SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities EXchange Act of 1934
For Quarter Ended: Commission File Number
March 31, 1996 0-19957
Quantech, Ltd.
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1709417
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification No.)
1419 Energy Park Drive
St. Paul, MN 55108
(Issuer's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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: 46,934,893 shares of Common
Stock, par value $.01 per share, outstanding as of May 6, 1996.
Transitional small business disclosure format (check one): Yes No X
<PAGE>
PART I
<TABLE>
<CAPTION>
QUANTECH LTD.
(A Development Stage Company)
BALANCE SHEET
(Unaudited)
March 31, June 30,
1996 1995
------------ ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 167,117 $ 4,276
Other current assets 38,261 37,222
----------- --------
205,378 41,498
----------- --------
EQUIPMENT
Equipment 237,136 87,347
Leasehold Improvements 15,000 8,000
----------- --------
252,136 95,347
Less:accumulated depreciation (69,141) (41,257)
----------- --------
182,995 54,090
OTHER ASSETS
Deferred offering costs 0 76,437
License agreement, at cost, less amortization 2,376,278 2,544,110
Organization expenses, at cost, less amortization 8,462 19,825
----------- ---------
2,384,740 2,640,372
----------- ---------
TOTAL ASSETS $2,773,113 $2,735,960
=========== ==========
LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
CURRENT LIABILITIES
Short term debt $ 28,872 $ 2,628,120
Accounts Payable 144,937 785,121
Accrued Expenses:
Minimum Royalty Commitment 18,750 562,500
Spectrum Diagnostics Inc. obligations 65,000 65,000
Other 17,500 404,358
---------- ---------
Total Current Liabilites 275,059 4,445,099
---------- ---------
STOCKHOLDERS EQUITY (DEFICIT)
Common stock, $.01 par value; authorized
60,000,000 shares issued and
outstanding 40,659,893 shares at March 31,
1996; and 6,840,000 at June 30, 1995 $ 406,599 $ 68,400
Additional paid-in capital 11,997,692 6,328,338
Subscriptions receivable (20,000) (20,000)
Deficit accumulated during the development stage (9,886,237) (8,085,877)
---------- ---------
Total Stockholders Equity (Deficit) 2,498,054 (1,709,139)
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 2,773,113 $2,735,960
=========== ==========
</TABLE>
<PAGE>
QUANTECH LTD.
(A Development Stage Company)
STATEMENT OF OPERATIONS-UNAUDITED
<TABLE>
<CAPTION>
Period From
September 30, 1991
Three months Three months Nine months Nine months (Date 0f
Ended Ended Ended Ended Inception), to
March 31, March 31, March 31, March 31, March 31,
1996 1995 1996 1995 1996
----------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Interest Income $ 10,983 $ -- $ 23,310 $ -- $ 71,199
----------- ----------- ----------- ------------- -----------
Expenses:
General & Administrative 270,769 292,186 919,506 902,981 5,842,303
Research and development 238,294 166,004 691,585 342,000 2,231,003
Minimum royalty expense 18,750 43,750 106,250 131,250 868,750
Loses resulting from transactions
with Spectrum Diagnostics Inc. -- -- -- -- 556,150
Net exchange (gain) -- -- -- -- (67,172)
Financing 3,501 51,022 106,329 147,677 483,807
----------- ----------- ----------- ------------- -----------
531,314 552,962 1,823,670 1,523,908 9,914,841
----------- ----------- ----------- ------------- -----------
Loss before income taxes (520,331) (552,962) (1,800,360) (1,523,908) (9,843,642)
Income taxes -- -- -- -- 42,595
----------- ----------- ----------- ------------- -----------
Net loss $ (520,331) $ (552,962) $ (1,800,360) $ (1,523,908) $ (9,886,237)
=========== =========== =========== ============ ===========
Loss per common share $ (0.01) $ (0.12) $ (0.07) $ (0.32) $ (1.23)
Weighted average common shares
outstanding 40,659,893 4,690,000 25,793,027 4,690,000 8,036,465
