<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
-----------
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended February 29, 2000 Commission File No. 33-23430-D
---------------
NETCOMMERCE, INC.
(Formerly Virtual Enterprises, Inc.)
-------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 84-1091271
- ------------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
15280 Addison Road, Suite 250, Addison, Texas 75001
------------------------------------------------- ----------------------
(Address of principal executive offices) (Zip Code)
(972) 503-8984
-----------------------------------------------------------
(Registrant's telephone number, including area code)
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 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____
-----
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of February 29, 2000, there were 18,996,385 shares of the Registrant's $.01
par value common stock issued and outstanding. There were also outstanding
warrants to purchase up to 668,014 shares of the Registrant's common stock.
<PAGE>
NETCOMMERCE, INC.
INDEX
<TABLE>
<CAPTION>
Page
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PART I
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<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheet - February 29, 2000............................................. 1
Consolidated Statements of Operations - Nine Months and Three Months Ended
February 29, 2000 and February 28, 1999.................................................. 2
Consolidated Statements of Stockholders' Equity -
Nine Months Ended February 29, 2000..................................................... 3
Consolidated Statements of Cash Flows - Nine Months Ended
February 29, 2000 and February 28, 1999.................................................. 4
Notes to Consolidated Financial Statements................................................. 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............................................. 8
PART II
-------
Item 1. Legal Proceedings.......................................................................... 10
Item 2. Changes In Securities...................................................................... 10
Item 3. Defaults Upon Senior Securities............................................................ 10
Item 4. Submission of Matters to a Vote of Security Holders........................................ 10
Item 5. Other Information.......................................................................... 10
Item 6. Exhibits and Reports on Form 8-K........................................................... 10
</TABLE>
1
<PAGE>
NetCommerce, Inc.
(Formerly, Virtual Enterprises, Inc.)
Consolidated Balance Sheet
February 29, 2000
ASSETS
Cash $ 150,982
Accounts receivable 76,106
Other current assets 156,870
---------------
Total current assets 383,958
Property and equipment, net of accumulated
depreciation of $194,080 267,629
Goodwill, net of accumulated amortization
of $203,284 779,781
Client lists, net of accumulated amortization
of $80,535 172,465
Other assets 39,460
---------------
Total assets $ 1,643,293
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 141,948
Accrued liabilities 178,171
Deferred revenue 47,019
Notes payable 539,532
---------------
Total current liabilities 906,676
Notes payable to officers 287,133
---------------
Total liabilities 1,193,809
---------------
Stockholders' equity:
Common stock, par value $0.01; 75,000,000 shares
authorized, 18,996,385 shares issued and outstanding
Additional paid in capital 189,964
Accumulated deficit 3,970,518
(3,710,998)
---------------
Total stockholders' equity 449,484
---------------
Total liabilities and stockholders' equity $ 1,643,293
===============
See accompanying notes to consolidated financial statements.
1
<PAGE>
NetCommerce, Inc.
(Formerly, Virtual Enterprises, Inc.)
Consolidated Statements of Operations
For The Nine Months and Three Months Ended February 29, 2000 and February 28,
1999
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------------------- ------------------------------
2000 1999 2000 1999
--------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Net revenues $ 307,884 $ 114,840 $ 707,503 $ 229,679
Expenses:
Salaries and wages 124,161 45,266 259,961 117,692
Consulting fees and commissions 188,699 172,967 635,777 449,714
Common stock issued to employees for
services rendered - 58,951 - 153,273
Other operating expenses 419,361 182,948 978,103 475,662
------------- ----------- ----------- -----------
Total expenses 732,221 460,132 1,873,841 1,196,341
------------- ----------- ----------- -----------
Operating loss (424,337) (345,292) (1,166,338) (966,662)
Interest expense 197,985 29,747 437,197 77,341
Other income (17) (216) (17) (560)
------------- ----------- ----------- -----------
Loss before income taxes (622,305) (374,823) (1,603,518) (1,043,442)
Income taxes - - 1,600 -
------------- ----------- ----------- -----------
Net loss $ (622,305) $ (374,823) $(1,605,118) $(1,043,442)
============= =========== =========== ===========
Basic and diluted net loss per share $ (0.30) $ (0.39) $ (0.09) $ (1.45)
============= =========== =========== ===========
Basic and diluted weighted average shares 18,715,033 950,378 17,120,329 720,394
============= =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
NetCommerce, Inc.
(Formerly, Virtual Enterprises, Inc.)
