U.S. 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
Securities Exchange Act of 1934
For the quarterly period ended: June 30, 1996
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from to
Commission file number: 33-20492-D
America's Coffee Cup, Inc.
(Exact name of small business issue as specified in its charter)
Colorado 84-1078201
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
12528 Kirkham Ct., Nos. 6 & 7, Poway, CA 92064
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (619) 679-3290
Not Applicable
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
issuer was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days: Yes X No .
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Check Mark whether the issuer has filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court: Yes No Not Applicable
X.
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date: Issuer
has one class of common stock, of which 845,567 shares were
outstanding on August 13, 1996.
Transitional Small Business Disclosure Format (check one): Yes
No X.
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements.
BALANCE SHEET
(America's Coffee Cup, Inc.-Unaudited)
ASSETS
June 30, 1996 December 31, 1995
CURRENT ASSETS
Cash and Cash Equivalents $ 38 $ 32,727
Accounts Receivable,
no allowance deemed
necessary 131,377 130,455
Inventories 66,282 135,776
Prepaid expense and other 35,301 15,996
TOTAL CURRENT ASSETS 232,998 314,954
PROPERTY AND EQUIPMENT, net 439,112 338,085
OTHER ASSETS:
License agreement, net 282,292 218,750
Slotting fee, net 55,901 61,581
Deferred offering costs
and other assets 202,594 72,060
TOTAL OTHER ASSETS 540,787 352,391
$1,212,897 $1,005,430
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $492,496 $259,457
License fee payable 100,000 -
Bank overdraft 69,731 -
Accrued expenses 58,549 62,239
Current portion of
long-term debt 959,490 722,717
TOTAL CURRENT LIABILITIES 1,680,266 1,044,413
LONG-TERM DEBT, less current
portion 457,660 480,160
STOCKHOLDERS' DEFICIT
Common stock, $.40 par value
(10,000,000 shares authorized,
and 802,043 shares issued and
outstanding as of December 31, 1995) 338,226 320,816
Additional paid-in-capital 436,010 366,373
Preferred stock, $.10 par value
(1,000,000 shares authorized,
none issued and outstanding) - -
Accumulated deficit (1,699,265) (1,206,332)
TOTAL SHAREHOLDERS' DEFICIT (925,029) (519,143)
$1,212,897 $1,005,430
<PAGE>
STATEMENT OF OPERATIONS
(America's Coffee Cup, Inc.-Unaudited)
For the six months ended
June 30, 1996 June 30, 1995
SALES $1,193,686 $1,504,139
COST OF SALES 474,060 706,815
Gross Profit 719,627 797,324
OPERATING EXPENSES
General and Administrative 1,169,716 940,955
Depreciation 28,859 11,095
TOTAL OPERATING EXPENSES 1,198,575 952,050
LOSS FROM OPERATIONS (478,948) (154,726)
OTHER INCOME (EXPENSES)
Interest expense (11,800) (38,092)
Other (2,185) 16,623
TOTAL OTHER INCOME (EXPENSES) (13,985) (21,469)
LOSS BEFORE INCOME TAX EXPENSE (492,933) (176,195)
Provision for income tax - 800
NET LOSS $(492,933) $(176,995)
NET LOSS PER COMMON SHARE $ (.57) $ (.21)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 857,005 848,326
<PAGE>
STATEMENT OF CASH FLOWS
(America's Coffee Cup, Inc. Unaudited)
Six Months Ended
June 30, 1996 June 30, 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(492,933) $(176,995)
Adjustments to reconcile net income
(loss) to net cash used
in operating activities:
Depreciation 28,859 11,095
Amortization of license agreement
included in cost of goods sold - 21,875
Changes in operating assets
and liabilities:
Accounts receivable (922) 47,754
Inventory 69,494 10,552
Prepaid expenses (19,305) (14,641)
License agreement (63,542) -
Slotting fee 5,680 -
Other assets - 19,167
Increase (decrease) in:
Accounts payable 233,039 33,844
Accrued expenses (3,690) 8,385
Bank overdraft 69,731 -
License fee payable 100,000 -
NET CASH USED IN OPERATING
ACTIVITIES (73,589) (38,964)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (129,886) (7,741)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from long-term debt 214,273 (12,052)
Proceeds from convertible debt - 105,000
Proceeds from issuance of common stock 17,410 -
Proceeds from additional paid-in-capital69,637 -
Deferred offering cost (130,534) -
NET CASH PROVIDED BY (USED IN )
FINANCING ACTIVITIES 170,786 92,948
NET INCREASE (DECREASE) IN CASH (32,689) 46,243
CASH, BEGINNING OF PERIOD 32,727 228,864
CASH, END OF PERIOD $ 38 $275,107
<PAGE>
Notes to Financial Statements
(America's Coffee Cup, Inc. - Unaudited)
A. Basis of Presentation:
The accompanying unaudited financial statements and related
notes have been prepared pursuant to the rules and regulations of
the Securities and Exchange Commission. 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 of a normal and
recurring nature which were considered necessary for a fair
presentation of these financial statements have been included. It
is suggested that these statements be read in conjunction with the
financial statements and footnotes thereto included in the annual
report of the Company on Form 10-KSB for the year ended December
31, 1995. The results of operations for the period ended June 30,
1996, may not necessarily be indicative of the operating results
for the entire 1996 year.
