SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------------------------------
Form 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996 Commission file number: 0-25326
Ariel Corporation
(exact name of registrant as specified in its charter)
Delaware 13-3137699
(State of incorporation) (IRS employer identification
number)
2540 Route 130
Cranbury, New Jersey 08512
(Address of principal executive offices)
609-860-2900
(Telephone number, including area code)
--------------------------------------------
Check mark whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes ( X ) No ( )
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, $.001 par value 8,369,242 shares outstanding
as of June 30, 1996
Documents Incorporated by Reference: None
<PAGE>
Ariel Corporation
Form 10-QSB for Quarter Ended June 30, 1996
Index
Part I. Financial Information
Item 1. Financial Statements
A. Unaudited Balance Sheet as of June 30, 1996
B. Unaudited Statements of Operations for the three and
six months ended June 30, 1996 and 1995.
C. Unaudited Statements of Cash Flows for the six months
ended June 30, 1996 and 1995.
D. Unaudited Notes to Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation.
Part II. Other Information
<PAGE>
PART I. - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
ARIEL CORPORATION
BALANCE SHEET
As of June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $13,362,657
ACCOUNTS RECEIVABLE, NET OF ALLOWANCE FOR DOUBTFUL
ACCOUNTS OF $183,039 2,852,286
OTHER RECEIVABLES 138,776
INVENTORIES 3,103,274
PREPAID EXPENSES 128,803
-----------
TOTAL CURRENT ASSETS 19,585,796
EQUIPMENT, NET OF ACCUMULATED DEPRECIATION
AND AMORTIZATION 1,302,678
OTHER ASSETS 352,628
===========
TOTAL ASSETS $21,241,102
===========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES & STOCKHOLDERS' EQUITY
<S> <C>
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $1,098,084
ACCRUED EXPENSES 990,314
NOTES PAYABLE - CURRENT, NET OF DISCOUNT OF $16,668 336,624
ROYALTIES PAYABLE 81,318
-----------
TOTAL CURRENT LIABILITIES 2,506,340
STOCKHOLDERS' EQUITY
PREFERRED STOCK, $.001 PAR VALUE; 2,000,000 SHARES
AUTHORIZED; SHARES ISSUED AND OUTSTANDING - NONE
COMMON STOCK, $.001 PAR VALUE; 20,000,000 SHARES
AUTHORIZED; 8,369,242 SHARES ISSUED AND OUTSTANDING 8,369
ADDITIONAL PAID-IN CAPITAL 26,614,438
ACCUMULATED DEFICIT (7,888,045)
-----------
TOTAL STOCKHOLDERS' EQUITY 18,734,762
===========
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $21,241,102
===========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
ARIEL CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SALES $3,660,669 $2,179,452 $5,183,048 $4,274,962
COST OF GOODS SOLD 1,877,816 1,241,768 2,697,533 2,212,884
---------- ---------- ---------- ----------
GROSS PROFIT 1,782,853 937,684 2,485,515 2,062,078
EXPENSES:
SALES AND MARKETING 999,204 664,246 1,948,463 1,226,947
GENERAL AND ADMINISTRATIVE 1,281,386 640,090 2,112,951 1,310,789
RESEARCH AND DEVELOPMENT 1,378,769 637,929 2,474,436 1,086,840
---------- ---------- ---------- ----------
LOSS FROM OPERATIONS (1,876,506) (1,004,581) (4,050,335) (1,562,498)
INTEREST INCOME 144,968 76,751 313,668 98,969
INTEREST EXPENSE (9,629) (8,370) (19,067) (17,614)
OTHER INCOME 4,467 7,514 19,216 13,590
---------- ---------- ---------- ----------
LOSS BEFORE INCOME TAX BENEFIT (PROVISION) (1,736,700) (928,686) (3,736,518) (1,467,553)
INCOME TAX BENEFIT (PROVISION) 0 0 0 0
========== ========== ========== ==========
NET LOSS ($1,736,700) ($928,686) ($3,736,518) ($1,467,553)
========== ========== ========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 7,285,416 4,758,625 7,079,120 4,536,044
========== ========== ========== ==========
NET LOSS PER COMMON SHARE ($0.24) ($0.20) ($0.53) ($0.32)
========== ========== ========== ==========
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
ARIEL CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS $(3,736,518) $(1,467,553)
ADJUSTMENTS TO RECONCILE NET LOSS TO
NET CASH USED IN OPERATING ACTIVITIES:
DEPRECIATION & AMORTIZATION 242,438 85,728
AMORTIZATION OF DISCOUNT ON ROYALTIES PAYABLE 15,953 14,478
PROVISION FOR DOUBTFUL ACCOUNTS 15,000 -
PROVISION FOR INVENTORY OBSOLESCENCE 15,000 15,000
