SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-QSB
Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
For the Quarter Ended Commission File
November 30, 1999 Number 0-19796
AIRTECH INTERNATIONAL GROUP, INC.
(Exact name of registrant as specified in charter)
Wyoming 98-0120805
- ------------------ ------------------
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation)
15400 Knoll Trail, Ste 200
Dallas, Texas 75248
(address of Principal Executive Offices)
972-960-9400
(Registrant's telephone number including area code)
Check mark whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the exchange Act 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 [ ]
The Registrant has 16,560,440 shares of common stock, par value $0.05 per
share issued and outstanding as of November 30, 1999.
Traditional Small Business Disclosure Format
Yes [ X ] No [ ]
<PAGE>
Airtech International Group, Inc.
Table of Contents
PART I - FINANCIAL INFORMATION Page No.
Item 1. Airtech International Group, Inc. 1 - 9
Financial Statements (Unaudited)
Balance Sheet as of November 30, 1999 and 1998
Statement of Operations for the six
months ended November 30, 1999 and 1998
Statement of Operations for the three
months ended November 30, 1999 and 1998
Statement of Cash Flows for the six months
ended November 30, 1999 and 1998
Notes to Financial Statements
Item 2. Management's Discussion and Analysis 10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities None
Item 3. Defaults upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K None
SIGNATURE PAGE 12
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1 Financial Statements
<TABLE>
<CAPTION>
AIRTECH INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1999 AND 1998
UNAUDITED
ASSETS
1999 1998
---- ----
CURRENT ASSETS
<S> <C> <C>
Cash $ 14,544 $127,400
Receivables
Trade accounts, net of allowance for doubtful
accounts of $20,000 and 10,000, respectively 295,385 163,131
Other 205,511 -
Notes receivable, current portion 143,750 -
Inventory 242,665 323,489
Prepaid expenses and other assets - 61,996
------------ ------------
Total current assets 901,855 676,016
------------ ------------
PROPERTY AND EQUIPMENT - net of accumulated depreciation
of $138,117 and $250,338, respectively 117,086 170,252
------------ ------------
NOTES RECEIVABLE - net of current portion, net of allowance
for doubtful accounts of $0 and $0, respectively 431,250 899,833
------------ ------------
OTHER ASSETS
Organizational costs, net of accumulated amortization 9,000 4,047
of $0 and $3,334, respectively
Goodwill, net of accumulated amortization of 6,000,541 6,487,072
$486,531 and $305,281, respectively
Net assets of discontinued operations, held for resale 840,000 3,463,762
Intellectual properties, net of accumulated amortization
of $1,485,993 and $305,281, respectively 20,811,691 21,996,603
Trademarks 9,000 -
Other 516,208 531,772
------------ ------------
Total other assets 28,186,440 32,483,256
------------ ------------
$ 29,636,631 $ 34,229,357
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
AIRTECH INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 1999 AND 1998
LIABILITIES AND STOCKHOLDERS' EQUITY
1999 1998
---- ----
<S> <C> <C>
CURRENT LIABILITIES
Notes payable - current portion $ 277,185 $ 66,748
Accounts payable, trade 654,563 403,318
Advances from officers 236,488 48,900
Accrued payroll and payroll taxes 354,802
Other accrued expenses 415,912 170,812
Current portion of license rights payable - 210,077
------------ ------------
Total current liabilities 1,938,950 899,855
------------ ------------
LONG-TERM LIABILITIES
License rights payable - 329,923
Notes Payable - 277,185
Deferred revenue 400,000 400,000
Product Marketing Obligation 405,000 -
Deferred tax liability 6,219,834 6,487,072
------------ ------------
Total long-term liabilities 7,024,834 7,494,180
------------ ------------
Total liabilities 8,963,784 8,394,035
------------ ------------
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Series M cumulative, convertible preferred, 1,143,750 and
1,143,750 shares issued and outstanding, respectively;
liquidation preference of $1.00 per share 1,143 1,143
Common stock - $.05 par value, 50,000,000 shares authorized,
16,560,440 and 10,637,380 shares issued and outstanding,