B. Net Loss per Common Share and Common Stock:
Net loss per common share of Common Stock is computed by
dividing net loss by the weighted average number of shares
outstanding for the periods presented.
C. Going Concern:
The Company has suffered recurring operating losses and, at
June 30, 1996, had a net deficiency in assets. These conditions
raise substantial doubt about the ability of the Company to
continue as a going concern. Several steps have been taken by the
Company in an attempt to increase working capital and improve
profitability. During 1994, 1995 and 1996, the Company issued
convertible debt, and during 1995, signed a letter of intent with
an underwriter for the purpose of conducting an offering of
securities, the net proceeds of which are currently estimated to
approximate $1,500,000. Additionally, the Company has orally
agreed with Ralph's to relocate fixtures in several stores to new
locations which present better market demographics, continue
installing concessions at newly constructed Ralph's stores and
began installing concessions at stores which are being converted
into Ralph's from Alpha Beta. The Company is also continuing to
pursue expansion into other grocery chains.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operation.
The following discussion of financial condition and results of
operations should be read in conjunction with the Company's
unaudited financial statements and notes thereto appearing
elsewhere in this form.
The Company has had recurring losses from operations since
inception and has a net capital deficiency, each of which raise
substantial doubts about its ability to continue as a going
concern. Accordingly, the auditors' report and opinion on the
financial statements as of and for the years ended December 31,
1995, and December 31, 1994, included an explanatory paragraph
about these uncertainties; however, management has taken a number
of steps which it believes will assure the future of the Company
irrespective of its current capital raising efforts.
The following discussion should be read with the understanding that
the Company was a start-up entity with limited working capital.
The Company has historically shown substantial losses during the
second and third calendar quarters of each year, due to seasonal
trends, while posting positive operating cash flows during the
first and final quarters of the year, the effect of which has been
a substantial reduction in the net losses incurred by the Company
in each year.
Results of Operations
Six Months Ended June 30, 1996, as Compared to Six Months Ended
June 30, 1995
1996 1995
Revenue 1,193,686 1,504,139
Costs of Sales 474,060 706,815
Operating Expenses 1,198,575 952,050
Loss from Operations 478,948 154,726
Other Income (Expenses) (13,985) (21,469)
Net Loss 492,933 176,995
The Company opened its first service concession in August of
1988, and, as of January 31, 1996, had expanded to 66 locations,
all of which are located in Southern California in a single
supermarket chain, Ralph's. During February of the current year,
the Company agreed with Ralph's to close concessions at eleven
locations and relocate ten of the fixtures to stores with higher
sales volume in neighborhoods with higher median income. As of
the date of this report, most of these locations had been
installed. The eleven closed locations were operating, at best, at
break even. Management believes that the ten new locations have
better prospects and will increase revenues on a per location basis
with a greater likelihood of profitability because of their
favorable locations. These closures had a direct impact on
revenues during the quarter because of (i) the reduced number of
locations generating revenues and (ii) the repurchase by the
Company from Ralph's of unsold coffee. These factors contributed
significantly to a reduction of revenues in the amount of $310,453
(20.63%) to $1,193,686 for the first six months of 1996 from
$1,504,139 during the first six months of 1995.
Costs of sales decreased $232,755 (32.93%) to $474,060 during
the first six months of 1996 from $706,815 during the first six
months of 1995, and also decreased as a percentage of revenues to
39.71% from 46.99%. The decrease in the total of these costs was
due primarily to the further decrease in the price per pound for
coffee during the first six months of 1996 which the Company paid,
as compared to the prices paid in the corresponding period of 1995,
which price decrease accounted almost entirely for the decrease of
these costs as a percentage of revenues between the two periods.
The decrease in the total of these costs was also due, in lesser
part, to the relocation within Ralph's discussed in the immediately
preceding paragraph.
