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 June 30, 1996
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: 0-19813
INFONOW CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
04-3083360
(I.R.S. Employer Identification No.)
3131 So. Vaughn Way, Suite 134, Aurora, CO 80014
(Address of principal executive offices) (Zip Code)
(303) 368-4646
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for 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. [X] Yes [ ] No
3,576,829 shares of common stock, $.001 par value, were outstanding as
of August 8, 1996.
INFONOW CORPORATION
INDEX
[S] [C]
PART I. Financial Information Page No.
Item 1. Financial Statements
Balance Sheets -- June 30, 1996 (Unaudited)
and December 31, 1995 1
Unaudited Statements of Operations -- For
the Three Months Ended June 30, 1996 and
June 30, 1995, and for the Six Months Ended
June 30, 1996 and June 30, 1995. 2
Unaudited Statements of Cash Flows -- For
the Six Months Ended June 30, 1996 and
June 30, 1995 3
Notes to Unaudited Condensed
Financial Statements 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 6
PART II. Other Information 12
SIGNATURES 14
INFONOW CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION> June 30, 1996 December 31, 1995
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 182,854 $ 231,781
Accounts receivable, net 316,217 494,918
Other current assets 55,900 34,809
Total current assets 554,971 761,508
Property and Equipment, net 297,279 336,050
Goodwill, net of accumulated
amortization of $194,079 and
$87,820 at June 30, 1996and
December 31, 1995, respectively. 2,993,696 3,099,955
Software development costs, net of
accumulated amortization of
$ 38,889 at June 30, 1996. 382,488 -
Other assets and deferred charges 19,717 18,381
Total assets $ 4,248,151 $ 4,215,894
CURRENT LIABILITIES:
Accounts payable and accrued
expenses $ 813,563 $ 435,591
Notes payable - current portion 83,011 43,202
Related party payables 150,000 -
Deferred compensation 108,612 -
Unearned revenue 42,835 123,386
Capital lease obligation - current 3,786 3,514
Total current liabilities $ 1,201,807 $ 605,693
CAPITAL LEASE OBLIGATION 15,840 14,039
NOTES PAYABLE 149,551 172,440
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDER'S EQUITY
Preferred stock, $.001 par value;
2,000,000 shares authorized,
none issued - -
Common stock, $.001 par value;
5,000,000 shares authorized,
3,107,275 and 3,183,567 shares
issued and outstanding at
March 31, 1996 and December 31,1995,
respectively 3,669 3,184
- -
Treasury stock
Additional paid-in capital 19,685,874 19,478,118
Accumulated deficit (16,808,590) (16,057,580)
Total stockholder's equity 2,880,953 3,423,722
Total liabilities and
stockholder's equity $ 4,248,151 $ 4,215,894
</TABLE>
The accompanying notes to financial statements
are an integral part of these consolidated balance sheets
INFONOW CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION> For the Three Months For the Six Months
Ended June 30, Ended June 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
SALES $ 479,481 $ 83,879 $1,222,814 $ 139,127
OPERATING EXPENSES:
Cost of sales 369,186 65,210 534,670 97,218
Selling, general and
administrative 667,899 654,679 1,428,122 939,660
Research and development - 12 - 11,740
Total operating expenses 1,037,085 719,901 1,962,792 1,048,618
Net loss from operations (557,604) (636,022) (739,978) (904,491)
OTHER INCOME (EXPENSE):
Loss on disposition of
assets - (72,758) - (113,422)
Interest income (expense),
net (7,068) 812 (11,032) 7,815
Net loss before extraor-
dinary gain from debt
restructuring (564,672) (707,968) 751,011) (1,030,728)
EXTRAORDINARY GAIN FROM
DEBT RESTRUCTURING - 169,683 - 169,683
NET LOSS $ (564,672) $ (538,285) $ (751,011) $ (861,045)
Net loss per common share
before extraordinary gains
from debt restructuring $ (0.17) $ (0.59) $ (0.23) $ 1.35)
Extraordinary gain from
debt restructuring - $ 0.14 - $ 0.22
Net loss per common share $ (0.17) $ (0.45) $ (0.23) $ (1.13)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 3,345,603 1,191,431 3,241,718 763,147
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
INFONOW CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION> For the Six Months Ended June 30,
1996 1995
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net loss $ (751,010) $ (861,045)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 235,813 61,160
Gain on debt restructuring (169,683)
Allowance for bad debts 43,785 -
Compensation expense related to stock
options and stock warrant issuances 327,599
Loss on asset dispositions 125,469
Changes in operating assets and liabilities:
Decrease (Increase ) in accounts receivable 134,916 101,138
Decrease in inventory - 5,969
Increase in other current assets (21,089) (34,797)
Increase (decrease) in payables and accrued
liabilities 236,582 51,782
Increase (decrease) in payables to officers,
directors and related parties - 114
Increase in unearned revenue (80,551) 55,250
Net cash flows used in operating activities (201,554) (337,044)