</TABLE>
<PAGE>
QUANTECH LTD
(A Development Stage Company)
STATEMENT OF STOCKHOLDERS' EQUITY-UNAUDITED
Period From September 30, 1991 (date of Inception), to December 31, 1995
<TABLE>
<CAPTION>
Deficit
Accumulated
During
Par Additional the Paid for Due Cumulative
Shares Value Paid-In Development Subscriptions Not From Translation
Issued Amount Capital Stage Receivable Issued Officers Adjustment
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at Inception
Net Loss ($3,475,608)
Common stock transactions:
Common stock issued,
October 1991 3,200,000 $3,154,574
Common stock issued,
November 1991 600,000 $611,746 $1,788,254
Common stock issuance
costs ($889,849)
Cumulative translation
adjustment $387,754
Common stock issued,
September 1992 700,000 $699,033 $875,967 ($53,689)
Common stock issuance costs ($312,755)
Common stock to be issued $120,000
Cumulative translation
adjustment ($209,099)
Elimination of cumulative
translation adjustment ($178,655)
Officers advances, net ($27,433)
----------------------------------------------------------------------------------------------------
Balance, December 31, 1992 4,500,000 $4,465,353 $1,461,617 ($3,475,608) ($53,689) $120,000 ($27,433) $0
Net loss ($996,089)
Common stock transactions:
Common stock issued,
January 1993 160,000 $1,600 $118,400 ($120,000)
Common stock issued,
April 1993 30,000 $300 $11,700
Change in common stock par
value resulting from merger
Change in common stock par
value resulting from merger ($4,420,353) $4,420,353
Repayments $5,137
----------------------------------------------------------------------------------------------------
Balance,June 30, 1993 4,690,000 $46,900 $6,012,070 ($4,471,697) ($53,689) $0 ($22,296) $0
Net loss ($1,543,888)
240,000 shares of common
stock to be issued $30,000
Repayments $53,689 $22,296
----------------------------------------------------------------------------------------------------
Balance, June 30, 1994 4,690,000 $46,900 $6,012,070 ($6,015,585) $0 $30,000 $0 $0
Net loss ($2,070,292)
Common stock issued, June 1995 2,150,000 $21,500 $276,068 ($20,000) ($30,000)
Warrants issued for services $40,200
----------------------------------------------------------------------------------------------------
Balance June 30, 1995 6,840,000 $68,400 $6,328,338 ($8,085,877) ($20,000) $0 $0 $0
Common stock issued , Sept. 95 13,200,000 $132,000 $2,750,952
Debenture conversions
including accrued interest
to 9/30/95 7,484,896 $74,849 $1,085,647
Compensation expense recorded
on stock option grants $125,000
Common stock issued Nov. 1995 1,897,840 $18,978 $415,482
Debenture conversions
including accrued interest
to 12/31/95 11,237,157 $112,372 $1,292,273
Net Loss ($1,800,360)
----------------------------------------------------------------------------------------------------
Balance March 31, 1996
(Unaudited) 40,659,893 $406,599 $11,997,692 ($9,886,237) ($20,000) $0 $0 $0
====================================================================================================
</TABLE>
<PAGE>
QUANTECH LTD
(A Development Stage Company)
STATEMENTS OF CASH FLOWS - UNAUDITED
<TABLE>
<CAPTION>
Period From
September 30,
Nine Nine 1991
Months Months (Date of
ended ended Inception), to
March 31, March 31, March 31,
1996 1995 1996
--------------- -------------- ---------------
<S> <C> <C> <C>
Cash Flows From Operating Activities
Net Loss $ (1,800,360) $ (1,523,908) $ (9,886,237)
Adjustments to reconcile net loss to net cash used in
operating activities:
Elimination of cumulative translation adjustment -- -- (178,655)
Depreciation 27,884 22,786 115,495
Amortization 179,195 179,195 1,068,548
Noncash compensation and interest 125,000 90,200 427,200
Losses resulting from transactions with
Spectrum Diagnostics Inc. -- -- 556,150
Write down of investment -- -- 67,500