Operating expenses during the first six months of 1996
increased $246,525 (25.89%) to $1,198,575 from $952,050 due
principally to an increase in general and administrative expenses of
$228,761 (24.31%) to $1,169,716 from $940,955. The increase in
general and administrative expenses was primarily the result of the
hiring of a new marketing executive, the finalization of the build
out of the warehouse and delivery systems by the Company that was
necessitated from the change in coffee supplier and the anticipated
expansion within Ralph's, as well as the additional labor and supply
expenses incurred in this regards, product development costs for new
product lines and the expenses incurred in the sale of debt
securities by the Company. Operating expenses were further increased
as a result of an increase in depreciation of $17,764.
The result of the above was a loss from operations of $492,933
in the first six months due principally to the relocation within
Ralph's discussed above, the build out of the warehouse and
delivery system to accommodate the change in coffee supplier and
anticipated new growth within Ralph's, the development of new
product lines, the hiring of marketing personnel and the sale of
debt securities.
Interest expense was substantially reduced during the first
six months of 1996 as a result of the conversion of approximately
$205,000 in debt securities during the last six months of 1995 and
in February of the period under discussion; thus, the net loss of
$492,933 was approximately equal to the loss from operations.
The Company generated negative cash flows from operations of
$73,589 during the first six months of 1996 due primarily to the
relocation within Ralph's, the build out of the warehouse and
delivery system discussed above, and the purchase of inventory.
This compared to a negative operating cash flow of $38,964 from
operations in the first six months of 1995. Cash was used outside
of operations to purchase property and equipment and repay the
Brothers debt. Cash was generated from the sale of the Bridge Loan
Notes and the conversion of outstanding debt, which, when combined
with the cash flows used in operations during the first quarter of
1996, resulted in a decrease in cash of $32,689 during the period,
as compared to an increase of $46,243 in cash during the comparable
period of 1995.
Liquidity and Capital Resources
The Company, since inception, has principally relied upon two
sources for its working capital for operations and expansion, (i)
cash flow generated from operations and (ii) the extension of
credit by Brothers in the forms of (a) trade account repayment
terms, (b) the advancement of fixture and delivery costs and (c)
the advancement of slotting fees to Ralph's on behalf of the
Company. In early 1995, the Company began a program to increase
cash flow from operations, the most significant result of which was
the replacement of Brothers with other suppliers. New suppliers
provide coffee to the Company at an average cost savings per pound
of $1.45, a decrease of approximately 33%. The Company expects
further revenue enhancements and other cost savings and expense
reductions to come from (i) additional employee training to improve
sales efforts at the service concessions, (ii) the conversion of
debt aggregating $117,970 in principal and accrued interest to
Common Stock on August 17, 1995, which resulted in an approximate
savings of $13,200 per year in interest, (iii) the termination on
July 31, 1995, of a consulting agreement with Fidiparex, S.A.,
which resulted in an approximate savings of $40,000 per year, (iv)
the conversion to Common Stock in February of this year of debt
evidenced by debentures aggregating $87,047 in principal and
accrued interest, which resulted in an approximate savings of
$7,830 per year in interest expense, and (v) the establishment of
new supply contracts for coffee accessory products. The Company
plans to further increase revenues through the closure of eleven
stores and the relocation of ten of the fixtures in these stores to
new locations, as discussed above in the third paragraph under this
item, and the expansion of concession stands in Ralph's.
These savings will be partially offset by (i) an increase over
a six month period in fees of $4,000 per month payable to an
individual to assist the Company in the upgrade of its accounting
and financial programs and the implementation of these programs,
(ii) a $15,000 increase in the annual salary of Mr. Marsik and
(iii) the employment of a new marketing executive, Mr. Vandenberg,
at an annual salary of $67,200.
Prior to August 25, 1995, the Company was obligated to
purchase its supply of gourmet coffee exclusively from Brothers,
the country's largest wholesale and retail supplier of gourmet
coffee. On that date, the Company entered into an agreement (the
"Supply Termination Agreement") with Brothers to supersede all
previous agreements between the parties. Under the terms of the
Supply Termination Agreement, the Company and Brothers terminated
the obligation of the Company to purchase its supply of coffee
exclusively from Brothers and agreed to the consolidation,
satisfaction and structured repayment of certain debt which had
been accrued by the Company in favor of Brothers during the term of
their relationship, which dated back to 1989. On the date of
execution, the Company further agreed to pay Brothers, from the
proceeds of a currently contemplated public offering, if
successful, approximately $740,000, as evidenced by two unsecured
promissory notes. Pursuant to the Supply Termination Agreement,
the Company and Brothers mutually released all claims, demands and
liabilities between them, with the exception of those obligations
specifically set forth in the agreement, as well as those accounts
payable which accrued after June 1, 1995. Included within the debt
released was $350,000 in slotting fees which Brothers had paid on
behalf of the Company to Ralph's. The debt remaining to be repaid
arose principally from the start-up and expansion of the Company
and consisted of (i) unpaid trade accounts accrued to April 1,
1993, and (ii) slotting fees paid by Brothers on behalf of the
Company to obtain space for the concessions of the Company in
Ralph's. Additionally, the Company acquired from Brothers under
this agreement all concession fixtures and equipment in those
stores installed prior to the date of the agreement, which were
valued by the parties at $295,000.
