SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1999 Commission File Number 0-23382
TRANS GLOBAL SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 62-1544008
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1393 Veterans Memorial Highway, Hauppauge, NY 11788
Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 724-0006
Indicate by check mark whether the Registrant (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
Number of shares of common stock outstanding as of August 1,1999: 2,669,716
<PAGE> 2
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
INDEX
Part 1 - Financial Information:
Item 1. Financial Statements: Page No.
---------
Balance Sheets as of June 30, 1999 and December 31, 1998. 3-4
Consolidated Statements of Operations-
Three Months Ended June 30, 1999 and June 30, 1998. 5
Consolidated Statements of Cash Flows-
Three Months Ended June 30, 1999 and June 30, 1998. 6-7
Consolidated Statement of Stockholders' Equity -
Six Months Ended June 30, 1999 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-13
Part 11 Other Information
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE> 3
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30 December 31,
1999 1998
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents $ 806,721 $ 234,917
Accounts Receivable- Net of allowance 3,066,555 3,922,843
for doubtful accounts of $62,500
Loans Receivable-Officer 5,000 5,000
Deferred Tax Asset -Current Portion 144,000 144,000
Deferred Loan Costs 51,366 82,266
Prepaid Expenses and Other Current Assets 83,492 214,323
--------- ---------
Total Current Assets 4,157,134 4,603,349
--------- ---------
Property and Equipment-Net 172,104 171,123
--------- ---------
Other Assets:
Due from Affiliates 1,234,810 1,615,035
Customer Lists 2,276,131 2,388,607
Goodwill, Net 702,680 726,968
Deferred Acquisition Costs 279,498 235,560
Deferred Tax Asset-Non Current 578,000 578,000
Other Assets 36,963 41,407
Investment in Preferred Stock of Affiliate -0- 2,237,230
--------- ---------
Total Other Assets 5,108,082 7,822,807
--------- ---------
Total Assets $ 9,437,320 $ 12,597,279
========== ==========
See notes to consolidated financial statements
</TABLE>
<PAGE> 4
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES CONSOLIDATED
BALANCE SHEETS
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
(Unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable and Accrued Expenses $ 147,440 $ 314,625
Accrued Income Taxes Payable 13,496 13,496
Accrued Payroll and Related Taxes and Expenses 1,314,729 528,574
Loans Payable, Asset-based lender 2,094,920 2,647,244
Note Payable- Other 41,768 126,767
------ -------
Total Current Liabilities 3,612,353 3,630,706
Commitments and contingencies [4] -- --
-------------- --------------
Stockholders' Equity:
Common Stock, $.01 Par Value, 25,000,000
Shares Authorized, 3,819,716 shares Issued
and Outstanding at December 31, 1998 and
2,669,716 outstanding at June 30, 1999 38,197 38,197
Capital in Excess of Par Value 12,887,851 12,887,851
Accumulated Deficit (4,534,399) (3,959,475)
---------- ----------
8,391,649 8,966,573
Less Treasury Stock, at cost
1,150,000 shares -1999 (2,566,682) -0-
---------- --------
Total Stockholders' Equity 5,824,967 8,966,573
Total Liabilities and Stockholders' Equity $ 9,437,320 $ 12,597,279
========== ==========
See notes to consolidated financial statements
</TABLE>
<PAGE> 5
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION> Three Months Ended Six Months Ended
June 30, June 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues $ 9,477,423 $ 18,682,293 $ 20,695,730 $37,170,801
Cost of Services Provided 8,719,853 17,050,515 19,212,350 34,075,226
---------- ---------- ---------- ----------