Change in assets and liabilities,
net of effects from purchase of Spectrum
Diagnostics Inc.:
(Increase) decrease in prepaid expenses (1,039) (25,596) (38,261)
Increase (decrease)in accounts payable (640,184) 261,964 143,382
Increase (decrease) in accrued expenses (536,784) 102,708 475,747
----------- ----------- -----------
Net cash used in operating activities (2,646,288) (892,651) (7,249,131)
----------- ----------- -----------
Cash Flows From Investing Activities
Purchase of property and equipment (156,789) (17,922) (291,519)
Organization expenses -- -- (97,547)
Officer advances -- -- (109,462)
Purchase of investment -- -- (225,000)
Purchase of license agreement -- -- (1,950,000)
Advances to Spectrum Diagnostics, Inc. -- -- (320,297)
Prepaid securities issuance costs -- -- (22,943)
Purchase of Spectrum Diagnostics, Inc., net of cash -- -- --
and cash equivalents acquired -- -- (1,204,500)
----------- ----------- -----------
Net cash used in investing activities (156,789) (17,922) (4,221,268)
----------- ----------- -----------
Cash Flows From Financing Activities
Net proceeds from the sale of common stock $ 3,312,952 $ -- $ 9,245,063
Proceeds on debt obligations -- 1,006,172 2,627,880
Payments on debt obligations (347,034) (59,863) (438,669)
----------- ----------- -----------
Net cash provided by financing activities 2,965,918 946,309 11,434,274
----------- ----------- -----------
Effect of Exchange Rate Changes on Cash -- -- 203,242
----------- ----------- -----------
Net increase in cash 162,841 35,736 167,117
Cash
Beginning 4,276 36,167 --
----------- ----------- -----------
Ending $ 167,117 $ 71,903 $ 167,117
=========== =========== ===========
</TABLE>
<PAGE>
QUANTECH LTD.
(A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
Note 1. BASIS OF PRESENTATION
In the opinion of the management of the Company, the accompanying unaudited
financial statements contain all adjustments (consisting of only normal,
recurring adjustments) necessary to present fairly the financial position of the
Company as of March 31, 1996 and the results of operations and its cash flows
for the three-month and nine month periods ended March 31, 1996 and March 31,
1995. The results of operations for any interim period are not necessarily
indicative of the results for the year. These interim financial statements
should be read in conjunction with the Company's annual financial statements and
related notes in the Company's Annual Report on Form 10-KSB for the year ended
June 30, 1995.
Note 2. DEBT CONVERSION
The Holders of the 8% debentures due September 1995, totaling $977,500 plus
accrued interest, converted these amounts to Common Stock at conversion prices
ranging from $.125 to $.25 per share on September 30, 1995. In total, including
accrued interest to September 30, 1995, these debentures were converted to
7,484,896 shares of Common Stock. The Holders of the notes due March 1996,
totaling $1,230,000 plus accrued interest, converted these amounts to Common
Stock at a conversion price of $.125 per share on December 31, 1995. Principal
and interest on these notes were converted into 11,237,157 shares of Common
Stock.
Note 3. PRIVATE PLACEMENT CLOSING
In September 1995, the Company received $2,882,952 of net proceeds as a result
of the completion of a private placement of the Company's Units at $1.00 per
Unit. In November 1995, the Company received $430,000 of net proceeds from the
sale of the Units at $ 1.00 per Unit. Each Unit consisted of four shares of
Common Stock and a warrant to purchase one share of Common Stock. The Company
used the proceeds from the offering for payment of bridge loans, including
interest, royalty due under the license referenced in Note 4, accounts payable
and accrued expenses, purchase of fixed assets and working capital.