Consolidated Statements of Stockholders' Equity
For the Nine Months Ended February 29, 2000
<TABLE>
<CAPTION>
Common Stock Additional
-----------------------
Paid-In Accumulated
Shares Amount Capital Deficit Total
----------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balances, May 31, 1999 15,919,372 $159,194 $2,486,345 $(2,105,880) $ 539,659
Shares issued in connection with
loan funding 300,000 3,000 297,000 - 300,000
Shares issued for acquisition 50,000 500 111,063 - 111,563
Shares issued in settlement of
consulting contracts 565,000 5,650 254,350 - 260,000
Shares issued in settlement of
debt restricted 85,900 859 109,141 - 110,000
Shares issued in private
placement 2,076,113 20,761 712,619 - 733,380
Net loss for period - - - (1,605,118) (1,605,118)
---------- -------- ---------- ----------- -----------
Balances for February 29, 2000 18,996,385 $189,964 $3,970,518 $(3,710,998) $ 449,484
========== ======== ========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
NetCommerce, Inc.
(Formerly, Virtual Enterprises, Inc.)
Consolidated Statements of Cash Flows
For The Nine Months Ended February 29, 2000 and February 28, 1999
<TABLE>
<CAPTION>
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(1,605,118) $(1,043,442)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation expense 87,506 67,703
Amortization expense 121,917 117,747
Issuance of common stock for services rendered by employees - 153,273
Issuance of common stock for settlement of debt 110,000 -
Amortization of debt issue costs 250,000 -
Change in operating assets and liabilities:
Accounts receivable (76,106) (9,350)
Prepaids and other current assets (106,870) -
Accounts payable 66,515 35,034
Accrued liabilities (186,601) 165,150
Deferred revenues (22,586) 10,666
----------- -----------
Net cash used in operating activities (988,141) (503,219)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (104,021) (30,000)
Other assets (29,768) -
----------- -----------
Net cash used in investing activities (133,789) (30,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the issuance of notes payable 539,532 -
Proceeds from private placement of common stock 733,380 -
Proceeds from investor contributions - 259,793
Issuance of notes payable to officers - 31,232
Proceeds from issuance for preferred stock - 252,315
----------- -----------
Net cash provided by financing activities
1,272,912 544,340
----------- -----------
Net increase in cash 150,982 11,121
Cash at beginning of period - -
----------- -----------
Cash at end of period $ 150,982 $ 11,121
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
NetCommerce, Inc.
(Formerly, Virtual Enterprises, Inc.)
Notes to Consolidated Financial Statements
Note 1 - Organization and History
On August 31, 1999, Net Commerce, Inc. ("Net Commerce" or the "Company")
received notice of filing and acceptance by the Nevada Secretary of State of its
restated and amended Articles of Incorporation. In the process, the name of the
Company was changed from Virtual Enterprises, Inc.("VTUE") to Net Commerce to
better reflect its new corporate direction.
On May 5, 1999, Net Commerce acquired the assets and assumed certain liabilities
of MetroplexWeb, Inc. ("Metroplex") for 10,000,000 shares of common stock,
valued at $3,000,000. Metroplex, a Texas corporation was formed on September
12, 1996. Metroplex is engaged primarily in the development, design, hosting
and support of Internet web pages and e-commerce applications. Metroplex also
creates, designs and administers Internet malls and city directories, where
users can search for products and services in their geographical area known as
"virtual cities." Metroplex's operations are primarily located in Dallas/Forth
Worth, Texas and are expanding into other metropolitan cities. The acquisition
of Metroplex is accounted for as a reverse merger as if Metroplex was
recapitalized by Net Commerce.
On June 30, 1998, Metroplex entered into an asset purchase agreement with
InteleSell, Inc. ("InteleSell"). In connection therewith, Metroplex issued
common stock and notes aggregating $1,335,142 to acquire these assets. The
acquisition was accounted for as a purchase. InteleSell develops, designs and
hosts Internet web pages.
Recent Developments
Consistent with its operating strategy, on July 23, 1999, the Company entered
into a Memorandum of Understanding with Anyuser.Net ("Anyuser"), South Korean
corporation, of Seoul, Korea, whereby the Company intends to invest $3 million
into Anyuser to acquire approximately 47% of the total issued and outstanding
common stock of Anyuser. Under the agreement, Anyuser will provide hardware and
market video Internet services in the Asian market and the Company will obtain
exclusive licensing for Anyuser's products including the exclusive right to
market the Web Video Phone and related services in the North and South American
marketplace. Anyuser will license and market the Company's products in the Asian
market, including the Metroplex city guides, web design, web hosting and e-
commerce products. On February 21, 2000, the Company transferred all the rights
to Anyuser to NuVen Capital Limited Partnership for 57,143 shares of
NetHoldings.com Inc.'s common stock. The shares received have been recorded in
prepaids and other current assets on the accompanying balance sheet and will be
accounted for as marketable securities.
