<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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
March 31, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission file No. 0-20870
Security Associates International, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 87-0467198
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2101 South Arlington Heights Road, Suite 100, Arlington Heights, Illinois
60005-4142
(Address of principal executive office, including zip code)
(847) 956-8650
(Registrant's telephone number, including area code)
Check whether the Registrant: (1) 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 [ ]
As of May 11, 2000 the Registrant had outstanding 7,219,801 shares of its $.001
par value Common Stock.
<PAGE> 2
Security Associates International, Inc.
Quarter Ended March 31, 2000
INDEX
Part I - FINANCIAL INFORMATION PAGE
----
Item 1 Financial Statements.............................................3
Consolidated Balance Sheets as of March 31, 2000
and December 31, 1999............................................3
Consolidated Statements of Operations for the three months
ended March 31, 2000 and 1999....................................4
Consolidated Statements of Cash Flows for the three months
ended March 31, 2000 and 1999....................................5
Notes to Consolidated Financial Statements.......................6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................10
Part II - OTHER INFORMATION
Item 1 Legal Proceedings...............................................15
Item 2 Changes in Securities...........................................15
Item 3 Defaults Upon Senior Securities.................................16
Item 4 Submission of Matters to a Vote of Security Holders.............16
Item 5 Other Information...............................................17
Item 6 Exhibits and Reports on Form 8-K................................18
SIGNATURES ............................................................19
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
SECURITY ASSOCIATES
INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(unaudited)
ASSETS MARCH 31, 2000 DECEMBER 31, 1999
<S> <C> <C>
CURRENT ASSETS:
Cash $ 503,840 $ 631,521
Accounts receivable, net 2,068,829 1,828,895
Other current assets 527,469 550,009
-----------------------------------------
Total current assets 3,100,138 3,010,425
-----------------------------------------
FIXED ASSETS, net 3,825,169 4,045,524
Goodwill 25,211,713 25,911,332
Other assets, net 359,659 373,369
-----------------------------------------
Total other assets 25,571,372 26,284,701
-----------------------------------------
-----------------------------------------
TOTAL ASSETS $ 32,496,679 $ 33,340,650
=========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 842,320 $ 463,310
Current maturities of long-term notes payable 1,908,356 1,973,352
Accrued expenses 3,600,229 3,923,722
Unearned revenue 314,480 499,407
-----------------------------------------
Total current liabilities 6,665,385 6,859,791
-----------------------------------------
NOTES PAYABLE, net of current maturities 12,839,460 12,314,460
-----------------------------------------
Total liabilities 19,504,845 19,174,251
-----------------------------------------
STOCKHOLDERS' EQUITY
Series A convertible preferred stock, $10 par
value; 137,686 shares authorized, 136,359 shares
outstanding 1,363,590 1,363,590
Common stock, $.001 par value; 50,000,000 shares
authorized; 7,169,801 and 7,145,287 shares outstanding on
March 31, 2000 and December 31, 1999, respectively 7,170 7,145
Warrants, net 124,424 111,689
Additional paid-in capital 35,048,085 34,955,971
Retained deficit (23,551,435) (22,271,996)
-----------------------------------------
Total stockholders' equity $ 12,991,834 $ 14,166,399
-----------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 32,496,679 $ 33,340,650
=========================================
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
SECURITY ASSOCIATES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED) (UNAUDITED)
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 2000 MARCH 31, 1999
Net Revenue $ 5,687,508 $ 6,300,352
Operating Unit Expense 4,220,075 3,804,162
-------------------------------------------
Operating Unit Margin 1,467,433 2,496,190
-------------------------------------------
Amortization and depreciation 1,206,935 1,638,727
General and administrative 530,959 631,453
Business development 658,346 615,489
-------------------------------------------
Total expenses 2,396,240 2,885,669
-------------------------------------------
Loss from operations (928,807) (389,479)
-------------------------------------------
Interest expense, net (350,635) (882,620)
-------------------------------------------
(Loss) before income
taxes (1,279,439) (1,272,099)
PROVISION FOR INCOME TAXES - -
-------------------------------------------
Net loss (1,279,439) (1,272,099)
DIVIDENDS ACCRUED ON PREFERRED
STOCK - (150,000)
-------------------------------------------
Net loss available to common
stockholders $ (1,279,439) $ (1,422,099)
===========================================
NET LOSS PER SHARE $ (.18) $ (.21)
===========================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,149,123 6,773,638
===========================================
