<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
--------------------- --------------------------
Commission File Number 0-21926
---------------------------------------------------------
AER ENERGY RESOURCES, INC.
--------------------------
(Exact name of registrant as specified in its charter)
Georgia 34-1621925
------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 Highlands Parkway, Suite G, Smyrna, Georgia 30082
------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(770) 433-2127
- -------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
There were 24,850,263 shares of Common Stock outstanding as of November 11,
1999.
<PAGE> 2
AER ENERGY RESOURCES, INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 1999
INDEX
<TABLE>
<CAPTION>
Page
----
PART I - FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Balance Sheets - September 30, 1999 and December 31, 1998. 3
Condensed Statements of Operations - Three Months Ended September 30, 4
1999 and 1998, Nine Months Ended September 30, 1999 and 1998, and Period From
July 17, 1989 (Date of Inception) to September 30, 1999.
Condensed Statements of Cash Flows - Nine Months Ended September 30, 5
1999 and 1998 and Period From July 17, 1989 (Date of Inception)
to September 30, 1999.
Notes to Condensed Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 7
RESULTS OF OPERATIONS
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 10
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,507,731 $ 4,249,868
Trade accounts receivable 7,835 --
Inventories, net 50,513 52,729
Prepaid expenses and other current assets 65,473 51,414
------------ ------------
Total current assets 2,631,552 4,354,011
Equipment and improvements 4,041,557 3,970,689
Less accumulated depreciation (3,338,830) (3,006,211)
------------ ------------
702,727 964,478
Other assets 11,841 16,841
------------ ------------
TOTAL ASSETS $ 3,346,120 $ 5,335,330
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 66,345 $ 79,089
Accrued royalties - related party -- 30,000
Deferred revenue 432,550 50,000
Other accrued expenses 139,439 125,901
------------ ------------
Total current liabilities 638,334 284,990
Long-term liabilities - deferred revenue 395,313 --
Stockholders' equity:
Preferred stock, no par value:
Authorized - 10,000,000 shares; no shares issued and outstanding -- --
Common stock, no par value:
Authorized - 100,000,000 shares; issued and outstanding - 24,850,263 shares
at September 30, 1999 and 24,862,263 shares at December 31, 1998 66,580,384 66,593,140
Unearned stock compensation (75,545) (115,840)
Deficit accumulated during the development stage (64,192,366) (61,426,960)
------------ ------------
Total stockholders' equity 2,312,473 5,050,340
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,346,120 $ 5,335,330
============ ============
</TABLE>
See notes to condensed financial statements.
3
<PAGE> 4
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
JULY 17, 1989
(DATE OF
THREE MONTHS ENDED NINE MONTHS ENDED INCEPTION) TO
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
License fees and research and
development revenues $ 484,783 $ 50,000 $ 1,464,158 $ 50,000 $ 1,814,158
Product sales -- -- -- -- 338,174
Cost of product sales -- -- -- -- (6,758,985)
------------ ------------ ------------ ------------ ------------
Gross margin on product sales -- -- -- -- (6,420,811)
------------ ------------ ------------ ------------ ------------
484,783 50,000 1,464,158 50,000 (4,606,653)
------------ ------------ ------------ ------------ ------------
Costs and expenses:
Research and development
- related party -- -- -- -- 1,145,913
- other 871,168 1,006,822 2,860,423 3,666,789 37,177,847
Marketing, general and administrative
- related party -- 25,000 50,000 74,933 1,388,695
- other 359,050 623,423 1,452,668 1,822,011 23,293,920
------------ ------------ ------------ ------------ ------------
Total costs and expenses 1,230,218 1,655,245 4,363,091 5,563,733 63,006,375
------------ ------------ ------------ ------------ ------------
Operating loss (745,435) (1,605,245) (2,898,933) (5,513,733) (67,613,028)
Interest income 34,741 79,289 133,527 317,345 4,021,665
Interest expense - related parties -- -- -- -- (264,445)
------------ ------------ ------------ ------------ ------------
Net loss $ (710,694) $ (1,525,956) $ (2,765,406) $ (5,196,388) $(63,855,808)
============ ============ ============ ============ ============
Net loss per share (basic and diluted) $ (0.03) $ (0.06) $ (0.11) $ (0.21) $ (4.01)
============ ============ ============ ============ ============
Weighted average shares outstanding
(basic and diluted) 24,850,263 24,862,263 24,853,695 24,831,700 15,939,931
</TABLE>
See notes to condensed financial statements.
