FORM 10-Q SB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 33-20897-D
HELIX BIOMEDIX, INC.
______________________________________________________
(Exact name of registrant as specified in its charter)
Colorado 84-1080717
_______________________________ __________________________________
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2151 E. Lakeshore Drive, Baton Rouge, LA 70808
___________________________________________________________________________
(Address of principal executive offices) (Zip Code)
(504)-387-1112
______________________________________________________________________________
(Registrant's telephone number, including area code)
Not Applicable
______________________________________________________________________________
(Former name, former address and former fiscal year, if changed since last
report)
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
___ ___
Indicate the number of shares outstanding of each of the issuer's classes
of stock, as of the latest practicable date.
Shares
Outstanding
Class of Securities at November 1, 1998
___________________ ___________________
Common Stock, no par value 1,616,200
DOCUMENTS INCORPORATED BY REFERENCE: YES, SEE INDEX ON PAGE 7.
-------------------------
EXHIBITS: Indexed at page 7.
-------------------
PAGES: This form 10-QSB consists of 8 pages, plus pages F-1 through F-6.
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Information
Please see Pages F-1 through F-6.
The following financial statements are filed as part of the Report:
Accountants' Disclaimer of Opinion ....................F-1
Balance Sheet .........................................F-2
Statements of Loss and Accumulated Deficit ............F-3
Statements of Cash Flows ..............................F-4
Notes to Financial Statements ......................F-5 - F-6
These financial statements should be read in conjunction with the audited
financial statements at December 31, 1997. Those statements are
incorporated herein by reference as part of Exhibit 99-a.
ITEM 2. Management's Discussion and Analysis or Plan of Operation
This item incorporates by reference Item 1-Part I and Item 6-Part II of
Registrant's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1997. (Exhibit No. 99-a). That Report was dated April 15, 1998, and,
except for the financial statements, the information therein is current and
fully applicable to this Report. This item also incorporates by reference
Item 2-Part I of Registrant's Quarterly Report on Form 10-QSB for the period
ended June 31, 1998 (Exhibit No. 99-b).
(a) Plan of Operation
The Company's general plan of operation is outlined in Item 1 of Part I
of Exhibit No. 99-a. The Company has maintained operations since 1990
primarily with limited capital provided by loans from key Shareholders. A
major strategic and financial corporate restructuring initiative has been
undertaken since 1993. The details of this program are set forth in Item 1 of
Part I, Exhibit No. 99-a. The Company believes it is now prepared to
implement a Business Plan providing for both near term and long term product
introductions. At the present time the Company is actively seeking additional
capital through private sector financing. Such financing will be used to
bring the Company to continuing economic viability from commercially
profitable operations. This plan contemplates revenues from licensing and
strategic alliances for long term development of prescription pharmaceutical
products as well as introduction within the near term of products subject to
less regulatory restraints. It is expected by management that achievement of
projected progress milestones will establish the Company as a financially
viable biotechnology firm with substantial public investor support.
Company's Proprietary Position and Competition
The Company believes it is establishing a strong patent position (both
U.S. and foreign) with respect to the compositions of matter and use of its
Cytoporin peptides. There is increasing interest in the biopharmaceutical
2
<PAGE>
industry in the potential for lytic peptides as therapeutic drug agents. To
the best of the Company's knowledge there are at least four other U.S.
companies actively working in the field. They have greater financial
resources available to them. However, Registrant believes its early dates on
patents and patent applications are a major competitive asset, as is the
proprietary technical and product know-how which it has gained over a period
of nine years. The Company's five year Business Plan embraces a concept of
long term strategic partnering and introduction of near term proprietary
products to niche markets. Company management believes the Plan takes full
cognizance of the emerging presence of well financed competitors in the
general field of endeavor.
Critical Developments in the Company's Relationship with Louisiana State
University ("LSU")
From the outset of its Agreement of Settlement with LSU in 1993, the
Company found its position as a patent licensee of the University to be one
without proper cooperative support. In 1996 and early 1997 the Company
formally notified LSU officials of its concerns about the deteriorating
relationship. During the first quarter of 1997 continuing disputes between
the Registrant and LSU resulted in each party's placing the other in default
of the agreements between the two.
During the second quarter of 1997 LSU formally terminated the Company's
license of certain LSU patents relating to the Cytoporin technology. This
termination of license and resolution of the alleged defaults of the parties
were all subject to arbitration. The arbitration procedures were invoked, and
the Company notified LSU of Registrant's intent to seek further relief in an
appropriate court of law. The actions of LSU in summarily terminating the
license were unwarranted in the opinion of management and corporate counsel.