(INCREASE) DECREASE IN ASSETS:
ACCOUNTS RECEIVABLE (1,357,372) (323,824)
OTHER RECEIVABLES (88,732) 2,433
INVENTORIES (857,515) (434,952)
PREPAID EXPENSES (24,981) (133,410)
OTHER ASSETS 108,317 (7,648)
INCREASE (DECREASE) IN LIABILITIES:
ACCOUNTS PAYABLE 583,198 (20,208)
ACCRUED EXPENSES (56,569) (94,492)
ROYALTIES PAYABLE, RELATED PARTIES 4,810 (60,980)
------------- -------------
NET CASH USED IN OPERATING ACTIVITIES (5,136,971) (2,425,428)
------------- -------------
CASH FLOWS USED IN INVESTING ACTIVITIES:
PURCHASE OF EQUIPMENT (961,557) (261,237)
------------- -------------
NET CASH USED IN INVESTING ACTIVITIES (961,557) (261,237)
------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
PROCEEDS FROM SALE OF COMMON STOCK,
NET OF EXPENSES - 5,610,528
PROCEEDS FROM EXERCISE OF WARRANTS
AND OPTIONS, NET OF EXPENSES 5,482,176 -
------------- -------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES 5,482,176 5,610,528
------------- -------------
NET (DECREASE) INCREASE IN CASH (616,352) 2,923,863
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR 13,979,009 313,189
============= =============
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 13,362,657 $ 3,237,052
============= =============
<FN>
See accompanying notes to unaudited financial statements.
</FN>
</TABLE>
<PAGE>
Ariel Corporation
Notes to Financial Statements
(Unaudited)
Basis of Presentation
The financial statements included herein have been prepared by the
Company, pursuant to the Rules and Regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. The Company believes, however, that the disclosure contained herein
is adequate to make the information presented not misleading. The financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Form 10-KSB for the year ended December 31,
1995. Certain prior period amounts have been reclassified in order to conform to
the current period presentation.
In the opinion of the management of the Company, the accompanying
unaudited financial statements contain all adjustments, consisting of normal
recurring accruals, which are necessary to present fairly the financial position
of the Company as of June 30, 1996 and the results of operations for the three
and six months ended June 30, 1996 and 1995 and the statements of cash flows for
the six months ended June 30, 1996 and 1995, respectively. The results for
interim periods are not necessarily indicative of results for the full year.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
COMPARISON OF RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, the percentage
relationship that certain items of the Company's results of operations bear to
total sales.
Three months ended Six months ended
June 30, June 30,
1996 1995 1996 1995
---- ---- ---- ----
Sales 100% 100% 100% 100%
Cost of goods sold 51 57 52 52
-------- -------- -------- -------
Gross profit 49 43 48 48
Expenses
Sales and marketing 27 31 38 29
General and administrative 35 29 41 31
Research and development 38 29 48 25
-------- -------- -------- -------
Loss from operations -51 -46 -78 -36
Interest Income 4 3 6 2
Interest Expense - - - -
Other Income - - - -
-------- -------- -------- -------
Loss before income tax benefit
(provision) -47 -43 -72 -34
Income tax benefit (provision) - - - -
======== ======== ======== =======
Net Loss -47% -43% -72% -34%
======== ======== ======== =======
<PAGE>
Three months ended June 30, 1996 as Compared to three months ended June 30, 1995
Net Sales
Worldwide sales were $3,660,669 for the three months ended June 30, 1996,
an increase of $1,481,217 or 68% compared to net sales of $2,179,452 for the
three months ended June 30, 1995. Domestic sales were $3,188,252 for the three
months ended June 30, 1996 compared to $1,789,508 for the three months ended
June 30, 1995. The Company achieved record bookings in February and March which
were shipped from backlog during the three months ended June 30, 1996. The
Company's Aruba and Hydra series DSP boards shipped in significant volume during
the quarter ending June 30, 1996. Export sales were $472,417 for the three
months ended June 30, 1996 compared to $389,944 for the three months ended June
30, 1995.
