<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 10-QSB
-------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED MARCH 31, 1997
[ ] 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 0-27368
ORTEC INTERNATIONAL, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 11-3068704
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3690 BROADWAY
NEW YORK, NEW YORK 10032
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(212) 740-6999
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE
----------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities 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
--- ---
-------------------------------------
The number of shares outstanding of the issuer's common stock is
4,619,921 (as of May 9, 1997).
================================================================================
<PAGE> 2
ORTEC INTERNATIONAL, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
QUARTER ENDED MARCH 31, 1997
ITEMS IN FORM 10-QSB
Page
Facing page
Part I
Item 1. Financial Statements. 1
Item 2. Plan of Operation. 12
Part II
Item 1. Legal Proceedings and Claims. None
Item 2. Changes in Securities. None
Item 3. Default 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. 14
Signatures
<PAGE> 3
PART I
Item 1. FINANCIAL STATEMENTS
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $6,519,868 $7,453,229
Prepaid expenses 3,750 7,616
Other current assets 1,959 1,958
---------- ----------
Total current assets 6,525,577 7,462,803
---------- ----------
Property and equipment, at cost:
Laboratory equipment 581,796 578,530
Office furniture and equipment 212,381 170,830
Leasehold improvements 573,723 462,995
---------- ----------
1,367,900 1,212,355
Accumulated depreciation and
amortization 386,436 321,646
---------- ----------
981,464 890,709
---------- ----------
Other assets:
Patent application costs, net of
accumulated amortization of $8,547 at
March 31, 1997 and $1,210 at
December 31, 1996 411,596 409,147
Deposits 30,873 29,266
---------- ----------
Total other assets 442,469 438,413
---------- ----------
Total Assets $7,949,510 $8,791,925
========== ==========
</TABLE>
See notes to condensed unaudited financial statements.
1
<PAGE> 4
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
---- ----
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 589,937 $ 570,397
Capital lease obligations - current 13,674 5,738
Loan payable - current 35,916 38,018
----------- -----------
Total current liabilities 639,527 614,153
----------- -----------
Long-term liabilities:
Capital lease obligations - noncurrent 26,110 9,846
Loan payable-noncurrent 441,679 450,928
----------- -----------
Total long-term liabilities 467,789 460,774
----------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par value;
authorized, 10,000,000 shares;
issued and outstanding shares -
4,606,040 at March 31, 1997 and
4,601,963 at December 31, 1996 4,606 4,602
Additional paid-in capital 15,577,256 15,573,183
Deficit accumulated during the
development stage (8,739,668) (7,860,787)
----------- -----------
Total stockholders' equity 6,842,194 7,716,998
----------- -----------
Total Liabilities and
Stockholders' Equity $ 7,949,510 $ 8,791,925
=========== ===========
</TABLE>
See notes to condensed unaudited financial statements.
2
<PAGE> 5
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Cumulative from
March 12, 1991
Quarter ended March 31, (inception) to
----------------------- March 31, 1997
1997 1996 --------------
---- ----
<S> <C> <C> <C>
Revenue
Interest income $ 83,861 $ 34,471 $ 322,076
---------- ---------- -----------
Expenses
Research and development 272,693 221,455 3,627,109
Rent 51,365 6,443 214,314
Consulting 62,143 40,933 819,539
Personnel 293,451 140,016 2,168,849
General and administrative 270,910 126,844 2,105,282
Other expense, net 12,180 1,027 126,651
---------- ---------- -----------
962,742 536,718 9,061,744
---------- ---------- -----------
Net loss $ (878,881) $ (502,247) $(8,739,668)
---------- ---------- -----------
Net loss per share $ (.18) $ (.14) $ (2.99)
---------- ---------- -----------
Weighted average common and
common equivalent shares
outstanding 4,915,774 3,670,195 2,923,615
---------- ---------- -----------
</TABLE>
See notes to condensed unaudited financial statements.
