt of Note Receivable - 40,000
------- -------
NET CASH FROM INVESTMENT ACTIVITIES 23,487 40,000
------- -------
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of Common Stock - 162,435
Increase in Long Term Debt 145,000 1,650
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 145,000 164,085
------- -------
NET INCREASE (DECREASE) IN CASH (257) (7,365)
CASH AT BEGINNING OF PERIOD 579 8,233
------- -------
CASH AT END OF PERIOD $ 322 $ 868
------- -------
</TABLE>
<F3>
The accompanying notes are integral part of these financial statements
[FN]
<PAGE> 5
EXTEN INDUSTRIES, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Organization and Nature of Operations
Exten Industries, Inc. (the "Company") was incorporated on December 1, 1970 in
the state of Delaware. The Company's principal business is the research and
development of the synthetic liver technology (SYBIOL) of its wholly owned
subsidiaries, Xenogenex, Inc. (Xenogenex) and Xenogenics Corporation
(Xenogenics).
Xenogenex was incorporated on July 30, 1991 in the state of California for the
purpose of funding this biotechnology research. In March 1993, Xenogenex
received all rights to the SYBIOL technology developed for Xenogenex under
contract with Cedars-Sinai Medical Center. During the year ending
November 30, 1996 Xenogenex transferred the SYBIOL technology to its parent
company, Exten. The Company during February 1997 formed a new company,
Xenogenics Corporation (Xenogenics). Xenogenics, a wholly owned subsidiary
was incorporated in the state of Nevada in February 1997 to engage in the
business of managing the development, research and commercialization of the
SYBIOL technology. In June 1997, the SYBIOL patents, trademarks, licenses
and assets were transferred to Xenogenics in exchange for 1,500,000 shares of
$0.001 par value common stock. Additionally, cash and assumption of debt
were exchanged between the two companies. A patent application has been filed
and approved for the process utilized by the SYBIOL device and the Company
has applied for trademark protection for the SYBIOL tradename. The Company
has filed patent applications under the Patent Cooperative Treaty in fifteen
countries including the United States.
Basis of Accounting
The Company's policy is to use the accrual method of accounting and to
prepare and present financial statements that conform to generally accepted
accounting principles. The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.
Basis of Consolidation
The consolidated financial statements include the accounts of Exten
Industries, Inc. and its wholly owned subsidiaries, Xenogenex, Inc. and
Xenogenics, Corporation (collectively, the Company). All significant
intercompany balances and transactions have been eliminated in consolidation.
Basis of Presentation
The accompanying unaudited condensed financial statements and related notes
have been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission for Form 10-QSB. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments, consisting of a normal recurring nature and considered
necessary for a fair presentation, have been included. It is suggested that
these financial statements are read in conjunction with the financial
statements and notes thereto included in the Company's annual report on
Form 10-KSB for the year ended November 30, 1996. The results of operations
for the nine months ended August 31, 1997 are not necessarily indicative of
the operating results for the year ended November 30, 1997. For further
<PAGE> 6
EXTEN INDUSTRIES, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies (continued)
information, refer to the financial statements and notes thereto included
in the Company's Annual Report on Form 10-KSB for the fiscal year
November 30, 1996.
Reclassifications
Certain August 31, 1996 balances have been reclassified to conform to the
August 31, 1997 condensed financial statement presentation.
Property and Equipment
Property and equipment is stated at cost, and depreciated using the
straight-line method over the estimated useful lives of the assets, which
range from three to five years. Assets under capital leases are depreciated
by the straight-line method over the shorter of the lease term or the useful
lives of the assets. Maintenance, repairs and minor renewals are charged to
operations as incurred. Major replacements or upgrades are capitalized. When
properties are retired or otherwise disposed, the related cost and accumulated
depreciation are eliminated from the respective accounts and any gain or loss
on disposition is reflected as income or expense.
Prepaid Expense
Prepaid Expense consists primarily of consulting services that have been
prepaid pursuant to contracts.
2. Property and Equipment
Property and equipment at August 31, 1997 and at November 30, 1996 are
summarized as follows:
<TABLE>
August 31, 1997 November 30, 1996
(unaudited)
<S> <C> <C>
Machinery and equipment $ 9,368 $ 9,368
Furniture and fixtures 14,706 14,706
24,074 24,074
Less accumulated depreciation and ------ ------
amortization (24,074) (24,074)
------ ------
Property and equipment, net $ - $ -
====== ======
</TABLE>
<PAGE> 7
EXTEN INDUSTRIES, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3. Supplemental Cash Flow Information
Supplemental disclosures of cash flow information for the six-month periods
ended August 31, 1997 and 1996 are summarized as follows:
<TABLE>
Nine Months Nine months
Ended Ended
August 31, August 31,
1997 1996
(unaudited) (unaudited)
<S> <C> <C>
Cash paid for interest and
income taxes:
Interest $ 7,698 $ 810
Income taxes $ 800 $ 800
</TABLE>
4. Earnings Per Share
Certain options granted and outstanding as of August 31, 1997 (unaudited) are
antidilutive for the purposes of calculating primary and fully diluted
earnings per share and therefore are not included in the earnings per share
calculations.
