<PAGE> 1
FORM 8-K/A-2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: JUNE 21, 1996
CYCOMM INTERNATIONAL INC.
--------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
WYOMING 1-11686(12b) 54-1779046
- --------------------------------------------------------------------------------
(STATE OF OTHER (COMMISSION (IRS EMPLOYER
JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.)
INCORPORATION)
1420 SPRINGHILL ROAD, SUITE 420, MCLEAN, VA 22102
------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (703) 903-9548
--------------
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 21, 1996, Cycomm International, Inc. (the "Company") entered
into an asset purchase agreement by and among the Company and 9036-8028
Quebec, Inc. (collectively the "Buyer") and M3i Technologies Inc. and M3i
Systems Inc. (collectively the "Seller") under which the Buyer acquired
substantially all of the assets of the Seller, for an aggregate purchase price,
subject to earn-out provisions, of a maximum of $5,000,000. The Seller is
based in Montreal, Quebec and is engaged in the design, manufacturing, sale and
support of mobile computing and communications systems.
On June 3, 1996, the Company incorporated 9036-8028 Quebec, Inc. for
the sole purpose of acquiring certain assets of the Seller. On June 21, 1996,
the Buyer acquired substantially all of the assets of the Seller in exchange
for cash of $1,000,000 and Common Stock of the Company valued at a maximum of
$4,000,000 for an aggregate purchase price, subject to earn-out provisions, of
a maximum of $5,000,000. The amount of the Common Stock is subject to earn-out
provisions based on the achievement of certain unit sales volumes for a five
year period. Any Common Stock issued under the earn-out provisions will be
issued at the average current market price for the quarter of issuance. The
earn-out provisions will be fully satisfied upon the Company recording
approximately $31 million in revenues from the sales of computer units.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) The Company is unable to provide certain audited information
regarding its acquisition of substantially all the assets of Seller, because
such information is not known or reasonably available to the Company without
undue effort and expense. See Rule 12b-21 of the Securities Exchange Act of
1934. Pursuant to the terms of the Asset Purchase Agreement, the Seller
represented that audited financial statements for M3i Technologies Inc.'s
("M3i's") fiscal year ending March 31, 1996 would be provided to the Company
shortly after the closing of the transaction. In December 1996, after repeated
requests by the Company for M3i's audited financial statements, the Seller
informed the Company that the audit of M3i would not be completed. Because the
Seller has advised the Company that the audit of M3i for the period preceding
the Company's purchase of M3i's assets would not be completed, and because the
information required to complete an audit of M3i rests peculiarly within the
knowledge of the Seller, which is not affiliated with the Company, the Company
is unable to obtain audited financial statements for M3i without unreasonable
effort or expense. The Company only has access to unaudited financial
statements for M3i for the year ended March 31, 1996, and for and the interim
period ended May 31, 1996. These unaudited financial statements were prepared
using Canadian generally accepted accounting principles, which differ in
certain respects from generally accepted accounting principles in the United
States; and were not compiled by the Company.
(b) Pro form financial information of Cycomm International.
(c) Unaudited Financial Statements for the year ended March 31, 1996
and the two months ended May 31, 1996 of M3i Technologies Inc.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CYCOMM INTERNATIONAL INC.
Date: December 1, 1997 By:
---------------- --------------------------
Albert I. Hawk
Chief Executive Officer
<PAGE> 4
M3I TECHNOLOGIES INC.