Gross Profit 757,570 1,631,778 1,483,380 3,095,575
Selling, General
and Administrative 1,052,972 1,123,449 1,816,722 2,395,625
Related Party
Administrative Expenses -0- 45,000 -0- 85,000
Amortization of Intangibles 68,382 68,386 136,764 136,773
--------- --------- --------- ---------
Total Operating Expenses 1,121,354 1,236,835 1,953,486 2,617,398
Operating (Loss)Profit (363,784) 394,943 (470,106) 478,177
Other Income (Expenses):
Interest Expense ( 63,326) (150,211) (129,037) (333,540)
Interest Income 33,875 29,980 64,292 59,089
Other (Expense) ( 42,133) ( 26,731) ( 40,073) ( 40,280)
--------- --------- --------- ---------
Total Other Expenses- Net ( 71,584) (146,962) (104,818) (314,731)
Net (Loss)Income $ (435,368) $ 247,981 $ (574,924) $ 163,446
Basic (Loss) Income
per Share Net (Loss) Income (.14) .07 (.17) .04
Weighted Average Number of
Shares of Common Stock 3,048,837 3,819,716 3,432,147 3,819,424
========= ========= ========= =========
Diluted (Loss) Income Per Share:
Incremental Shares from
Assumed Conversion of
Options and Warrants 66,653 16,239 46,760 44,308
Weighted Average Number of Shares
Assuming Dilution 3,115,490 3,835,955 3,478,907 3,864,024
Diluted (Loss) Income Per Share:
Net (Loss) Income (.14) .07 (.17) .04
See notes to consolidated financial statements
</TABLE>
<PAGE> 6
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- -----------------------------------------------------------------------------
<TABLE> Six Months Ended
<CAPTION> June 30,
1 9 9 9 1 9 9 8
<S> <C> <C>
Operating Activities:
Net (Loss) Income $ ( 574,923) $ 163,446
Adjustments to Reconcile Net(Loss)Income
to Net Cash Provided By (Used in) Operating
Activities:
Depreciation and Amortization 202,490 174,075
Charges from Option Exercise -0- 81,300
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Assets:
Receivables 856,288 (672,746)
Loans Receivable - Officer -0- 42,500
Prepaid Expenses and Other
Current Assets 130,831 (181,254)
Increase (Decrease) in Liabilities:
Accounts Payable and Accrued
Expenses (167,185) (310,990)
Accrued Payroll and Related
Taxes and Expenses 786,155 805,663
Accrued Income Taxes Payable -0- ( 76,537)
Accrued Voluntary Settlement Agreement -0- (150,000)
--------- ---------
Total Adjustments 1,808,579 (287,809)
--------- --------
Net Cash Provided by (Used In)Operating Activities 1,233,656 (124,363)
--------- ---------
See notes to consolidated financial statements
</TABLE>
<PAGE> 7
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION> Six Months Ended
June 30,
1999 1998
<S> <C> <C>
Net Cash -
Operating Activities Forwarded $ 1,233,656 $( 124,363)
Investing Activities:
Capital Expenditures ( 35,808) ( 43,074)
Deferred Acquisition Costs ( 43,938) -0-
Repayments from Affiliates 54,273 122,822
Interest on Advances to Affiliates -0- ( 47,565)
Other, net 4,444 2,688
--------- --------
Net Cash - Investing Activities ( 21,029) 34,871
Financing Activities:
Net Payments to
Asset-Based Lender ( 552,324) 87,411
Repayment of Note Payable ( 84,999) -0-
-------- ---------
Net Cash - Financing Activities ( 637,323) 87,411
Net Increase (Decrease) in Cash and
Cash Equivalents 571,804 (2,081)
Cash and Cash Equivalents
- Beginning of Year 234,917 328,484
Cash and Cash Equivalents
- June 30 $ 806,721 $ 326,403
=========== ===========
Supplemental Disclosures of Cash
Flow Information:
Interest $ 129,037 $ 333,540
Income Taxes $ -0- $ 76,357
Supplementary Disclosure of Non Cash investing and Financing Activities during
the six months ended June 30, 1999.
On May 3, 1999, the Company acquired 1,150,000 shares of Common Stock in
exchange for the investment in Preferred Stock of an Affiliate, which was held
by the Company in the amount of $2,240,730, and a reduction in Due from
Affiliates in the amount of $325,952.