4
<PAGE> 5
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
JULY 17, 1989
(DATE OF
NINE MONTHS ENDED INCEPTION) TO
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999
----------- ------------ ------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $(2,765,406) $ (5,196,388) $(63,855,808)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 335,582 351,921 3,751,384
Amortization of unearned stock compensation 27,539 63,287 728,371
Grant of compensatory stock options -- -- 14,063
Forgiveness of promissory notes -- -- 69,875
Loss on disposal of equipment -- -- 67,270
Deferred rental expense -- (2,112) --
Accretion of discount on short-term investments
and marketable securities (75,852) -- (263,259)
Net changes in operating assets and liabilities 733,979 366,214 1,073,450
----------- ------------ ------------
Net cash used in operating activities (1,744,158) (4,417,078) (58,414,654)
INVESTING ACTIVITIES:
Purchases of equipment and improvements (73,831) (26,529) (4,147,708)
Purchases of short-term investments and marketable securities (3,224,148) -- (14,736,444)
Purchase of license agreement -- -- (250,000)
Proceeds from sales/maturities of short-term investments and
marketable securities 3,300,000 -- 15,000,000
Changes in other assets -- -- (140,501)
----------- ------------ ------------
Net cash provided by (used in) investing activities 2,021 (26,529) (4,274,653)
FINANCING ACTIVITIES:
Proceeds from revolving credit note to related parties -- -- 5,430,000
Issuance of convertible debentures, net of issuance costs -- -- 9,834,500
Payments on notes payable to related parties -- -- (1,150,000)
Payments received on promissory notes -- 2,000 59,425
Issuance of common stock upon exercise of stock options -- 10,012 143,558
Issuance of common stock, net of issuance costs -- -- 50,879,555
----------- ------------ ------------
Net cash provided by financing activities -- 12,012 65,197,038
----------- ------------ ------------
(Decrease) increase in cash and cash equivalents (1,742,137) (4,431,595) 2,507,731
Cash and cash equivalents at beginning of period 4,249,868 10,206,870 --
----------- ------------ ------------
Cash and cash equivalents at end of period $ 2,507,731 $ 5,775,275 $ 2,507,731
=========== ============ ============
Supplemental disclosure of non-cash financing activities:
Upon the resignation of one member of the Company's Board
of Directors, 12,000 non-vested shares of common stock,
issued under the 1993 Non-Employee Directors' Restricted
Stock Award Plan, were forfeited and returned to
authorized and unissued shares. $ 12,756 $ -- $ 12,756
=========== ============ ============
</TABLE>
See notes to condensed financial statements.
5
<PAGE> 6
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of AER Energy
Resources, Inc. (the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. These financial statements
should be read in conjunction with the Company's audited financial statements
included in the Company's Annual Report on Form 10-K filed with the Securities
and Exchange Commission for the year ended December 31, 1998. Operating results
for the three and nine month periods ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1999 or any interim period.
2. SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
Cash and cash equivalents consist of cash, bank deposits and highly
liquid investments with maturities of three months or less when purchased and
are stated at cost, which approximates market.
Inventories
The Company's inventories are valued at the lower of cost or market,
using the first in, first out (FIFO) method. The inventory balances at September
30, 1999 and December 31, 1998 of $50,513 and $52,729, respectively, consist
entirely of raw materials.
Reclassifications
Certain amounts in the prior period financial statements have been
reclassified to conform to the current period presentation.
Use of Estimates
The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
6
<PAGE> 7
In accordance with FASB Statement No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
the Company records impairment losses on long-lived assets used in operations
when events and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amounts of those assets. Based on the Company's estimate of future
undiscounted cash flows, the Company expects to recover the carrying amounts of
its remaining fixed assets. The Company's estimates of future undiscounted cash
flows have taken into consideration its change in focus during 1998. Such
estimates contemplate the Company entering into license agreements and research
and development agreements, similar to its 1998 agreement with Duracell Inc.,
throughout the remaining lives of the Company's fixed assets. The Company may
need working capital infusions, from yet unidentified sources, to bridge
shortfalls in cash flow before such license or research and development
agreements are executed and generating cash. If the Company is unable to enter
into such agreements, raise needed working capital, or perform as anticipated, a
writedown of long-lived assets to fair value may be required. Write-offs of
obsolete equipment recorded in the nine-month periods ended September 30, 1999
and 1998 were $2,963 and $0, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Company was incorporated in 1989 and has been engaged in the
development and commercialization of high energy density zinc-air batteries. The
Company's operations, until 1998, were focused primarily on developing and
improving its technology, setting up the manufacturing process, testing and
selling zinc-air batteries, recruiting personnel, and similar activities. The
Company began selling its first product in August 1994, but sales from products
have been minimal.