CASH FLOWS FROM (USED IN) INVESTING ACTIVITIES:
Purchase of property and equipment (51,895) (8,825)
Proceeds of net assets of Cimarron - (160,000)
Decrease (increase) in other assets 422,712) -
Proceeds from sale of equipment-12,047
Net cash flow used in investing activities (474,607) (156,778)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from issuance of common stock - 1,250,956
Proceeds from the exercise of options and
warrants 208,241 -
Payment of capital lease obligation (1,710) (1,721)
Proceeds from notes payable 553,664 292,512
Payment of notes payable (132,961) (210,247)
Net cash flows from financing activities 627,234 1,331,500
Net increase (decrease) in cash and cash
equivalents (48,927) 837,678
CASH AND CASH EQUIVALENTS, beginning of period 231,781 17,976
CASH AND CASH EQUIVALENTS, end of period $ 182,854 $ 855,654
Supplemental Information:
Cash paid during period for interest $ 14,200 $ 29,230
</TABLE>
The accompanying notes to condensed financial statements are an integral
part of these condensed statements.
INFONOW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Note 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion
of management,necessary for a fair presentation ofthe financial position and
operating results for the interim periods. Thefinancial statements as of
December 31, 1995 have been derived from audited financial statements,
the report on which included an explanatory paragraph describing
uncertainties concerning the Company's ability to continue as a going
concern. The financial statements should be read in conjunction with the
financial statements and notes thereto contained in the Company's Form 10-K
for the fiscal year ended December 31, 1995. The results of operations for
the three months and six months ended June 30, 1996 are not necessarily
indicative of the results that will be achieved for the entire fiscal
year ending December 31, 1996.
Note 2 - SUPPLEMENTAL CASH FLOW DISCLOSURES
During the six months ended June 30, 1996, the Company completed a noncash
transaction with Environmental Research Institute, Inc. ("ESRI"), in which
the company received computer equipment and software licenses from ESRI in
exchange for an obligation of $350,000 to be paid to ESRI which has been
recorded as an accrued expense.
During the six months ended June 30, 1995, the Company had the following
noncash transactions: the Company purchased Cimarron International, Inc.
("Cimarron") with a combination of cash, notes and common stock, the Company
renegotiated certain accounts and notes payable, the Company agreed to issue
common stock, warrants, and certain other consideration to certain related
party debtholders and preferred shareholders, and the Company converted a
convertible note payable to common stock.
Note 3 - RELATED PARTY TRANSACTIONS
On March 29, 1996, the company executed a promissory note to the Chief
Financial Officer of the Company in the amount of $100,000 secured by all
the receivables of the Company. The note is due in March 1997 bearing
interest at prime plus 2.75%. The note can be converted into common stock
of the Company at $3.00 per share at the option of the note holder at any
time prior to maturity.
In a separate transaction, a Vice-President of the Company has advanced
$50,000 to the Company as a short term non-interest bearing loan.
Item 2: Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The Company was originally formed to engage in the development and
marketing of an electronic distribution system using CD-ROM technology for
software programs and other products. During 1995, the Company ceased all
activities in this business and shifted its strategy towards providing
Internet-based turn-key applications and services to large business and
governmental organizations. As part of this strategy change, the Company
acquired Cimarron International, Inc., a multimedia production company and
Navigist, Inc., a network engineering consulting company in May and August
of 1995, respectively. In addition to these acquisitions, the Company formed
a third business unit, Internet Products, which is pursuing opportunities
on the Internet utilizing the skills of both Cimarron and Navigist, as well
as its own personnel.
As the result of declining sales and negative cash flows from it's Navigist
operations during the six months ended June 30, 1996, the Company ceased
Navigist's network and communications consulting operations located in
Denver, CO during the second quarter. The applications development group
that was previously part of the Denver Navigist operations was consolidated
into the Internet Products Group. Navigist's San Jose operations have
remained unchanged, and the Company believes that those ongoing operations
are self sustaining on a cash flow basis. These actions were taken to better
focus the application development group on Internet Products projects and
reduce recent operating and cash losses due to poor sales in the network
communications engineering business in Denver.