3
<PAGE> 6
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Common Stock accumulated
Additional in the
Paid-in development
Shares Amount Capital stage Total
------ ------ ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
Issuance of stock:
Founders 1,553,820 $ 1,554 $ (684) $ 870
First private placement 217,440 217 64,783 65,000
The Director 149,020 149 249,851 250,000
Second private placement 53,020 53 499,947 500,000
Share issuance expenses (21,118) (21,118)
Net loss for the period from
March 12, 1991 (inception) to
December 31, 1991 $ (281,644) (281,644)
--------- ----------- ----------- ----------- -----------
Balance - December 31, 1991 1,973,300 1,973 792,779 (281,644) 513,108
Issuance of stock:
Second private placement 49,320 49 465,424 465,473
Stock purchase agreement with
The Director 31,820 32 299,966 299,998
Share issuance expenses (35,477) (35,477)
Net loss for the year ended
December 31, 1992 (785,941) (785,941)
--------- ----------- ----------- ----------- -----------
Balance - December 31, 1992 2,054,440 2,054 1,522,692 (1,067,585) 457,161
Issuance of stock:
Third private placement 132,150 132 1,321,368 1,321,500
Stock purchase agreement with
Home Insurance Company 111,111 111 999,888 999,999
Stock purchase agreement with
The Director 21,220 21 199,979 200,000
Shares issued in exchange
for commissions earned 600 1 5,999 6,000
Share issuance expenses (230,207) (230,207)
Net loss for the year ended
December 31, 1993 (1,445,624) (1,445,624)
--------- ----------- ----------- ----------- -----------
Balance - December 31, 1993 2,319,521 $ 2,319 $ 3,819,719 $(2,513,209) $ 1,308,829
========= =========== =========== =========== ===========
</TABLE>
See notes to condensed unaudited financial statements.
4
<PAGE> 7
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Common Stock accumulated
------------------- Additional in the
Paid-in development
Shares Amount Capital stage Total
------ ------ ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
(brought forward) 2,319,521 $2,319 $ 3,819,719 $(2,513,209) $ 1,308,829
Issuance of stock:
Fourth private placement 39,451 40 397,672 397,712
Stock purchase agreement with
Home Insurance Company 50,000 50 499,950 500,000
Share issuance expenses (8,697) (8,697)
Net loss for the year ended
December 31, 1994 (1,675,087) (1,675,087)
--------- ------ ------------ ----------- -----------
Balance - December 31, 1994 2,408,972 2,409 4,708,644 (4,188,296) 522,757
Rent forgiveness 40,740 40,740
Net loss for the year ended
December 31, 1995 (1,022,723) (1,022,723)
--------- ------ ------------ ----------- -----------
Balance - December 31, 1995 2,408,972 2,409 4,749,384 (5,211,019) (459,226)
Issuance of stock:
Initial public offering 1,200,000 1,200 5,998,800 6,000,000
Exercise of warrants 33,885 34 33,851 33,885
Fifth private placement 959,106 959 6,219,838 6,220,797
Share issuance expenses (1,580,690) (1,580,690)
Non-cash stock compensation
and interest 152,000 152,000
Net loss for the year ended
December 31, 1996 (2,649,768) (2,649,768)
--------- ------ ------------ ----------- -----------
Balance - December 31, 1996 4,601,963 $4,602 $ 15,573,183 $(7,860,787) $ 7,716,998
========= ====== ============ =========== ===========
</TABLE>
See notes to condensed unaudited financial statements.
5
<PAGE> 8
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Common Stock accumulated
------------------- Additional in the
Paid-in development
Shares Amount Capital stage Total
------ ------ ---------- ----------- -----
<S> <C> <C> <C> <C> <C>
(brought forward) 4,601,963 $4,602 $15,573,183 $(7,860,787) $7,716,998
Issuance of stock:
Exercise of warrants 4,077 4 4,073 4,077
Net loss for the quarter ended
March 31, 1997 (878,881) (878,881)
--------- ------ ----------- ----------- ----------
Balance - March 31, 1997 4,606,040 $4,606 $15,577,256 $(8,739,668) $6,842,194
========= ====== =========== =========== ==========
</TABLE>
See notes to condensed unaudited financial statements.