respectively 828,022 531,869
Additional paid-in capital 37,480,172 36,691,619
Retained earnings (17,636,490) (11,389,309)
------------ -------------
Total stockholders' equity 20,672,847 25,835,322
------------ -------------
$ 29,636,631 $ 34,229,357
============ =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
AIRTECH INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1999 AND 1998
UNAUDITED
1999 1998
---- ----
<S> <C> <C>
REVENUES
Product sales $ 418,338 $ 640,601
Franchisee fees 115,000
Other revenues 225
------------ -----------
Total revenues 533,563 640,601
COSTS AND EXPENSES
Salaries and wages 385,138
Cost of sales 415,649 346,230
Advertising 50,195 21,234
Depreciation and amortization 880,660 337,360
General & administrative expenses 407,332 691,947
------------ -----------
Total costs and expenses 2,138,974 1,396,771
------------ -----------
LOSS FROM OPERATIONS (1,605,411) (756,170)
Interest expense (37,276) (170,817)
------------ -----------
NET LOSS BEFORE INCOME TAXES BENEFIT (1,642,687) (926,987)
Income taxe benefit - -
------------ -----------
NET LOSS $(1,642,687) $ (926,987)
============ ===========
LOSS PER COMMON SHARE - BASIC $ (0.11) $ (0.09)
============ ===========
LOSS PER COMMON SHARE - DILUTED $ (0.11) $ (0.09)
============ ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
AIRTECH INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1999 AND 1998
UNAUDITED
1999 1998
---- ----
<S> <C> <C>
REVENUES
Product sales $ 72,897 $ 168,236
Franchisee fees 100,000
Other revenues 225
------------ -----------
Total revenues 173,122 168,236
COSTS AND EXPENSES
Salaries and wages 168,968
Cost of sales 93,100 84,354
Advertising 25,555 21,234
Depreciation and amortization 440,329 317,916
General & administrative expenses 339,539 456,725
------------ -----------
Total costs and expenses 1,067,491 880,229
------------ -----------
LOSS FROM OPERATIONS (894,369) (711,993)
Interest expense (18,680) (48,338)
------------ -----------
NET LOSS BEFORE INCOME TAXES BENEFIT (913,049) (760,331)
Income taxe benefit - -
------------ -----------
NET LOSS $ (913,049) $ (760,331)
============ ===========
LOSS PER COMMON SHARE - BASIC $ (0.06) $ (0.08)
============ ===========
LOSS PER COMMON SHARE - DILUTED $ (0.06) $ (0.08)
============ ===========
The accompanying notes are an integral part of the financial statements.
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
AIRTECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1999 AND 1998
UNAUDITED
1999 1998
---- ----
Cash flows from operating activities:
<S> <C> <C>
Cash received from customers $ 317,601 $ 611,009
Cash paid to employees (385,138) (299,827)
Cash paid to suppliers (271,555) (688,123)
------------ ------------
Net cash used in operating activities (339,092) (376,941)
------------ ------------
Cash flows from financing activities:
Advances to Subsidiaries - (132,395)
Proceeds from issuance of preferred
stock, net offering costs - 112,500
Repayments of notes payable 291,828 (20,668)
Proceeds from issuance of common stock - 399,060
------------ ------------
Net cash provided by financing activities 291,828 358,497
------------ ------------
Net increase (decrease) in cash (47,264) (18,444)
Cash at beginning of period 61,808 145,844
------------ ------------
Cash at end of period $ 14,544 $ 127,400
============ ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
AIRTECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1999 AND 1998
UNAUDITED
Reconciliation of Net Income to Net Cash
Used in Operating Activities
1999 1998
---- ----
<S> <C> <C>
Net loss $(1,642,687) $ (926,987)
Adjustments to reconcile
net loss to net cash
used in operating activities:
Amortization and Depreciation 880,660 337,360
Common stock for services 263,618 150,000
(Increase) decrease in accounts receivable (121,434) 9,006
(Increase) decrease in prepaid expenses - 5,218
(Increase) decrease in other assets 19,970 (94,756)
Increase (decrease) accounts payable 144,370 266,363
Increase (decrease) in accrued expenses 116,411 (123,145)
------------- -------------
Total adjustments 1,303,595 550,046
------------- -------------
Net cash (used) in operating activities $ (339,092) $ (376,941)
============= =============
The accompanying notes are an integral part of the financial statements.