UNAUDITED BALANCE SHEET
AS OF MARCH 31, 1996 AND 1995
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
CANADIAN $
MARCH 31
1996 1995
---- ----
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash 2,381 ---
Investments
Accounts receivable 850,733 220,079
Advances 185,245 107,075
Government assistance receivable 787,259 350,000
Inventory 3,761,062 1,377,394
Other current assets 5,826 15,308
----------- -----------
TOTAL 5,592,506 2,069,856
OTHER ASSETS
Fixed assets 786,286 957,500
Deferred development cost 2,131,585 2,197,185
Investments Lectogram (R&D) Inc. 60,500 60,500
Pre-production costs 1,878,338 1,856,405
Tax Credit receivable --- 262,911
----------- -----------
TOTAL 4,856,709 5,334,501
----------- -----------
TOTAL ASSETS 10,449,214 7,404,357
=========== ===========
LIABILITIES
CURRENT LIABILITIES
Bank loan 1,218,447 192,636
Accounts payable 535,969 301,357
Salaries payables 68,231 ---
Income taxes (900,500) ---
Unearned income 9,656 ---
----------- -----------
TOTAL 931,803 493,993
LONG TERM BORROWING
Due to shareholder --- 373,739
Long term debt 950,000 950,000
Due to related companies 8,292,588 3,636,677
----------- -----------
TOTAL 9,242,588 4,960,416
SHAREHOLDERS' EQUITY
Common stock 249,948 249,948
Preferred stock 1,700,000 1,700,000
Retained earnings 1 ---
Earnings for the fiscal year (1,675,126) ---
----------- -----------
TOTAL 274,823 1,949,948
----------- -----------
LIABILITIES & EQUITY 10,449,214 7,404,357
=========== ===========
</TABLE>
<PAGE> 5
M3I TECHNOLOGIES INC.
INCOME STATEMENT
FOR THE YEAR ENDED MARCH 31ST, 1996
(IN CANADIAN DOLLARS)
<TABLE>
<S> <C>
SALES
PCMobile 1,694,237
Peripheral 653,941
----------
TOTAL 2,348,178
COST OF GOODS SOLD
Materials (1,089,898)
Assembly (16,168)
Peripheral (399,607)
----------
TOTAL (1,505,673)
Royalties (39,503)
Sales commissions (41,025)
----------
TOTAL COST OF GOODS SOLD (1,586,201)
----------
GROSS PROFIT MARGIN 761,977
OPERATING EXPENSES
Salaries & fringe benefits (1,694,074)
Materials, NRE and sub-contracts (164,492)
Equipment rent and maintenance (13,591)
Business promotion fees (64,115)
Transportation fees (7,782)
Printing, documentation and office expenditures (97,366)
Travelling expenses (166,195)
Facilities expenses (118,438)
Training expenses (2,321)
Professional fees (118,549)
Parent administrative charges (120,000)
Premium (73,812)
Other expenses (418,905)
Other expenses (109,699)
Other maintenance (1,020)
Other revenues 84,175
----------
TOTAL OPERATING EXPENSES (3,086,184)
Depreciation deferred development costs (118,400)
Depreciation fixed assets (175,049)
----------
TOTAL OPERATING EXPENSES & DEPRECIATIONS (3,379,633)
FINANCIAL CHARGES
Interest and bank charges (67,340)
Long term interest charges (57,133)
Other interest expenses (394)
----------
TOTAL (124,867)
INCOME BEFORE TAXES (2,742,523)
----------
Income taxes 900,500
Investments tax credits 166,897
----------
TOTAL TAXES 1,067,397
----------
NET INCOME (1,675,126)
==========
</TABLE>
<PAGE> 6
M3I TECHNOLOGIES INC.
STATEMENT OF CASH FLOW
FOR THE YEAR ENDED MARCH 31ST, 1996
(IN CANADIAN DOLLARS)
<TABLE>
<S> <C>
OPERATING ACTIVITIES
- --------------------
Net loss (1,675,126)
Adjustment to reconcile net loss to net cash provided
Depreciation of fixed assets 175,049
Amortization of deferred costs 118,400
Change in non-cash working capital balance related to
operating activities (3,456,198)
----------
Cash (used) in operating activities (4,837,875)
==========
INVESTING ACTIVITIES
- --------------------
Acquisition of fixed assets (3,835)
Disposal Deferred development costs (52,800)
Pre-Production costs (21,933)
Tax credit receivable 262,911
----------
Cash (used) in investing activities 184,343
==========
FINANCING ACTIVITIES
- --------------------
Due to related companies 4,655,911
Shareholders Equity 2
----------
Cash provided by financing activities 4,655,913
----------
Increase (decrease) in cash during the year 2,381
Cash, beginning of the year ---
----------
Cash, end of year 2,381
==========
</TABLE>
<PAGE> 7
M3I TECHNOLOGIES INC.