In February 1997, the Financial Accounting Standards Board issued "Statement
of Financial Accounting Standards ("SFAS") No. 128, Earnings per Share,"
which is required to be adopted on December 31, 1997. At that time, the
Company will be required to change the method currently used to compute
earnings per share and to restate all prior periods. Under the new
requirements for calculating primary earnings per share, the dilutive effect
of stock options will be excluded. The impact is not expected to result in
any change in primary earnings per share for the nine months ended
August 31, 1997. The impact of Statement 128 on the calculation of fully
diluted earnings per share for these periods is also not expected to be
material.
5. Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
6. Going Concern Matters
The Company's accumulated deficit and stockholders' deficiency at
August 31, 1997 were $9,999,623 and $544,341, respectively. In addition, at
August 31, 1997, the Company's current liabilities exceeded its current assets
by $488,767. Additionally, even though the Company has been able to satisfy
certain operating expenses by issuing shares of the Company's common stock,
operating activities have still resulted in negative cash flows for the nine
months ended August 31, 1997. Furthermore, judgments and claims against the
Company relating to loan guarantees, claims of a former president of the
Company, and amounts owed current and former suppliers continue to accumulate.
These factors, among others, raise substantial doubt about the Company's
ability to continue as a going concern.
In order to continue as a going concern, management's plans include
(1) raising additional capital through sales of common stock, the proceeds
of which would be used to perfect the Company's patent position in its SYBIOL
<PAGE> 8
EXTEN INDUSTRIES, INC.
PART I - FINANCIAL INFORMATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
6. Going Concern Matters (continued)
technology and satisfy immediate operating needs; (2) continue to use common
stock to pay for consulting and professional services; (3) negotiate reduced
settlements of existing liabilities; and (4) sell non-productive assets. In
addition, management is continually seeking other potential joint venture
partners or merger candidates that would allow for the immediate recognition
of the value of the SYBIOL technology for creditors and stockholders. However,
management cannot provide any assurances that the Company will be successful
in accomplishing any of its plans. The ability of the Company to continue as
a going concern is dependent upon its ability to successfully accomplish the
plans described in the preceding paragraph and eventually secure other
sources of financing and attain profitable operations. The accompanying
consolidated financial statements do not include any adjustments that might
be necessary should the Company be unable to continue as a going concern.
7. New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" (SFAS 128).
SFAS 128 supersedes existing generally accepted accounting principles relative
to the calculation of earnings per share, is effective for years ending after
December 15, 1997 and requires restatement of all prior period earnings per
share information upon adoption. Generally, SFAS 128 requires a calculation of
basic earnings per share, which takes into consideration income (loss)
available to common shareholders and the weighted average of common shares
outstanding. SFAS 128 also requires the calculation of a diluted earnings per
share, which takes into effect the impact of all additional common shares
that would have been outstanding if all dilutive potential common shares
relating to options, warrants, and convertible securities had been issued, as
long as their effect is dilutive, with a related adjustment of income
available for common shareholders, as appropriate. SFAS 128 requires dual
presentation of basic and diluted earnings per share on the face of the
statement of operations and requires a reconciliation of the numerator and
denominator of the basic earnings per share computation. The Company does not
expect the effect of its adoption of SFAS 128 to be material.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
(SFAS 130). Generally, SFAS 130 establishes standards for reporting and
display of comprehensive income in financial statements. All components of
comprehensive income shall be reported in the financial statements in the
period in which they are recognized. A total amount for comprehensive income
shall be displayed in the financial statement where the components of other
comprehensive income are reported. The statement divides comprehensive income
into net income and other comprehensive income. Items included in other
comprehensive income shall be classified separately based on their nature and
include foreign currency items, minimum pension liability adjustments, and
unrealized gains and losses in certain investments in debt and equity
securities. The total of other comprehensive income for a period shall be
transferred to a component of equity that is accumulated and displayed
separately from retained earnings and additional paid-in capital in the equity
section of the balance sheet. SFAS 130 is effective for periods beginning
after December 15, 1997, and will require reclassification of all prior
periods presented in the financial statements. The Company does not expect the
adoption of SFAS 130 to materially effect the financial statement presentation.
<PAGE> 9
PART IA. FACTORS AFFECTING FUTURE OPERATING RESULTS
An investment in the Common Stock of the Company involves a high degree of
risk. In addition to the other information contained in this Form 10-QSB,
prospective investors should carefully consider the following risk factors:
1. SIGNIFICANT AND REPEATED LOSSES. During the most recent fiscal year ended
November 30, 1996, the Company's losses were significant. The Company has a
history of losses dating back to 1992 and beyond. The Company faces all the
risks inherent in a new business. The Company's Xenogenex subsidiary is
without any record of earnings and sales. There can be no assurance that any
of the Company's business activities will result in any operating revenues or
profits. Investors should be aware that they may lose all or substantially all
of their investment.
2. QUALIFIED OPINION. The Company's independent public accountants issued
qualified opinions for the Company's financial statements for the years ended
November 30, 1996, 1995 and 1994 with respect to uncertainties concerning the
Company's ability to continue as a going concern.
3. LACK OF REVENUES. The Company's only active business is the research and
development activities from which the Company generates no stream of
revenues and there can be no assurance that the Company will ever generate any
revenues in the near future. As a result, the Company may continue to incur
losses and any investor who purchases or acquires any shares of the Company's
common stock will likely incur further substantial dilution and loss in the
value of their investment.