On August 2, 1999, the Company formed InterCom, Inc., a Nevada corporation
("InterCom") as a wholly owned subsidiary to conduct all of the Company's
planned ventures in the telecommunications arena. To date, no operations have
commenced in InterCom.
On February 15, 2000, the Company acquired all the assets of CurrentMedia LLC
("CurrentMedia") for $10,000 cash and 50,000 shares of common stock, fairly
valued at $111,563. The acquisition was accounted for under the purchase method
with the excess of cost over the fair value of the net assets acquired of
$100,923 allocated to goodwill since CurrentMedia had no significant net assets.
CurrentMedia is located in Park City, Utah, and develops, designs and hosts
Internet web pages. The Company believes that the acquisition is the first step
in expanding their operations throughout the United States. The acquisition is
not material to the Company's operations.
On March 17, 2000, the Company acquired all the issued and outstanding shares of
capital stock of Netcom ISP, Inc. ("Netcom") for 100,000 shares of restricted
common stock valued at $144,960. The acquisition was accounted for under the
purchase method with the excess of cost over the fair value of assets acquired
of approximately $120,000
5
<PAGE>
NetCommerce, Inc.
(Formerly, Virtual Enterprises, Inc.)
Notes to Consolidated Financial Statements
allocated to goodwill. Netcom provides connectivity and bandwidth services to
small and medium sized businesses.
On April 10, 2000, the Company acquired a 51% interest in Tectonic Data, L.L.C.
("Tectonic"), a provider of products and services for video/audio media storage
and streaming. In connection with the agreement, the Company issued 50,000
shares of common stock, and will issue 50,000 on or before August 6, 2000, and
50,000 on or before March 6, 2001. The Company believes that through the
acquisition of Tectonic it can improve its website design, development and
hosting services.
Note 2 - Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying consolidated financial statements at February 29, 2000, include
the accounts of NEET, Metroplex and InteleSell (collectively, the "Company").
All intercompany accounts have been eliminated in consolidation.
The accompanying consolidated financial statements reflect the historical
operations of Metroplex for all periods presented. The accompanying
consolidated financial statements include the operations of InteleSell beginning
July 1, 1998.
Liquidity
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. Since inception, the Company
has generated cash flows from financing activities to fund losses from
operations. The Company expects to raise equity and/or debt financing through a
private placement of securities. The Company expects to use the financing to
fund losses from operations for the foreseeable future. Losses from operations
are expected to increase due to management's belief that expanded marketing and
sales efforts is required to significantly increase the Company's revenues.
There are no assurances that the Company will be successful in obtaining
additional funding on terms satisfactory to the Company. These factors raise
substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
Unaudited Interim Financial Statements
The interim financial data as of February 29, 2000, and for the three months and
nine months ended February 29, 2000 and February 28, 1999, is unaudited;
however, in the opinion of management, the interim data includes all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly and Company's financial position as of February 29, 2000, and the
results of its operations and cash flows for the nine months ended February 29,
2000 and 1999.
Note 3 - Sales Taxes
Effective October 1, 1999, the State of Texas requires that sales tax must be
paid on all revenues derived from services related to the development of web
sites. During fiscal 1999, the Company has not remitted any amounts to the
State of Texas for sales taxes on their web development services. The Company
estimates that the liability will be approximately $50,000, which has been
accrued in the third quarter of fiscal 1999 and is included in accrued
liabilities at February 29, 2000. The Company is currently acting to resolve
this matter with the State of Texas.
Note 4 - Stockholders Equity
In the third quarter of fiscal 1999, the Company conducted a private placement
of its common stock. Shares were
6
<PAGE>
NetCommerce, Inc.
(Formerly, Virtual Enterprises, Inc.)
Notes to Consolidated Financial Statements (Continued)
issued at 80% of the closing stock price on the date of subscription due to
trading restrictions placed on the common stock. As of February 29, 2000, under
this placement the Company has issued 2,076,113 shares of restricted common
stock for amounts ranging from $0.24 to $1.00 per share for an aggregate of
$733,380. Subsequent to February 29, 2000, the Company has issued 164,022
shares of restricted common stock for $213,534.