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
SECURITY ASSOCIATES INTERNATIONAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 2000 MARCH 31, 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,279,439) $(1,272,099)
Adjustments to reconcile net loss to net cash used
For operating activities-
Amortization and depreciation 1,206,935 1,638,727
Issuance of common stock for services 54,668 4,500
Warrants and stock issued under dealer stock incentive plan 50,206 68,979
Changes in assets and liabilities-
Accounts Receivables, net (239,934) 267,139
Other current assets 22,540 (88,714)
Other long-term assets (6,161) 92,322
Accounts payable 379,010 (20,471)
Accrued expenses (323,493) 647,956
Unearned revenue (184,927) (157,568)
----------------------------------
Net cash (used in) provided by operating activities (320,595) 1,180,771
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of contract rights to monitor security
systems, net - (616,680)
Purchase of fixed assets (189,306) (364,501)
Cash paid for acquisitions, net (77,784) -
----------------------------------
Net cash used for investing
activities (267,090) (981,181)
----------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends earned on preferred stock - (150,000)
Payment of notes payable (64,996) (258,514)
Proceeds from notes payable 525,000 900,000
----------------------------------
Net cash provided by financing activities 460,004 491,486
INCREASE (DECREASE) IN CASH (127,681) 691,076
CASH, beginning of the period 631,521 1,480,869
----------------------------------
CASH, end of period $ 503,840 $ 2,171,945
==================================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
SECURITY ASSOCIATES INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1. BASIS OF PRESENTATION
The accompanying financial statements have been prepared by Security
Associates International, Inc. (SAI) without an audit, in accordance with
generally accepted accounting principles for interim financial information and
in compliance with 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 financial
statements. In the opinion of management, all adjustments (consisting only of
normal recurring matters) considered necessary for a fair presentation have been
included.
The results of operations for the three-month period ended March 31, 2000,
are not necessarily indicative of the results that may be expected for the full
year. These financial statements should be read in conjunction with SAI's
financial statements and related notes in SAI's 1999 Annual Report on Form
10-KSB/A filed with the Securities and Exchange Commission.
The presentation of the statement of operations has been changed to more
clearly depict SAI's activities. Therefore, prior period results have been
reclassified to conform to the new presentation.
NOTE 2. STATEMENTS OF CASH FLOWS
The supplemental schedule of non-cash activities for the three months ended
March 31, 2000 and 1999, includes the following:
<TABLE>
<CAPTION>
<S> <C> <C>
2000 1999
------ -----
Supplemental schedule of cash flow information-
Cash paid during the period for interest $329,893 $ 658,599
Supplemental schedule of noncash activities-
Purchase of contract rights with notes - 124,577
Purchase of contract rights with deferred revenue - 66,174
</TABLE>
NOTE 3. NET LOSS PER SHARE
Net loss per share are calculated using the weighted average number of
shares outstanding during each period. Stock options, warrants and convertible
preferred stock have not been included in the calculation of net loss per share
as their effect would be antidilutive.
6
<PAGE> 7
NOTE 4. SEGMENT REPORTING
SAI sold its Owned Accounts on June 30, 1999. SAI now has one line of
business which is to provide electronic alarm monitoring to residences and
businesses for alarm dealers through agreements with alarm dealers and invoices
the dealers at wholesale rates ("Central Stations"). SAI evaluates performance
based upon operating income (or loss) before interest and income taxes; and
operating cash flow, defined as operating income (or loss) plus depreciation and
amortization. SAI does not separately identify interest expense by operating
segment, nor does it allocate corporate general and administrative, selling and
marketing expenses by operating segment.
<TABLE>
<CAPTION>
- ------------------------------------ ----------------- ------------------ ----------------- -----------------
OWNED CENTRAL CORPORATE AND
ACCOUNTS STATIONS INTERCOMPANY CONSOLIDATED
- ------------------------------------ ----------------- ------------------ ----------------- -----------------
<S> <C> <C> <C> <C>
Three months ended March 31, 1999
- ------------------------------------ ----------------- ------------------ ----------------- -----------------
Revenues 1,836,153 4,849,327 (385,128) 6,300,352
- ------------------------------------ ----------------- ------------------ ----------------- -----------------
Depreciation and amortization 962,271 676,456 - 1,638,727
- ------------------------------------ ----------------- ------------------ ----------------- -----------------
Operating income (loss) 22,551 495,147 (907,177) (389,479)
- ------------------------------------ ----------------- ------------------ ----------------- -----------------
</TABLE>
NOTE 5. STOCK AND OPTIONS ISSUED
SAI issued 24,513 shares of common stock during the first quarter of 2000.