Gross Profit
Gross profit increased by $845,169 or 90% to $1,782,853 for the three
months ended June 30, 1996 compared to $937,634 for the three months ended June
30, 1995. Gross profit margin increased to 49% for the three months ended June
30, 1996 compared to 43% for the three months ended June 30, 1995. The Company
has significantly improved its manufacturing process in 1996 compared to 1995
and has intentionally built certain products to stock quantities and avoid
costly short-run and quick turnaround purchases in response to market demands.
Additionally, the mix of product sold during the second quarter of 1996 carried
higher gross margins compared to product shipped during the second quarter of
1995.
Sales and marketing
Sales and marketing expenses were $999,204 or 27% of sales for the three
months ended June 30, 1996 compared to $664,246 or 31% of sales for the three
months ended June 30, 1995. The increase of $334,958 or 50% includes $93,344 for
sales commissions reflecting the significant increase in sales quarter to
quarter. Additionally, advertising and marketing expenses increased $94,402
reflecting print advertising for certain of the Company's general purpose DSP
boards and the Computer Telephony Integration ("CTI") modem products.
General and administrative
General and administrative expenses were $1,281,386 or 35% of sales for
the three months ended June 30, 1996 compared to $640,090 or 29% of sales for
the three months ended June 30, 1995, an increase of $641,296 or 100%. The
increase of $641,296 included an increase of $328,287 in salaries and wages
reflecting non-recurring severance expense related to certain management
personnel and the addition of a full-time human resource manager. Depreciation
expense increased throughout the company, reflecting the significant increase in
fixed assets related to additional computer equipment and furniture and fixtures
needs, and as a result, depreciation expense for the administrative and support
staff increased by $41,805. Recruitment expenses increased by $65,695 reflecting
completed searches for human resource and accounting positions and progress
payments on two additional administrative searches. Relocation expenses
increased by $63,356 reflecting payment of certain one-time expenses related to
the relocation of a senior executive and the closing of the Company's liaison
office in Paris, France. Rent expense increased by $81,283 reflecting the
Company's occupancy of its 30,000 square foot Corporate Headquarters in January
1996. Commercial Insurance expense increased by $35,696 reflecting increases in
premium expense due to increased coverage for Directors and Officers Liability
insurance. Consulting expense increased by $90,200 reflecting specific
assignments for management process, financial public relations and corporate
marketing programs.
Research and Development
Research and development expenditures were $1,378,769 or 38% of sales for
the three months ended June 30, 1996 compared to $637,929 or 29% of sales for
the three months ended June 30, 1995, an increase of $740,840. Salaries and
wages increased by $327,100 reflecting principally the hiring of certain senior
level managers and additional engineering staff to meet the demands for internal
product development in the CTI and Communications System Groups ("CSG"). In
addition, research and development expense increased by $96,000 due to prototype
assemblies for certain CTI and OEM products. In addition, certain overhead
expenses allocated to research and development increased by $317,734, reflecting
the overall increase in engineering headcount, space requirements, and operating
expenses.
For the foregoing reasons, the Company incurred a net loss of $1,736,700
for the three months ended June 30, 1996 compared to a net loss of $928,686 for
the three months ended June 30, 1995.
.
<PAGE>
Six months ended June 30, 1996 as Compared to six months ended June 30, 1995
Net Sales
Worldwide sales were $5,183,048 for the six months ended June 30, 1996, an
increase of $908,086 or 21% compared to worldwide sales of $4,274,962 for the
six months ended June 30, 1995. Domestic sales were $4,280,446 for the six
months ended June 30, 1996 compared to $3,440,083 for the six months ended June
30, 1995. The Company began calendar year 1996 with an historically low backlog
but after a low bookings month in January, it has experienced significant
increases in bookings for the months of February through June 1996. Bookings
through June 30, 1996 have increased by approximately 42% versus the first six
months of 1995. The Company has experienced strong shipments of its Aruba and
Hydra series DSP boards. Export sales were $902,602 for the six months ended
June 30, 1996 compared to $834,879 for the six months ended June 30, 1995.
Gross Profit
Gross profit increased $423,437 or 21% from $2,062,078 or 48% of sales to
$2,485,515 or 48% of sales. The increase in gross margin reflects the higher
sales volume absorbing the increase in fixed production costs and allocation of
certain overhead expenses.