</TABLE>
6
<PAGE>
AIRTECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
Airtech International Group, Inc. (the Company), (formerly Interactive
Technologies Corporation, was incorporated in the state of Wyoming on August 8,
1991. As of May 31, 1998, in connection with the acquisition discussed below,
the Company manufactures and sells a full line of air purification products.
On May 31, 1998, the Company acquired all of the outstanding common stock shares
Airtech International Group (AIC), which through its subsidiaries manufacture
and sell various air filtration and purification products. The total purchase
price of $22,937,760 was funded through the issuance of 10,500,000 of its common
stock shares valued at $.625 per share, the issuance of 11,858,016 of its Series
A convertible preferred stock shares valued at $.625 per share and the issuance
of $9,000,000 of convertible debentures.
The transaction was accounted for using the purchase method of accounting.
Accordingly, the purchase price of the net assets acquired has been allocated
among the net assets based on their relative fair values with $22,297,684 of the
purchase price allocated to intellectual properties based on an independent
asset appraisal and $6,487,072 allocated to goodwill. The acquired goodwill will
be amortized using the straight-line method over 20 years.
Principles of consolidation
The accompanying consolidated financial statements include the general accounts
of the Company and its subsidiaries, AIC, Airsopure, Inc. and McCleskey Sales
and Service, Inc., each of which has fiscal year ends of May 31, and the
Company's investment in Airsopure 999 LP, a Texas Limited Partnership with a
December year end. All material intercompany accounts and balances have been
eliminated in the consolidation.
Amortization
Intellectual property is allocated to the Company's air filtration products
based on expected sales as a percent of total sales by product. The Company
records amortization beginning when the product is initially inventoried for
sale. Amortization is recorded ratably over a ten-year term. For the quarter
ended November 30, 1999 and 1998, amortization expense totaled $350,000 and
$305,281, respectively.
Goodwill recorded in the acquisition of AIC, is being amortized under the
straight-line method over 20 years. For the quarter ended November 30, 1999 and
1998, amortization expense totalled $81,089 and $12,635, respectively.
Inventories
Inventories are carried at the lower of cost or net realizable value (market)
and include component parts used in the assembly of the Company's line of air
purification units and filters and finished goods comprised of completed
products. The costs of inventories are based upon specific identification of
direct costs and allocable costs of direct labor, packaging and other indirect
costs.
Property and equipment
Property and equipment are stated at cost less accumulated depreciation.
Depreciation of property and equipment is currently being provided by straight
line and accelerated methods for financial and tax reporting purposes,
respectively, over estimated useful lives of five years.
7
<PAGE>
AIRTECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
Intellectual properties
In its acquisition of AIC the Company purchased certain intellectual properties.
Costs incurred by the Company in developing its products consisting primarily of
design, testing and completion of working prototypes, which are not considered
patentable, are capitalized and will be amortized over the estimated useful life
of the related patents once a unit has been placed in production.
Revenue recognition
Revenues from the Company's operations are recognized at the time products are
shipped or services are provided. Revenue from franchise sales are recognized at
the time all material services relating to the sale of a franchise have been
performed by the Company.
Management estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Cash flow
For purposes of the statement of cash flows, cash includes demand deposits and
time deposits with maturities of less than three months. None of the Company's
cash is restricted.
Earnings per share
Basic and diluted loss per share are based upon 16,560,440 and 10,637,380,
respectively, weighted average shares of common stock outstanding. No effect has
been given to the assumed conversion of convertible preferred stock and
convertible debentures and the assumed exercise of stock options and warrants as
the effect would be antidilutive.
2. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company is currently obligated under a noncancellable operating lease for
its Dallas office facilities which expire in January 2002.
Minimum future rental payments required under the above operating lease is as
follows.
Year ending May 31
2000 $ 28,044
2001 59,820
2002 42,376
------------------
$ 130,240
==================
8
<PAGE>
AIRTECH INTERNATIONAL GROUP, INC.
AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
3. FINANCIAL INSTRUMENTS
The Company's financial instruments consist of its cash, accounts and notes
receivable, trade payable.
Cash
The Company maintains its cash in bank deposit and other accounts , which, at
times, may exceed federally insured limits. The Company has not experienced any
losses in such accounts, and does not believes it is subject to any credit risks
involving its cash.
