UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
EXCHANGE ACT OF 1934
For the transition period from __ to __
Commission File No. 0-22744
VIKING CAPITAL GROUP, INC.
---------------------------------------------
(Exact name of small business issuer as specified in its charter)
Utah 87-0442090
------------------------------- -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
Two Lincoln Centre, Suite 300, 5420 LBJ FWY, Dallas, Texas 75240
(Address of principal executive offices)
(972) 386-9996
(Issuer's telephone number)
(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
As of September 30, 1997, 16,805,759 shares of Common Stock of the issuer were
outstanding. As of September 30, 1997, 100,000 shares of Class B Common Stock of
the issuer were outstanding.
<PAGE>
VIKING CAPITAL GROUP, INC.
INDEX
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Page
Number
------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations - For the three
months ended September 30, 1997 and 1996 5
Consolidated Statements of Operations - For the nine
months ended September 30, 1997 and 1996, and for the period from inception
(November 12, 1986) to September 30, 1997 6
Consolidated Statements of Cash Flows - For the nine months ended
September 30, 1997 and 1996, and for the period from inception
(November 12, 1986) to September 30, 1997 7
Notes to Consolidated Condensed Financial Statements 9
Item 2. Management's Discussion and Analysis or Plan of Operation. 11
PART II - OTHER INFORMATION
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 14
EXHIBITS 15
</TABLE>
2
<PAGE>
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
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September 30, December 31,
1997 1996
CURRENT ASSETS ------------- ------------
Cash $ 3,136 $ 9,920
Accounts receivable -- 99,703
Notes and accounts receivable and accrued interest 81,026 72,485
Prepaid expense -- 588
-------- --------
Total current assets 84,162 182,696
-------- --------
Office furniture and equipment, net 101,379 113,538
OTHER ASSETS
Other assets 31,367 31,767
Accounts receivable, non-current 50,000 --
Investment in subsidiary 34,800 --
-------- --------
Total other assets 116,167 31,767
-------- --------
TOTAL ASSETS $301,708 $328,001
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
LIABILITIES AND STOCKHOLDERS' DEFICIT
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September 30, December 31,
1997 1996
------------- ------------
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 35,204 $ 66,601
Accrued payroll and payroll taxes 327,466 304,342
Lease obligation, current portion 25,944 20,688
Note payable and accrued interest 916,194 342,329
----------- -----------
Total current liabilities 1,304,808 733,960
----------- -----------
LONG-TERM DEBT
Obligations under capital leases, less current portion 64,585 76,565
----------- -----------
Total liabilities 1,369,393 810,525
----------- -----------
STOCKHOLDERS' DEFICIT
Common stock $0.001 par value; 150,000,000 shares authorized;
16,805,759 and 13,971,720 issued and outstanding as of September
30, 1997 and December 31, 1996, respectively 16,806 13,971
Common stock Class B $0.001 par value; 100,000 shares
authorized and outstanding 100 100
Paid-in capital 3,751,991 3,304,575
Deficits accumulated in the development stage (4,830,176) (3,794,764)
----------- -----------
(1,061,279) (476,118)
----------- -----------
Less treasury stock - 25,625 shares at cost (6,406) (6,406)
----------- -----------
Total stockholders' deficit (1,067,685) (482,524)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 301,708 $ 328,001
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
-4-
<PAGE>
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended September 30, 1997 and 1996
Three months ended
September 30,
1997 1996
-------- -------
Revenue $ 50,000 $ 49,630
Cost and expenses
Depreciation and amortization 7,653 350
General and administrative expenses 458,805 308,570
------------ ------------
Total cost and expenses 466,458 308,920
------------ ------------
Loss from operations (416,458) (259,290)
Other income (expenses)
Interest income 2,585 1,841
Interest and penalty expense (27,514) (7,193)
Other -- --
------------ ------------
Total other income(expense) (24,929) (5,352)
------------ ------------
Loss before income taxes (441,387) (264,642)
Income tax provision -- --
------------ ------------
Net loss $ (441,387) $ (264,642)
============ ============
Loss per common share attributable to
common stockholders
Primary $ (.028) $ (.019)
Weighted average common share outstanding
Primary 15,411,557 13,740,287
Dividends per share of preferred stock $ -- $ --
The accompanying notes are an integral part of these financial statements.