See notes to consolidated financial statements
</TABLE>
<PAGE> 8
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statement of Stockholders Equity
For the Six Months Ended June 30, 1999
- -----------------------------------------------------------------------------
<TABLE>
<CAPTION>
Shares Amounts
-------- --------
<S> <C> <C>
Common Stock $.01 Par Value Authorized
25,000,000 Shares
Balance December 31, 1998 3,819,716 $ 38,197
Purchase of treasury stock (1,150,000) ( 11,500)
---------- ---------
Balance-June 30, 1999 2,669,716 26,697
Capital in Excess of Par Value
Balance December 31, 1998 12,887,851
Balance-June 30, 1999 12,887,851
Accumulated (deficit)
Balance December 31, 1998 (3,959,475)
Net Loss ( 574,924)
----------
Balance - June 30, 1999 (4,534,399)
Treasury Stock Balance December 31, 1998 -0- -0-
Treasury stock at cost (1,150,000) (2,555,182)
---------- ----------
Balance - June 30, 1999 (1,150,000) (2,555,182)
Total Stockholders' Equity
Balance December 31, 1998 $ 8,966,573
Purchase of treasury stock (2,566,682)
Net Loss ( 574,924)
-----------
Balance - June 30, 1999 $ 5,824,967
See notes to consolidated financial statements
</TABLE>
<PAGE> 9
TRANS GLOBAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -----------------------------------------------------------------------------
(1) Basis of Presentation
Trans Global Services, Inc. (the "Company" or "Trans Global"), a Delaware
corporation, operates through two subsidiaries, Avionics Research Holdings,
Inc., formerly known as ARC Acquisition Group, Inc.["Holdings"] and Resource
Management International,Inc. ["RMI"]. The Company is engaged in providing
technical temporary staffing services throughout the United States, principally
in the aerospace and aircraft industry.
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments (consisting of only normal recurring accruals) necessary
to present fairly the financial position of the Company as of June 30, 1999 and
the results of its operations for the three and six months ended June 30, 1999
and 1998. These consolidated financial statements should be read in conjunction
with the consolidated financial statements and notes thereto together with
management's discussion and analysis of financial condition and results of
operations contained in the Company's Form 10-K for the year ending December 31,
1998. The results of operations for the three and six months ended June 30, 1999
are not necessarily indicative of the results for the entire year or any future
interim period.
(2) Summary of Significant Accounting Policies
The accounting policies followed by the Company are set forth in Note 2 to the
Company's consolidated financial statements included in the Company's Form 10-K
for the year ended December 31, 1998.
[3] Investment in Preferred Stock of Affiliate
Pursuant to an agreement dated February 25, 1999 between Consolidated Technology
Group Ltd. ("Consolidated"), SIS Capital Corp. ("SISC"), a wholly-owned
subsidiary of Consolidated, and the Company, on May 3, 1999, Consolidated,
through SISC, transferred 1,150,000 shares of the Company's common stock to the
Company in consideration of the cancellation of shares of Consolidated's Series
G 2% Cumulative Redeemable Preferred Stock owned by the Company, including
accrued dividends, and certain other obligations due to Trans Global. The
transfer of the 1,150,000 shares to the Company reduced Consolidated's holdings
in the Company to 379,994 shares, or approximately 14.2% of its outstanding
common stock. Prior to the transfer, Consolidated owned 40.1% of the Company's
outstanding common stock. The effect of this transaction is the elimination of
the investment in preferred stock of affiliate and the reduction of the amount
due from affiliates by $325,952, and a reduction of approximately $2.6 million
in stockholders' equity.
<PAGE> 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Three Months Ended June 30, 1999 and 1998
Revenue from technical temporary staffing services is based on the hourly cost
of payroll plus a percentage. The success of the Company's business is dependent
upon its ability to generate sufficient revenue to enable it to cover its fixed
costs and other operating expenses and to reduce its variable costs. Under its
agreements with its clients, the Company is required to pay its employees and
pay all applicable federal and state withholding and payroll taxes prior to the
receipt of payment from the clients. Furthermore, the Company's payments from
its clients are based upon the hourly rate paid to the employee, without regard
to when payroll taxes are payable with respect to the employee. Accordingly, the
Company's cost of services are greater during the first part of the year, when
federal Social Security taxes and state unemployment and related taxes, which
are based on a specific level of compensation, are due. Thus, until the Company
satisfies its payroll tax obligations, it will have a lower gross margin than
after such obligations are satisfied. Furthermore, to the extent that the
Company experiences turnover in employees, its gross margin will be adversely
affected. For example, in 1999, Social Security taxes are payable on the first
$72,600 of compensation. Once that level of compensation is paid with respect to
any employee, there is no further requirement for the Company to pay Social
Security tax for such employee. Since many of the Company's employees receive
compensation in excess of that amount, the Company's costs with respect to any
employee are significantly higher during the period when it is required to pay
Social Security taxes than it is after such taxes have been paid.
