UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998
Commission file no. 0-28348
DBS INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1124675
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 Shoreline Highway, Suite 190A
MILL VALLEY, CA. 94946 (415) 380-8055
(Address of principal executive offices) (Zip Code) (Registrant's
telephone number)
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
common stock, as of the latest practicable date.
Class of Securities Shares Outstanding
Common Stock, $.0004 Par Value as of April 30, 1998
5,910,236
Transitional Small Business Disclosure Format:
YES: ______ NO: X
<PAGE>2
INDEX
PART I - FINANCIAL INFORMATION
PAGE
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets:
As of March 31, 1998 (unaudited) and December 31, 1997 (audited) 3
Condensed Consolidated Statements of Operations (unaudited):
For the Three Months Ended March 31, 1998 and March 31, 1997
and for the period from April 25, 1990 (Inception) to March 31,
1998 4
Condensed Consolidated Statements of Cash Flows (unaudited):
For the Three Months Ended March 31, 1998 and March 31, 1997
and for the period from April 25, 1990 (Inception) to March 31,
1998 5
Notes to Condensed Consolidated Financial Statements 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II - OTHER INFORMATION
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 11
SIGNATURES 13
<PAGE>
DBS INDUSTRIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
March 31 December 31,
1998 1997
(Unaudited) (Audited)
Current assets:
Cash and cash equivalents $ 128,199 $ 383,054
Prepaid and other current assets 115,957 119,265
------------- -------------
Total current assets 244,156 502,319
------------- -------------
Furniture and equipment (at cost) 73,277 73,277
Less accumulated depreciation 50,758 47,828
------------- -------------
22,519 25,449
------------- -------------
Other assets:
Investments in and advances to
affiliated companies 1,453,497 1,248,649
Goodwill, net of accumulated
amortization of $85,541 and $81,864,
respectively 5,449 9,126
------------- -------------
1,458,946 1,257,775
------------- -------------
Total assets $ 1,725,621 $ 1,785,543
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable 478,475 152,485
Deferred revenue 400,000 400,000
Accrued liabilities 133,101 145,019
Deferred compensation 234,231 216,000
------------- ------------
Total current liabilities 1,245,807 913,504
Stockholders' equity:
Preferred stock - -
Common stock 2,383 2,373
Capital in excess of par value 4,695,201 4,681,295
Warrants 112,500 112,500
Deficit accumulated during the
development stage (4,245,270) (3,839,129)
Treasury stock (85,000) (85,000)
------------- ------------
Total stockholders' equity 479,814 872,039
------------- ------------
Total liabilities and
stockholders' equity $ 1,725,621 $ 1,785,543
============= ============
<PAGE>
DBS INDUSTRIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
April 25, 1990
Three Months Ended (Inception) to
March 31, March 31,
1998 1997 1998
Revenue $ - $ - $ 161,420
---------- ---------- -------------
Cost and operating expenses:
Cost of revenue - - 127,580
General and administrative 305,482 368,592 6,768,470
Research and development 98,982 118,137 2,268,553
---------- ---------- ------------
404,464 486,729 9,164,603
---------- ---------- ------------
Loss from operations (404,464) (486,729) (9,003,183)
---------- ---------- ------------
Other income (expense):
Interest, net (1,678) (128,015) (743,558)
Equity in loss of investees, net - - (412,777)
Gain on sale of investment - 6,221,270 6,057,541
Other, net - - (56,634)
--------- ----------- ------------
(1,678) 6,093,255 4,844,572
Profit (loss) before provision (406,142) 5,606,526 (4,158,611)
income taxes and minority
interests
Provision for income taxes - - 95,235
--------- ----------- -----------
Profit (loss) before minority (406,142) 5,606,526 (4,253,846)
interests
Minority interests in income of
consolidated subsidiaries - - 8,575
---------- ----------- -----------
Net income (loss) $ (406,142) $ 5,606,526 $(4,245,271)
=========== =========== ===========
Basic net income (loss) per
share $ (0.07) $ 0.96
=========== ==========
Diluted net income (loss) per
share $ (0.07) $ 0.95
=========== ==========
Weighted average number of
shares of common stock,
basic 5,896,906 5,836,122
=========== ==========
Weighted average number of
shares of common stock,
diluted 5,896,906 5,892,447
=========== ==========
The accompanying notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
DBS INDUSTRIES, INC. AND SUBSIDIARY
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
April 25, 1990
Three Months Ended (Inception) to
March 31, March 31,
1998 1997 1998
Net cash used in operating
activities $ (50,007) $ (422,588) $ (7,836,300)
------------ ------------ ---------------
Cash flows from investing
activities:
Proceeds from sale of investment - - 900,000
Proceeds from Loral settlement - - 3,573,677
Purchase of fixed assets - - (105,524)
Organization costs - - (28,526)
Investment in affiliates (204,848) - (872,826)
Advances to affiliates - - (213,160)
Proceeds from affiliates advances - - 152,500
Advances to officer - - (31,187)
Purchase of interest in Continental - - (2,292,409)
Net assets of purchased subsidiaries - - (147,500)
Cash transferred from Fi-Tek IV, Inc.
