<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[x] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended December 31, 1999.
[ ] Transition report pursuant to Section 13 or 15(d) of the Exchange act for
the transition period from to
--------------------- ---------------------
Commission File Number: 0-20316
-------------
Avitar, Inc.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 06-1174053
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
65 Dan Road, Canton, Massachusetts 02021
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(781) 821-2440
- --------------------------------------------------------------------------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report)
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. [x]Yes [ ]No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
COMMON STOCK: 26,049,836
AS OF FEBRUARY 11, 1999
Transitional Small Business Disclosure Format
(Check One): [ ] Yes ; [x] No
Page 1 of 19 pages
Exhibit Index is on page 17 hereof.
1
<PAGE>
TABLE OF CONTENTS
Page
PART I: FINANCIAL INFORMATION 3
Item 1 Consolidated Financial Statements
Balance Sheet 4
Statements of Operations 5
Statement of Stockholders' Equity 6
Statements of Cash Flows 7
Notes to Consolidated Financial Statements 8
Item 2 Management's Discussion and Analysis or Plan of Operation 11
PART II: OTHER INFORMATION 14
Item 2 Changes in Securities and Use of Proceeds 15
Item 6 Exhibits and Reports on Form 8-K 15
SIGNATURES 16
EXHIBIT INDEX 17
2
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PART I FINANCIAL INFORMATION
3
<PAGE>
Item 1. FINANCIAL STATEMENTS
Avitar, Inc. and Subsidiaries
Consolidated Balance Sheet
December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma
(Unaudited)
(Note 6)
- --------------------------------------------------------------------------------------------- -------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 76,623 $ 2,366,641
Accounts receivable 507,325 507,325
Inventories 330,187 330,187
Prepaid expenses and other 283,844 283,844
Preferred stock subscription receivable 100,000 100,000
------------ ------------
Total current assets 1,297,979 3,587,997
PROPERTY AND EQUIPMENT, net 364,685 364,685
GOODWILL, net 2,676,104 2,676,104
OTHER ASSETS 329,387 329,387
------------ ------------
Total $ 4,668,155 $ 6,958,173
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Notes payable $ 398,147 $ 398,147
Accounts payable 1,084,005 1,084,005
Accrued expenses 548,051 548,051
Current portion of long-term debt 129,434 129,434
------------ ------------
Total current liabilities 2,159,637 2,159,637
LONG TERM DEBT, LESS CURRENT PORTION 131,802 131,802
------------ ------------
Total liabilities 2,291,439 2,291,439
------------ ------------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Series A, B and C convertible preferred stock, $.01 par value; authorized
5,000,000 shares; 1,816,736 shares issued and
outstanding 18,167 21,319
Common Stock, $.01 par value; authorized 75,000,000 shares;
25,292,316 shares issued and outstanding 252,923 259,440
Additional paid-in capital 25,414,049 27,694,398
Accumulated deficit (22,951,955) (22,951,955)
------------ ------------
2,733,184 5,023,202
Less preferred stock subscription receivable (356,468) (356,468)
------------ ------------
Total stockholders' equity 2,376,716 4,666,734
------------ ------------
Total $ 4,668,155 $ 6,958,173
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
Avitar, Inc. and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
- --------------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1999 1998
------------ ------------
SALES $ 807,664 $ 484,097
------------ ------------
OPERATING EXPENSES
Cost of sales 625,450 468,269
Selling, general and administrative 991,927 340,740
Research and development 326,209 124,730
Amortization of goodwill 70,424 --
------------ ------------
Total operating expenses 2,014,010 933,739
------------ ------------
LOSS FROM OPERATIONS (1,206,346) (449,642)
------------ ------------
OTHER INCOME (EXPENSE)
Interest income 6,730 --
Interest expense and financing costs (28,732) (41,863)
Other income 18,000 24,000
------------ ------------
Total other income (expense) (4,002) (17,863)
------------ ------------
NET LOSS $ (1,210,348) $ (467,505)
============ ============
BASIC AND DILUTED NET LOSS PER SHARE (Note 5) $ (0.05) $ (0.03)
============ ============
WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING 24,718,727 17,481,720
============ ============
See accompanying notes to consolidated financial statements.