NOTES TO BALANCE SHEET
MARCH 31, 1996
- --------------------------------------------------------------------------------
1.INCORPORATION
The Company was incorporated under Part IA of the Quebec Companies Act on
November 2, 1993 and has not yet commenced operations.
2.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
INVENTORIES
Inventories are recorded at the lower of cost and net realizable value, with
cost being determined on the average cost basis.
FIXED ASSETS
Fixed assets are recorded at cost. Depreciation is provided for over the
estimated useful lives of the fixed assets as follows:
Computer equipment 20% straight-line
Furniture and fixtures 20% declining balance
Moulds and dies 20% straight-line
Leasehold improvements 20% straight-line
LONG-TERM INVESTMENT
The long-term investment is valued at cost and written down if and when there
has been a permanent impairment in value.
DEVELOPMENT COSTS
Internally-generated development costs are expensed as incurred unless
management believes a development project meets a strict interpretation of
principles applicable to deferral and amortization. Purchased development
costs are capitalized. The costs which are capitalized are amortized based
on the sales of the product for which these costs were incurred. The net
book value of all deferred development projects is reviewed annually and
written down when it has been determined that the costs may not be recovered
from corresponding future sales.
PRE-PRODUCTION COSTS
Pre-production costs are amortized based on the estimated market life of the
products to be sold. Any incidental revenues earned during the pre-production
period are recorded as a reduction of these pre-production costs.
INCOME TAXES AND TAX CREDITS
The Company follows the tax allocation basis of accounting for income taxes.
Deferred income taxes are provided for on timing differences between
accounting income and income for tax purposes. These differences result
because certain provisions recorded in the accounts are not deductible for
tax purposes until a future year and because certain amounts included in
accounting income are not taxable until a future year. Tax credits arising
from the acquisition of fixed assets are recorded as a deduction from the
cost of the assets acquired while those arising from current expenses are
deducted from either (i) those expensed in the year of expenditure, or (ii)
those capitalized as pre-production costs.
<PAGE> 8
M3I TECHNOLOGIES INC.
NOTES TO BALANCE SHEET
MARCH 31, 1996 PAGE 2
- -----------------------------------------------------------------------------
3. INVENTORIES
<TABLE>
<CAPTION>
1996 1995
(unaudited) (unaudited)
<S> <C> <C>
Raw materials $3,132,892 $1,153,070
Finished goods 628,170 224,324
---------- ----------
$3,761,062 $1,377,394
========== ==========
</TABLE>
4. FIXED ASSETS
<TABLE>
<CAPTION>
1996 1995
(unaudited) (unaudited)
<S> <C> <C>
Computer equipment $201,260 $222,930
Furniture and fixtures 25,568 26,770
Moulds and dies 557,129 704,888
Leasehold improvements 2,329 2,912
-------- --------
$786,286 $957,500
======== ========
</TABLE>
5. PRE-PRODUCTION COSTS
Pre-production costs consist of the following:
<TABLE>
<CAPTION>
1996 1995
(unaudited) (unaudited)
<S> <C> <C>
Salaries and fringe benefits $1,694,074 $1,718,439
Materials 164,492 328,558
Professional fees 118,549 169,348
Rent 118,438 96,867
Other expenses 528,604 266,257
---------- ----------
2,624,157 2,579,469
Less: Tax credits 900,500 531,055
Incidental revenue 166,897 192,009
---------- ----------
1,067,397 723,064
---------- ----------
$1,556,760 $1,856,405
========== ==========
</TABLE>
<PAGE> 9
M3I TECHNOLOGIES INC.