pursuant to the merger and
reorganization - - 156,648
Cash of divested subsidiary - - (277)
Purchase of patents - - (18,251)
Restricted cash on credit line - - 300,000
----------- --------- -------------
Net cash provided by investing
activities (204,848) 0 1,452,869
----------- --------- --------------
Cash flows from financing
activities:
Proceeds from credit line - - (300,000)
Issuance of debentures - - 4,817,501
Issuance of common stock - 20,000 3,153,516
Issuance of common stock warrants - - (19,490)
Stock issue costs - - (57,235)
Purchase of shares - - (5,000)
Payment of debentures - - (1,168,445)
Proceeds from stockholders' loan - - 442,750
Payment of stockholders' loan - - (351,967)
---------- --------- -------------
Net cash provided by financing
activities 0 20,000 6,511,630
---------- --------- ------------
Net increase (decrease) in cash (254,855) (402,588) 128,199
Cash and cash equivalents,
beginning of period 383,054 402,588 -
----------- --------- -----------
Cash and cash equivalents,
end of period $ 128,199 $ 0 $ 128,199
============ ========= ==========
The accompany notes are an integral part of these condensed consolidated
financial statements.
<PAGE>
DBS INDUSTRIES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 UNAUDITED INTERIM FINANCIAL STATEMENTS
The information presented in these condensed consolidated financial
statements of DBS Industries, Inc. (DBSI or the Company) and its wholly
owned subsidiary, Global Energy Metering Services, Inc., (the
subsidiary) is unaudited. These condensed consolidated financial
statements have been prepared assuming the Company will continue as a
going concern. Since inception, the Company has devoted substantially
all of its efforts to developing its business. The Company has
therefore incurred substantial losses and negative cash flows from
operating activities. To address financing needs, the Company is
pursuing various financing alternatives. These factors raise
substantial doubt about the Company's ability to continue as a going
concern. These financial statements do not reflect any adjustments
that might result from the outcome of this uncertainty.
The financial statements include all adjustments consisting of only
normal recurring adjustments which are, in the opinion of management,
necessary to present fairly the condensed consolidated financial
position of DBSI at March 31, 1998, and condensed consolidated results
of operations and cash flows for the interim periods reported. The
results of operations for the interim period presented are not
necessarily indicative of expected results for the full fiscal year.
Certain information and footnote disclosures normally contained in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. The condensed
consolidated financial statements should be read in conjunction with
the financial statements and notes contained in DBSI's 1997 Annual
Report to Shareholders.
NOTE 2 EQUITY IN INCOME & LOSSES OF INVESTEES
E-SAT Corporation
In October 1994, the Company and Echostar Communications, Inc. formed
E-SAT for the purpose of filing with the Federal Communications
Commission for a license to operate a low earth satellite system. E-
SAT filed a license application with the Federal Communications
Commission on November 16, 1994. In April 1998, the FCC formally
approved E-Sat's application. The Company holds a 20% interest in E-
SAT. The Company's total investments in and advances to E-SAT were
$409,723 as of March 31, 1998. The investment is accounted for using
the equity method. The Company's equity in losses of E-SAT for the
three months ended March 31, 1998 were $56,492. As of March 31, 1998,
the Company had a receivable of $858,831 from Echostar which represents
the excess of advances to date to E-SAT in excess of its proportionate
20% share of its investee's financing requirements.