6
<PAGE> 9
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Cumulative from
March 12, 1991
Quarter ended March 31, (inception) to
----------------------- March 31, 1997
1997 1996 --------------
---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (878,881) $ (502,247) $ (8,739,668)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Deferred occupancy costs (1,327)
Depreciation and amortization 72,127 14,679 405,221
Unrealized loss on marketable
securities 67,204
Realized loss on marketable
securities 5,250
Non-cash stock compensation and
interest 152,000
Rent forgiveness 40,740
Changes in operating assets and
liabilities
Prepaid expenses 3,866 (3,750)
Other current assets (1) (14) (1,959)
Accounts payable and accrued
liabilities 19,540 (279,890) 589,937
----------- ----------- ------------
Net cash used in operating activities (783,349) (768,799) (7,485,025)
----------- ----------- ------------
Cash flows from investing activities:
Purchases of property and equipment (155,545) (216,449) (1,367,900)
Payments for patent application (9,786) (3,780) (420,143)
Organization costs (10,238)
Deposits (1,607) (331) (30,873)
Purchases of marketable securities (594,986)
Sale of marketable securities 522,532
----------- ----------- ------------
Net cash (used in) provided by
investing activities (166,938) (220,560) (1,901,608)
=========== =========== ============
</TABLE>
See notes to condensed unaudited financial statements.
7
<PAGE> 10
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Cumulative from
March 12, 1991
Quarter ended March 31, (inception) to
March 31, 1997
1997 1996 --------------
---- ----
<S> <C> <C> <C>
Cash flows from financing activities:
Proceeds from issuance of notes payable $ 515,500
Repayment of notes payable $ (515,500) (515,500)
Proceeds from issuance of common stock $ 4,077 6,012,866 17,265,311
Share issuance expenses (826,097) (1,876,189)
Proceeds from loan payable 500,000
Repayment of loan payable (11,351) (22,405)
Proceeds from capital lease obligations 25,331 43,867
Repayment of capital lease obligations (1,131) (4,083)
---------- ---------- -----------
Net cash provided by financing activities 16,926 4,671,269 15,906,501
---------- ---------- -----------
Net increase (decrease) in cash (933,361) 3,681,910 6,519,868
Cash at beginning of period 7,453,229 2,364
---------- ---------- -----------
Cash at end of period $6,519,868 $3,684,274 $ 6,519,868
========== ========== ===========
</TABLE>
See notes to condensed unaudited financial statements.
8
<PAGE> 11
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996 AND 1997
NOTE 1 - FINANCIAL STATEMENTS
The condensed balance sheet as of March 31, 1997 and the statements of
operations, shareholders' equity and cash flows for the three month periods
ended March 31, 1997 and 1996 and for the period from March 12, 1991 (inception)
to March 31, 1997 have been prepared by the Company without audit. In the
opinion of management, all adjustments (which include only normal recurring
accrual adjustments) necessary to present fairly the financial position, results
of operations and cash flows at March 31, 1997 and for all periods presented
have been made. Certain information and footnote disclosure normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and notes thereto in the Company's December 31, 1996 annual report on
Form 10-KSB filed with the Securities and Exchange Commission. The results of
operations for the quarter ended March 31, 1997 are not necessarily indicative
of the operating results for the full year.