On June 6, 1999, the Company issued 8% notes payable totaling $250,000, due and
payable June 6, 2000. As an inducement to obtain the financing, the Company
issued 200,000 shares of its restricted common stock. Management estimated the
value of such shares at $200,000 to be amortized to interest costs over the term
of the note. During the nine months ended February 29, 2000, the Company
amortized $150,000.
On September 1, 1999, the Company issued 8% notes payable totaling $100,000, due
and payable January 1, 2000. As an inducement to obtain the financing, a
NetCommerce shareholder pledged as collateral 235,000 shares of its common
stock. Additionally, the Company issued 100,000 shares of restricted common
stock. Management estimated the value of such shares was approximately $100,000,
which will be amortized to interest costs. As of February 29, 2000, 100% of the
costs have been amortized to interest expense.
On September 1, 1999, the Company issued 8% notes payable totaling $10,000, due
and payable November 1, 1999. On October 27, 1999, the Company issued 20,900
shares of its restricted common stock as repayment of the notes payable.
On December 1, 1999, the Company issued 565,000 shares of restricted common
stock to five certain consultants for full settlement of amounts owed for
consulting fees of $260,000. These consulting agreements expired on November 1,
1999.
Note 5 - Subsequent Events
Subsequent to February 29, 2000, the Company issued 76,088 shares of restricted
common stock to various employees. These shares have been valued at $62,544 and
will be charged to compensation expense in the forth quarter of 1999.
See Notes 1 and 4 for a discussion of additional subsequent events.
7
<PAGE>
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
NetCommerce is an Internet-related holding company which invests in, develops
and operates Internet service companies from majority or wholly owned
subsidiaries. NetCommerce's Internet services, including web page design, web-
hosting and ISP marketing activities are conducted through Metroplex.
NetCommerce's Internet-related telecommunications services are developmental-
stage and include the sale of prepaid calling cards and re-marketing of long
distance services. All of the company's telecommunication services will be
conducted through InterCom. As of February 29, 2000, there have been no
operations in InterCom. Both Metroplex and InterCom are wholly-owned
subsidiaries of the Company.
Subsequent to February 29, 2000, the Company has increased their web site
design, development and hosting services through acquisitions of CurrentMedia
and Tectonic. CurrentMedia is located in Park City, Utah, and develops, designs
and hosts Internet web pages. The Company believes that the acquisition is the
first major step in expanding their operations throughout the United States.
Tectonic is a provider of products and services for video/audio media storage
and streaming. The Company plans on having Tectonic provide products, such as
streaming video technology and full service encoding of media to the 3,000
existing clients of the Company. These services will allow clients to include
commercials, sales presentations, movies and other media messages.
Additionally, on March 17, 2000 the Company acquired Netcom. Netcom provides
connectivity and bandwidth services to small and medium sized businesses. Prior
to the acquisition of Netcom the Company outsourced the Company's bandwidth
needs. The Company believes that the acquisition of Netcom allows them to better
serve their clients and brings the Company one step closer to providing the
complete package of Internet solutions to small and medium sized businesses.
The consolidated financial statements presented herein reflect the acquisition
of Metroplex on May 5, 1999. As the acquisition resulted in a change of control
of the Company, generally accepted accounting principles required that the
transaction be accounted for as a recapitalization of Metroplex. The
accompanying consolidated financial statements reflect the historical operations
of Metroplex for the nine months and three months ended February 29, 2000 and
February 28, 1999. The accompanying consolidated financial statements include
the operations of the Company from May 5, 1999, the date of the reverse
acquisition. On June 30, 1998, Metroplex entered into an asset purchase
agreement with InteleSell. The acquisition was accounted for as a purchase.
InteleSell develops, designs and hosts Internet web pages. The accompanying
consolidated financial statements include the operations of InteleSell from July
1, 1998.
Results of Operations
Nine Months Ended February 29, 2000 Compared to Nine Months Ended February 28,
- ------------------------------------------------------------------------------
1999
- ----
Revenues for the nine months ended February 29, 2000, were $707,503 versus
$229,679 in fiscal 1998, an increase of $477,824 or 208% from the prior year.
Revenues increased as the Company continued to expand its operations, as well as
the fiscal 1999 nine months included the operations of InteleSell for the full
nine months versus only eight months in fiscal 1998. The Company's revenues
from web development and hosting were $540,564 and $166,939, respectively for
the current nine months versus total revenues of $229,679 for the 1998 nine
months.