Seimac Limited
On November 30, 1995, the Company acquired 232,829 shares representing
20% of the voting shares of common stock of Seimac Limited, a Canadian
company, pursuant to a stock purchase and exchange agreement in
exchange for 165,519 shares of common stock of the Company, valued at
$662,010. The company's investment of $662,010 was $464,255 in excess
of the Company's proportionate share of the net book value as of
November 30, 1995. This excess is being amortized over a period of
five years. The amortization of this excess book value amounted to
$23,213 for the months ended March 31, 1998. This investment is
accounted for using the equity method. On April 30, 1998, the company
sold its entire interest in Seimac. (See Note 6)
<PAGE>
DBS INDUSTRIES, INC. AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 UNEARNED REVENUE
The Company's wholly owned subsidiary, Global Energy Metering Services,
Inc. (GEMS), is party to a contract to deliver 10,000 satellite radio units.
The purchase order is for $1.2 million and under the terms of the purchase
order, GEMS would receive a total of $500,000 in advance payments on the
contract, based on certain milestone achievements. These milestone payments
are refundable if the contractee does not qualify GEMS' automatic meter reading
system. As of March 31, 1998, this purchase order had been suspended by both
parties due to the Company's limited access to the Argos System. The $400,000
in milestone payments received are reported as unearned revenue on the
accompanying balance sheets.
NOTE 4 NET INCOME (LOSS) PER SHARE
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share,
which establishes standards for computing and presenting earnings (loss) per
share. Under the new standard, Basic earnings per share is computed based on
the weighted average number of common shares outstanding and excludes any
potential dilution. Diluted earnings per share reflects financial statements
issued for periods ending after December 15, 1997. The financial statements
presented have been restated to conform with current year presentation.
Options and warrants to purchase 1,418,233 shares of common stock with exercise
prices from $.40 to $5.60 were outstanding as of March 31, 1998 and were
excluded from the loss per share calculation for the quarter then ended as they
have the effect of decreasing loss per share. Options and warrants to purchase
1,180,116 shares of common stock with exercise prices from $.40 to $6.00 were
outstanding as of March 31, 1997 and were included in the computation of
earnings.
NOTE 5 RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income" and Statement of Financial Accounting
Standards No. 131, "Disclosures About Segments of An Enterprise and Related
information" were issued and are effective for the year ending December 31,
1998. The Company has not determined the impact of the implementation of these
pronouncements.
NOTE 6 SUBSEQUENT EVENTS
As discussed in NOTE 2, the Federal Communications Commission ("FCC")
formally approved E-SAT's application for a LEO satellite license in April
1998.
On April 30, 1998 , the company received $200,000 in cash and had
approximately $70,000 of debt forgiven, in exchange for returning the 232,829
Seimac shares it owned. The company expects to record a loss of approximately
$200,000 with respect to this transaction.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
On April 30, 1998, the Company divested its interest in Seimac Limited in
exchange for $200,000 and forgiveness of approximately $70,000 of debt owed to
Seimac. At March 31, 1998 the Company's investment in Seimac was valued at
approximately $485,000. The net result of this divestiture will be a net loss
on investment of approximately $215,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has been in the development stage since its inception and has
not recognized any significant revenues or capital resources other than the
receipt, of (i) a minimal amount of inside capitalization funds at its
inception, (ii) net proceeds in the amount of $166,175 from its public
offering, (iii) gross proceeds of $70,000 from a sale of debentures, (iv)
subscriptions representing gross proceeds of $2,024,588 in connection with
five private placements of common stock, (v) gross proceeds of $342,750
from bridge loans made by the Company's president and shareholders, (vi)
gross proceeds of $1,056,500 from the sale of the Company's interest in the
stock of a company holding a DBS license, (vii) gross proceeds of $4,747,501
from the sale of a seven convertible debentures, (viii) $100,000 from the
issuance of a note and (ix) gross proceeds of approximately $3.5 million
settlement for the Company's interest in Continental Satellite Corp.
Stockholders' equity was $479,814 at March 31, 1998 compared to $872,039
at December 31, 1997 a decrease of 45%, resulting from continued operating
costs associated with the development of the Company's business. The Company
continues to incur approximately $100,000 of monthly operating costs which will
continually act to reduce stockholders' equity in the absence of the sale of
additional equity.