NOTE 2 - FORMATION OF THE COMPANY AND BASIS OF PRESENTATION
Formation of the Company
Ortec International, Inc. ("Ortec" or the "Company") was incorporated
in March 1991 as a Delaware corporation to secure and provide funds for the
further development of the technology developed by Dr. Mark Eisenberg of Sydney,
Australia, to replicate in the laboratory, composite cultured skin for use in
skin replacement procedures (the "Technology"). Pursuant to a license agreement
dated September 7, 1991, Dr. Eisenberg has granted Ortec a license for a term of
ten years, which may be automatically renewed by Ortec for two additional
ten-year periods, to commercially use and exploit the Technology for the
development of products, subject to certain limitations. At the expiration or
earlier termination of the agreement, Dr. Eisenberg is entitled to the exclusive
rights in the Technology, and Ortec is entitled to the exclusive rights to all
improvements to the Technology developed during the license period.
The Skin Group, Ltd. (the "Skin Group") also was formed as a Delaware
corporation, in March 1991, to raise funds for development of the Technology. On
July 27, 1992, the Skin Group
<PAGE> 12
was merged with and into Ortec. Owners of Skin Group shares were given .83672 of
an Ortec share for each Skin Group share. The merger was accounted for as if it
were a pooling of interests and, accordingly, the accompanying financial
statements include the accounts of Skin Group for all periods presented.
Basis of Presentation
The Company is a development stage enterprise, and has neither realized
any operating revenue nor has any assurance of realizing any future operating
revenue. Successful future operations depend upon the successful development and
marketing of the composite cultured skin to be used in skin replacement
procedures.
Initial Public Offering
On January 19, 1996, the Company completed an initial public offering
("IPO") of 1,200,000 units. Each unit consists of one share of the Company's
common stock, one Class A warrant to purchase one share of common stock at $10,
expiring July 1997 and one Class B warrant to purchase one share of common stock
at $15, expiring January 1999. The Class A and B warrants will be redeemable by
the Company at $.01 per warrant, if the market price of the Company's common
stock equals or exceeds $10 for 10 consecutive trading days during a specified
period, as defined.
The IPO raised gross proceeds of $6,000,000, of which $800,000,
$515,500 and approximately $341,000 were used to pay underwriting commissions,
notes payable and deferred offering costs, respectively, thereby providing the
Company with net proceeds of approximately $4,343,500. The Company has used and
intends to use the proceeds for continued research and development of composite
cultured skin, performing human clinical trials and general corporate purposes.
1996 Private Placement
In November 1996, the Company completed a private placement of its
securities from which it received gross proceeds of $6,220,797 and net proceeds
of approximately $5,733,000 (after deducting approximately $487,000 in placement
fees and other expenses of such private placement). The Company sold 959,106
shares of Common Stock in such private placement at average prices of $6.49 per
share. In addition, the Company granted five-year warrants to placement agents
to purchase such number of shares equal to 10% of the number of shares of common
stock sold by such placement agent, exercisable at prices equal to 120% of the
prices paid for such shares. The purchasers have demanded that the Company
register all such 959,106 shares.
The Company intends to use the net proceeds it has received in such
private placement offering for continued research and
<PAGE> 13
development of its composite cultured skin, performing human clinical trials and
for general corporate purposes.
NOTE 3 - NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, EARNINGS PER SHARE, which
is effective for financial statements for both interim and annual periods
ending after December 15, 1997. Early adoption of the new standard is not
permitted. The new standard eliminates primary and fully diluted earnings per
share and requires presentation of basic and diluted earnings per share
together with disclosure of how the per share amounts were computed. Basic
earnings per share excludes dilution and is computed by dividing income
available to common shareholders by the weighted-average common shares
outstanding for the period. Diluted earnings per share reflects the
weighted-average common shares outstanding plus the potential dilutive effect
of securities or contracts which are convertible to common shares, such as
options, warrants, and convertible preferred stock. The effect of adopting this
new standard has not been determined.
<PAGE> 14
ITEM 2. PLAN OF OPERATION
OPERATIONS FOR THE NEXT TWELVE MONTHS
For the next twelve months the Company will continue to conduct human
clinical trials. To that end, the Company has recruited and intends to continue
to recruit hospital burn centers which will provide the necessary patients. In
addition, human clinical trials are presently being conducted at a research
hospital in New York City for the application of the Company's Composite
Cultured Skin in treating the symptoms of a unique disease called Epidermolysis
Bullosa ("EB"). The wounds resulting from EB are very similar to those caused by
burns and require similar treatment.