NOTES TO BALANCE SHEET
MARCH 31, 1996 PAGE 3
- -------------------------------------------------------------------------------
6. DEBENTURE PAYABLE
<TABLE>
<CAPTION>
1996 1995
(unaudited) (unaudited)
<S> <C> <C>
Exchangeable debenture, non-interest bearing until March 31, 1995, and
bearing interest at 6% per annum, thereafter, maturing in March 1999,
exchangeable at the option of the debenture holder after March 31,
1997, provided that the related company is listed on a stock exchange
on the basis of the average closing price of the related company's
common shares less a discount varying from 10% to 15% $950,000 $950,000
======== ========
</TABLE>
7. SHARE CAPITAL
<TABLE>
<CAPTION>
1996 1995
(unaudited) (unaudited)
<S> <C> <C>
Authorized
Unlimited number of voting and participating Class A, B and C
common shares, without nominal or par value
Unlimited number of First rank preferred shares issuable in series,
without par value. These shares are redeemable based on the
future sales of the PCMobile at a redemption price of their
issue price, carry a monthly, preferential, fixed
non-cumulative dividend at the rate of $0.003 per share
Unlimited number of Second rank preferred shares issuable
in series, with or without par value
Issued
6,822,000 Class A common shares $189,447 $ 189,447
2,178,000 Class B common shares 60,501 60,501
1,700,000 Second rank Series 1 preferred shares 1,700,000 1,700,000
---------- ----------
$1,949,948 $1,949,948
========== ==========
</TABLE>
<PAGE> 10
M3I TECHNOLOGIES INC.
NOTES TO BALANCE SHEET
MARCH 31, 1996 PAGE 4
- -------------------------------------------------------------------------------
8. TAX CREDITS
The tax credits claimed have been applied as follows;
<TABLE>
<CAPTION>
1996 1995
(unaudited) (unaudited)
<S> <C> <C>
Reduction of expenses incurred on research and development activities $151,243 $430,392
Reduction of the cost of fixed assets. 1,191 96,225
-------- --------
$152,434 $526,617
======== ========
</TABLE>
9. INCOME TAXES
The Company has non-capital losses of approximately $3,100,000 which can
be carried forward up to 2001, 2002 and 2003 to reduce future taxable
income. In addition, the Company has unclaimed research and development
expenses in the approximate amount of $1,577,000 (federal) and $1,722,000
(Quebec) which can be carried forward indefinitely to reduce future
taxable income. The future tax benefits of these items have not been set
up in the financial statements nor reflected as a reduction of the
pre-production costs.
10. RELATED PARTY TRANSACTIONS
During the year in the course of its regular business activities, the
Company purchased a total of $663,359 (1995 - $398,024 - unaudited) in
services from related companies.
11. COMMITMENTS
The Company has issued an irrevocable standby letter of credit in the
amount of US$700,000 to a sub-contractor for the manufacture of the
PCMobile.
12. COMPARATIVE FIGURES
Certain of the 1995 comparative figures have been reclassified to conform
with the financial statement presentation adopted for the current year.
<PAGE> 11
M3I TECHNOLOGIES INC.
BALANCE SHEET
AS OF MAY 31, 1996 AND MARCH 31, 1996
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
CANADIAN $
MAY 31, 1996 MARCH 31, 1996
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash 2,381 2,381
Investments
Accounts receivable 626,471 1,464,879
Advances 184,656 185,245
Taxes receivable 209,880 ---
Government assistance receivable 800,144 788,800
Inventory 3,996,061 3,761,062
Other current assets --- 5,825
----------- -----------
TOTAL 5,819,593 6,208,191
=========== ===========
OTHER ASSETS
Fixed assets 760,053 786,286
Deferred development cost 2,120,185 2,127,688
Investments Lectogram (R&D) Inc. 60,500 60,500
Tax credit receivable 1,008,000
Pre-production costs 1,868,938 1,878,338
----------- -----------
TOTAL 5,817,676 4,852,812
----------- -----------
TOTAL ASSETS 11,637,269 11,061,003
=========== ===========
LIABILITIES
CURRENT LIABILITIES
Bank loan 1,590,924 1,218,447
Accounts payable 433,037 535,969
Salaries payables 171,862 68,231
Income taxes --- (900,500)
Unearned income 9,656 9,656
----------- -----------
TOTAL 2,205,479 931,803
LONG TERM BORROWING
Due to shareholder 373,739 373,739
Long term debt 950,000 950,000
Due to related companies 8,040,177 8,534,535
----------- -----------
TOTAL 9,363,916 9,858,274
SHAREHOLDERS' EQUITY
Common stock 249,948 249,948
Preferred stock 1,700,000 1,700,000
Retained earnings (1,675,126) 1
Earnings for the fiscal year (206,949) (1,679,023)
----------- -----------
TOTAL 67,874 270,926
----------- -----------
LIABILITIES & EQUITY 11,637,269 11,061,003
=========== ===========
</TABLE>
<PAGE> 12
M3I TECHNOLOGIES INC.