Expenses were $1,873,841 in the for the nine months ending February 29, 2000
compared to $1,196,341 for the same
8
<PAGE>
period in fiscal 1998, a 57% increase. The increase was primarily attributable
to an increase in marketing and sales efforts, as well as the expansion of city
malls into additional cities. Salaries and wages increased from $117,692 in the
nine months ended February 28, 1999 to $259,961 for the nine months ended
February 29, 2000, an increase of $142,269 or 121%. An increase in sales efforts
in fiscal 1999 required additional production and support staff for web page
design and support.
Interest expense increased from $77,341 for the nine months ended February 28,
1999 to $437,197 for the nine months ended February 29, 2000, an increase of
$359,856 or 465%. The increase is attributed to the value of shares that were
issued in connection with two notes payable. The total amount expensed to
interest from these notes was $250,000 in the nine months ended February 29,
2000.
Three Months Ended February 29, 2000 Compared to Three Months Ended February
- -----------------------------------------------------------------------------
28, 1999
- --------
Revenues for the three months ended February 29, 2000, were $307,884 versus
$114,840 in fiscal 1998, a 168% increase over the prior year. Revenues
increased as the Company continued to expand its operations. The Company's
revenues from web development and hosting were $212,564 and $95,320,
respectively for the current quarter versus total revenues of $114,840 for the
1998 quarter.
Expenses were $732,187 in the third quarter of fiscal 1999 compared to $460,131
in the third quarter of 1998, a 59% increase. The increase was primarily
attributable to an increase in marketing and sales efforts, as well as expansion
of city malls into additional cities. Salaries and wages increased from $45,266
in the three months ended February 28, 1999 to $124,161 for the three months
ended February 29, 2000, an increase of $78,895 or 174%. An increase in sales
efforts in fiscal 1999 required additional production and support staff for web
page design and support.
Liquidity and Capital Resources.
As of February 29, 2000, the Company had a working capital deficiency of
$303,638, and a cash balance at February 29, 2000.
From June 6, 1999, to September 1, 1999, the Company raised cash of $539,532
from notes issued at stated interest rates of 8%. Common shares totaling
300,000 were issued in connection with these financings.
In the third quarter of fiscal 2000, the Company conducted a private placement
of common stock. Shares were issued at 80% of the closing stock price on the
date of subscription due to trading restrictions placed on the common stock. As
of February 29, 2000, under this placement the Company has issued 2,076,113
shares of restricted common stock for amounts ranging from $0.24 to $1.00 per
share for an aggregate of $733,380. Subsequent to February 29, 2000 the Company
has issued 164,022 shares of restricted common stock for $213,534.
The Company's plan is to seek for additional sources of capital and new
operating opportunities. Management believes that $1 to $3 million is needed to
fund sale, marketing, and product development. In the interim, the Company's
existence is dependent on continuing financial support from an affiliate.
Furthermore, the Company intends to utilize its common stock for future
financial support to finance its needs. There are no assurances that the
Company will be successful in completing an offering sufficient to meet its
operating needs. Such conditions raise substantial doubt about the Company's
ability to continue as a going concern unless substantial funds can be raised
through debt or equity capital.
The Company has no commitments for capital expenditures or additional equity or
debt financing and no assurances can be made that its working capital needs can
be met.
Part II OTHER INFORMATION
9
<PAGE>
Item 1. Legal Proceedings
There have been no changes since the Company's last report in Item 3, "Legal
Proceedings" of Form 10-KSB for the fiscal year ended May 31, 1999.
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to Vote of Securities Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Form 8-K - None
10
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
NetCommerce, Inc.
Date: April 13, 2000 By: /s/ Mark Lindberg
----------------------------------
Mark Lindberg
President
By: /s/ Daniel Henderson
------------------------
Daniel Henderson
Secretary
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> JUN-01-1999
<PERIOD-END> FEB-29-2000
<CASH> 150,982
<SECURITIES> 0
<RECEIVABLES> 76,106
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 383,958
<PP&E> 461,709
<DEPRECIATION> (194,080)
<TOTAL-ASSETS> 1,643,293
<CURRENT-LIABILITIES> 906,676
<BONDS> 287,133
189,964
0
<COMMON> 0
<OTHER-SE> 259,520
<TOTAL-LIABILITY-AND-EQUITY> 1,643,293
<SALES> 707,503
<TOTAL-REVENUES> 707,503
<CGS> 0
<TOTAL-COSTS> 1,166,338
<OTHER-EXPENSES> (17)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 437,197
<INCOME-PRETAX> (1,603,518)
<INCOME-TAX> 1,600
<INCOME-CONTINUING> (1,,605,118)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,605,118)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