Furthermore, throughout 1997 Registrant's ongoing initiatives to raise capital
and to confect strategic alliances were effectively in a state of hiatus until
the conflict with LSU was settled or otherwise resolved. Management and
corporate counsel for the Company emphasized to LSU that the University was
exposing itself to serious liability for damages which would continue to
increase by the month.
In late 1997 the Company and LSU made substantial progress in good faith
negotiations to settle all disputes. Continued progress in negotiations by
year end prompted the parties to place the arbitration proceedings in abeyance
and to withhold contemplated legal actions pending the outcome of the
negotiations.
In March 1998 the Company and LSU reached final agreement on a "Novation
of Prior Agreements". Arbitration procedures were terminated by the
parties. In consideration of the Company's dismissing and waiving its causes
of action against LSU, LSU assigned to the Company all right, title and
interest to all of the U.S. and foreign patents and patent applications
previously under license to the Company.
(b) Management's Discussion and Analysis
During the two fiscal years ending December 31, 1993 and December 31,
1994, while the Company was instituting the restructuring program discussed in
this report, the cost of operations was held to a minimum. Continuing through
1995, in the absence of revenues operating losses were held to approximately
$47,000 per quarter, of which approximately $14,000 per quarter represents
interest accrual rolled into the principal of loans from shareholders.
Administrative costs were controlled at a low level by the fact that only the
Company's President was a full time employee. During this period the Company
substantially enhanced its patent prosecution with an investment of nearly
$11,000 per quarter. In-house research and development was placed in a
holding pattern, with no funds of the Company expended in this area. However,
evaluation and product development with the Company's Cytoporin compounds has
continued on an accelerated basis at Therapeutic Peptides, Inc.
3
<PAGE>
During 1996 operations continued to be funded by loans from shareholders
in the amount of approximately $236,000. At December 31, 1996 the Company's
balance sheet was substantially improved by the conversion of approximately
$111,000 in debt into common stock.
In 1996 operating losses increased to an average of approximately $82,500
per quarter, of which approximately $16,500 per quarter represented interest
accrual on loans from major shareholders. The main source of increase in
operating expense in 1996 over the prior year came from stepped up R & D
expense.
Because of the hiatus created in 1997 by the revocation of the Company's
license by LSU, operating expenses and R & D expenditures were substantially
curtailed. Operating losses averaged approximately $57,100 per quarter, of
which amount $19,900 was for accrual of interest. Operations were funded by
loans from key shareholders. On December 31, 1997 the Company's balance sheet
was substantially improved by debt reduction through the conversion of
$772,075 in promissory notes payable to key shareholders into common stock of
the Company. This was indicative of the continuing confidence of management
and key shareholders in the prospects for the Company's future.
In 1996 and 1997 full implementation of the alliance between the Company
and TPI through the Cooperative Endeavor Agreement confected in November 1995
strengthened the Company's capability to expand its patent estate and bring
the Cytoporin technology to commercial fruition. During this period the
Company greatly accelerated the development of its technology platform. Over
the last two years the development and testing of more active and selective
peptides produced data which has been particularly valuable in the Company's
dialogue with potential strategic alliances in the pharmaceutical and
biotechnology fields.
In 1998 the Company expects to complete its renewed initiative to raise
capital through private financing, pursuant to successful resolution of the
disputes with LSU. In its first phase of financing, the Company is seeking to
raise $600,000 as bridge capital to fund operations for a period of twelve to
sixteen months at the level projected in the Business Plan. Management
believes it is now critically important to increase spending in order to (i)
step up further development of the patent estate, (ii) fund the vital product
development work at TPI, (iii) aggressively proceed with seeking strategic
alliances, (iv) maintain public reporting of Company finances and operations,
and to (v) conclude successfully an effort to bring further equity capital
funding to the Company. Management believes after the bridge capital funding
that an additional $2.0 million added to the Company's equity capital base
will permit the Company to emerge profitably from its development stage during
the next two to three years. Success in its efforts to consummate the planned
private capital financing steps is now essential to the Company's completion
of the restructuring program which it has undertaken.
During the last quarter of 1995 operations were highlighted by two
important technical developments. These were reported in two News Releases
which were both nationally and internationally promulgated through the media
and Business Wire services. Copies of these releases were included as
exhibits in Registrant's 1995 10-KSB Report, which is incorporated by
reference herein as Exhibit 13-j. In 1996 and 1997 these News Releases have
resulted in inquiries from over 20 international pharmaceutical and
biotechnology companies. The inquiries about the Cytoporin technology have
already developed for the Company on-going dialogue with several potential
candidates for strategic alliances.