5
<PAGE>
Avitar, Inc. and Subsidiaries
Consolidated Statement of Stockholders' Equity
Three Months Ended December 31, 1999
(Unaudited)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
Preferred Stock Common Stock
---------------------------- ---------------------------
Additional
Shares Amount Shares Amount paid-in capital
- ---------------------------------------------------------- ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1999 1,720,095 $ 17,201 24,498,642 $ 244,987 $ 24,450,661
Exercise of warrants -- -- 500,000 5,000 191,025
Sale of Series C preferred stock 125,333 1,253 -- -- 750,747
Conversion of Series B preferred stock
into common stock (29,231) (292) 292,310 2,923 (2,631)
Exercise of stock options -- -- 1,364 13 792
Reclassification of preferred stock
subscription receivable
Payment of preferred stock dividend, Series
B preferred stock 539 5 -- -- 11,455
Value of warrants issued in connection
with Series C preferred stock sales -- -- -- -- 12,000
Net loss -- -- -- -- 0
- ---------------------------------------------------------- ------------ ------------ ------------ ------------
Balance at December 31, 1999 1,816,736 $ 18,167 25,292,316 $ 252,923 $ 25,414,049
========================================================== ============ ============ ============ ============
<CAPTION>
- ---------------------------------------------------------------------------
Preferred
Stock
Accumulated Subscription
deficit Receivable
------------ ------------
<S> <C> <C>
Balance at September 30, 1999 $(21,718,147) $ (456,468)
Exercise of warrants -- --
Sale of Series C preferred stock -- --
Conversion of Series B preferred stock
into common stock -- --
Exercise of stock options -- --
Reclassification of preferred stock
subscription receivable -- 100,000
Payment of preferred stock dividend, Series
B preferred stock (11,460) --
Value of warrants issued in connection
with Series C preferred stock sales (12,000) --
Net loss (1,210,348) --
------------ ------------
Balance at December 31, 1999 $(22,951,955) $ (356,468)
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
Avitar, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED DECEMBER 31,
-------------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,210,348) $ (467,505)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 41,098 31,895
Amortization of goodwill 70,424
Non cash charges for consulting services -- 10,996
Changes in operating assets and liabilities:
Accounts receivable (48,466) 31,909
Prepaid expenses and other current assets (5,842) 66,595
Other assets 36,684 --
Accounts payable and accrued expenses 157,478 80,373
----------- -----------
Net cash used in operating activities (958,972) (245,737)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (91,563) --
----------- -----------
Net cash used in investing activities (91,563) --
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of notes payable and long-term debt (102,430) (39,750)
Sales of preferred stock and warrants 752,000 285,000
Exercise of stock options and warrants 196,830 --
----------- -----------
Net cash provided by financing activities 846,400 245,250
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (204,135) (487)
CASH AND CASH EQUIVALENTS, beginning of the period 280,758 12,483
----------- -----------
CASH AND CASH EQUIVALENTS, end of the period $ 76,623 $ 11,996
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during period:
Income taxes $ -- $ 2,456
Interest $ 26,528 $ 41,681
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
AVITAR, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
================================================================================
1. BASIS OF PRESENTATION
Avitar, Inc. ("Avitar" or the "Company"), through its wholly-owned
subsidiary, Avitar Technologies Inc. ("ATI") develops, manufactures,
markets and sells diagnostic test products and proprietary hydrophilic
polyurethane foam disposables fabricated for medical, diagnostics, dental
and consumer use. During Fiscal Year 1999, the Company completed the
development and began marketing OralScreen(TM), innovative point of care
oral fluid drugs of abuse tests that use the Company's foam as the means
for collecting the oral fluid sample.
On July 9, 1999, the Company completed its acquisition of United
States Drug Testing Laboratories, Inc. (`USDTL"), which became a
wholly-owned subsidiary of Avitar. USDTL operates a certified laboratory
and provides specialized drug testing services primarily utilizing hair as
the sample.
The accompanying consolidated financial statements of the Company
have been prepared in accordance with generally accepted accounting
principles for interim financial information, the instructions to Form
10-QSB and Regulation S-B (including Item 310(b) thereof). 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 the Company's management, all adjustments
(consisting only of normal recurring accruals) considered necessary for a
fair presentation have been included. Operating results for the three
month period ended December 31, 1999 are not necessarily indicative of the
results that may be expected for the full fiscal year ending September 30,
2000. The accompanying consolidated financial statements should be read in
conjunction with the audited financial statements of the Company for the
fiscal year ended September 30, 1999.