The Company's revenues, derived principally from the aircraft and aerospace
industry, during the three month period ended June 30, 1999 totalled $9.5
million. This reflected a decrease of 49% from the revenue earned in the three
month period ended June 30, 1998. The decrease is directly impacted by the
slowdown in the aerospace industry and the resulting reduced orders. Companies
in the aircraft and aerospace industry have significantly reduced their labor
costs in general, including their use of contract labor. During the three month
periods ended June 30, 1999 and 1998 approximately 62% and 79% of the Company's
revenue was generated from its five largest customers, which were Lockheed
Martin, Boeing Corp, Bell Helicopter Textron, Northrop Grumman Corp., and
Gulfstream Aerospace. Additionally, during the 1999 period, the Company
generated approximately 6.7 % of its revenue from CDI Corp., a major staffing
supplier.
The Company's gross margins for the quarters ended June 30, 1999 and June 30,
1998 were 8.0 and 8.7% respectively. The reduced gross margin during the current
year is attributed to the reduction in business with some of the Company's
higher margin clients as well as a slight increase in the unemployment
experience ratings for the Company which resulted in a higher level of
unemployment taxes.
Selling, general and administrative expenses in the second quarter of 1999
decreased by 6.3% compared to the second quarter of 1998. There were no related
party expenses for the period ended June 30, 1999 compared to $45,000 during the
same period one year ago due to the termination of the Company's management
services agreement with Consolidated Technology Group Ltd., now known as The
Sagemark Companies Ltd.
<PAGE> 11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Interest expense during the three month period ended June 30, 1999 decreased by
57.8% compared to the three months ended June 30, 1998. This decrease is
primarily attributable to the lower financing rates payable through the
Company's credit facility with Citizens Credit and to a lesser extent by the
reduced borrowing reflecting a reduced level of revenue and accounts receivable.
As a result of the foregoing, the Company incurred a loss of approximately
$435,000 or $.14 per share, basic and diluted, for the three months ended June
30, 1999, compared to net income of $248,000 or $.07 per share, basic and
diluted, for the three months ended June 30, 1998.
Six Months Ended June 30, 1999 and 1998
The Company had revenues of $ 20.7 million for the six months ended June 30,
1999 reflecting a 44.3% decrease from the revenues of $ 37.2 for the same period
one year earlier. This decrease can be attributed to the turbulent market
conditions that have caused the Company's largest clients primarily in the
aircraft and aerospace industry to reduce their overall labor costs including
their use of contract labor. The gross margin decreased from 8.3% in the six
months ended June 30, 1998 to 7.2% for the six months ended June 30, 1999. A
part of this decrease can be attributed to the loss of higher gross margin
revenue from some of the Company's larger customers. During the six months ended
June 30, 1999 the Company's five largest customers accounted for approximately
65% of the revenue generated by the Company compared to 78% for the same period
in 1998. In addition, in 1999 the Company generated 6.4% from another customer,
CDI Corp.
Selling, general and administrative expenses exclusive of related party expenses
and amortization of intangibles have decreased by 24.2% during the six month
period ended June 30, 1999 compared to the same period in 1998. Approximately
56% of that decrease is the result of the Company's successful efforts in
collecting contested tax penalties which were paid in previous years to the IRS.
Interest expense during the current six month period decreased by approximately
$205,000 or 61.3% compared to the six months ended June 30, 1998. This decrease
is primarily attributable to the lower financing rates payable through the
Company's credit facility with Citizens Credit and to a lesser extent by the
reduced borrowing reflecting a reduced level of revenue and accounts receivable.
The Company incurred a loss of approximately $575,000, or a $.17 per share loss,
basic and diluted, for the six months ended June 30, 1999 compared to net income
of $163,000 or $.04 per share, basic and diluted, for the six months ended June
30, 1998.
<PAGE> 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
As of June 30, 1999, the Company had working capital of approximately $545,000,
a decrease of $427,000 compared to the working capital available at December 31,
1998. This decrease is the result of the Company's loss from operations for the
six months ended June 30, 1999. The most significant current asset at June 30,
1999 was the Company's accounts receivable, which was $ 3.1 million. These
receivables were offset by payroll and related expenses of $1.3 million and $
2.1 million due to Citizens Business Credit. The payroll and related taxes and
expenses relate primarily to compensation of the Company's contract employees
and related taxes, which were paid during the first week of July 1999.