On November 22, 1995, the Company executed a promissory note
in the principal amount of $292,312.78, which evidenced accrued
accounts payable due Brothers after the execution and delivery of
the Supply Termination Agreement. The Company made its first
payment under this note on December 15, 1995, but Brothers
initiated suit on this note after this date in the Circuit Court
for the 15th Judicial District in and for Palm Beach County,
Florida. The Company and Brothers settled the matter without the
necessity of an answer to the complaint by the Company on January
25, 1996, by agreeing to the joint stipulation for the settlement
of all obligations between Brothers and the Company, including the
obligations under the Supply Termination Agreement and the note
discussed immediately above, an aggregate of $1,025,280 in
principal as of January 25,1996. Brothers originally agreed to
reduce this amount to $717,696 if paid by April 1, 1996, and if not
paid by that date, the $1,025,280 was to have been paid in 40 equal
monthly installments of $30,246 beginning on April 1, 1996, and
ending on July 1, 1999. Brothers subsequently extended the April
1, 1996, due date. Pursuant to the settlement agreement, the
Company paid Brothers $15,000 on January 25, February 17, and March
13, 1996, and $30,246 on April 1 and May 1, 1996, all of which
amounts were credited against the amount which is due Brothers,
whether paid by June 7, 1996, or later through monthly payments. In
consideration for the extension, the Company agreed to pay interest
at 10% per annum from April 1, 1996, on the balance then due, an
amount equal to $10,000, which amount of interest was paid along
with the $30,246 payment due on May 1, 1996.
Beginning in January, 1996, the Company sold, directly and
through an unaffiliated intermediary, $262,000 of promissory notes
(the "Bridge Loan Notes") to two unaffiliated third parties. The
Bridge Loan Notes bear interest at the rate of 12% per annum and
are due to be paid at the earlier of the close of the public
offering which the Company is currently contemplating. The Bridge
Loan Notes are secured by a second position in all tangible and
intangible property which the Company now owns and may subsequently
acquire. The first three months of interest on these notes was paid
in advance at each closing, as were the due diligence and/or
placement fees, the result of which was a net of $235,800 in loan
proceeds to the Company.
In conjunction with the sale of the Bridge Loan Notes, the
Company issued to the purchaser thereof warrants (the "Bridge Loan
Warrants") which allow the holders thereof to acquire during a
period of five years from the commencement of the public offering
which the Company is currently contemplating up to 78,600 units,
each consisting of four shares of Common Stock and four warrants at
a price of $6.50 per unit. When recorded in the financial
statements, the units are anticipated to be recorded at $786,000
and the difference between the $786,000 and the proceeds of
$510,900 will be recorded as a finance expense. The shares of
Common Stock and warrants underlying these units have been included
in the contemplated public offering for sale by the holders of the
Bridge Loan Warrants. The agreements which led to the issuance of
the Bridge Loan Warrants have customary anti-dilution protections
against such matters as reverse stock split, reclassifications and
reorganizations.
In addition, in May of 1996, the Company sold an additional
note for $40,000 (the "May Note"). The first three months of
interest on this note, the sum of $800, was paid in advance at the
closing of the sale. An affiliate of the holder of this note
subsequently became a consultant to the Company for $4,000 per
month during a six month term, as discussed in the third paragraph
of this item.
If the currently contemplated public offering by the Company is
not closed, the Company will (i) repay the Bridge Loan and May Notes
in full and (ii) at the option of the holders thereof, issue a
second warrant, in lieu of and on substantially similar terms as the
Bridge Loan Warrants, to purchase up to 135,000 shares of Common
Stock, which have been registered in the public offering, at a price
per share which will equal 65% of the average bid price for these
shares for the 20 trading days preceding the maturity date. If the
Bridge Loan and May Notes are not repaid from the proceeds of the
contemplated public offering, the holders thereof at their option
may either (i) call the Bridge Loan and May Notes and proceeds
against the collateral or (ii) surrender the Bridge Loan and May
Notes to the Company in exchange for 403,000 shares of Common Stock
which have also been registered with the public offering.