4. SIGNIFICANT AND INCREASING CURRENT LIABILITIES AND DEFAULT. As of
August 31, 1997, the Company had current debts and other obligations that are
due and payable on or before November 30, 1997. Included in these
obligations is approximately $10,000 in notes payable currently in default.
Furthermore, as of August 31, 1997, the Company had over 16 times as many
current liabilities as current assets. In the event that the Company is not
able to generate sufficient cash resources to pay these and other current
liabilities on or before their due dates, the Company will likely incur
substantial additional costs and expenses and otherwise risk whatever claims
creditors may assert against the Company in connection with any default
thereby. This may result in an investor losing all or substantially all of
their investment.
5. NEED FOR ADDITIONAL FINANCING & LACK OF UNDERWRITING COMMITMENT. The
Company's management recognizes that the Company needs to obtain additional
external financing from the sale of the Company's debt, common stock, or
preferred stock in order to support the Company and otherwise meet the
Company's growing financial obligations. While the Company may attempt to
obtain a commitment from an underwriter for a private placement or public
offering of the Company's securities, there can be no guarantee that the
Company will be successful. If the Company is not successful, the Company
may suffer additional and continuing financial difficulties with consequent
loss to any investor acquiring the Company's common stock.
6. NEGATIVE WORKING CAPITAL AND NEGATIVE CASH FLOW. While the Company's
management seeks additional financing for the Company to complete its business
plan, there can be no assurance that the Company will obtain any additional
financing or, if it is obtained, that it can be obtained on terms reasonable
in view of the Company's current circumstances. In addition, the Company has
experienced negative cash flow from the 1992, 1993, 1994 and 1996 fiscal years.
<PAGE> 10
7. POTENTIAL DILUTION. Funding of the Company's proposed business plan will
result in substantial and on-going dilution of the Company's existing
stockholders. During the nine months ended August 31, 1997 and for the year
ended November 30, 1996, the Company issued 6,190,760 and 6,300,227 additional
shares of its common stock, respectively, in connection with its operations
while incurring continuing and ever-increasing financial losses. While there
can be no guarantee that the Company will be successful in raising additional
capital, if the Company is successful in obtaining any additional capital,
existing stockholders may incur substantial dilution.
8. DEFAULT ON INDEBTEDNESS. The Company was in default on its repayment of a
certain loan totaling $343,072 (as of November 30, 1996) (the "Loan") with
Union Bank and a former officer of the Company, Robert H. Goldsmith, asserts
that the Company has defaulted on approximately $388,000 in promissory notes.
The Company has settled this default on repayment with the former officer by
negotiation of debt for settlement of the previous obligation and an issuance
of restricted stock. While Union Bank has sued the Company and has
aggressively sought repayment of the Loan, together with interest and fees
due, the result, Union Bank has obtained a judgment against the Company. The
Company's management has settled this debt for payment of $50,000. In
addition, the Company has over $520,000 in liabilities all due and payable
on or before November 30, 1997. In the event that the Company is not able to
generate additional cash from the sale of the Company's securities or
otherwise obtain funds on some other basis, the Company will remain in
default on its obligations and likely default on obligations to other
creditors with the result that any investor in the Company's common stock
will lose all or substantially all of their investment.
9. GOVERNMENT REGULATION AND PRODUCT APPROVALS. The Company's research,
testing, preclinical development, clinical trials, manufacturing, and
marketing of its proposed therapeutic products is subject to extensive and
ever-changing regulation by numerous governmental authorities in the United
States and other countries. Clinical trials, manufacturing, and marketing of
products in the U.S. will be subject to the rigorous testing and approval
processes of the U.S. Food and Drug Administration (the "FDA") and by
comparable regulatory authorities in foreign countries. The testing and
regulatory approval process will likely take several years and require the
expenditure of substantial resources. Any testing of the Company's proposed
products may not support the safety and efficacy of the Company's products.
There can be no assurance that the Company will gain any regulatory approvals
for the Company's proposed products or, if such approvals are obtained that
such approvals may be limited and far narrower than those sought by the
Company. To the extent that the above information describes statutory or
regulatory provisions, it is qualified in its entirety by reference to the
particular statutory and regulatory provisions currently in effect. Any change
in applicable law or regulation may have a material effect on the business and
prospect of the Company.
10. LACK OF INDEPENDENT EVALUATION OF TECHNOLOGY AND COMMERCIAL VIABILITY. The
Company's current management does not possess any studies performed by an
independent third party, which demonstrate that the synthetic bio-liver
technology has ever been rigorously evaluated. There can be no assurance that
this technology offers safe, efficacious, and cost-effective therapeutic
attributes relative to those provided by competing technologies or, if it
does that the technology is commercially viable.
11. COSTS OF LITIGATION. The Company is likely to incur significant costs for
litigation in connection with a dispute with a law firm that previously
represented the Company. While the Company seeks to resolve this dispute on
terms favorable to the Company, there can be no assurance that the Company
will be successful or that the costs incurred will not exceed any benefits
that the Company may derive from this litigation.