In 1998, the Company changed its focus to research and product
development of zinc-air technology in primary (disposable) rather than
rechargeable batteries with plans to commercialize the technology through
alliances with large established battery and original equipment manufacturers
("OEMs"). This change allows the Company to capitalize on the capability of its
patented Diffusion Air Manager technology and opportunities in hand-held
electronic products like camcorders, cellular telephones, cordless telephones,
digital cameras, and hand-held computers. The Diffusion Air Manager is a
simplified method of isolating the cells in zinc-air batteries from exposure to
air during periods when the battery is in storage or not in use. The Company has
ceased marketing its rechargeable battery products.
In September 1998, the Company announced its Technology Licenses and
Services ("TLAS") Agreement with Duracell Inc., a subsidiary of The Gillette
Company, making Duracell the first licensee of the Company's zinc-air
technology. Under the TLAS Agreement, Duracell agrees to license the rights to
the Company's currently existing patents. In addition, Duracell is funding
certain joint product development projects with the Company in 1999. Duracell
will own technology developed under the projects it funds, and the Company will
have rights to utilize the technology. Duracell also has options to obtain
certain other license rights.
7
<PAGE> 8
Throughout 1999, the Company has been and will continue working with
Duracell under the TLAS Agreement, seeking additional license agreements for its
patented zinc-air technology with other companies, and focusing on the
development of prototype primary zinc-air batteries that utilize Diffusion Air
Manager technology.
RESULTS OF OPERATIONS
Three Months Ended September 30, 1999 and 1998
The Company generated $0.48 million and $0.05 million of license fees
and research and development revenues primarily related to the TLAS Agreement
with Duracell during the three months ended September 30, 1999 and 1998,
respectively.
Research and development expenses decreased 14% to $0.87 million for
the three months ended September 30, 1999 from $1.01 million for the same period
in 1998. This decrease resulted primarily from a decrease in patent attorney
legal fees, as well as reduced personnel-related expenses due to approximately
23% fewer employees than the same period in 1998.
Marketing, general and administrative expenses decreased 45% to $0.36
million for the three months ended September 30, 1999 from $0.65 million for the
same period in 1998. This decrease resulted primarily from a $0.15 million
provision for obsolete materials during the prior year's third quarter, lower
liability insurance premiums, decreased investor relations costs, the completion
of minimum royalty payments to the licensor of certain technology to the
Company, and lower personnel-related expenses due to employee reductions.
Nine Months Ended September 30, 1999 and 1998
The Company generated $1.46 million and $0.05 million of license fees
and research and development revenues primarily related to the TLAS Agreement
with Duracell during the nine months ended September 30, 1999 and 1998,
respectively.
Research and development expenses decreased 22% to $2.86 million for
the nine months ended September 30, 1999 from $3.67 million for the same period
in 1998. This decrease resulted primarily from reduced personnel-related
expenses due to fewer employees than the same period in 1998. These employee
reductions are associated with the Company's change in focus during 1998.
Marketing, general and administrative expenses decreased 21% to $1.50
million for the nine months ended September 30, 1999 from $1.90 million for the
same period in 1998. This decrease resulted primarily from a $0.18 million
provision for obsolete materials during the 1998 period, lower personnel-related
expenses due to employee reductions, lower liability insurance premiums, and a
decrease in trade show activities from the same period in 1998.
8
<PAGE> 9
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
As of September 30, 1999, the Company had cash and cash equivalents of
$2.51 million. The Company anticipates using these funds as needed to fund
capital equipment purchases, research and product development efforts, marketing
and licensing activities, production of prototype zinc-air battery products,
development of alliances with battery manufacturers and OEMs, working capital
and general corporate purposes as determined by management.
For the nine months ended September 30, 1999, net cash and cash
equivalents used in operating, investing, and financing activities decreased 61%
to $1.74 million from $4.43 million for the same period in 1998. This decrease
resulted primarily from the $2.23 million received from Duracell under the TLAS
Agreement during the nine months ended September 30, 1999 and the 22% decrease
in total costs and expenses for the nine month period ended September 30, 1999
compared to the same period in 1998.
The Company currently anticipates that its existing cash and cash
equivalents balance, along with cash anticipated to be received during the
remainder of 1999 under the TLAS Agreement, will fund operations and continue
technology development at the current level of activity through the end of 1999
and into early 2000. No later than early in the first half of 2000 the Company
will need to raise additional funds through additional license agreements,
research and development contracts, debt or equity. There is no assurance that
the needed funds will be raised. If sufficient funds are not raised, the Company
will be required to severely curtail or terminate operations.
The market price of the Company's common stock has fluctuated
significantly since it began to be publicly traded in July 1993 and may continue
to be highly volatile. Factors such as the ability of the Company to achieve
development goals, ability of the Company to commercialize its battery
technology, ability of the Company to license its technology, development of
competing battery technologies, ability of the Company to protect its
proprietary rights to its technology, improvements in conventional battery
technologies, demand for and acceptance of the Company's products in the
marketplace, ability to obtain commitments from battery companies and OEMs,
impact of any future governmental regulations, impact of pricing or material
costs, ability of the Company to raise additional funds, general market
conditions and other factors affecting the Company's business that are beyond
the Company's control may cause significant fluctuations in the market price of
the Company's common stock. The market prices of the stock of many high
technology companies have fluctuated substantially, often unrelated to the
operating or research and development performance of the specific companies.