Of these shares, 23,013 shares were issued as 1999 performance awards to
employees under SAI's Management Incentive Plan and 1,500 shares were issued to
an independent consultant as payment for services. SAI did not receive any cash
in exchange for these shares.
In January 2000 SAI issued options to purchase 815,000 shares of common
stock to its officers and directors under a stock option plan pending approval
by our stockholders. Options to purchase these shares have an exercise price of
$2.75 per share, vest over a two year period and expire 6 years from the date of
the grant. Additional options to purchase 100,000 shares at an exercise price of
$2.88 per share were issued to new officers of SAI and 123,000 options to
purchase shares at an exercise price of $3.13 per share were issued to key
employees. These options expire 6 years from the date of grant and vest over a
three year period. The options are valued at $1.62, $1.71 and $1.85, per share
respectively under the Black-Scholes option pricing model. Had compensation
costs for the options been determined based on the fair value at their grant
date, SAI's net loss for the three-month period would have been increased by
$1,718,850. As a result, the loss per share would have increased by $.24 per
share to $.42 per share.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Some of the information in this Quarterly Report may be forward-looking
statements under the federal securities laws. Such statements can be identified
by the use of words such as "anticipates," "intends," "seeks," "believes,"
"estimates," "plans," and "expects." These statements discuss expectations for
the future, contain projections concerning the results of our operations or our
future financial condition or state other forward-looking information. Such
statements are subject to a number of risks and uncertainties. Our actual
results, performance or achievements could differ substantially
7
<PAGE> 8
from the results expressed in, or implied by, those statements. We assume no
responsibility for revising forward-looking statements in light of future events
or circumstances.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 2000
For the three months ended March 31, 2000, revenues were $5,687,508
compared to $6,300,352 for the same period in the prior year, a decrease of
9.73%. The change in revenue was due to an increase in revenues from central
station operations of $838,131 or 17.28% and a decrease in revenue from the
retail operation of $1,836,153. The increase in central station revenues is due
to acquisitions in 1999. The decrease in revenue from the retail operation is
due to the sale of the owned accounts that occurred on June 30, 1999.
Operating unit expenses increased from $3,804,162 to $4,220,075 or 10.93%
during the three-month period ended March 31, 2000 primarily due to the
acquisition of central stations in 1999.
General and administrative expenses for the three months ended March 31,
2000, decreased by $100,492 or 15.91% over the same period in the prior year.
The decrease was primarily attributable to the sale of the owned accounts and a
realignment of management responsibilities in the central stations.
Business development expenses increased by $42,857 or 6.96% as salespeople
and related expenses were added to focus on bringing new dealers into our
central stations. Included in these expenses were non-cash expenses related to
the dealer stock incentive program of $50,206.
The decrease of $431,794 in amortization and depreciation expenses is
related to an increase in amortization of goodwill of $530,477 due to
acquisitions completed over the previous twelve months combined with a decrease
in amortization related to the retail operations of $962,271.
Interest expense decreased from $882,620 in the first quarter of 1999 to
$350,635 in the first quarter of 2000. Debt decreased by approximately
$22,000,000 from the first quarter of 1999 to the first quarter of 2000. As a
result of the sale of SAI owned accounts, a debt repayment of $20,000,000 was
made on June 30, 1999. As of March 31, 2000 SAI has total debt of $14,747,816
compared to total debt of $36,746,563 as of March 31,1999.
LIQUIDITY AND CAPITAL RESOURCES
Since 1994, we have financed our operations and growth from a combination
of internally generated cash flow, borrowings under our credit facilities and
sales of equity securities. We are constantly evaluating alternative sources of
funding to accomplish our long-term business objectives. Our principal uses of
cash are for capital expenditures to support internal growth, the acquisition of
central monitoring stations and operating expenses.
8
<PAGE> 9
We are implementing our strategy to attract new dealers to our
wholesale central station monitoring facilities. We intend to continue issuing
shares of common stock throughout the remainder of the year consistent with our
Registration Statement on Form S-1, as amended from time to time, which was
declared effective on April 11, 2000. The number of shares of common stock to be
issued can not be estimated at this time, but may not exceed 2,000,000 shares,
including those that may be issued upon exercise of warrants previously issued
to Dealers under this program.