As disclosed in the News Releases, Management believes the Company's
Cytoporin compounds may play a vital role in addressing the current health
care crisis related to rapid and continuing emergence of antibiotic resistant
bacteria and other pathogens. Also, the announced issuance of two important
European patents, now owned by the Company, will materially strengthen the
Company's competitive position and enhance the Company's posture in its
initiatives to acquire financing and to establish alliances in the
biopharmaceutical industry.
4
<PAGE>
The Company's common stock, which is traded OTC under the symbol "HXBM"
on the NASDAQ bulletin board, continues to trade only sporadically and in
small transactions. Management believes this will continue to be the case
until the Company completes its first step of bridge financing and thereby
permit expanded operations under a sound and viable Business Plan. As a step
precedent to resumption of active public trading of the common stock, in late
1995 the Company made application for and obtained published coverage of the
Company in Standard and Poor's Corporation Records. This coverage continues
on a current basis.
Pending completion of ongoing financing initiatives, current operations
of the Company continue to be financed by loans from and/or investments by
several key shareholders.
5
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 3, 1995 the Company entered into a Loan Agreement with
International Biochemicals Group, Inc. ("IBG") whereby IBG advanced $25,000 to
the Company and made a commitment for further lending. On November 3, 1995
the Company issued to IBG a promissory note for $25,000 due and payable May 3,
1996. The Company has not made payment on the note and advised IBG of its
breach of various provisions of the lending agreement. From time to time the
due date of the note was extended, and the Company agreed to pay the note in
full promptly following resolution of its disputes with LSU, in consideration
of which the Company had offered to withdraw its allegations of IBG's default
on the Loan Agreement. The protracted nature of the disputes between LSU and
the Company and the termination of the Company's license by LSU prompted IBG
to take legal action to collect on the above referenced note.
On September 16, 1997 IBG filed a petition in the Nineteenth Judicial District
Court of Louisiana seeking judgment on the note. Corporate Counsel for the
Company timely responded to the petition and filed a reconventional demand in
support of Registrant's allegation of IBG's breach of the Loan Agreement.
On August 19, 1998 the Court granted the judgment to Interbio for payment of
principal and interest due on the note along with legal costs. The judgment
is on appeal and the Company continues the litigation to recover damages from
Interbio on the reconventional demand still pending in the suit. Included in
the accompanying financial statements is $25,000, representing principal
amount of the IBG note, plus interest of $7,454. In the event the Company's
appeal is unsuccessful, management estimates the Company will be liable for
an additional $15,080 in interest and legal fees pursuant to the
aforementioned judgment. In its reconventional demand the Company is
seeking to recover damages in excess of $1,000,000 from Interbio for its
alleged breaches of contract.
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
6
<PAGE>
ITEM 5. OTHER INFORMATION
As set forth in Part I - Item 2 herein, in March 1998 LSU assigned to the
Company all right, title and interest to all of the U.S. and foreign patents
and patent applications previously under license to the Company. The named
assignee was Helix BioMedix, Inc. of Louisiana, the wholly owned subsidiary of
Registrant. On August 7, 1998, by an act of conveyance, Registrant transferred
to Helix BioMedix of Louisiana any and all rights it held to other
intellectual property relating to the lytic peptide technology. Registrant
had previously secured its convertible, demand notes payable to related
parties by a pledge of a first security interest in all of its technology and
intellectual property rights. Therefore, pursuant to consolidation of such
rights to the technology in the subsidiary, on August 7, 1998 the Company
agreed to secure its "Demand Notes Payable-Related Parties" with a pledge of
all the capital stock of its wholly owned subsidiary, Helix BioMedix of
Louisiana. As seen on page F-2 of the financial statements herein, the
aggregate amount of these secured notes was $379,237 as of September 30,
1998.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No. Description and Location
- ----------- ---------------------------------
99-a Registrant's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1997
Incorporated by reference to Form 10-KSB for 1997 filed by
Registrant with the SEC (File No. 33-20897-D) on
April 15, 1998.
99-b Registrant's Quarterly Report on Form 10-QSB for the period
ended June 30, 1998
Incorporated by reference to Form 10-QSB for the period
ended March 31, 1998 and filed by Registrant with the SEC
(File No. 33-20897-D) on August 14, 1998.
(b) Reports on Form 8-K--None
7
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
HELIX BIOMEDIX, INC. DATE: November 13, 1998
BY:/s/ Keith P. Lanneau
Keith P. Lanneau, President, Principal Financial and Accounting Officer.
8
<PAGE>
HELIX BIOMEDIX, INC.