-5-
<PAGE>
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Nine months ended September 30, 1997 and 1996 and
Period from November 12, 1986 (inception) to September 30, 1997
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Nine months ended Period from
September 30, November 12, 1986
1997 1996 to September 30, 1997
-------- --------- ---------------------
Revenue $ 50,000 $ 49,630 $ 366,855
Cost and expenses
Depreciation and amortization 22,436 1,000 36,271
General and administrative expenses 1,002,027 922,111 4,983,160
----------- ----------- ------------
Total cost and expenses 1,024,463 923,111 5,019,431
----------- ----------- ------------
Loss from operations (974,463) (873,481) (4,652,576)
Other income(expenses)
Interest income 7,753 5,288 23,714
Interest and penalty expense (68,703) (18,471) (132,832)
Other - - (37,260)
----------- ----------- -------------
Total other income(expense) (60,950) (13,183) (146,378)
----------- ----------- ------------
Loss before income taxes (1,035,413) (886,664) (4,798,954)
Income tax provision - - (32)
----------- ----------- ------------
Net loss $ (1,035,413) $ (886,664) $ (4,798,986)
=========== =========== ============
Loss per common share attributable to
common stockholders
Primary $(.07) $(.066)
Weighted average common share outstanding
Primary 14,513,400 13,288,926
Dividends per share of preferred stock $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
-6-
<PAGE>
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30, 1997 and 1996 and
Period from November 12, 1986 (inception) to September 30, 1997
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Nine months ended Period from
September 30, November 12, 1986
1997 1996 to September 30, 1997
-------- --------- ---------------------
Cash flows from operating activities
Net loss $ (1,035,413) $ (886,664) $ (4,798,986)
Non-cash charges included in operations
Depreciation and amortization 22,436 1,000 36,271
Common stock issued for services and interest 346,952 209,843 1,404,886
Note payable issued for services - - 3,200
Common stock issued for services and
accrued expenses - - 30,434
Provision for doubtful notes receivable - - 52,754
Common stock issued for interest payable - - 20,102
Loss on assets - - 15,000
Changes in assets and liabilities
Accounts receivable 49,703 (49,630) (50,000)
Prepaid expenses 588 36,018 985
Accrued interest receivable - (5,289) (6,623)
(Increase) in deposits 400 - (31,767)
Accounts payable and accrued expenses (31,397) (22,836) 58,446
Accrued payroll and payroll taxes 23,124 34,399 328,117
------------ ------------ -------------
Net cash used for operating activities (623,607) (683,159) (2,937,181)
Cash flows from investing activities
Capital expenditures (10,377) (2,105) (31,791)
Loans made (10,541) (68,750) (214,049)
Loan repayments 2,000 5,000 17,500
Other - - (15,050)
------------ ------------ -------------
Net cash used for investing activities (18,918) (65,855) (243,390)
Cash flows from financing activities
Stock sale expenses - - (11,716)
Proceeds from sale of common stock 52,500 601,850 1,773,393
Proceeds from notes payable 706,612 139,090 1,925,598
Principal repayments of notes payable (116,747) (35,000) (499,691)
Principal payments on capital lease obligations (6,724) - (6,724)
Security deposit - (21,517) -
Proceeds from preferred stock sale - - 20,000
Repurchase of preferred stock - (11,319) (11,319)
Preferred dividends paid - (300) (5,834)
------------ ------------ -------------
Net cash provided by financing activities 635,641 672,804 3,183,707
Increase (decrease) in cash (6,884) (76,210) 3,136
</TABLE>
- continued -
The accompanying notes are an integral part of these financial statements.
-7-
<PAGE>
VIKING CAPITAL GROUP, INC.