On April 21, 2000, SAI entered into a letter of intent which commits SAI to
combine with a company which operates wholesale monitoring stations in the
United States. The consideration for this transaction includes $5,000,000 cash,
the equivalent of 4,500,000 shares of SAI common stock and the assumption of
approximately $33,000,000 of bank debt. The letter of intent also calls for SAI
to issue the equivalent of 2,500,000 shares of common stock and options to
purchase approximately 2,800,000 shares of SAI common stock at a $5 per share
exercise price to another party in exchange for cash, the rights to enter into
the merger transaction discussed previously, and to enter into a series of put
and call options between SAI and this second party. The issuance of stock and
options and the put and call agreement will require SAI to file a proxy and
obtain shareholder approval.
INFLATION
Management does not believe that inflation had a significant impact on the
Company's results of operations for the periods presented.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.
We currently do not invest excess funds in derivative financial
instruments or other market rate sensitive instruments for the purpose of
managing interest rate or foreign currency exchange rate risk or for any other
purpose.
We incur debt from three sources: dealers from whom we have acquired
subscriber accounts, a note payable to Security Alarm Financing Enterprises,
Inc. related to the sale of our owned account portfolio and senior debt from
FINOVA and Citizens Bank of Massachusetts. Debt owed to dealers is in the form
of a "holdback note" which is collateral to a guaranty of the aggregate revenue
produced by subscriber accounts purchased from dealers for a period of time.
These notes are non-interest bearing and comprise less than 1% of our total
debt. At March 31, 2000 we had $12,839,460 in senior debt due to FINOVA at an
interest rate of prime (9%) plus .75% and a note due June 30, 2000 of $1,800,000
at an 8% annual rate related to the sale of the owned account portfolio. We do
not have exposure to foreign currency fluctuations and do not use derivatives
for trading purposes.
Interest Rate Risk. The table below provides information about our debt
obligations that are sensitive to changes in interest rates. For these debt
obligations, the table presents principal cash flows and related average
interest rates by expected maturity dates.
9
<PAGE> 10
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
- -------------------------- -- ---------- ----------- ---------- ---------- ---------- ---------- -------------
(dollars in millions) Maturity Date
- -------------------------- -- ---------- ----------- ---------- ---------- ---------- ---------- -------------
2000 2001 2002 2003 2004 Total Fair Value
- -------------------------- -- ---------- ----------- ---------- ---------- ---------- ---------- -------------
Fixed Rate Debt $1.8 $1.8 $1.8
- -------------------------- -- ---------- ----------- ---------- ---------- ---------- ---------- -------------
Average Interest Rate 8% 8%
- -------------------------- -- ---------- ----------- ---------- ---------- ---------- ---------- -------------
- -------------------------- -- ---------- ----------- ---------- ---------- ---------- ---------- -------------
- -------------------------- -- ---------- ----------- ---------- ---------- ---------- ---------- -------------
Variable Rate Debt $811 $1,290 $2,323 $10,324 $14,748 $14,748
- -------------------------- -- ---------- ----------- ---------- ---------- ---------- ---------- -------------
Average Interest Rate 9.75% 9.75% 9.75% 9.75% 9.75%
- -------------------------- -- ---------- ----------- ---------- ---------- ---------- ---------- -------------
</TABLE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
On September 10, 1999, a Writ of Summons was issued against SAI North
Central Command Center, Inc., a wholly owned subsidiary of SAI, and Blair
Communications, Inc. (First Evangelical Lutheran Church vs. Blair
Communications, Inc. et al, No. 1999-04689 (Blair County, Pennsylvania)). The
case involves damages resulting from a fire at the First Evangelical Lutheran
Church. To date, no complaint has been filed, no claim for damages has been
entered and no theory of liability has been asserted. SAI believes it has no
liability in this matter and will vigorously defend its position.
From time to time we experience routine litigation in the normal course of
our business. We do not believe that any pending litigation will have a material
adverse affect on our financial condition or results of operations.
Item 2. Changes in Securities and Use of Proceeds.
We cancelled the following securities previously issued under our
Registration Statement on Form S-1 File No. 333-33356, declared effective April
11, 2000.