Pursuant to the previously reported February 25, 1999 agreement between
Consolidated Technology Group Ltd. ("Consolidated"), SIS Capital Corp. ("SISC"),
a wholly-owned subsidiary of Consolidated, and the Company, on May 3, 1999
Consolidated, through SISC, transferred 1, 1 50,000 shares of the Company's
common stock to the Company in consideration of the cancellation of shares of
Consolidated's Series G 2% Cumulative Redeemable Preferred Stock owned by the
Company, including accrued dividends, and certain other obligations due to Trans
Global. The transfer of the 1, 1 50,000 shares to the Company reduced
Consolidated's holdings in the Company to 379,994 shares, or approximately 14.2
% of its outstanding common stock. Prior to the transfer, Consolidated owned
40.1 % of the Company's outstanding common stock.
During 1998 and the first six months of 1999, the Company has relied primarily
on its cash flow from operations and financing from its asset-based lender to
fund its operations. However, the Company must still improve its working capital
and stockholders' equity in order to increase its revenue from certain major
clients and to attract clients requiring greater working capital.
The company relies on its ability to generate cash flows from operating activity
and its borrowings to fund operations. The company does not have any agreements
with any other funding sources and its business may be impaired if it does not
maintain adequate financing.
Year 2000 Issue
Many existing computer programs use only two digits to identify a year in a date
field. These programs were designed and developed without considering the impact
of the upcoming change in the century. If not corrected, many computer
applications could fail or create erroneous results by or at the year 2000. This
issue is referred to as the "year 2000" Issue". A significant portion of the
Company's critical computer software, particularly the software relating to
payroll, billing and other employee records, is presently Year 2000 compliant.
The Company is in the process of addressing other software utilized by the
Company to assure Year 2000 compliance. Although the Company believes that it
will not incur significant expense to become Year 2000 compliant, no assurance
can be given that the Company will not incur significant cost in addressing the
Year 2000 issue or that the failure to adequately addresss the Year 2000 issue
will not have a material effect upon the Company.
<PAGE> 13
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Forward Looking Statements
The statements in this Form 10-Q that are not descriptions of historical facts
may be forward-looking statements that are subject to risks and uncertainties.
In particular, statements in this form 10-Q that state our intentions, beliefs,
expectations, strategies, predictions or any other statements relating to our
future activities or other future events or conditions are "forward-looking
statements." Forward-looking statements are subject to risks, uncertainties and
other factors, including, but not limited to, those identified under "Risk
Factors", those described in Management's Discussion and Analysis of Financial
Conditions and Results of Operations in the Company's Form 10-K for the year
ended December 31, 1998, those described in Management's Discussion and Analysis
of Financial Conditions and Results of Operations in this Form 10-Q, and those
described in any other filings by the Company with the Securities and Exchange
Commission, as well as general economic conditions, any one or more of which
could cause actual results to differ materially from those stated in such
statements.
Item 5. Other Information
On May 3, 1999 Mr. Donald Chaifetz resigned as a director of the Company. On May
7, 1999 Mr. Glen R. Charles was elected as a director of the Company. Mr.
Charles has been the Chief Financial Officer of the Company since May 1995.
Item 6. Exhibits and Reports on From 8-K.
(a) Exhibits
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended June 30, 1999.
EXHIBIT 11.1 - Computation of Earnings per Share
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Trans Global Services, Inc.
(Registrant)
-------------------------
Date: August 13, 1999 Joseph G. Sicinski
(Chief Executive Officer)
------------------------
Date: August 13, 1999 Glen R. Charles
(Chief Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF OPERATIONS FILED
AS PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 806,721
<SECURITIES> 0
<RECEIVABLES> 3,066,555
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,157,134
<PP&E> 723,549
<DEPRECIATION> 551,445
<TOTAL-ASSETS> 9,437,320
<CURRENT-LIABILITIES> 3,612,353
<BONDS> 0
<COMMON> 38,197
0
0
<OTHER-SE> 5,786,770
<TOTAL-LIABILITY-AND-EQUITY> 9,437,320
<SALES> 20,695,730
<TOTAL-REVENUES> 20,695,730
<CGS> 19,212,350
<TOTAL-COSTS> 19,212,350
<OTHER-EXPENSES> 1,929,267
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 129,037
<INCOME-PRETAX> (574,924)
<INCOME-TAX> 0
<INCOME-CONTINUING> (574,924)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (574,924)
<EPS-BASIC> (.17)
<EPS-DILUTED> (.17)
</TABLE>