In July 1996, the Company deployed its first Internet offering, called
FindNowSM a locator and mapping service. FindNowSM was integrated into the VISA
International web site (http://www.visa.com) in July 1996, and is the first
customer for this service. In August of 1996, the Company implemented the
FindNowSM system for Compaq Computers (http://www.compaq.com). The Company
is in discussions with other customers at the current time and expects sales
of this service to increase in the third and fourth quarters of this fiscal
year.
Results of Operations
As discussed in the Company's annual report on Form 10-K for the fiscal
year ended December 31, 1995, the Company's business changed substantially
in 1995. The results of operations for the quarter ended June 30, 1995
include the results of the operations for Cimarron from May 23, 1995, which
was the date the Company acquired Cimarron. The results of Navigist for the
six months ended June 30, 1995 were not included as the Company did not
acquire Navigist until August 1995. For the six months ended June 30, 1995,
$76,041 of the Company's revenues related to the sales of software
distributed via CD-ROM. The results for the three and six months ended J
une 30, 1996 reflect the acquisitions of Cimarron and Navigist, the
formation of the Company's Internet Products Group, and include no revenues
or expenses from the Company's previous CD-ROM software distribution
business as all operations in this business were discontinued in the third
quarter of 1995.
Three and Six Months Ended June 30, 1996 Compared to the Three and Six
Months Ended June 30, 1995
Total sales for the three months and six months ended June 30, 1996
increased by 471% and 779%, respectively compared to the same periods in the
prior year. These increases are the result of the acquisition of the
operations of Cimarron and Navigist and revenues generated from the Internet
Products Group, which comprised 47%, 38% and 15%, respectively of the
Company's revenues for the six months ended June 30, 1996. These increases
were offset by a decrease of $76,041 in revenues from the Company's previous
business of selling software distributed via CD-ROM. The Company ceased all
activity in this business during the quarter ending September 30, 1995.
Sales for the three months ended June 30, 1996 declined 35%, or approximately
$263,800 compared to sales in the first quarter ended March 31, 1996. This
decline was due primarily to the decline in the sales of the Denver Navigist
operations.
The net loss of the Company increased by approximately 5% for the three
months ended June 30, 1996, and decreased by 13% for the six months ended
June 30, 1996, respectively, compared to the same periods in the prior year
the results for the three and six month periods ended June 30, 1995 included
$ 96,925 and $ 56,261, respectively, of net non- operating income related
to the loss on and sale of assets and extraordinary gain from debt
restructuring. Without these non-operating items, the net operating loss of
the Company would have decreased by 11% and 18% for the three months and six
months ended June 30, 1996, respectively. Although the net losses were lower
when compared to prior year periods, the net loss in the quarter ended
June 30, 1996, increased significantly (203%) compared to the previous
quarter ended March 31, 1996. The increase in loss in the current quarter
was due primarily to the losses incurred in the Denver Navigist operations
in the second quarter which accounted for approximately 68% of the total net
loss for the quarter ended June 30, 1996. These losses were caused
primarily from the decline of sales as compared to the first quarter sales
of Navigist. As a result of these declining sales, the Company closed the
Denver Navigist operations and the operating expenses related to that unit
were eliminated. The Company believes that the reassignment of the
applications development group, closure of the Denver Navigist office and
elimination of the related expenses may result in lower operating losses in
future quarters and will allow the Company to better focus its effort on the
further development of its FindNowSM system and other Internet products.
The decline in sales experienced in the quarter ended June 30, 1996,
contributed to a decline in gross margins from 75% in the first quarter to
23% in the second quarter of 1996. However, gross margins improved over
comparable periods in the prior year improving 2% and 39% for the three and
six month periods ended June 30, 1996, compared to the reported results of
the prior year. If the effect of the sales decrease and related costs in the
Navigist operations are eliminated, the gross margins of the business have
significantly improved over the prior year primarily due to the replacement
of revenues generated from the sales of software distributed on CD-ROM with
the sales of multimedia and slide presentations and network engineering
services. Profit margins in the Company's prior business was dependent upon
completing a relatively large number of small transactions in order to
generate sufficient revenues to offset operating costs. The Company's
current business involves providing Internet and intranet applications
development and services, multimedia and slide presentations, and network
engineering consulting on a project basis. These projects are sold on a
fixed fee or time and expense basis and are priced to generate
sufficient gross margins on a stand alone basis, and are therefore less
dependent on sales volume to generate gross margin percentages. The Company
anticipates that future revenues from its Internet Products Group may
contain continuing service fees, either on a fixed monthly, or transaction
basis which may cause variances the overall gross margin levels depending on
the structure of the arrangements ultimately consummated with customers.