<PAGE> 11
12. LIMITED MANAGEMENT. The Company currently has only one full time officer
and one full-time employee. The Company's limited cash flow and financial
resources do not allow the Company to increase or add to the Company's full
time management and there can be no guarantee that the Company's cash flow
and financial resources will increase in the near future. As a result, the
Company continues to rely upon consultants and others for a large part of its
operations and the research and development work.
13. LACK OF DIVIDENDS. The Company has never paid any cash dividends on its
common stock. The Company's board of directors intends to retain profits, if
any, to finance the Company's business.
14. LIMITED MARKET FOR COMMON STOCK. The Company's Common Stock, traded on the
Electronic Bulletin Board (OTC), has experienced significant price fluctuations
and will likely remain highly volatile in the future. There can be no
assurance that a meaningful trading market for the Company's Common Stock
will be established, or, if established that it can be maintained for any
significant period.
15. VALUATIONS & PRIOR ASSET ACQUISITIONS. The Company's current management has
determined that the values accorded certain assets acquired in prior years be
revalued to reflect lower carrying values in light of current market
circumstances. While management believes that current carrying values for
these assets more accurately reflect likely recovery values, there can be no
assurance that the Company will not later revalue the Company's assets further.
16. POSSIBLE RULE 144 STOCK SALES. As of November 30, 1996, the Company had a
substantial amount of shares of the Company's outstanding Common Stock as
"restricted securities" which may be sold only in compliance with Rule 144
adopted under the Securities Act of 1933 or other applicable exemptions from
registration. Rule 144 provides that a person holding restricted securities
for a period of one year may thereafter sell in brokerage transactions, an
amount not exceeding in any six month period the greater of either (i) 1% of
the Company's outstanding Common Stock, or (ii) the average weekly trading
volume during a period of four calendar weeks immediately preceding any sale.
Persons who are not affiliated with the Company and who have held their
restricted securities for at least six years are not subject to the volume
limitation. Possible or actual sales of the Company's Common Stock by present
shareholders under Rule 144 may have a depressive effect on the price of the
Company's Common Stock if any liquid trading market develops.
17. POSSIBLE STOCK SALES - REGULATION S AND FORM S-8 REGISTRATION STATEMENT.
The Company has periodically issued shares to non-U.S. citizens under
Regulation S. In addition, the Company has utilized the services of
consultants and, in this connection, and the Company has issued shares of the
Company's Common Stock and registered these shares for sale on Form S-8. The
shares issued under Regulation S become freely tradable 41 days after issuance.
The shares registered on Form S-8 are immediately freely tradable. As a result,
the Company's issuance of shares pursuant to Regulation S and Form S-8 likely
depresses the market price of the Company's Common Stock. While the Company's
management intends to carefully evaluate the need to issue shares of the
Company's Common Stock on this basis, the Company's meager financial resources
will likely prevent the Company from limiting its use of Regulation S and
Form S-8, with the result that the market price of Company's Common Stock will
likely be depressed by the registration and sale of shares on an on-going basis.
<PAGE> 12
18. RISKS OF LOW PRICED STOCKS. Trading in the Company's Common Stock is
limited. Consequently, a shareholder may find it more difficult to dispose of,
or to obtain accurate quotations as to the price of, the Company's securities.
In the absence of a security being quoted on NASDAQ, or the Company having
$2,000,000 in net tangible assets, trading in the Common Stock is covered by
Rule 3a51-1 promulgated under the Securities Exchange Act of 1934 for
non-NASDAQ and non-exchange listed securities.
Under such rules, broker/dealers who recommend such securities to persons
other than established customers and accredited investors (generally
institutions with assets in excess of $5,000,000 or individuals with net
worth in excess of $1,000,000 or an annual income exceeding $200,000 or
$300,000 jointly with their spouse) must make a special written suitability
determination for the purchaser and receive the purchaser's written agreement
to a transaction prior to sale. Securities are also exempt from this rule if
the market price is at least $5.00 per share, or for warrants, if the
warrants have an exercise price of at least $5.00 per share. The Securities
Enforcement and Penny Stock Reform Act of 1990 requires additional disclosure
related to the market for penny stocks and for trades in any stock defined
as a penny stock.
The Commission has recently adopted regulations under such Act which define a
penny stock to be any NASDAQ or non-NASDAQ equity security that has a market
price or exercise price of less than $5.00 per share and allow for the
enforcement against violators of the proposed rules.
In addition, unless exempt, the rules require the delivery, prior to any
transaction involving a penny stock, of a disclosure schedule prepared by the
Commission explaining important concepts involving a penny stock market, the
nature of such market, terms used in such market, the broker/dealer's duties
to the customer, a toll-free telephone number for inquiries about the
broker/dealer's disciplinary history, and the customer's rights and remedies
in case of fraud or abuse in the sale.
Disclosure also must be made about commissions payable to both the
broker/dealer and the registered representative, current quotations for the
securities, and, if the broker/dealer is the sole market maker, the
broker/dealer must disclose this fact and its control over the market.
Monthly statements must be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in
penny stocks. While many NASDAQ stocks are covered by the proposed definition
of penny stock, transactions in NASDAQ stock are exempt from all but the sole
market-maker provision for (i) issuers who have $2,000,000 in tangible assets
($5,000,000 if the issuer has not been in continuous operation for three
years), (ii) transactions in which the customer is an institutional accredited
investor and (iii) transactions that are not recommended by the broker/dealer.