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Unaudited)
Nine months ended September 30, 1997 and 1996 and
Period from November 12, 1986 (inception) to September 30, 1997
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Nine months ended Period from
September 30, November 12, 1986
1997 1996 to September 30, 1997
-------- --------- ---------------------
Cash at beginning of period 10,000 77,023 -
------------ ------------ -------------
Cash at end of period $ 3,136 $ 813 $ 3,136
============= ============ =============
Cash flow information:
Interest paid $ - $ 6,613 $ 34,642
Income taxes paid $ - $ - $ 32
Non-cash investing activities:
Common stock issued for:
Acquisition of Triple A $ 34,800 $ - $ 34,800
Acquisition of NIAI $ 10,000 $ - $ 10,000
Acquisition of VISI $ $ - $ 434
Oil lease $ - $ - $ 40,000
Non-cash financing activities:
Preferred stock issued for:
Note payable-related party $ - $ - $ 60,000
Accrued interest-related party $ - $ - $ 4,500
Accrued expenses-related party $ - $ - $ 25,500
Common stock issued for:
Services $ 345,092 $ 209,843 $ 1,207,008
Repayment of notes payable 27,207 12,500 337,357
Payment of interest 1,860 150 21,963
Payment of accounts payable - - 15,000
Conversion of preferred stock - - 100,000
Payment of preferred stock dividend - - 25,556
Note payable issued for services $ - $ - $ 3,200
Assignment of oil lease in payment of note payable $ - $ - $ 40,000
Common stock acquired for conversion of
note receivable $ - $ - $ 6,406
Common stock canceled for conversion of
note receivable $ - $ - $ 5,600
Additions to equipment under capital leases $ - $ - $ 107,631
</TABLE>
The accompanying notes are an integral part of these financial statements.
-8-
<PAGE>
VIKING CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The consolidated interim financial statements include the accounts of Viking
Capital Group, Inc. and its wholly owned subsidiaries (collectively the
"Company").
The consolidated interim financial statements included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the "SEC"). Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principals ("GAAP") have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in
conjunction with the consolidated financial statements and related notes
included in the Company's Form 10-KSB as of and for the year ended December 31,
1996.
In the opinion of management, the unaudited interim consolidated financial
statements of the Company contains all adjustments, consisting only of those of
a normal recurring nature, necessary to present fairly the Company's financial
position and the results of its operations and cash flows for the periods
presented. The preparation of financial statements in accordance with GAAP
requires management to make estimates and assumptions. Such estimates and
assumptions affect the reported amounts of assets and liabilities, as well as
the disclosures of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
2. BUSINESS COMBINATIONS
During the quarter ended September 30, 1997, the Company acquired two additional
companies: Triple A Annuity Marketing Inc. ("Triple A") and N.I.A.I. Insurance
Administrators, Inc. ("NIAI"). Pursuant to the Reorganization Agreement dated
August 8, 1997, the Company acquired all of the outstanding stock of NIAI in
exchange for 200,000 shares of its common stock. The NIAI acquisition was
accounted for as a pooling of interests. The Company's consolidated financial
statements give retroactive effect to the acquisition of NIAI for all periods
presented herein. The interim results of the Company for the period from January
1, 1996 to September 30, 1996 have been restated for the NIAI acquisition and
include retroactive adjustments to weighted average shares outstanding. NIAI had
no activity during these periods, resulting in no effect to revenue, net loss,
or net loss per share.
Pursuant to the Reorganization Agreement dated September 4, 1997, the Company
acquired all of the outstanding stock of Triple A in exchange for 500,000 shares
of its common stock. Due to provisions in the agreement, the transaction was
accounted for as an unconsolidated subsidiary under the equity method as it is
unclear whether or not control of the subsidiary will be permanent. The
investment was recorded at the net book value of Triple A on the date of
acquisition.
-9-
<PAGE>
VIKING CAPITAL GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
3. SOFTWARE LICENSING AGREEMENT
On July 21, 1997, the Company entered into an agreement for the licensing of
certain proprietary software to a Company shareholder. Total consideration
received under the agreement totals $400,000 which is to be paid out over a
period of ten years plus interest at seven percent. The Company holds as
collateral 250,000 shares of Viking Capital Group, Inc. common stock. The
Company has recorded the sale and related receivable based upon the value of the
underlying collateral, totaling $50,000. All other amounts will be recognized
when received.
4. EQUITY TRANSACTIONS
During the current quarter certain expenses were paid in stock rather than cash.