INCOME STATEMENT
FOR THE TWO MONTHS ENDED MAY 31, 1996
(IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
CANADIAN $
<S> <C>
SALES
PCMobile 331,806
Peripheral 139,762
--------
TOTAL 471,568
COST OF GOODS SOLD
Materials (157,677)
Assembly (717)
Peripheral (83,152)
--------
TOTAL (241,546)
Royalties (6,315)
Sales commissions (17,976)
--------
TOTAL COST OF GOODS SOLD (265,837)
--------
GROSS PROFIT MARGIN 205,731
OPERATING EXPENSES
Salaries & fringe benefits (291,672)
Materials, NRE and sub-contracts (30,245)
Equipment rent and maintenance (5,716)
Business promotion fees (8,599)
Transportation fees 1,350
Printing, documentation and office expenditures (13,379)
Travelling expenses (31,081)
Facilities expenses (19,155)
Communications (14,153)
Training expenses (1,388)
Professionnal fees (16,213)
Parent administrative charges (20,000)
Other expenses (910)
--------
TOTAL OPERATING EXPENSES (451,161)
Depreciation deferred development costs (20,800)
Depreciation fixed assets (29,767)
--------
TOTAL OPERATING EXPENSES & DEPRECIATIONS (501,728)
FINANCIAL CHARGES
Interest and bank charges (20,242)
Long term interest charges (9,554)
--------
TOTAL (29,796)
--------
INCOME BEFORE TAXES (325,793)
--------
Income taxes 107,500
Investments tax credits 11,344
--------
TOTAL TAXES 118,844
--------
NET INCOME (206,949)
========
</TABLE>
<PAGE> 13
M3I TECHNOLOGIES INC.
STATEMENT OF CASH FLOW
FOR THE TWO MONTHS ENDED MAY 31ST, 1996
(IN CANADIAN DOLLARS)
<TABLE>
<S> <C>
OPERATING ACTIVITIES
- --------------------
Net loss (206,949)
Adjustment to reconcile net loss to net cash provided
Depreciation of fixed assets 29,767
Amortization of deferred costs 20,800
Change in non-cash working capital balance related to
operating activities 408,430
--------
Cash (used) in operating activities 252,048
--------
INVESTING ACTIVITIES
- --------------------
Acquisition of fixed assets
Disposal Deferred development costs 240
Pre-Production costs 123
--------
Cash (used) in investing activities 363
--------
FINANCING ACTIVITIES
- --------------------
Due to related companies (252,411)
--------
Cash provided by financing activities (252,411)
--------
Increase (decrease) in cash during the period ---
Cash, beginning of the period 2,381
--------
Cash, end of period 2,381
========
</TABLE>
<PAGE> 14
CYCOMM INTERNATIONAL INC.