In addition, transactions in a NASDAQ security directly with the NASDAQ market
maker for such securities, are subject only to the sole market-maker
disclosure, and the disclosure with regard to commissions to be paid to the
broker/dealer and the registered representatives.
Finally, all NASDAQ securities are exempt if NASDAQ raised its requirements for
continued listing so that any issuer with less than $2,000,000 in net tangible
assets or stockholder's equity would be subject to delisting. These criteria
are more stringent than the proposed increase in NASDAQ's maintenance
requirements. The Company's securities are subject to the above rules on penny
stocks and the market liquidity for the Company's securities could be severely
affected by limiting the ability of broker/dealers to sell the Company's
securities.
<PAGE> 13
Item 2. Management's' Discussion and Analysis of Financial Condition and
Results of Operations.
This Quarterly Report on Form 10-QSB contains forward-looking statements that
involve risks and uncertainties. The Company's actual results may differ
significantly from the results discussed in the forward-looking statements.
Factors that might cause such a difference include, but are not limited to,
those discussed in the section entitled "Factors Affecting Future Operating
Results."
Forward-Looking Information -General
The following information contains certain forward-looking statements that
anticipate future trends or events. These statements are based on certain
assumptions that may prove to be erroneous and are subject to certain risks
including, but not limited to, the Company's ability to complete and fund it
research and development. Accordingly, actual results may differ, possibly
materially, from the predictions contained herein.
Although the Company cannot accurately anticipate the effects of inflation,
the Company does not believe inflation has had or is likely to have a material
effect on its results of operations or liquidity.
The Company's quarterly operating results vary significantly depending on the
occurrence of funding and the involvement of Company personnel in these
endeavors. The results of operations for any quarter are not necessarily
indicative of the results to be expected for any future period.
Overview
The Company's only active business is the proposed research and development
activities of its SYBIOL technology.
Between 1985 and 1990 the Company provided merchant banking services for small
businesses. As compensation for these services the Company received both cash
and common stock in the companies. The Company distributed shares of stock in
some of these companies to its shareholders as dividends in kind.
In October of 1990 the Company's Board of Directors decided on a major change
in the Company's business. Due to the difficulty of raising capital for its
small business merchant banking clients, the Company decided to change its
business emphasis to that of becoming a diversified company. The merchant
banking would be combined on a smaller scale with more substantial companies.
The Company's merchant banking experience would be primarily directed to the
acquisition of varied business for the Company.
In September of 1991 the Company acquired all of the outstanding stock of
Xenogenex, formerly known as Ascot Close Research Institute, Ltd. At that time
Xenogenex was funding research on xenogeneic transplants with a major West
Coast medical center. Xenogenex had the rights to the commercial development
of the research work.
Xenogenex, Inc. ("Xenogenex") was incorporated in California on July 30, 1991
for the purpose of funding biotech research. On September 11, 1991 the Company
signed a research contract with Cedars-Sinai Medical Center in Los Angeles,
California. The research contract was for the genetic manipulation of human
to pig target antigens and xenogeneic transplants. Xenogeneic transplants
involve the use of donor organs from species other than humans. The major
objective of the research was to discover a way to transplant organs (heart,
liver, lung and kidney) from a pig into a human.
<PAGE> 14
In 1993, the Company divested itself of its other business lines, leaving
development of the synthetic bio-liver ("SYBIOL") through its subsidiary
Xenogenex, Inc. as the Company's only business.
In March of 1993 Xenogenex received all the rights to a synthetic bio-liver
("SYBIOL") developed for Xenogenex under contract with Cedars-Sinai Medical
Center. A patent application is presently pending on the process utilized by
the SYBIOL device and the Company has applied for trademark protection for the
SYBIOL tradename. In July 1996, the Company acquired all of the assets of
Xenogenex; and, as a result, as of August 31, 1997, the Company owned all
assets of Xenogenex.
On August 31, 1995, the Company entered into a license agreement (the "GMI
License") with GroupMed International, Inc. ("GMI"). Under the terms of the
GMI License, the Company granted GMI the exclusive right and license to
manufacture, market, and sell the technology and patents held by Xenogenex
in Mexico, Central America, and South America. Subsequently, the Company
terminated the GMI License due to lack of consideration.
Newly formed wholly owned subsidiary: Xenogenics Corporation, is a new company
formed in February, 1997 to engage in the business of managing the research,
development and commercialization of the SYBIOL artificial liver support
technology. Sybiol is an external bio-liver support system designed to
perform and maintain some of the essential liver functions for patients with
chronic liver disease or liver trauma until a liver transplant can be arranged
or the damaged liver heals and resumes it normal functions. The system
functions in a manner similar to kidney dialysis treatment. Xenogenics
Corporation is a wholly owned subsidiary of Exten, which has owned the SYBIOL
technology since 1993. Exten conveyed all SYBIOL technology rights to
Xenogenics Corporation in June 1997.
Xenogenics Corporation is currently conducting a private offering of its
shares. An investment in the shares of the company may be considered
speculative, involve certain risks, and are suitable only for "accredited
investors" as that term is defined in Rule 501(a) promulgated under the
Securities Act of 1933, as amended (the Act).