These amounts included consulting and other services of $182,575 (912,873
shares), loan incentives of $9,300 (46,500 shares), and other miscellaneous
expenses totaling $133,316 (666,580 shares). Of the services paid for in stock,
$30,000 (150,000 shares) was paid to Matthew W. Fossen for his services.
5. OPTIONS ISSUED
During the current quarter, the Company issued 1,048,958 common restricted share
options with exercise prices between $0.50 and $1.00 and a weighted average
price of $0.99.
6. OTHER
The financial statements have been prepared on the assumption that the Company
will continue as a going concern. Its continued existence depends upon the
success of management's efforts to raise additional capital necessary to meet
the Company's obligations as they come due and to obtain sufficient capital to
execute its business plan.
Management has estimated that the Company will require an additional $300,000 to
$500,000 to operate until phase two is completed. Phase two of the Company's
plans to acquire an insurance company and to acquire books of business from
existing insurance companies will require additional capital.
There can be no degree of assurance given that the Company will be successful in
completing additional financing transactions. Should the Company be unsuccessful
in its efforts to obtain adequate financing, it's current financial condition
may be affected adversely, and such affects may be material.
7. EVENTS SUBSEQUENT TO SEPTEMBER 30, 1997
Subsequent to September 30, 1997, approximately 300,000 shares of common stock
were issued for services to unrelated parties and 300,000 shares of common stock
were issued to related parties in connection with services as new members on the
board of directors.
-10-
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operations.
Material Changes in Results of Operations
During the three month period ended September 30, 1997, the company
continued in its efforts to secure capital and implement its proposed plan of
business. In the course of its efforts to fulfill its strategic plan of
operation it has acquired, through two stock for stock agreements, an
administration company, NIAI Insurance Administrators, Inc., in exchange for
200,000 common restricted shares, and a marketing company, Triple A Annuity
Marketing, Inc. in exchange for 500,000 common restricted shares. NIAI Insurance
Administrators, Inc. does not have any operating revenues and provides the
software and management necessary to administrate life, health & accident, and
annuity type insurance business. Triple A Annuity Marketing, Inc. had operating
revenues of $23,344 for the three months ended September 30, 1997 and $136,363
for the nine months ended September 30, 1997. Triple A Annuity Marketing, Inc.
sells life and annuity products through approximately three thousand agents and
submitted such business to various carriers during the nine month period ended
September 30, 1997 with annual premiums of approximately $15,394,000. The
acquisition of Triple A Annuity Marketing Inc. is accounted for as an
unconsolidated subsidiary under the equity method and therefore its profit and
loss and balance sheet entries do not appear on the consolidated financial
statements except for the registrant's equity share (100%) of its net income
since the acquisition and the recording of the initial investment at the net
book value of Triple A. During the three month and nine month period ended
September 30, 1997, the registrant's equity share of Triple A Annuity Marketing
Inc.'s net income is immaterial.
In connection with its efforts to attract capital and implement its
plan of business, the Company incurred general and administrative expenses of
$458,805 and reported net losses of $441,387 for the three month period ended
September 30, 1997. For the nine month period ended September 30, 1997, general
and administrative costs were $1,002,027 and the Company reported a net loss of
$1,035,413. Common stock was issued during the three month period ended
September 30, 1997 to pay for $325,191 of the total expenses incurred in such
period.
Material Changes in Financial Condition, Liquidity and Capital Resources
The Company had a cash balance of $3,136 at September 30, 1997. During
the third quarter of 1997, the company raised $137,000 via short term loans from
unrelated parties and an additional $25,000 through private sale of stock.
Even after the receipt of $162,000 from these sources, the Company
lacks adequate financing to implement its full plan of business or to sustain
its operations beyond the following twelve months. Management believes that to
support the first stage of the Company's plan of operations, involving the
supporting of the operations of its subsidiaries; Viking Insurance Services,
Inc., Viking Financial Services, Inc., Viking Administrator, Inc., NIAI
Insurance Administrators, Inc. and Viking Systems Inc., will require additional
capital over the next twelve months. Triple A Annuity Marketing, Inc. is self
sufficient and will not require specific additional funds in the foreseeable
future. The Company is currently evaluating various options to raise additional
capital, including possible placements of debt and equity. There is no
assurance, however, that the Company will be successful in securing additional
financing and, therefore, there is no assurance that the Company can implement
its full plan of operations.