Note 4. LICENSE AGREEMENT
The Company has a license agreement for certain patents, proprietary information
and associated hardware related to SPR technology. The license calls for an
ongoing royalty of 6 percent on all products utilizing the SPR technology which
are sold by the Company. In addition, if the Company sublicenses the technology,
the Company will pay a royalty of 15 percent of all revenues received by the
Company under any sublicense (provided that, until July 1996, the sublicense
payments shall be in an amount not less than 1/2 percent of the net sales of the
products sublicensed). If the cumulative payments of these two royalties fail to
reach at least $1,000,000 by December 31, 1997, the licensor has the right to
deprive the Company of its exclusive rights under the license agreement. As of
May 6, 1996 the Company has paid $850,000 in minimum royalties and will owe the
balance of $150,000 on December 31, 1997.
<PAGE>
Note 5. SUBSEQUENT EVENT
On May 3, 1996, the Company completed a private placement of its Common Stock at
$.60 per share which provided approximately $3,350,000 of net proceeds. The
Company intends to apply the proceeds of such offering, along with cash on hand,
to expenses relating to product development, FDA submission, establishing sales
and marketing and production capabilities and to provide working capital.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
History
Quantech Ltd. ("Quantech" or the "Company") was formed under the laws of
Minnesota for the purpose of effecting the change of domicile of Spectrum
Diagnostics S.p.A ("SDS") from Italy to the state of Minnesota through the
merger with SDS on April 14, 1993. Quantech had no operations prior to the
merger and is continuing the business of SDS to commercialize Surface Plasmon
Resonance ("SPR") technology licensed from Ares-Serono. SPR, the core technology
of Quantech's proposed medical diagnostic system, enables the Company to
integrate the existing diagnostic methodologies of immunoassays, DNA probes and
chemical binding into a single, simple economical system in order to provide
rapid, quantitative, diagnostic results. The Quantech system configuration will
consist of a small, bench top instrument and a series of disposable slides with
multiple tests per slide. It is anticipated that the Quantech system will have
the ability to analyze body fluids (e.g. whole blood, urine, saliva) without
preparation or addition or reagents. The Company's initial focus is to develop
SPR for the hospital emergency room point-of-care ("POC") medical diagnostic
market. Its first test will aid physicians in assessing whether a patient has
suffered a heart attack.
Results of Operations
Quantech is a development stage company which has suffered losses from
operations and will require additional financing to commercialize its product.
The Company's product development must be completed, FDA approval obtained, the
product introduced to the market and ultimately Quantech will need to
successfUlly attain profitable operations. These factors raise substantial doubt
about the Company's ability to continue as a going concern.
The Company has incurred a net loss of $9,886,237 from September 30, 1991
(date of inception) through March 31, 1996 due to expenses related to formation
and operation of SDS in Italy, continuing costs of raising capital, normal
expenses of operating over an extended period of time, funds applied to the
research and development, royalty payments related to the SPR technology, losses
due to expenses of Quantech's predecessor, Spectrum Diagnostics Inc. and
interest on borrowed funds. In addition, an investment of $3,356,629 was made
when Quantech purchased the exclusive rights to the SPR technology.
<PAGE>
For the three and nine months ended March 31, 1996 the Company had interest
income of $10,983 and $23,310, respectively, compared to $0 in the same periods
of 1995, due to cash on hand as a result of funds remaining from Quantech' s
private placement in the first quarter of fiscal 1996. General and
administration expenses decreased from $292,186 to $270,769 for the three months
ended March 31, 1995 compared to 1996 and increased from $902,981 to $919,506
for the nine months ended March 31, 1995 as compared to the same period in 1996.