Such market fluctuations could adversely affect the market price for the
Company's common stock.
On March 30, 1999, the common stock of the Company ceased trading on
the Nasdaq SmallCap Market, moving to over-the-counter stock trading on the OTC
Bulletin Board.
YEAR 2000 DISCLOSURE
The "Year 2000" issue is the result of some computer programs being
written using two digits instead of four digits to define an applicable year.
Time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000 which could potentially result in miscalculations or system
failure. The Year 2000 issue is believed to affect all companies and
organizations, including the Company. The Company has been assessing its
exposure to the Year
9
<PAGE> 10
2000 issue by reviewing all internal business, network and testing systems and
by identifying key areas of exposure related to outside third parties.
The Company has determined that its major operational and accounting
programs that control its purchasing, inventory, billing, accounts payable and
general accounting systems are designed to be Year 2000 compliant, and the
Company has received outside certification of this compliance. In addition to
its operational programs, the Company has several software programs that test
product performance and quality. These programs have been tested internally as
Year 2000 compliant, and the Company does not anticipate any material
modifications. The Company has completed the upgrades to its network server and
all user workstations, which are now Year 2000 compliant.
Currently, the Company has no critical interfacing systems to third
parties. It is very difficult to predict the Year 2000 impact on third parties
with which the Company has business transactions, and while the Company does not
anticipate any significant problems, there can be no assurance that problems
will not occur or not have a material adverse effect on the Company.
While the Company believes that the risks to the Company with respect
to Year 2000 issues are manageable, the Company cannot at this time fully assess
the potential impact.
FORWARD LOOKING STATEMENTS
This report contains statements which, to the extent that they are not
recitations of historical fact, may constitute "forward looking statements"
within the meaning of applicable federal securities laws and are based on the
Company's current expectations and assumptions. These expectations and
assumptions are subject to a number of risks and uncertainties which could cause
actual results to differ materially from those anticipated, which include but
are not limited to the following: ability of the Company to achieve development
goals, ability of the Company to commercialize its battery technology, ability
of the Company to license its technology, ability of the Company to implement
its new strategy, development of competing battery technologies, ability of the
Company to protect its proprietary rights to its technology, improvements in
conventional battery technologies, demand for and acceptance of the Company's
products in the marketplace, ability to obtain commitments from battery
manufacturers and OEMs, impact of any future governmental regulations, impact of
pricing or material costs, ability of the Company to raise additional funds and
other factors affecting the Company's business that are beyond the Company's
control. All forward looking statements contained in this report are intended to
be subject to the safe harbor protection provided by applicable federal
securities laws.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has invested a portion of its cash and cash equivalents in
highly liquid financial instruments. The Company has historically held, and
plans in the future to hold, all such instruments until maturity. If the
instruments were, for some reason not anticipated, redeemed earlier than their
maturity, there might be a gain or loss on the transaction. The Company has no
transactions that qualify for treatment under SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities".
AER Energy is a trademark of AER Energy Resources, Inc.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
27 Financial Data Schedule (for SEC use only).
(B) REPORTS ON FORM 8-K:
The registrant did not file any reports on Form 8-K during the three
months ended September 30, 1999.
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.
AER ENERGY RESOURCES, INC.
Date: November 11, 1999 By: /s/ David W. Dorheim
--------------------------------
David W. Dorheim, President and
Chief Executive Officer
Date: November 11, 1999 By: /s/ J.T. Moore
---------------------------------
J.T. Moore, Vice President,
Chief Financial Officer, Secretary
and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AER ENERGY
RESOURCES, INC.'S CONDENSED FINANCIAL STATEMENTS AS OF AND FOR THE NINE MONTHS
ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,507,731
<SECURITIES> 0
<RECEIVABLES> 7,835
<ALLOWANCES> 0
<INVENTORY> 50,513
<CURRENT-ASSETS> 2,631,552
<PP&E> 4,041,557
<DEPRECIATION> 3,338,830
<TOTAL-ASSETS> 3,346,120
<CURRENT-LIABILITIES> 638,334
<BONDS> 0
0
0
<COMMON> 66,580,384
<OTHER-SE> (64,267,911)
<TOTAL-LIABILITY-AND-EQUITY> 3,346,120
<SALES> 0
<TOTAL-REVENUES> 1,464,158
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,363,091
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,765,406)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,765,406)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,765,406)
<EPS-BASIC> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