2. INVENTORIES
At December 31, 1999, inventories consist of the following:
Raw Materials $108,504
Work-in-Process 110,831
Finished Goods 110,852
--------
Total $330,187
========
8
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3. MAJOR CUSTOMERS
Customers in excess of 10% of total sales are:
Three Months Ended December 31,
-------------------------------
1999 1998
-------- --------
Customer A $106,817 $134,534
Customer B * 115,354
Customer C * 56,026
Customer D 112,500 0
*Customer was not in excess of 10% of total sales in 1999.
4. PREFERRED STOCK
During the quarter ended December 31, 1999, the Company sold 125,333
shares of Series C convertible preferred stock and received proceeds of
approximately $752,000. In connection with the sale of the preferred
stock, the Company issued to the holders of the preferred stock
warrants to purchase 125,333 shares of the Company's common stock at
exercise prices of $2.45 to $3.38 per share for three years. The value of
the warrants issued amounted to approximately $12,000. On the anniversary
dates of their investment, the holders of the Series C convertible
preferred stock may convert their investment into shares of the Company's
common stock based on the average closing price of the Company's common
stock for the five trading days immediately prior to the date of the
conversion. The holders of the Series C convertible preferred stock are
entitled to receive royalty payments which are based on 5% of the revenues
received by the Company for disease testing products that are developed
pursuant to an oral fluid disease testing development program to be
undertaken by the Company.
For the three months ended December 31, 1999, holders of the Series B
convertible preferred stock converted 29,231 shares of their preferred
stock into 292,310 shares of the Company's common stock.. Preferred stock
dividends related to the Series B convertible preferred stock for the
three months ended December 31, 1999 amounted to $66,295. As of December
31, 1999, the total amount of unpaid and undeclared dividends was
$324,943.
5. EARNINGS PER SHARE
The following data show the amounts used in computing earnings per share:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Net loss $(1,210,348) $ (467,505)
Less:
Preferred Stock Dividends (66,295) --
Value of warrants issued in
connection with Series C
preferred stock sales (12,000) --
----------- -----------
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C>
Loss available to common
stockholders used in basic and
diluted EPS $(1,288,643) $ (467,505)
=========== ===========
Weighted average number of
common shares outstanding 24,718,727 17,481,720
=========== ===========
</TABLE>
6. SUBSEQUENT EVENTS
Since December 31, 1999 the Company sold 315,167 shares of Series C
convertible preferred stock and received proceeds of $1,891,000. The terms
of this preferred stock are described above in Note 4. In connection with
the sale of the preferred stock, the Company issued to the holders of the
Series C convertible preferred stock warrants to purchase 315,167 shares
of the Company's common stock at exercise prices of $4.50 to $5.93 per
share for 3 years. During the same period, the Company received proceeds
of approximately $399,000 from the exercise of stock options and warrants
to purchase approximately 651,700 shares of the Company's common stock.
Due to the significant amount of capital raised since December 31, 1999, a
pro forma balance sheet has been presented to reflect the impact of these
additional funds as if the proceeds were received by December 31, 1999.
The Company anticipates that it will have a net loss from operations of
approximately $310,000 for the month of January 2000.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis should be read in conjunction with
the Company's consolidated financial statements and the notes thereto appearing
elsewhere in this report.
RESULTS OF OPERATIONS
Revenues
Sales for the three months ended December 31, 1999 increased $323,567 or
approximately 67 %, to $807,664 from $484,097 for the corresponding period of
the prior year. The change for the three months ended December 31, 1999
primarily reflect the increase in sales of its OralScreen(TM) products and sales
of USDTL of $287,933.
Operating Expenses
Cost of sales for the three months ended December 31, 1999 were
approximately 77% of sales which compares to the cost of sales of 97% for the
three months ended December 31, 1998. The improvement in the ratio of direct
cost to sales for the quarter ended December 31, 1999 was primarily due to the
increase in sales described and the change in the product mix.