General and administration expenses, although appearing to remain basically flat
in the comparative three and nine month periods, have in fact changed modestly
in how funds are expended in such category. In each quarter of fiscal 1996,
Quantech has been able to reduce the significant general and administration
expenses it has incurred in the past relating to professional fees, consulting
arrangements and other expenses required to maintain an inadequately funded
organization. Quantech believes its general and administration expenses for the
three months ended March 31, 1996 reflect normal operations. Such expenses are
expected to increase in the future as the Company expands in anticipation of
introduction of its product to the market in the third quarter of fiscal 1997.
Research and development costs increased from $166,004 to $238,294 for the
three months ended March 31, 1995 compared to the same period in 1996, while
such costs for the nine months ended March 31, 1995 and 1996 also increased from
$342,000 to $691,585, respectively. These increases are a result of accelerated
research and development activity including hiring of employees and engaging
firms to perform contract development work. Minimum royalty expense decreased
for the three and nine month periods ending March 31, 1996 as compared to the
same 1995 periods as a result of the declining minimum royalties owed under
Quantech's license with Ares-Serono.
For the three months ended March 31, 1996 Quantech had a loss of $520,331
as compared to $552,962 for the three months ended March 31, 1995. Such decrease
in net loss was a result of greater interest income and lower general and
administrative, minimum royalty and financing expenses for the three months
ended March 31, 1996 without an offsetting rise in research and development
expenses. For the nine months ended March 31, 1996 the loss was $1,800,360
compared to $1,523,908 for the same period in 1995. This increase was a result
of the rise in research and development expenses in the 1996 nine month period
offsetting decreases in such period in general and administrative, minimum
royalty and financing expenses.
Management believes the reduction from prior periods in general and
administration and financing expenses while research and development expenses
have increased reflects the Company's current stability. Quantech is now able to
apply an appropriate amount of funds to pursue the development and
commercialization of its product. The Company believes it will be able to
continue to apply funds to the areas most appropriate to complete its system and
introduce it to the market. This forward looking information regarding the
anticipated use of funds will be influenced, however, by the timing of product
introduction, need for additional capital and other factors beyond the Company's
control.
<PAGE>
In fiscal 1996, the Company has continued to contract for the development
of its prototype instrument and its manufacture; continued to develop the
chemistries necessary to do specific tests; contracted the development of the
disposable slides for the tests; and continued to raise the necessary funds to
stay in operation. Management anticipates that a system suitable to begin FDA
clinical work will be available in the summer of 1996. The next major step for
the Company will be to submit its system to the FDA for approval which is
anticipated in the fall of 1996. At the time of submission to the FDA, the
system is expected to be ready for the commercial market and marketing in the
United States will proceed upon approval by the FDA. Such FDA approval is
anticipated in the first calendar quarter of 1997. This timetable will be
influenced by the Company's ability to complete prototype development of its
system and necessary testing for submission of its FDA filing and delays it may
encounter with the FDA in its review of the system.
Liquidity and Capital Resources
From inception to May 6, 1996, Quantech has raised approximately
$15,500,000 through a combination of public stock sales, private stock sales and
debt obligations. Additional funds will be needed to establish sales and
marketing and production capabilities and to begin any significant sales of the
Company's product once development is completed. There can be no assurance that
the Company will obtain additional capital when needed or that additional
capital will not have a dilutive effect on current shareholders.
Since its fiscal year ended June 30, 1995, Quantech has had a number of
events occur affecting its capital resources. With regard to debt conversion
transactions, holders of Quantech 8% debentures due September 30, 1995, totaling
$977,500 plus accrued interest, on such date converted these amounts to Common
Stock at conversion prices ranging from $.125 to $.25 per share. In total,
including accrued interest to September 30, 1995, these debentures were
converted into 7,484,896 shares of Common Stock. In addition, holders of notes
due March 19, 1996, totaling $1,230,000 plus accrued interest, converted these
notes to Common Stock at a conversion price of $.125 per share on December 31,
1995. In total, including accrued interest, these notes were converted into
11,237,157 shares of Common Stock.