(A Development Stage Company)
September 30, 1998
(Unaudited)
<PAGE>
CONTENTS
Page
ACCOUNTANTS' REPORT F-1
BALANCE SHEET F-2
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT F-3
STATEMENTS OF CASH FLOWS F-4
NOTES TO FINANCIAL STATEMENTS F-5 - F-6
<PAGE>
The Board of Directors
Helix BioMedix, Inc.
The accompanying balance sheet of Helix BioMedix, Inc. (a
development stage company) as of September 30, 1998 and the
related statements of loss and accumulated deficit and
cash flows for the period then ended were not audited by
us, and accordingly, we do not express an opinion on them.
Denver, Colorado
November 12, 1998
COMISKEY & COMPANY
PROFESSIONAL CORPORATION
F-1
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
BALANCE SHEET
September 30, 1998
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 142
Note receivable - TPI 25,000
----------
Total current assets 25,142
OTHER ASSETS
Accrued interest receivable 4,904
Antimicrobial technology (net) 124,057
Patents pending and approved (net) 346,077
----------
475,038
----------
TOTAL ASSETS $ 500,180
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 12,397
Accounts payable - related party 26,534
Notes payable 40,000
Notes payable - related parties 379,237
Accrued interest payable 15,854
----------
Total current liabilities 474,022
LONG-TERM LIABILITIES
Notes payable to shareholders 26,530
STOCKHOLDERS' EQUITY
Preferred stock, no par value, 400,000 shares
authorized, no shares issued and outstanding -
Common stock, no par value, 2,000,000 shares
authorized, 1,6166,200 shares issued and outstanding 2,800,400
Additional paid-in-capital 137,400
Deficit accumulated during the
development stage (2,938,172)
----------
(372)
----------
Total liabilities and stockholders' equity $ 500,180
==========
The accompanying notes are an integral part of the financial statement
F-2
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
STATEMENTS OF LOSS AND ACCUMULATED DEFICIT
For the period from inception (November 7, 1988) to September 30, 1998
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C> <C>
Inception to For the three months ended For the nine months ended
September 30, September 30, September 30,
1998 1998 1997 1998 1997
------------ --------- --------- ---------- --------
REVENUE $ 19,500 $ - $ - $ - $ 10,000
EXPENSES
Accounting & legal 120,524 817 585 4,585 3,758
Advertising 13,488 - - - -
Amortization 124,349 4,895 4,373 14,685 13,119
Compensation cost 137,400 - - - -
Consulting fees 513,748 8,500 8,950 26,795 25,450
Office expense 166,888 5,004 6,035 15,573 16,492
Other general &
administrative costs 12,672 311 240 1,385 668
Research & development 1,468,319 12,000 12,000 36,000 58,500
------------ -------- -------- ---------- --------
TOTAL OPERATING
EXPENSES 2,557,388 31,527 32,183 99,023 117,987
------------ -------- -------- ---------- --------
NET LOSS FROM
OPERATIONS (2,537,888) (31,527) (32,183) (99,023) (107,987)
OTHER (INCOME) EXPENSE
Gain on settlement
of lawsuit (48,574) - - - -
Interest income (4,904) (438) (438) (1,314) (1,314)
Interest expense 453,762 8,566 20,277 23,954 58,350
------------ -------- ------- --------- -------
400,284 8,128 19,839 22,640 57,036
NET LOSS $ (2,938,172) $ (39,655) $ (52,022) $ (121,663) $(165,023)
============ ========= ========== ========== =========
NET LOSS PER SHARE ($2.98) ($0.02) ($0.04) ($0.08) ($0.13)
============ ========= ========== ========== =========
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 985,460 1,613,700 1,270,620 1,522,859 1,270,620
============ ========= ========== ========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
For the period from inception (November 7, 1988) to September 30, 1998
(Unaudited)
<TABLE>
<S> <C> <C> <C>
Inception to For the nine months ended
September 30, September 30,
1998 1998 1997
------------ ----------- ----------
NET CASH USED IN OPERATIONS $ (1,947,187) $ (74,249) $ (15,441)
CASH FLOWS FROM INVESTING ACTIVITIES
Patents (231,473) (29,246) (7,494)
------------ ----------- ----------
NET CASH USED IN INVESTING ACTIVITIES (231,473) (29,246) (7,494)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of stock for debt 837,719 4,900 -
Issuance of stock for cash 62,000 10,000 -
Note receivable (25,000) - -
Cash received in reverse acquisition 634,497 - -
Notes payable 73,924 1,530 37,100
Related party notes payable (net) 595,662 56,106 (11,000)
------------ ----------- ----------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 2,178,802 102,536 26,100
------------ ----------- ----------
NET INCREASE (DECREASE) IN CASH 142 (959) 3,165
CASH, BEGINNING OF PERIOD - 1,101 1,369
------------ ----------- ----------
CASH, END OF PERIOD $ 142 $ 142 $ 4,534
============ =========== ==========
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
AND OTHER CASH INFORMATION
Stock issued to acquire patents 66,486 - -
Debt issued to acquire technology 200,000 - -
Bridge loans outstanding at acquisition 200,000 - -
Patent costs included in accounts payable 99,859 25,739 7,494
Accounts payable converted to notes 700,559 - 22,953
Accrued interest rolled into note 368,602 21,852 56,248
Notes converted to equity 1,639,548 - -
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
1. Management's representation of interim financial information. The
accompanying financial statements have been prepared by Helix BioMedix,
Inc. without audit pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted as allowed by such rules and regulations, and management believes
that the disclosures are adequate to make the information presented
not misleading. These financial statements include all of the adjustments
which, in the opinion of management, are necessary to a fair
presentation of financial position and results of operations. All
such adjustments are of a normal and recurring nature. These
financial statements should be read in conjunction with the audited
financial statements at December 31, 1997.