In addition to the other information contained in this Form 10-QSB,
prospective investors should carefully consider the following risk factors:
1. PATENTS AND PROPRIETARY TECHNOLOGY. Any proprietary protection that the
Company can obtain and maintain will be important to its proposed business.
The Company has exchanged its U.S. patent application for a P.C.T. filing and
has filed a patent application in China. The patent positions of
bio-pharmaceutical and biotechnology firms, as well as academic and other
research institutions, are uncertain and involve complex legal and factual
questions. Accordingly, no firm predictions can be made regarding the
bio-pharmaceutical and biotechnology patents or whether the Company will have
the financial resources to aggressively protect its rights.
2. INTENSE COMPETITION. Competition from other biotechnology and pharmaceutical
companies and from research and academic institutions is intense and is expected
to increase. Competitors or potential competitors of the Company have filed
applications for, or have been issued, certain patents, and may obtain
additional patents and proprietary rights, relating to technologies competitive
with those of the Company. Accordingly, there can be no assurance that the
Company's patent applications will result in patents being issued or that, if
issued, such patents will provide protection against competitive technology
that circumvents such patents or will be held valid by a court of competent
jurisdiction; nor can there be any assurance that others will not obtain
patents that the Company would need to license or circumvent. Furthermore,
there can be no assurance that licenses that might be required for the
Company's processes or products would be available on reasonable terms, if at
all. The Company also intends to rely upon non-patented trade secrets,
know-how and continuing technological innovation to develop and maintain its
competitive position. No assurance can be given that others will not
independently develop substantially equivalent proprietary information and
technology, or otherwise gain access to the Company's trade secrets or
disclose such technology, or that the Company can meaningfully protect its
rights to its non-patented trade secrets.
3. GOVERNMENT REGULATION. The Company's present and proposed activities are
subject to regulation by numerous governmental authorities in the United States
and other countries. To the extent that the following information describes
statutory or regulatory provisions, it is qualified in its entirety by reference
to the particular statutory and regulatory provisions currently in effect. Any
change in applicable law or regulation may have a material effect on the
business and prospects of the Company.
4. THERAPEUTIC PRODUCTS. The Company's products will be subject to regulation
in the U.S. by the Food and Drug Administration ("FDA") and by comparable
regulatory authorities in foreign jurisdictions. The products produced will
be classified as "biologics" regulated under the Public Health Service Act and
the Federal Food, Drug and Cosmetic Act. Development of a therapeutic product
for human use is a multi-step process. First, animal or in vitro testing must
establish the potential safety and efficacy of the experimental product in a
given disease. Once the product has been found to be reasonably safe and
potentially efficacious in animals, suggesting that human testing would be
appropriate, an Investigational New Drug ("IND") application is submitted to
the FDA. FDA approval is necessary before commencing clinical investigations.
That approval may, in some circumstances, involve substantial delays.
Clinical investigations typically involve three phases. Phase I is conducted to
evaluate the safety of the experimental product in humans, and if possible, to
gain early evidence of effectiveness. Phase I studies also evaluate various
routes, dosages and schedules of product administration. The demonstration of
therapeutic benefit is not required in order to complete Phase I successfully.
If acceptable product safety is demonstrated, the Phase II studies are
initiated. The Phase II trials are designed to evaluate the effectiveness of the
product in the treatment of a given disease and, typically, are well controlled
closely monitored studies in a relatively small number of patients.
<PAGE> 15
The optimal routes and schedules of administration are determined in these
studies. As Phase II trials are successfully completed, Phase III studies will
be commenced. Phase III studies are expanded, controlled and uncontrolled
trials which are intended to gather additional information about safety and
efficacy in order to evaluate the overall risk/benefit relationship of the
experimental product and provide an adequate basis for physician labeling.
These studies also may compare the safety and efficacy of the experimental
device with currently available products. It is not possible to estimate the
time in which Phase I, II and III studies will be completed with respect to a
given product, although the time period is often as long as several years.
Following the successful completion of these clinical investigations, the
preclinical and clinical evidence that has been accumulated is submitted to
the FDA as part of a product license application ("PLA"). Approval of the PLA
or IND is necessary before a company may market the product. The approval
process can be very lengthy and depends upon the time it takes to review the
submitted data and the FDA's comments on the application and the time required
to provide satisfactory answers or additional clinical data when requested.
In addition to the regulatory framework for product approvals, the Company is
and may be subject to regulation under state and federal law, including
requirements regarding occupational safety, laboratory practices, the use,
handling and disposition of radioactive materials, environmental protection
and hazardous substance control, and may be subject to other present and
possible future local state, federal and foreign regulation, including future
regulation of the biotechnology field.
Results of Operations
Nine months Ended August 31, 1997 Compared to Nine months Ended August 31, 1996
During the nine months ending August 31, 1997 and August 31, 1996 the Company
recorded no revenues.
During the nine months ended August 31, 1997, the Company incurred $45,350 in
consulting fees compared to $363,030 for the nine months ended August 31, 1996.
This decrease (88%) in consulting fees was due primarily to the Company's
continued limited use of outside consultants and the increased reliance on the
services of the Company's Chief Executive Officer and Directors to fill the
roles previously filled by outside consultants.