Selling, general and administrative expenses of the Company increased 2%
and 51% for the three and six months ending June 30, 1996, respectively.
Selling, general and administrative expenses have declined 12% in the
quarter ended June 30, 1996, compared to the quarter ended March 31, 1996.
The increases compared to the prior year relate to the added costs of
operations from the acquisitions of Navigist and Cimarron and the formation
of the Internet Products Group, resulting in selling general and
administrative expenses declining as a percent of sales from 675% in the six
month period ended June 30, 1995, to 116% for the six month period ending
June 30, 1996 and has declined from 787% in the three month period ending
June 30, 1995, to 139% for the three month period ending June 30, 1996. The
decline of selling, general and administrative expenses in the second
quarter of 1996 compared to the first quarter of 1996 is the result of the
effect of further management cost reductions in several areas and
elimination of the operating expenses for Navigist during a part of the
second quarter of 1996.
Liquidity and Capital Resources; Need for Additional Financing
The Company had cash and equivalents of $182,854 at June 30, 1996, compared
to $205,024 at the end of the first quarter of 1996 and $231,781 as of
December 31, 1995. Although the Company has made progress in commercializing
its FindNowSM Service with the implementation of two clients as of the date
of this report, the Company has sustained continued operating losses and
expects an operating losses for third quarter. However, the Company believes
that it will be able to reduce the losses in the third quarter based on the
elimination of losses from its Navigist Denver operation, as a result of
it's closure, and additional sales of its FindNowSM service, as the Company
increases sales and marketing efforts for FindNowSM. The Company used cash
of $114,170 and $201,554 in its operations during the quarters ended
March 31, 1996 and June 30, 1996 respectively.
The Company has a working capital deficit of $646,836 as of June 30, 1996
compared to a working capital surplus of $155,815 at the beginning of the
fiscal year. This change in working capital relates to short term financing
from two officers of the Company. The two loans, totaling $150,000, are
intended to provide "bridge" capital until the Company is able to complete
a private placement. In addition, the Company also recorded a short term
obligation of $350,000 related to computer hardware and software licenses
obtained from ESRI in connection with the development of the Company's
FindNowSM system. Cash payments of $100,000 have been made towards this
obligation during the six months ended June 30, 1996. These transactions
increased current liabilities by $500,000 during the six months ending
June 30, 1996. During the same period, while current assets were reduced by
approximately $207,000 primarily due to the reduction in receivables related
to the closure of the Navigist Denver operations, and collection of
receivables in the normal course of the Company's operations.
During the quarter ended June 30, 1996, the Company received approximately
$208,000 in proceeds from the exercise of warrants to purchase common stock
of the Company. The Company believes that it will require additional cash to
fund operations for the remainder of 1996 in order to continue operations as
currently planned. The Company is planning a private placement of its common
stock which is intended to raise gross proceeds of approximately $1.0
million to $1.5 million. The proceeds will be used to continue development
of the FindNowSM system, increase sales and customer support resources in
the Internet Products Group and provide for general corporate working
capital. The Company believes the proceeds of the offering, if the planned
amount is raised, would be sufficient to meet its capital needs for the next
12 months. The Company is currently in discussions with a number of
potential clients for its FindNowSM service. As of August 13, 1996, two
customers had contracted with the Company to utilize the FindNowSM service.
The Company believes that it has a viable market for its FindNowSM service
based on contact and inquiries from prospective customers received since the
deployment of FindNowSM.However, there can be no assurance that the Company
will be able to generate sufficient cash flow from anticipated sales of
FindNowSM service to cover operating costs of the Internet Products group or
related corporate administrative costs.
In addition to its planned private placement, the Company has also taken
steps to minimize its operating cash needs including reductions in operating
expenses. In addition, voluntary salary deferrals for certain of its officer
which amounted to $108,612 at the end of the six months ended June 30, 1996
have been put in place. Without additional financing, sales of FindNowSM
service or additional changes in the Company's operations, the Company
believes that it has sufficient working capital to continue operations
through the end of the third quarter of 1996. In the event that the Company
can not obtain additional funding, the Company believes that it can make
additional changes in its operations to further reduce the Company's cash
requirements. However, the Company believes that these changes would
significantly reduce its chances of successfully marketing its FindNowSM
service and that there can be assurance that the Company could continue as a
going concern even with additional cost reduction measures. Accordingly,
there is an explanatory paragraph in the auditors report describing
uncertainties concerning the Company's ability to continue as a going
concern included in the Company's audited financial statements dated
December 31, 1995.