PRO FORMA FINANCIAL INFORMATION
ACQUISITION OF XL COMPUTING CANADA INC. ("XL CANADA")
<TABLE>
<CAPTION>
BALANCE SHEET (A) (B)
Acquisition of XL Canada
Actual M3i Tech. Inc. June 21, 1996
May 31, 1996 Assets Balance Sheet
----------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
Current Assets
Cash $ 2,477,267 (1,000,000) $ -
Accounts Receivable 1,782,982 184,466
Inventories 2,691,000 2,968,998
Prepaid Expenses 186,451
----------------------------------------------------------------
7,137,700 (1,000,000) 3,153,465
Notes Receivable 69,182
Property & Equipment - Net 1,593,672 641,474
Long-term Investments 1,175,859 1,000,000
Deferred Costs 473,838
Goodwill - Net 1,849,114
Patents - Net 22,500
----------------------------------------------------------------
$ 12,321,865 $ - $ 3,794,939
================================================================
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable & Accrued Liabilities $ 2,404,934
Due to affiliate 60,129
Dividends payable-preferred stock 46,000
Capital Lease Obligations-current 9,360
Notes Payable - Current Portion 1,032,942
----------------------------------------------------------------
3,553,365
Convertible Debentures 3,309,001
Capital Lease Obligations-long-term 8,207 79,004
Deferred Credit
Shareholders' Equity
Preferred Stock 1,500,000
Common Stock 33,584,302 3,715,935
Accumulated Deficit (29,633,010)
----------------------------------------------------------------
5,451,292 3,715,935
----------------------------------------------------------------
$ 12,321,865 $ - $ 3,794,939
================================================================
<CAPTION>
BALANCE SHEET
(C)
Consolidation & Pro Forma
Elimination May 31, 1996
------------------------------------
ASSETS <C> <C>
Current Assets
Cash $ 1,477,267
Accounts Receivable 1,967,448
Inventories 5,659,998
Prepaid Expenses 186,451
------------------------------------
9,291,165
Notes Receivable 69,182
Property & Equipment - Net (641,474) 1,593,672
Long-term Investments (1,000,000) 1,175,859
Deferred Costs 473,838
Goodwill - Net 1,849,114
Patents - Net 22,500
------------------------------------
$ (1,641,474) $ 14,475,330
====================================
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable & Accrued Liabilites $ 2,404,934
Due to affiliate 60,129
Dividends payable-prefered stock 46,000
Capital Lease Obligations-current 9,360
Notes Payable - Current Portion 1,032,942
------------------------------------
3,553,365
Convertible Debentures 3,309,001
Capital Lease Obligations-long-term 87,211
DeferredCredit 2,074,461 2,074,461
Shareholders' Equity
Preferred Stock 1,500,000
Common Stock (3,715,935) 33,584,302
Accumulated Deficit (29,633,010)
------------------------------------
(3,715,935) 5,451,292
------------------------------------
$ (1,641,474) $ 14,475,330
====================================
</TABLE>
PRO FORMA ADJUSTMENTS:
(A) On June 21, 1996, Cycomm, through a wholly-owned subsidiary, acquired
certain assets and assumed certain liabilites of M3i Technologies in
exchange for $1,000,000 cash and a earn-out of a maximum of $4,000,000 of
stock. The subsidiary has been named XL Computing Canada Inc.
(B) Per the unaudited financial statements of XL Canada.
(C) Pro forma adjustments include (i) the elimination of the investment in
XL Canada, and (ii) the allocation of the excess fair market value of net
assets acquired over cost to negative goodwill.
<PAGE> 15
CYCOMM INTERNATIONAL INC.
PRO FORMA FINANCIAL INFORMATION
ACQUISITION OF XL COMPUTING CANADA INC. ("XL CANADA")
INCOME STATEMENT
<TABLE>
<CAPTION>
Actual XL Canada Pro Forma
Twelve Months Twelve Months (A) Twelve Months
Ended Ended Pro Forma Ended
May 31, 1996 May 31, 1996 Adjustments May 31, 1996
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 4,985,036 $1,966,679 $ 6,951,715
Cost of sales 3,634,254 1,284,196 4,918,450
-------------------------------------------------------------------------------
Gross profit 1,350,782 682,483 2,033,265
-------------------------------------------------------------------------------
General & Administrative 7,719,858 2,436,103 10,155,961
Depreciation and amortization 1,228,295 237,542 (207,446) 1,258,391
-------------------------------------------------------------------------------
8,948,153 2,673,645 (207,446) 11,414,352
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
LOSS FROM OPERATIONS (7,597,371) (1,991,162) 207,446 (9,381,087)
-------------------------------------------------------------------------------
OTHER INCOME(EXPENSE)
Interest income 64,345 64,345
Interest expense (235,190) (111,265) (346,455)
Gain (loss) on sale of fixed assets (22,408) (22,408)
Other income 6,019 797,599 803,618
-------------------------------------------------------------------------------
(187,234) 686,334 499,100
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NET LOSS $ (7,784,605) $ (1,304,828) $ 207,446 $ (8,881,987)
===============================================================================
LOSS PER SHARE
Net loss per share ($1.95) ($2.22)
============== =============
Weighted average shares outstanding 4,002,289 4,002,289
============== =============
</TABLE>
PRO FORMA ADJUSTMENTS:
(A) Amortization of deferred credit of $2,074,461 over 10 years.