Accounts and notes receivable, trade
The Company accounts and notes receivables are unsecured and represent sales not
collected to date. Management believes these accounts and notes receivables are
fairly stated at estimated net realizable amounts.
4. ASSETS HELD FOR SALE
In February 1998, the Company formally discontinued its Rebate TV operations and
adopted a plan to dispose of the only asset of this business segment, the
proprietary software and trademark. The Company also adopted a plan to dispose
of its FCC license rights, the only asset of its interactive video and data
services business segment, which were never operational. Management expects to
sell these assets by May 31, 2000.
At November 30, 1999 and 1998, net assets of these discontinued operating
segments, stated at the lower of cost or net realizable value, were comprised of
the following:
1999 1998
------------ ------------
License rights, net of $438,760
and $438,760, respectively, of
of accumulted amortization and
net of license rights payable
of $540,000 $ (303,750) $ (303,750)
Proprietary software and trademark
net of $0 and $1,643,53, respectively
of accumulated amortization 1,143,750 3,767,512
------------ ------------
$ 840,000 $3,463,762
============ ============
5. STOCK OPTIONS AND WARRANTS
Through the quarter ended November 30, 1999 and 1998, the Company has issued
various stock options and warrants to employees and others and uses the
intrinsic value method of accounting for these stock options. Compensation cost
for options granted has not been recognized in the accompanying financial
statements because the amounts are not material. The options and warrants expire
between December 1999 and December 2008 and are exercisable at prices from $0.20
to $22.50 per option or warrant. Exercise prices were set at or above the
underlying common stock's fair market value on the date of grant.
6. RELATED PARTIES
For the six months ended November 30, 1999, the Chief Executive Officer and the
President made cash advances of $20,000 and $20,000 and received repayments of
$0 and $0, respectively. The advances are to be paid as cash is avaiable or by
the issuance of common stock. These advances are unsecured but bear interest at
15% per annum.
As of November 30, 1999, advances payable to these officers totaled $20,000 and
$20,000, respectively
9
<PAGE>
PART I
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
1. Results of operations
The Company's operations for the three months ending November 30, 1999
resulted in a net loss of $913,049.00 or a $0.06 basic loss per share. This is
compared to a loss of $760,331.00 or $0.08 per share for the same period in
1998.
The Company through its wholly owned subsidiary, Airsopure Inc. reflected
increased sales totaling $173,122 for the three months ended November 30, 1999.
This was primarily the result of sales of air purification equipment,
installation and sales of replacement filters. This compares to sales of
$168,236 for the three months ended November 30, 1998. Included in these sales
is a sale of one franchise for 1999 totaling $100,000.00.
The Company's sales of air purification equipment reflect the completion of
the Company's efforts to introduce a full line of commercial and consumer air
purification and sanitation equipment. The sale of equipment was hampered by the
Company's financing shortfall resulting in a lower inventory of finished goods.
During the Quarter ended November 30,1999, the Company made an application
to the Medicare administration on its new Model S-950 and expects an affirmative
response by February 3, 2000. At the same time the Company has announced the
opening of two Company retail sales stores in Dallas and Las Vegas to facilitate
the sale of the Company's home consumer products. The Company expects this
marketing approach to complement the Medicare market.
Production and sales of the Model S-999 auto unit was slowed by the
Company's due diligence in finding a replacement out-sourced manufacturer. The
acceptance of the auto unit in such a new market has been enhanced during the
Quarter by the sales and marketing efforts and expenditures of the Company. The
media attention and the increased public awareness of the auto emissions, for
example Houston TX. replacing Los Angeles CA. as the dirtiest US city, should
allow the unit to gain market acceptance. The clinical efficacy test results
should be available in the quarter, triggering sales to fleet services and
Police Departments to mention only two end users that will benefit from the
unit. The European auto accessory after market continues to review the auto unit
and the Company is reviewing its EU sales strategy.
The Company's commercial lines of products continue to have very favorable
after sale satisfaction. The replacement filter market is growing and keeps
customer satisfaction high. The Company will be focusing on adding qualified
Franchisees worldwide to take care of the demand for pure air.
The Cost of goods sold for the three months ended November 30, 1999 was
$93,100 as compared to $84,354 for the prior period, November 30, 1998. These
costs are higher than Management anticipates due to the manufacturing overhead
being absorbed by lower sales and the current lack of economies of scale in
purchasing.