The Company raised approximately $233,750 in working capital
during the final month of 1994 from (i) a group of European
investors who purchased two year, unsecured, 9% interest bearing
notes in the principal amount of $123,750 which are presently
convertible into shares of Common Stock at a price per share of
$9.00 and (ii) parties then affiliated with a director, who
purchased one year, unsecured 11.5% interest bearing promissory
notes in the principal amount of $110,000, all of which were
converted on August 17, 1995, into 589,848 "restricted" shares of
Common Stock. In February of 1996, two European investors
converted $78,750 and $8,296.77 in principal and interest,
respectively, for a total of $87,047, into 43,524 shares of Common
Stock at a price of $2.00 per share.
Management expects that operations and the proceeds of the
proposed public offering discussed above will be sufficient to
provide operating capital for expansion. The lower cost of coffee
derived from new supply sources is anticipated to improve operating
cash flow as well as to pay any remaining indebtedness following
the close of the public offering. Additional coffee concessions
are self-funding.
PART II-OTHER INFORMATION
Item 1. Legal Information.
Brothers initiated suit against the Company in December, 1995,
in the Circuit Court for the 15th Judicial District in and for Palm
Beach County, Florida. The suit claimed that the Company had
failed to make payments under a promissory note for accrued
payables due Brothers after the execution and delivery of the
Supply Termination Agreement. The Company was prepared to defend
the suit vigorously, as the first and only payment then due had
been made. The Company and Brothers settled the matter on January
25, 1996, without the necessity of the Company filing an answer, by
agreeing to the joint stipulation for the settlement of all
obligations between Brothers and the Company, including the
obligations under the Supply Termination Agreement and the note
discussed immediately above, an aggregate of $1,025,280 in
principal as of January 25, 1996. Under the terms of this
settlement, the amount which the Company was required to pay
Brothers by April 1, 1996, was $717,696, which would have resulted
in a release to the Company of an additional $307,584 in debt and
which would have had an equal impact on shareholders' equity. As
originally agreed, if this payment was not made by April 1, 1996,
the total amount due Brothers would increase to $1,025,280, to be
repaid, with interest at the rate of 10% per annum, in 40 equal
monthly installments of $30,246 beginning on April 1, 1996, and
ending on July 1, 1999. The obligation is unsecured. The Company
paid Brothers $15,000 on January 25, February 17, and March 13,
1996, and $30,246 on April 1 and May 1, 1996, all of which amounts
were credited against the amount which is due Brothers. Brothers
subsequently agreed to allow the Company to make this lump sum
payment, provided that all of the other terms of the settlement are
adhered to. If the Company does not repay this obligation, and does
not make the monthly payments, a judgment will be entered against it
in the amount of $1,025,280, less the good faith and other payments
to the date of judgment, plus interest and the costs and expenses of
entering the judgment and collecting on it. Brothers would then be
entitled to exercise its rights as a judgment creditor and attach
and sell all of the assets of the Company, subject to the rights of
existing lien holders.
In December of 1995, counsel for Robert Matossian and
Fidiparex, S.A., demanded the recision of and subsequent conversion
into Common Stock of notes which the Company had entered into with
certain affiliates of one of its directors, Mr. Pierce, on December
30, 1994, alleging, among other claims, breach of fiduciary duty to
the Company by Messrs. Marsik and Pierce. The notes were converted
into Common Stock on August 17, 1995. Mr. Matossian was a
consultant to the Company from June 1, 1993, until July 31, 1995,
when the consulting agreement was terminated by the Company. Mr.
Matossian was also a director of the Company with Messrs. Pierce
and Marsik during the time that the notes were entered into and the
conversion of the notes effected. The Company and Messrs. Marsik
and Pierce are prepared to vigorously defend their actions, and
have corresponded such to Mr. Matossian and Fidiparex, S.A.
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. Exhibits and Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the small business issuer has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
AMERICA'S COFFEE CUP, INC.
By: /s/ Robert W. Marsik
Robert W. Marsik
Chief Executive, Financial
and Accounting Officer
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 38
<SECURITIES> 0
<RECEIVABLES> 131,377
<ALLOWANCES> 0
<INVENTORY> 66,282
<CURRENT-ASSETS> 232,998
<PP&E> 439,112
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,212,897
<CURRENT-LIABILITIES> 1,680,266
<BONDS> 0
0
0
<COMMON> (925,029)
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,212,897
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<TOTAL-REVENUES> 1,193,686
<CGS> 0
<TOTAL-COSTS> 1,198,575
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,800
<INCOME-PRETAX> (492,933)
<INCOME-TAX> 0
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (492,933)
<EPS-PRIMARY> (.57)
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