The consolidated balance sheet as of March 31, 1998 reflects cash and
cash equivalents of $128,199 compared to $383,054 as of December 31, 1997 a
decrease of 66.5% from the prior period. Cash will continue to be used by the
Company for the ongoing development of the E-Sat low earth orbit satellite
system, GEMS' automatic meter reading ("AMR") business and the Company's
operating activities. The Company anticipates monthly expenses to average
approximately $100,000 per month for the current period which includes
approximately $75,000 per month for operating, legal and consulting expenses,
and $25,000 per month for GEMS & E-SAT research & Development. However,
expenses will continue to increase with the demands of developing the E-sat
license and business applications. Accordingly, cash resources presently
available to the Company are not sufficient to continue operations at their
projected level, and additional capital will be necessary to expand operations
or continue current operations. No assurances can be given that additional
capital financing will be available when required or it if will be on terms
favorable to the Company. The Company does not expect its automated meter
reading operations to produce any significant revenue in 1998 or become
profitable until 2003 at the earliest, and no assurance can be given as to this
estimate. Beginning in July 1996, the Company began to receive milestone
payments under the terms of a $1.2 million purchase order for 10,000 satellite
radio units. Under this agreement, the Company was eligible to receive up to
$500,000 towards development costs upon meeting the milestone requirements of
the contract. The Company met the first four milestones of the contract and has
received $400,000 in cash. Currently, the Company and ABB have suspended their
development under this agreement due to the expiration of the Company's
agreement for the use of the Argos system on December 31 1997, and the proposed
limit placed on future commercial use of the Argos system. Therefore, such
milestone payments could be subject to refund, in whole or in part. These funds
are currently classified as unearned revenue. Unless and until the Company is
able to raise additional capital or become profitable through its subsidiary's
automated meter reading operations, the Company's liquidity and capital
resources will continue to be depleted. Historically, the Company has funded
its operations and obligations through the private placement of equity
securities and convertible debentures. The Company may continue to fund its
commitments through these financing methods. However, no assurances can be
given that the Company will be able to raise the necessary capital to meet its
commitments. In the event the Company is unable to raise the necessary
capital, its business objectives will be adversely affected.
Total assets at March 31, 1998 were $1,725,621 compared to $1,785,543 at
December 31, 1997. The largest components of total assets represent
investments in and advances to affiliated companies of $1,453,497. This
compares to investments in and advances to affiliated companies of $1,248,649
at December 31, 1997. This increase was due primarily to the continued
contributions and advances made to E-Sat by the Company in excess of its 20%
ownership. (See: Note 2 Equity In Income & Losses Of Investees)
Net cash used in operating activities for the three month period ended
March 31, 1998 was $50,007, compared with $422,588 for the three month period
ended March 31, 1997, and $7,836,300 for the period from inception through
March 31, 1998. Net cash used in operating activities have significantly
decreased from the same period in 1997 due primarily to repayment of all
debentures and settlement of the Loral Litigation. (See: The Company's 10Q-SB
dated 9/30/97).
Net cash used in investing activities for the three month period ended
March 31, 1998 was $204,848 compared to no net cash used at March 31, 1997, and
net cash provided of $1,452,869 for the period from inception through March 13,
1998 attributed primarily to Proceeds from the Loral Settlement of Approximately
$3.5 million.
The were no Cash flows from financing activities for the three month
period ended March 31, 1998, compared to $64,110 at March 31, 1997 and
$6,511,630 for the period from inception through March 31, 1998.
RESULTS OF OPERATIONS
The Company remains in the development stage and did not generate any
revenues or net interest earnings in either the three month period ended
March 31, 1998, or March 31, 1997. Revenues from inception through March 31,
1997 were $161,420.
The Company's net loss for the three month period ended March 31,1998 was
$406,142 compared to a net profit of $5,606,526 for the three month period
ended March 31, 1997. Net loss from inception through the period ended March
31, 1998 was $4,245,271. In the three month period ended March 31, 1997, the
Company's net profit was due primarily to a one-time gain on marketable equity
securities of approximately $6.2 million offset by operating and interest
expenses.
The Company's Loss from operations for the three month period ended March
31, 1998 was $404,464 compared to $486,729 for the three month period ended
March 31, 1997, a decrease of approximately 17%. Total loss from operations
from inception through March 31, 1998 was $9,003,183. General and
administrative costs ("G&A") were $305,482 for the three month period ended
March 31, 1998, compared with $368,592 in the same three month period
ended March 3, 1997, a decrease of 17%. Total G&A from inception through
March 31, 1998 was $6,768,470. Research and development costs associated
with GEMS was $98,982 for the three month period ended March 31, 1998 compared
to $118,137 for the three month period ended March 31, 1997 a decrease of 16%.