Operating expenses were $974,391 for the three months ended November 30,
1999 compared to $795,875. for the prior three months ending November 30, 1998.
This increase is primarily due to the full amortization of the intangible assets
acquired in the Merger, an increase of $122,413. Salaries and wages along with
General and administration expenses increased $51,782 due to increased staffing
to promote the Company and its products.
For the six months ended November 30, 1999 the Company reflects a loss from
operations of $1,642,687, or $0.11 per share, as compared to a loss of $926,987
or $0.09 loss per share for the comparable period in 1998.
The six months comparisons are similar. Sales reflect two new franchisees
and the inventory liquidity ramifications. The only expense differences are the
larger Amortization expenses due to the merger where the expense is $543,300
larger for the six months ended November 30,1999 than 1998. Also, the larger
consulting expense attributable to the new consumer products brought on line is
reflected in a larger general and administrative category.
10
<PAGE>
2. Liquidity and Capital Resources
During the three and six months ended November 30, 1999 the Company
continued to fund operations through revenues, private sales of securities and
paying certain debts and business services in Company common stock. As of
November 30, 1999 the Company has invested $295,385 in accounts receivable and
$654,563 in Trade accounts payable. As of January 15, 2000, the Company is in
the final stages of negotiation with a number of parties to provide the
financing required to manufacture sufficient inventory and provide the cash flow
for operational support for at least the next year.
3. "SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995.
Statements contained in this document which are not historical fact are
forward looking statements based upon management's current expectations that are
subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by forward looking statements.
These risks are described in the Company's Form 10-KSB for the fiscal year ended
May 31,1999 filed with the Securities and Exchange Commission.
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
On October 26, 1999 the Company was named as a defendant in an action
entitled Carlo Gavazzi Inc. v. Airtech International Corporation and Airtech
International Group, Inc., Case no-99-11101-D, County Court No. 4, Dallas Texas.
The suit alleges failure to pay invoices on goods shipped to the Company, on
goods not shipped, for raw materials and damage claims totaling a relief sought
of $1,600,000. The Company has answered with affirmative defenses and denied all
of the allegations. The Company has sued Carlo Gavazzi Inc. in a cross action
suit, joined to the above styled case seeking a relief of over $1,000,000 in
damages. The Company expects to prevail in this suit and has fully reserved for
the delivered goods in the financial statements.
The Company has been named as a defendant in a number of routine
litigations seeking payment for goods delivered or for services rendered to the
Company. The Company has also had several judgements rendered against the
Company in the cases. The Company has answered these causes of action where
appropriate, is in negotiation for settlement where appropriate and is under
payment schedules with others. The Company has fully reserved for these in the
Financial Statements.
Item 4: Submission of Matters To a Vote of Security Holders
The Company held its Annual Securities Holders Meeting on November 26,
1999. The Securities Holders elected R. John Harris, Dr. Andrew Welch, M.D.
Robert Galvan as directors of the Company for a term of one year and re-elected
CJ Comu and John Potter for the same term.
11
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing and has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Dallas, State of Texas, on January 14, 2000.
AIRTECH INTERNATIONAL GROUP, INC.
by: /s/ CJ Comu
-----------------------------------
CJ Comu, Chief Executive Officer
by: /s/ James R. Halter
----------------------------------------
Chief Financial Officer, General Counsel
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-21-2000
<PERIOD-START> AUG-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 14,544
<SECURITIES> 0
<RECEIVABLES> 644,646
<ALLOWANCES> (20,000)
<INVENTORY> 242,665
<CURRENT-ASSETS> 901,855
<PP&E> 255,203
<DEPRECIATION> (138,117)
<TOTAL-ASSETS> 29,636,631
<CURRENT-LIABILITIES> 1,938,950
<BONDS> 0
0
1,144
<COMMON> 928,022
<OTHER-SE> 37,480,172
<TOTAL-LIABILITY-AND-EQUITY> 29,636,631
<SALES> 173,122
<TOTAL-REVENUES> 173,122
<CGS> 93,100
<TOTAL-COSTS> 93,100
<OTHER-EXPENSES> 974,391
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,680
<INCOME-PRETAX> (913,049)
<INCOME-TAX> 0
<INCOME-CONTINUING> (913,049)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (913,049)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