Sales and Marketing
Sales and marketing expenses were $1,948,463 or 38% of sales for the six
months ended June 30, 1996 compared to $1,226,947 or 29% of sales for the six
months ended June 30, 1995. The increase of $721,516 or 59% includes an increase
of $247,739 in salaries and wages reflecting additions to the field sales force
in San Francisco, California which primarily focuses on sales in Far Eastern
market and one-time severance costs associated with closing the Company's
liaison office in Paris, France. Additionally, the Company has significantly
increased headcount in its sales support group. Advertising and marketing
expenses increased by $158,785 reflecting increased expenditures for print
advertising, brochures and marketing programs associated with the introduction
of certain new products focused on OEM and CTI markets.
General and Administrative
General and administrative expenses were $2,112,951 or 41% of sales for
the six months ended June 30, 1996 compared to $1,310,789 or 31% of sales for
the six months ended June 30, 1995, an increase of $802,162. Salaries and wages
increased by $377,628 reflecting non-recurring severance expense of $235,000
related to certain management personnel, approximately $50,000 related to the
impact of the Chief Financial Officer's salary for six months of 1996 versus two
months in 1995 (hire date May 1, 1995) , severance expense related to certain
management personnel, reorganization of the finance department and the addition
of a full time human resource manager. Depreciation expense increased throughout
the company, reflecting the significant increase in fixed assets related to
additional computer equipment and furniture and fixture needs, and as a result,
depreciation expense for the administrative and support staff increased by
$75,329. Relocation expense increased by $156,097 reflecting the relocation of a
senior executive and the closing of the Company's liaison office in Paris,
France. Recruitment expense increased by $54,852 reflecting completed searches
for human resource and accounting positions and expenses incurred to date on
certain additional management searches. Rent expense increased by $147,776
reflecting the Company's occupancy of its 30,000 square foot Corporate
Headquarters in January. Commercial insurance costs increased by $61,000
reflecting increases in premium expense related to an increase in coverage for
directors and officers liability insurance.
<PAGE>
Liquidity and Capital Resources
On December 20, 1995, the Company completed a secondary offering of its
securities pursuant to which it sold 2,040,000 common shares at $7.50 per share.
After payment of certain expenses associated with the offering, the Company
received net proceeds of approximately $14 million.
On January 1, 1996, 1,725,000 publicly traded warrants were outstanding.
Each warrant entitled the holder to purchase one share of the Company's common
stock at a per share price of $3.50. Effective January 24, 1996, each warrant
was eligible for exercise and under certain circumstances, could be called for
redemption by the Company at a price per warrant of $0.01. On May 22, 1996, the
Company notified all registered holders of warrants that it had elected to
redeem on or after June 28, 1996 all warrants outstanding on the redemption
date. Each holder of a warrant called for redemption could within 30 days, elect
to preempt the redemption by exercising the warrant and purchasing one share of
common stock of the Company at the exercise price of $3.50. Through June 30,
1996, the Company received net proceeds of $4,723,660 representing the exercise
of 1,349,617 warrants.
For the six months ended June 30, 1996, net cash used in operating
activities amounted to $5,136,971. The negative cash flow from operations was
the result of Company's net loss of $3,736,518 for the six months ended June 30,
1996. Additionally, trade accounts receivable increased by $1,357,372 from
December 31, 1995 reflecting the significant increase in sales volume during the
second quarter of 1996. Also, inventories increased by $857,515 as a result of
the Company's decision to order certain key raw material components in ample
quantity to meet anticipated shipment of its CTI products commencing in the
third quarter of 1996.
Cash used in investing activities for the six months ended June 30, 1996
amounted to $961,557 and reflected purchases of computer and peripheral
equipment to support the increase in engineering and professional staff, office
equipment and furniture related to the Company's relocation to its new Corporate
Headquarters.
Cash flow from financing activities were $5,482,176 for the six months
ended June 30, 1996. As previously discussed, the Company has received
$4,723,660 from the exercise of 1,349,617 warrants. Additionally, the Company
has received $768,000 resulting from the exercise of 150,000 unit purchase
options issued to the Company's Underwriters in conjunction with its Initial
Public Offering. Such options entitled the holder to purchase for an aggregate
consideration of $768,000, 150,000 Underwriter Units. Upon exercise, each
Underwriter Unit entitles the holder to one share of common stock and one
warrant.