Forward Looking Statements and Related Business Risks and Assumptions
The Company's actual results may vary materially from the forward looking
statements made above. The Company intends that such statements be subject
to the safe harbor provision of the Securities Act. The Company's forward-
looking statements include the plans and objectives of management for future
operations and relate to: (i) the ability of the Company to generate future
sales of the Company's FindNowSM service, (ii) market acceptance of the
FindNowSM service, (iii) success of the Company in forecasting and meeting
the demand of the customers of the FindNowSM service, including maintaining
technical performance of the system as new FindNowSM customers are added,
(iv) ability to obtain financing to purchase equipment needed to provide
service to additional FindNowSM customers, (v) ability to maintain pricing
and thereby maintain adequate profit margins on its products and services
(vi) ability to retain qualified technical personnel (vii) ability of the
company to maintain current pricing and sales volume in its operations of
Cimarron and Navigist (viii) ability to control development costs of
FindNowSM service within current budgeted levels, (ix) and the ability of
the Company to raise additional capital.
The foregoing assumptions are based on judgments with respect to, among
other things, future economic, competitive and market conditions, and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond the Company's ability to control.
There are also other risks which could cause the Company's revenues or costs
to vary markedly from the forward-looking statements made above, such as the
risk that the market demand for the FindNowSM may not develop as expected or
if it does develop, that the Company will be able to generate sufficient
sales to fund its operations. Accordingly, although the Company believes
that the assumptions underlying the forward-looking statements are
reasonable, any such assumption could prove to be inaccurate and therefore
there can be no assurance that the results contemplated in forward-looking
statements will be realized and any statements should not be regarded as a
representation by the Company or any other person that the Company's
objectives or plans will be achieved.
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
None
Item 6. Exhibits and Reports on Form 8-K
a.Reports on Form 8-K
None
b.Exhibits - Included as exhibits are the items listed on the Exhibit
Index. The Registrant will furnish a copy of any of the exhibits listed
below upon payment of $5.00 per exhibit to cover the costs to the
Registrant of furnishing such exhibit.
<TABLE>
<CAPTION>
<C> <C>
Exhibit
Number Exhibit
27.1* Financial Data Schedule
3.1 -- Certificate of Incorporation of Infonow
Corporation. (Incorporated by Reference to Exhibit
3.1 of Registration No. 33-43035 on Form S-1).
3.3 -- By-Laws of InfoNow Corporation (Incorporated by
Reference to Exhibit 3.3 of Registration No. 33-
43035 on Form S-1).
4.1 -- Form of Common Stock Certificate for the
Registrant's common stock, $0.01 par value per
share (Incorporated by Reference to Exhibit 4.1 of
Registration No. 33-43035 on Form S-1).
* Filed herewith
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.
Dated: August 16,1996
<C>
INFONOW CORPORATION
(Registrant)
/s/ Michael W. Johnson_______
Michael W . Johnson
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Kevin D. Andrew
Kevin D. Andrew
Chief Financial Officer,
Treasurer and Secretary
(Principal Financial and
Accounting Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM INFONOW'S 6 MONTH QUARTERLY REPORT TO
STOCKHOLDERS FOR THE QUARTER ENDED JUNE 30, 1996 AND
IS QUALIFIED IN ITS ENTIRETY TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 182,854
<SECURITIES> 0
<RECEIVABLES> 316,217
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 55,900
<PP&E> 607,006
<DEPRECIATION> 309,727
<TOTAL-ASSETS> 4,248,151
<CURRENT-LIABILITIES> 1,201,807
<BONDS> 0
0
0
<COMMON> 3,669
<OTHER-SE> 2,877,284
<TOTAL-LIABILITY-AND-EQUITY> 4,248,151
<SALES> 1,222,814
<TOTAL-REVENUES> 1,222,814
<CGS> 534,670
<TOTAL-COSTS> 534,670
<OTHER-EXPENSES> 1,428,123
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (11,032)
<INCOME-PRETAX> (751,010)
<INCOME-TAX> 0
<INCOME-CONTINUING> (751,010)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (751,010)
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.23
</TABLE>