Selling, general and administrative expenses for the three months ended
December 31, 1999 increased $651,187, or approximately 191%, to $991,927 from
$340,740 for the corresponding period of the prior year. The increase for the
three month period ended December 31, 1999 continued to reflect the expanded
sales, marketing and administrative efforts associated with the Company's
OralScreen(TM) products and the selling, general and administrative expenses of
USDTL of $129,540.
Expenses for research and development for the three months ended December
31, 1999 amounted to $326,209 compared to $124,730 for the corresponding period
of the prior year. The increase of $201,479, or approximately 162%, was
primarily attributable to the increased research and development activities
related to the Company's OralScreen(TM) products.
For the three months ended December 31, 1999, amortization of goodwill was
$70,424 which resulted from the Company's acquisition of USDTL. No amortization
of goodwill occurred during the three months ended December 31, 1998.
Other Income and Expense
Interest income amounted to $ 6,730 for the quarter ended December 31,
1999 compared to no interest income for the same period of the prior year. The
increase resulted primarily from the interest earned on cash management
accounts.
Interest expense and financing costs were $28,732 for the three months
ended December 31, 1999 compared to $41,863 incurred during the three months
ended December 31, 1998. This decrease resulted from reduced interest expense on
loans from banks and related parties.
For the three months ended December 31, 1999, other income amounted to
$18,000 as
11
<PAGE>
compared to other income of $24,000 for the three months ended December 31,
1998. This change is mainly a result of lower rental income from the lease of
excess square feet in the Company's facility.
Net Loss
Primarily as a result of the factors described above, the Company had a
net loss of $1,210,348, $ .05 per basic and diluted share, for the three months
ended December 31, 1999, as compared to net loss of $467,505, $ .03 per basic
and diluted share, for the three months ended December 31, 1998.
FINANCIAL CONDITION AND LIQUIDITY
At December 31, 1999 and September 30, 1999 the Company had working
capital deficiencies of $961,658 and $738,755, respectively, and cash and cash
equivalents of $76,623 and $280,758 respectively. Net cash used in operating
activities during the three months ended December 31, 1999 amounted to $958,972
resulting primarily from a net loss of $1,210,348, an increase in accounts
receivable of $48,466 and an increase in prepaid expenses and other current
assets of $5,842; partially offset by depreciation and amortization of $41,098,
amortization of goodwill of $70,424, a decrease in other assets of $36,684 and
increases in accounts payable and accrued expenses of $157,478. Net cash
provided by financing and investing activities during the three months ended
December 31, 1999 amounted to $754,837 which included proceeds from the sale of
preferred stock and warrants of $752,000 and proceeds from the exercise of stock
options and warrants of $196,830; offset in part by the repayment of notes
payable and long term debt of $102,430 and purchases of property and equipment
of $91,563.
Since October 1999, the Company received proceeds of approximately
$2,642,000 from the sale of 440,500 shares of Series C Convertible Preferred
Stock and of warrants to purchase 440,500 shares of the Company's common stock
at exercise prices of $2.45 -$5.93 per share for a period of three years. During
the same period the Company received proceeds of approximately $596,000 from the
exercise of stock options and warrants to purchase 1,153,064 shares of the
Company's common stock. From February through May 2000, the Company expects
proceeds of approximately $3,000,000 to $3,500,000 from the remaining warrants
issued in connection with the Series B convertible preferred stock. Currently,
all such warrants are in the money. In addition, the Company is attempting to
raise up to $1,000,000 from the sales of equity securities. The Company plans to
use the proceeds from these financings and warrant exercises to provide the
working capital and capital equipment funding to operate the Company, to expand
the Company's business and to pursue the development of oral fluid diagnostic
testing for diseases. However, there can be no assurance that these financings
will be achieved or that the remaining warrants will be exercised.
For the balance of fiscal year 2000, the Company's cash requirements are
expected to include primarily the funding of operating losses, the payment of
outstanding accounts payable, the repayment of certain notes payable, the
funding of operating capital to grow the Company's drugs of abuse testing
products and the initial funding for the development of oral fluid diagnostic
testing products for diseases.