Impact of the Adoption of Recently Issued Accounting Standards
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and Long-Lived Assets to Be Disposed Of" ("SFAS 121") in March 1995,
effective January 1, 1996. SFAS 121 requires companies to review their
long-lived assets and certain identifiable intangibles (collectively,
"Long-Lived Assets") for impairment whenever events or changes in circumstances
indicate that the carrying value of a Long-Lived Asset may not be recoverable.
Impairment is measured using the lower of a Long-Lived Asset's book value or
fair value, as defined. The Company believes that, based upon current operations
and prospects, SFAS 121 will not have a material impacton the Company's
financial position or results of operations.
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123") in October 1995, effective January 1, 1996. SFAS 123 requires companies to
estimate the fair value of common stock, stock options, or other equity
instruments ("Equity Instruments") issued to employees using pricing models
which take into account various factors such as current price of the common
stock, volatility and expected life of the Equity Instrument. SFAS 123 permits
companies to either provide pro forma note disclosure, or adjust operating
results, for the amortization of the estimated value of the Equity Instrument
over the vesting period of the Equity Instrument. The Company has elected to
continue to account for stock options under Accounting Principles Board Opinion
No. 25.
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
A) Exhibits - Exhibit 11
- Exhibit 27
B) Reports on Form 8-K - None.
<PAGE>
Signature
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Ariel Corporation
------------------------------------
Registrant
------------------------------------
Gerard E. Dorsey
Chief Financial Officer and
Principal Accounting Officer
Date: August 9, 1996
<PAGE>
<TABLE>
Exhibit 11
ARIEL CORPORATION
STATEMENT OF COMPUTATION OF PER SHARE AMOUNTS
For the Three Months and Six Months Ended June 30, 1996 and 1995
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
----------- ----------- ----------- ------------
Primary
Net loss for the period ........................ $ (1,736,700) $ (928,686) $ (3,736,518) $ (1,467,553)
----------- ----------- ----------- ------------
Weighted average number of shares of common
stock outstanding ...................................... 7,285,416 4,758,625 7,079,120 4,536,044
Shares issuable upon exercise of outstanding
options and warrants ....................................... -- -- -- --
Shares assumed to be acquired in accordance
with the treasury stock method .............................. -- -- -- --
----------- ----------- ----------- ------------
Shares used in computing per share loss .................... 7,285,416 4,758,625 7,079,120 4,536,044
----------- ----------- ----------- ------------
Net loss per share ........................................ $ (0.24) $ 0.20) $ (0.53) $ (0.32)
----------- ----------- ----------- ------------
Fully Diluted:
Net loss for the period .................................. $ (1,736,700) $ (862,551) $ (3,736,518) $ (1,410,922)
----------- ----------- ----------- ------------
Weighted average number of shares of common
stock outstanding .......................................... 7,285,416 4,758,625 7,079,120 4,536,044
Shares issuable upon exercise of outstanding
options and warrants ....................................... 2,857,586 2,989,375 3,064,882 2,642,550
Shares assumed to be acquired in accordance
with the treasury stock method ............................. (2,575,748) (951,725) (2,575,748) (951,725)
----------- ----------- ----------- ------------
Shares used in computing per share loss ................... . 7,567,254 6,796,275 7,568,254 6,226,869
----------- ----------- ----------- ------------
Net loss per share ......................................... $ (0.23) $ (0.13) $ (0.49) $ (0.23)
----------- ----------- ----------- ------------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000911167
<NAME> ARIEL CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 13,362,657
<SECURITIES> 0
<RECEIVABLES> 3,035,325
<ALLOWANCES> 183,039
<INVENTORY> 3,103,274
<CURRENT-ASSETS> 19,585,796
<PP&E> 2,463,263
<DEPRECIATION> 1,160,585
<TOTAL-ASSETS> 21,241,102
<CURRENT-LIABILITIES> 2,506,340
<BONDS> 0
0
0
<COMMON> 8,369
<OTHER-SE> 18,726,393
<TOTAL-LIABILITY-AND-EQUITY> 21,241,102
<SALES> 5,183,048
<TOTAL-REVENUES> 5,183,048
<CGS> 2,697,533
<TOTAL-COSTS> 2,697,533
<OTHER-EXPENSES> 6,535,850
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,067
<INCOME-PRETAX> (3,736,518)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,736,518)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,736,518)
<EPS-PRIMARY> (0.53)
<EPS-DILUTED> (0.49)
</TABLE>