During the nine months ended August 31, 1997, the Company incurred $245,103 in
general and administrative expenses. This increased slightly from the six-month
period ended August 31, 1996. This increase was primarily due to increased
officers salary (which has been accrued and not paid) offset by reduced
administrative, payroll, legal and accounting functions and other ancillary
expenses.
During the nine months ended August 31, 1997 no research and development costs
were incurred. The absence of research and development costs reflected the
Company's substantially limited financial resources and the efforts expended
in pursuing those financial resources. The Company believes that research and
development efforts will commence within the next year if private placement
funds become available. The Company however did incur expenses related to the
patent for the SYBIOL technology, which it intends to defend vigorously.
<PAGE> 16
During the nine months ended August 31, 1997, the Company incurred $35,214 in
amortization expense. This amortization expense is resultant of the Goodwill
recognized during the year ended November 30, 1996 pursuant to the redemption
of the minority shareholders interest in the subsidiary Xenogenex. There will
be no additional amortization expense related to this Goodwill. The $146
incurred for the six-month period ended August 31, 1996 was due to equipment
that the Company held at the research facility.
As a result, total operating expenses for the nine month period ended
August 31, 1997 were $339,979 compared to $598,622 for the nine month period
ended August 31, 1997. This resulted in the Company recording a loss from
operations of $339,979 for the nine month period ended August 31, 1997
compared to a loss from operations of $598,622 for the comparable period in
1996, or a decrease of approximately 43%.
During the nine months ended August 31, 1997 the Company entered into an
agreement with Union Bank to settle a previous existing note payable and
judgment with a balance due of $333,000. As of August 31, 1997 a payment of
$50,000 was made for full settlement in connection with the note payable and
judgment, the Company recorded a gain on extinguishment of debt of $283,000
during this period. For the nine months ended August 31, 1996 the Company
recognized loss on dispositions totaling $264,000.
Three Months Ended August 31, 1997 Compared to Three Months Ended
August 31, 1996
During the three months ending August 31, 1997 and August 31, 1996 the Company
recorded no revenues.
During the three months ended August 31, 1997, the Company incurred consulting
fee expense of $32,850 compared to $110,717 for the three months ended
August 31, 1996. This decrease in consulting fees was due primarily to the
Company's continued limited use of outside consultants and the increased
reliance on the services of the Company's Chief Executive Officer and Directors
to fill the roles previously filled by outside consultants.
During the three months ended August 31, 1997, the Company incurred $90,049
in general and administrative expenses. This increased by nearly 100% from the
three-month period ended August 31, 1996. This increase was primarily due to
the executive officer positions being held by Mr. Newmin as an employee versus
the status of a consultant, legal and accounting functions and other ancillary
expenses. The Company will continue to hold these expenses to a minimum due
to economic and financial reasons.
During the three months ended August 31, 1997 no research and development costs
were incurred. The absence of research and development costs reflected the
Company's substantially limited financial resources and the efforts expended
in pursuing those financial resources. The Company believes that research and
development efforts will commence within the next year if funds become
available.
During the three months ended August 31, 1997, the Company incurred $11,736 in
amortization expense. This amortization expense is resultant of the Goodwill
recognized during the year ended November 30, 1996 pursuant to the redemption
of the minority shareholders interest in the subsidiary Xenogenex. The Company
incurred no expense for the three-month period ended August 31, 1996.
<PAGE> 17
As a result, the Company recorded a loss from operations of $140,428 for the
three month period ended August 31, 1997 compared to a loss from operations of
$158,043 for the three month period ended August 31, 1996, or a decrease of
approximately 11%. The Company believes that expenses and losses will be
significantly less than previous years due to cost cutting and outside services
being held to a minimum.
Liquidity and Capital Resources
The Company's principal capital requirements are to fund operations and
development of new products. The Company has historically satisfied its cash
requirements through cash flows from private placements and short-term
borrowings.
The Company's current ratio (current assets over current liabilities) is .0642
to 1 as of August 31, 1997. During the first nine months of fiscal year 1997,
the Company's cash requirements were met by short term borrowings from an
officer of the Company and long term borrowings from an unrelated party. The
Company issued in the amount of $357,664, common stock of the Company for
services performed.
Several steps have been taken by the Company to reduce its liabilities, reduce
cash requirements, and raise capital. The Company has been negotiating with the
bank and its vendor creditors to settle its liabilities. Exten is also
negotiating with investment bankers for raising of additional capital. The
Company is also considering mergers with other entities. No assurances can be
given that any such activity will prove successful. The Company will require
substantial working capital to continued synthetic bio-liver development of
Xenogenex, Inc. and there can be no guarantee that the Company will be
successful in obtaining any such needed financing.
The Company has also continued to pay salaries, consulting fees, and in some
cases, legal fees through the issuance of the Company's Common Stock with the
subsequent registration of the shares so issued on Form S-8. The Company has
been forced to take these steps to conserve the Company's cash and liquid
resources.
The Company is raising some funds intermittently through the use of long-term
debt instruments and through the payment of services with stock. The Company
is also currently conducting a private placement of common stock of its wholly
owned subsidiary Xenogenics. The offering is a best efforts offering with a
minimum and maximum amount to be placed. There can be no assurance that the
Company will be successful with this offering.