Operating revenues of the Company (exclusive of revenues from USDTL) grew
7% during the first quarter of Fiscal 2000 and are expected to grow at a more
rapid pace during the remainder of Fiscal 2000 as the Company continues to
increase the shipments of its OralScreen(TM) products and grows the business of
USDTL. Based on current sales, expense and cash flow projections, the Company
believes
12
<PAGE>
that the current level of cash and short term investments on hand and a
portion of the anticipated net proceeds from the financing mentioned above would
be sufficient to fund operations until the Company achieves profitability. There
can be no assurance that the Company will consummate the above-mentioned
financing, or that all of the proceeds expected from the financing or exercise
of warrants will be obtained. Once the Company achieves profitability, the
longer-term cash requirements of the Company to fund operating activities,
purchase capital equipment, expand the existing business and develop new
products are expected to be met by the anticipated cash flow from operations and
proceeds from the financing and warrant exercises described above. However,
because there can be no assurances that sales will materialize as forecasted,
management will continue to closely monitor and attempt to control costs at the
Company and will continue to actively seek additional capital as necessary.
Year 2000 Impact
Many currently installed computer systems and software products are coded
to accept or recognize only two digit entries in the date code field. These
systems and software products will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, computer
systems and/or software used by many companies and governmental agencies may
need to be upgraded to comply with such Year 2000 requirements or risk system
failure or miscalculations causing disruptions of normal business activities.
The Company has completed its review concerning the ability of its
internal information systems, including its internal accounting systems, to
handle date information and function appropriately from and after January 1,
2000. The final step to become Year 2000 compliant, which involves the
implementation of new software at USDTL, is underway and is expected to be
complete by March 15, 2000.
13
<PAGE>
PART II OTHER INFORMATION
14
<PAGE>
ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS
During the quarter ended December 31, 1999, the Company sold to private
investors 125,333 shares of Series C Convertible Preferred Stock and received
cash proceeds of approximately $752,000. In connection with the sale of this
preferred stock, the Company issued to the holders of the preferred stock
warrants to purchase 125,333 shares of the Company's common stock at an exercise
price of $2.45 to $3.38 per share for a period of three years. On the
anniversary dates of their investment, the holders of the Series C convertible
preferred stock may convert their investment into shares of the Company's common
stock based on the average closing price of the Company's common stock for the
five trading days immediately prior to the date of the conversion. The holders
of the Series C convertible preferred stock are entitled to receive royalty
payments which are based on 5% of the revenues received by the Company for
disease testing products that are developed pursuant to an oral fluid disease
testing development program to be undertaken by the Company. In addition the
Company issued 500,000 shares of common stock in connection with the exercise of
warrants for which it received proceeds of approximately $196,000. The exemption
for registration of these securities is based upon Section 4(2) of the
Securities Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit No. Document
----------- --------
27.2 Financial Data Schedule
(b) Reports on Form 8-K:
None
15
<PAGE>
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.
AVITAR, INC.
(Registrant)
Dated: February 14, 2000 /S/ Peter P. Phildius
-----------------------------
Peter P. Phildius
Chairman and Chief
Executive Officer
(Principal Executive Officer)
Dated: February 14, 2000 /S/ J.C. Leatherman, Jr.
-----------------------------
J.C. Leatherman, Jr.
Chief Financial Officer
(Principal Accounting and
Financial Officer)
16
<PAGE>
EXHIBIT INDEX
================================================================================
Exhibit No. Document Page
- ----------- -------- ----
27.2 Financial Data Schedule 18
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AVITAR'S
QUARTERLY REPORT FOR THE QUARTER ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 76,623
<SECURITIES> 0
<RECEIVABLES> 542,325
<ALLOWANCES> 35,000
<INVENTORY> 330,187
<CURRENT-ASSETS> 1,197,979
<PP&E> 1,019,075
<DEPRECIATION> 654,390
<TOTAL-ASSETS> 4,568,155
<CURRENT-LIABILITIES> 2,159,637
<BONDS> 0
0
18,167
<COMMON> 252,924
<OTHER-SE> 2,005,625
<TOTAL-LIABILITY-AND-EQUITY> 4,568,637
<SALES> 807,664
<TOTAL-REVENUES> 807,664
<CGS> 625,450
<TOTAL-COSTS> 2,014,010
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,272
<INCOME-PRETAX> (1,210,348)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,210,348)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,210,348)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