-11-
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
The Company's common stock trades on the OTC Electronic Bulletin Board.
Its symbol is "VGCP".
Company information can be found on the World Wide Web. The address is
www.vcgi.com.
Subsequent events:
Tommy Walker resigned from the Board of Directors but remains an
advisor to the management on an as needed basis. Matthew W. Fossen and Richard
W. Pryor were appointed to the board of directors. Mr. Fossen was also appointed
chief financial officer, treasurer, and secretary of the company and Mr. Pryor
was appointed executive vice president - technology of Viking Capital Group,
Inc. and chairman, president and CEO of Viking Systems, Inc., a wholly owned
subsidiary of the company.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit 2.1 Stock for Stock agreement - Plan of Reorganization
Triple A Annuity Marketing, Inc.
Exhibit 21.1 List of subsidiaries of the Registrant
Exhibit 27.1 Financial Data Schedule
b) Form 8-K filed on 9/19/97 reporting the stock for stock agreement
between Triple A Annuity Marketing, Inc. and Registrant. At the time of the
filing of the Report, it was impracticable for the Registrant to provide any of
the financial statements for the acquired business required by Item 7 of Form
8-K promulgated by the Commission under the Securities and Exchange Act of 1934,
as amended (the "Act"). Accordingly, the Registrant will file the required
financial statements, if any, as soon as practicable, but not later than
November 18, 1997, as required by Item 7 of Form 8-K.
-12-
<PAGE>
EXHIBIT INDEX
-------------
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
2.1 Stock for Stock agreement - Plan of Reorganization
between Registrant and Triple A Annuity Marketing,
Inc. (exhibits and schedules omitted) (incorporated
by reference to Exhibit 2.2 to the Registrant's
Current Report on Form 8-K dated 9/04/97 and filed on
9/19/97)
21.1 List of Subsidiaries of the Registrant
27.1 Financial Data Schedule
-13-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VIKING CAPITAL GROUP, INC.
Dated: November 19, 1997 By: \s\ William J. Fossen
---------------------------
William J. Fossen, President
Dated: November 19, 1997 By: \s\ William J. Fossen
---------------------------
William J. Fossen
Chief Financial and
Accounting Officer
-14-
<PAGE>
EX-21
Subsidiaries of the Registrant
EXHIBIT 21.1
Viking Capital Group, Inc. and Subsidiaries
List of subsidiaries of the registrant
The following are current subsidiaries of Registrant.
Subsidiary and Name Under Which Business is Done Where Organized
- ------------------------------------------------ ---------------
Viking Financial Services, Inc. Texas
Viking Insurance Services, Inc. Texas
Viking Systems, Inc. Texas
Viking Administrators, Inc. Texas
NIAI Insurance Administrators, Inc. California
Triple A Annuity Marketing, Inc. Arizona
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENT OF THE COMPANY AS OF SEPTEMBER 30, 1997 INCLUDED IN THE
10QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10QSB
</LEGEND>
<CIK> 0000886093
<NAME> VIKING CAPITAL GROUP, INC
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,136
<SECURITIES> 0
<RECEIVABLES> 131,026
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 84,162
<PP&E> 101,379
<DEPRECIATION> 0
<TOTAL-ASSETS> 301,708
<CURRENT-LIABILITIES> 1,304,808
<BONDS> 64,585
0
0
<COMMON> 16,906
<OTHER-SE> (1,078,185)
<TOTAL-LIABILITY-AND-EQUITY> 301,708
<SALES> 50,000
<TOTAL-REVENUES> 50,000
<CGS> 0
<TOTAL-COSTS> 466,458
<OTHER-EXPENSES> (24,929)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (27,514)
<INCOME-PRETAX> (441,387)
<INCOME-TAX> 0
<INCOME-CONTINUING> (441,387)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (441,387)
<EPS-PRIMARY> (0.028)
<EPS-DILUTED> (0.028)
</TABLE>