On October 31, 1999, pursuant to an agreement with the Stockholder, we
cancelled 29,741 shares of common stock originally issued August 31, 1999 as a
deferred part of the purchase price in connection with the acquisition of our
central station located in Ogden, Utah.
We do not receive cash from our Selling Stockholders when they sell their
shares of common stock, nor do we receive cash from dealers for common stock or
warrants issued to them in connection with our dealer incentive programs. We
receive cash only when the warrants are exercised. We expect to use any cash
proceeds received from the exercise of warrants for general corporate purposes,
including working capital. Pending such use, the net cash proceeds from the
exercise of warrants will be deposited into our company's bank accounts or
invested in short-term, investment grade, interest-bearing securities. We can
not be sure of the number of warrants that will be issued, or the number that
will be exercised when issued.
In addition to the securities listed above, we issued the following
securities during the first quarter of 2000 under our Registration Statement on
Form S-8, File No. 333-77897, filed with the Securities and Exchange Commission
on May 6, 1999.
10
<PAGE> 11
On March 1, 2000, we issued 23,013 shares of common stock to key employees
under our Management Incentive Plan. We did not receive any cash proceeds in
exchange for these securities.
In addition to the securities listed above, we issued the following
securities during the first quarter of 2000 under our Registration Statement on
Form S-8, File No. 333-87833, filed with the Securities and Exchange Commission
on September 24, 1999.
On January 11, 2000 we issued options to purchase 815,000 shares of common
stock to our officers and directors under our Stock Option Plan pending approval
by our stockholders. The options have an exercise price of $2.75 per share, they
vest over a two-year period and expire 6 years from the issue date..
On February 14, 2000, we issued options to purchase 100,000 shares of
common stock at an exercise price of $2.88 per share to new officers under our
Stock Option Plan, subject to approval by our stockholders. The options vest
over a three-year period and expire 6 years from the issue date.
On March 13, 2000, we issued options to purchase 123,000 shares of
common stock under our Stock Option Plan to key employees at an exercise price
of $3.13, subject to stockholder approval. These options vest over a three-year
period and expire 6 years from the issue date.
We did not receive any cash proceeds in exchange for these securities.
In addition to the securities listed above, we issued the following
securities during the first quarter of 2000 that were not registered under the
federal Securities Act.
On March 31, 2000 we issued 1,500 shares of common stock to an independent
consultant in payment for services.
We did not receive any cash proceeds in exchange for these unregistered
securities. No underwriters were engaged in connection with these securities.
These sales were made in reliance upon the exemption from registration set forth
in Section 4(2) of the Securities Act. Securities were issued to a very limited
number of individuals.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
No matters were presented to our stockholders for a vote during the
first quarter of 2000.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
11
<PAGE> 12
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K.
We filed a Current Report on Form 8-K on January 6, 2000, dated November 5,
1999, which reported that SAI had purchased Total Electronic Alarm Monitoring,
L.L.C. (located in Chino, CA) and Monark Central Dispatch (located in Metairie,
LA). The aggregate purchase price for these smaller central station acquisitions
was approximately $1,071,960 plus 100,000 shares of our common stock which was
valued at $200,000 on the dates of the acquisitions.
12
<PAGE> 13
SIGNATURES
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.
Security Associates International, Inc.
Date: May 12, 2000 By: /s/ James S. Brannen
James S. Brannen
President and Chief Executive Officer
Date: May 12, 2000 By: /s/ Daniel S. Zittnan
Daniel S. Zittnan
Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 503,840
<SECURITIES> 0
<RECEIVABLES> 2,529,926
<ALLOWANCES> (461,097)
<INVENTORY> 0
<CURRENT-ASSETS> 3,100,138
<PP&E> 5,797,980
<DEPRECIATION> 1,972,811
<TOTAL-ASSETS> 32,496,679
<CURRENT-LIABILITIES> 19,504,845
<BONDS> 0
0
1,363,590
<COMMON> 7,170
<OTHER-SE> 11,621,074
<TOTAL-LIABILITY-AND-EQUITY> 32,496,679
<SALES> 0
<TOTAL-REVENUES> 5,687,508
<CGS> 0
<TOTAL-COSTS> 6,616,315
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 350,635
<INCOME-PRETAX> (1,279,439)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,279,439)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,279,439)
<EPS-BASIC> .18
<EPS-DILUTED> 0
</TABLE>