On March 7, 1997, the Company borrowed $125,000 from an unrelated party.
On March 18, 1997, this note was increased to $145,000 by an additional
borrowing of $20,000. The terms of the note require monthly interest payments
of approximately $1,000 beginning April 7, 1997. Interest will be charged at
the published prime rate, which was 8.25% at March 7, 1997.
On March 18, 1997, the Company entered into an agreement with a bank to
settle a note payable in the amount of $333,000. The Company is in default
on the note and the bank has received a judgment for the full amount of the
note plus fees of $35,000 associated with the collection of the note. As
stipulated by the agreement, the Company made a cash payment in the amount of
$50,000 in full settlement of the note and fees.
<PAGE> 18
The Company entered into an agreement with a former president of the Company
to settle a previously existing note in the amount of $388,000. As part of that
settlement, the Company has agreed to a cash payment of $50,000, which was
never made. On March 6, 1997, the Company settled that $50,000 obligation by
issuing an additional 1,000,000 shares of stock with a market value of $.05
per share to the former president of the Company. This transaction was recorded
within the year ending November 30, 1996 stock issuances.
In connection with the formation and private placement of the Company's wholly
owned subsidiary Xenogenics, the following transpired. Xenogenics assumed a
promissory note in the amount of $162,500, plus accrued interest of $6,045
owing to an officer of the Company in connection with the transfer of the
SYBIOL patents, trademarks, licenses and assets from Exten. This note matures
within two years and is payable interest only at 7% per annum until maturity
and is convertible into common stock of Xenogenics at $1.00 per share over
its term. In addition, a grant of an option to purchase an additional 162,500
shares of common stock at $1.00 per share over a three year period. The note
is secured by a security interest in the SYBIOL patents, trademarks,
technology and assets.
An unrelated party loaned Xenogenics (as stated above) $145,000 under a two
year promissory note in June 1997, that is payable interest only and is
convertible into common stock under a formula ranging from $2.00 to $3.00 per
share. In addition, the unrelated party was granted an option to purchase
145,000 shares of common stock of Xenogenics at $1.00 per share over a
three-year period. The note is also secured by a security interest.
Additionally, two directors of Xenogenics were granted stock options in
June 1997, to purchase 50,000 shares of common stock each at $1.00 per share
over a five-year period.
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
As of October 13, 1997, there were no pending legal proceedings involving the
Company which, in the opinion of management, after discussion with legal
counsel, were of a material nature except the following:
1. Zampi & Associates Litigation
(1)San Diego County Superior Court, State of California
(2)October 16, 1996.
(3)Zampi & Associates as plaintiff. Exten Industries, Inc. as a defendant.
(4)Lawsuit to collect legal fees.
(5)Relief Sought: Monetary payment.
Item 2: Changes in Securities
NONE
Item 3: Defaults Upon Senior Securities
NONE
Item 4: Submission of Matters to a Vote of Security Holders
NONE
Item 5: Other Information
NONE
Item 6(a): Exhibits
NONE
Item 6(b): Reports on Form 8-K
Form 8-K dated October 13, 1997
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report be signed on its behalf by the
undersigned thereunto duly authorized.
EXTEN INDUSTRIES, INC.
(Registrant)
Date: 10/13/97 By: /s/ W. Gerald Newmin
W. Gerald Newmin
Chairman, Chief Executive Officer
Date: 10/13/97 By: /s/ William R. Hoelscher
William R. Hoelscher
Director, Vice-President and
Principal Accounting Officer
<PAGE> 20
[ARTICLE] 5
[S] [C] [C]
[PERIOD-TYPE] 3-MOS 9-MOS
[FISCAL-YEAR-END] NOV-30-1997 NOV-30-1997
[PERIOD-START] JUN-01-1997 DEC-01-1996
[PERIOD-END] AUG-31-1997 AUG-31-1997
[CASH] 0 322
[SECURITIES] 0 0
[RECEIVABLES] 0 0
[ALLOWANCES] 0 0
[INVENTORY] 0 0
[CURRENT-ASSETS] 0 33,539
[PP&E] 0 0
[DEPRECIATION] 0 0
[TOTAL-ASSETS] 0 122,965
[CURRENT-LIABILITIES] 0 552,306
[BONDS] 0 0
[PREFERRED-MANDATORY] 0 0
[PREFERRED] 0 1
[COMMON] 0 359,532
[OTHER-SE] 0 (544,341)
[TOTAL-LIABILITY-AND-EQUITY] 0 122,965
[SALES] 0 0
[TOTAL-REVENUES] 0 0
[CGS] 0 0
[TOTAL-COSTS] 140,428 339,479
[OTHER-EXPENSES] 0 0
[LOSS-PROVISION] 0 0
[INTEREST-EXPENSE] 5,793 14,312
[INCOME-PRETAX] (98,286) (14,837)
[INCOME-TAX] 0 800
[INCOME-CONTINUING] (98,286) (14,837)
[DISCONTINUED] 0 0
[EXTRAORDINARY] 42142 325,142
[CHANGES] 0 0
[NET-INCOME] (98,286) (15,637)
[EPS-PRIMARY] .00 .00
[EPS-DILUTED] .00 .00