The Company estimates that the cost to it of each human clinical trial
for burn patients and EB patients will be approximately $8,000. Such amounts
include testing for pathogens and payments to the hospital, but do not include
any allocation to the cost of such trials of salaries, rent or other overhead
expenses of the Company.
CASH REQUIREMENTS
The Company estimates that it has sufficient funds necessary to operate
through approximately January 1999. The Company may have to secure additional
funds prior thereto or thereafter to complete its human clinical trials, if not
then already completed, to secure FDA pre-market approval for commercial sales
and thereafter to produce and market its Composite Cultured Skin in commercial
quantities. See "Forward Looking Information May Prove Inaccurate."
CLINICAL TRIALS AND PRODUCT RESEARCH AND DEVELOPMENT
The Company has spent an aggregate of approximately $3,627,109 from its
inception through March 31, 1997 for the human clinical trials and for research
and development. That amount includes the salaries of its employees involved in
producing the Composite Cultured Skin, performing quality control, securing
hospital burn centers to participate in the human clinical trials, monitoring
the progress of the patients thereafter and to prepare reports to be filed with
the FDA. The Company anticipates that it will be required to continue to spend
additional funds for such purposes in the twelve months ending March 31, 1998 in
order to continue its human clinical trials, continue its efforts to secure FDA
pre-market approval for commercial sales and thereafter to produce and market
its Composite Cultured Skin in commercial quantities. See "Forward Looking
Information May Prove Inaccurate."
<PAGE> 15
FORWARD LOOKING INFORMATION MAY PROVE INACCURATE
This Quarterly Report on Form 10-QSB contains certain forward-looking
statements and information relating to the Company that are based on the beliefs
of Management, as well as assumptions made by and information currently
available to the Company. When used in this document, the words "anticipate,"
"believe," "estimate," and "expect" and similar expressions, as they relate to
the Company, are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions,
including those described in this Quarterly Report on Form 10-QSB. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated or expected. The Company
does not intend to update these forward-looking statements.
<PAGE> 16
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Description
3.1 Agreement of Merger of the Skin Group, Ltd. and the
Company dated July 9, 1992 (1)
3.2 Original Certificate of Incorporation (1)
3.3 By-Laws (1)
27.1 Financial Data Schedule *
- ----------
* Filed herewith.
(1) Filed as an Exhibit to the Company's Registration Statement on Form SB-2
(File No. 33-96090), or Amendment 1 thereto, and incorporated herein by
reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the first quarter of 1997.
<PAGE> 17
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereto duly authorized.
Registrant:
ORTEC INTERNATIONAL, INC.
Date: May , 1997 By: /s/ Steven Katz
-----------------------------
President and
Chief Executive Officer
(Principal Executive Officer)
Date: May , 1997 By: /s/ Ron Lipstein
-----------------------------
Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ORTEC
INTERNATIONAL, INC. (A DEVELOPMENT STAGE ENTERPRISE) UNAUDITED FINANCIAL
STATEMENTS AS PRESENTED IN THE COMPANY'S FORM FOR THE FISCAL QUARTER ENDED
MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,519,868
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,525,577
<PP&E> 1,367,900
<DEPRECIATION> 386,436
<TOTAL-ASSETS> 7,949,510
<CURRENT-LIABILITIES> 639,527
<BONDS> 0
0
0
<COMMON> 4,606
<OTHER-SE> 6,842,194
<TOTAL-LIABILITY-AND-EQUITY> 7,949,510
<SALES> 0
<TOTAL-REVENUES> 83,861
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 962,742
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (878,881)
<INCOME-TAX> 0
<INCOME-CONTINUING> (878,881)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (878,881)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> 0
</TABLE>