Total Research & Development from inception through March 31, 1998 was
$2,268,553.
The Company's accumulated deficit at March 31, 1998 was $4,245,270
compared to $3,839,129 at December 31, 1997 an increase of approximately 10.5%,
due to the continued cost of operations and research & development.
Accumulated deficit will continue to increase unless and until the
Company generates revenues from the operations of GEMS in such amounts so
as to cover the Company's expenses. Revenues substantial enough to make the
Company profitable are not expected to be generated until 2003, and no
assurances can be given as to that estimate. The Company has been
devoting a substantial amount of its financial and personnel resources
toward developing the Company's AMR business.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
None
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.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995.
With the exception of historical facts stated herein, the matters discussed
in this report are "forward looking" statements that involve risks and
uncertainties that could cause actual results to differ materially from
projected results. Such "forward looking" statements include, but are not
necessarily limited to, statements regarding anticipated levels of future
revenue and earning from the operations of the Company, and its wholly
owned subsidiary Global Energy Metering Service, Inc. (collectively the
"Company"), projected costs and expenditures relating to the Company's
interest in direct broadcasting satellite ("DBS") technology and
development of its automated meter reading ("AMR") business, the
availability of future debt and equity capital on commercially reasonable
terms, legal costs related to the litigation with Loral and consulting
costs in connection with FCC licenses and permits. Factors that could
cause actual results to differ materially, include, in addition to other
factors identified in this report, the availability of capital on
commercially acceptable terms, the completion of a commercially viable AMR
service, the dependence and uncertainty of utility companies to utilize
such an AMR service, the reliance on third parties for the advancement of
the design, manufacturing and marketing of the service, the fulfillment of
contract obligations by suppliers and other third parties, challenges to
the Company's investments in DBS licensees and permitees, the availability
of qualified personnel and equipment, delays in the receipt of or failure
to receive necessary governmental approvals, permits and licenses or
renewals thereof, risks and uncertainties relating to general economic and
political conditions, both domestically and internationally, changes in the
law and regulations governing the Company's activities in both AMR and DBS
technology, results of the Company's financing efforts and marketing
conditions, and other risk factors related to the Company's AMR business
and DBS investments. Readers of this report are cautioned not to put undue
reliance on "forward looking" statements which are, by their nature,
uncertain as reliable indicators of future performance. The Company
disclaims any intent or obligation to publicly update these "forward
looking" statements, whether as a result of new information, future events,
or otherwise.
<PAGE>
Item 6. Exhibits and Reports on Form 8-k
Exhibit 11.1 Computation of Earnings (Loss) per Share
Exhibit 27.1 Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
DBS INDUSTRIES, INC.
DATE: MAY 20, 1998 BY: FRED W. THOMPSON
Fred W. Thompson
President and Chief Financial Officer
EXHIBIT 11.1
Computation of Earnings (Loss) per Share
Three Months Ended March 31
1997 1998
Weighted average number of common shares
outstanding used for Basic calculation 5,836,122 5,896,906
Effect of Common stock equivalents
including options and warrants 56,325 -
_________ _________
5,892,447 5,896,906
Net Income (Loss) $5,606,526 $ (406,142)
========= =========
Basic Income (Loss) per share $ 0.95 $ (0.07)
========== =========
Diluted Income (Loss) per share $ 0.96 $ (0.07)
========== =========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE 10-QSB
FOR THE PERIOD ENDED MARCH 31, 1998 FOR DBS INDUSTRIES, INC. AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 128,199
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 244,156
<PP&E> 73,277
<DEPRECIATION> 50,758
<TOTAL-ASSETS> 1,725,621
<CURRENT-LIABILITIES> 1,245,807
<BONDS> 0
0
0
<COMMON> 2,383
<OTHER-SE> 4,807,701
<TOTAL-LIABILITY-AND-EQUITY> 1,725,621
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 404,464
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,678
<INCOME-PRETAX> (406,142)
<INCOME-TAX> 0
<INCOME-CONTINUING> (406,142)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (406,142)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