Quantech has also completed three private offerings of its Common Stock. In
September 1995, the Company received $2,882,952 of net proceeds as a result of
completion of a private placement of Units at $1.00 per Unit. In November 1995,
it received $430,000 of net proceeds also from the private placement of $1.00
Units. Each Unit consisted of four (4) shares of Company Common Stock and a
warrant to purchase one share of Common Stock at $.25 per share. The Company
used the proceeds from these offerings for payment of bridge loans, including
interest, minimum royalties due under its license with Ares-Serono, accounts and
accrued payables, purchased equipment and for working capital.
On May 3, 1996, Quantech completed its third private offering of 6,250,000
shares of Common Stock at $.60 per share. Such offering provided the Company
with net proceeds of approximately $3,350,000. Quantech intends to apply the
proceeds of such offering, along with cash on hand, to expenses relating to
product development, FDA submission, establishing sales and marketing and
production capabilities and to provide working capital. Although current funds
are expected to allow the Company to proceed through FDA approval of its system,
Quantech will not have sufficient funds to commence commercial production of its
system. Although the Company has a limited lending arrangement with its bank, it
does not anticipate receiving significant funding from lenders.
<PAGE>
For the nine months ended March 31, 1996, Quantech incurred capital
expenditures of approximately $156,000. The Company anticipates capital
expenditures for the three months ended June 30, 1996 to be in excess of
$450,000 for the purchase of production and laboratory equipment. Capital
expenditures for future quarters will be necessary for production equipment and
office expansion as the Company nears product introduction. The timing and
amount of such expenditures will be governed by the Company's development and
market introduction schedules which are subject to change due to a number of
factors including development delays, FDA approval and availability of future
financing. In addition to capital expenditures, the Company has a final minimum
royalty payment of $150,000 due to Ares-Serono on December 31, 1997.
The Company currently has outstanding 46,934,893 shares of Common Stock. It
also has options and warrants outstanding to purchase an additional 15,470,103
shares.
Issued but not yet adopted Accounting Standard
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement No. 123, "Accounting for Stock-Based Compensation", which establishes
financial accounting and reporting standards for stock-based employee
compensation plans. The Company will be required to adopt Statement No. 123 in
fiscal 1997. Quantech has not yet determined what effect, if any, Statement No.
123 will have on the financial statements.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not Applicable
Item 5. Other Materially Important Events
On April 23, 1996, a group of three shareholders of Quantech Ltd., calling
itself The Group for the Maximization of Shareholder Value of Quantech Ltd. (the
"Group"), notified the Company that it had filed a Schedule 13D with the
Securities and Exchange Commission. The Group, which indicates that it owns 6.7%
of the Company's shares, said in its filing that it believes the Company's
present Board of Directors and senior management are not maximizing shareholder
value. The Group has requested the resignation of two management directors and
the appointment of four board members to be designated by the Group. None of the
proposed new board members are identified in the Schedule 13D. The Company does
not agree with the Group's requests and has communicated such to the Group.
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits -
27 - Financial Data Schedule
(filed with electronic version only)
b. Reports on Form 8 - K - None
<PAGE>
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.
QUANTECH LTD
/s/ R.H. Joseph Shaw
R.H. Joseph Shaw
President and Chief Executive
Officer
/s/ Gregory G. Freitag
Gregory G. Freitag
Chief Financial Officer
Date: May 7, 1996
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
27 Financial Data Schedule
(filed with electronic version only)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 167,117
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 205,378
<PP&E> 252,136
<DEPRECIATION> (69,141)
<TOTAL-ASSETS> 2,773,113
<CURRENT-LIABILITIES> 275,059
<BONDS> 0
0
0
<COMMON> 406,599
<OTHER-SE> 11,977,692
<TOTAL-LIABILITY-AND-EQUITY> 2,773,113
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 106,329
<INCOME-PRETAX> (1,800,360)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,800,360)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
</TABLE>