2. Changes in Classification
Classification changes in the 1997 financial statement cash flow data were
made in order to conform to the current year presentation.
3. Legal Proceedings
On November 3, 1995 the Company entered into a Loan Agreement with
International Biochemicals Group, Inc. ("IBG") whereby IBG advanced
$25,000 to the Company and made a commitment for further lending. On
November 3, 1995 the Company issued to IBG a promissory note for $25,000
due and payable May 3, 1996. The Company has not made payment on the note
and advised IBG of its breach of various provisions of the lending
agreement. From time to time the due date of the note was extended, and
the Company agreed to pay the note in full promptly following resolution
of its disputes with LSU, in consideration of which the Company had offered
to withdraw its allegations of IBG's default on the Loan Agreement. The
protracted nature of the disputes between LSU and the Company and the
termination of the Company's license by LSU prompted IBG to take legal
action to collect on the above referenced note.
On September 16, 1997 IBG filed a petition in the Nineteenth Judicial
District Court of Louisiana seeking judgment on the note. Corporate
Counsel for the Company timely responded to the petition and filed a
reconventional demand in support of Registrant's allegation of IBG's
breach of the Loan Agreement. On August 19, 1998 the Court granted the
judgment to IBG for payment of principal and interest due on the
note along with legal costs. The judgment is on appeal and the Company
continues the litigation to recover damages from IBG on the reconventional
demand still pending in the suit. Included in the accompanying financial
statements is $25,000, representing principal amount of the IBG note, plus
interest of $7,454. In the event the Company's appeal is unsuccessful,
management estimates the Company will be liable for an additional $15,080
in interest and legal fees pursuant to the aforementioned judgment. In
its reconventional demand the Company is seeking to recover damages in
excess of $1,000,000 from IBG for its alleged breaches of contract.
F-5
<PAGE>
Helix BioMedix, Inc.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
September 30, 1998
(Unaudited)
4. Changes in Securities
On June 22, 1998 Registrant's Board of Directors, in accordance with
Section 7-106-102 of the Colorado Corporation Code, duly adopted an
Amendment to the Corporation's Articles of Incorporation by adding a
new Article XIV which creates a "Series A Convertible Preferred
Stock". The amendment designates the preferences, powers, and
special rights of this series of the 400,000 shares of presently
authorized No Par Value Preferred Stock in the stated capital of the
corporation. No shares of such Series A Preferred Stock have been
issued; however, management believes such shares may be offered by
the Company in connection with its on going initiatives to attract
substantial private financing.
The Series A Preferred Stock, which is convertible into common stock
on a share for share basis, will have liquidation preference over the
no par value common stock of Registrant and will have preferential
voting rights. The Series A Preferred Stock will have three (3)
votes per share, whereas each share of common stock is entitled to
one (1) vote per share on all matters to come before both classes of
shareholders. The Company has no plans for registration of the
shares of Series A Preferred Stock which may be issued in connection
with the contemplated private financing initiatives.
F-6
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENTS OF LOSS AND ACCUMULATED DEFICIT AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH 10QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 142
<SECURITIES> 0
<RECEIVABLES> 25000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 25142
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 500180
<CURRENT-LIABILITIES> 474022
<BONDS> 26530
0
0
<COMMON> 2800400
<OTHER-SE> (2800772)
<TOTAL-LIABILITY-AND-EQUITY> 500180
<SALES> 0
<TOTAL-REVENUES> 438
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 31527
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8566
<INCOME-PRETAX> (39655)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (39655)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
