<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-24936
7TH LEVEL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-2480669
(State of incorporation) (I.R.S. Employer Identification No.)
1110 EAST COLLINS BOULEVARD
SUITE 122
RICHARDSON, TEXAS 75081
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (972) 498-8100
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 and
(2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
COMMON STOCK, $0.01 PAR VALUE 13,755,955
(Title of Each Class) (Number of Shares Outstanding at
November 7, 1997)
<PAGE>
7TH LEVEL, INC.
Form 10-Q
For the Quarterly Period Ended September 30, 1997
Index
PART I FINANCIAL INFORMATION Page No.
--------
Item 1 Condensed Consolidated Balance Sheets at September 30,
1997 and December 31, 1996 3
Condensed Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows for
the Nine Months Ended September 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II OTHER INFORMATION
Item 2 Changes in Securities 12
Item 6 Exhibits and Reports on Form 8-K 12
SIGNATURE 13
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
7TH LEVEL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 2,988,483 $ 10,798,372
Short-term investments 700,441 4,485,470
Accounts receivable, net 1,255,314 6,130,903
Inventories 126,762 571,545
Building for sale -- 5,117,222
Other current assets 1,689,036 1,776,446
------------ ------------
Total current assets 6,760,036 28,879,958
Fixed assets, net 6,190,883 7,839,278
Intangible assets, net 14,727 1,130,095
Other assets 766,397 1,083,603
============ ============
Total assets $ 13,732,043 $ 38,932,934
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 1,112,080 $ 2,190,290
Accrued expenses and other current liabilities 5,636,110 5,304,595
Current portion of notes payable 23,947 5,633,675
------------ ------------
Total current liabilities 6,772,137 13,128,560
Notes payable 94,550 94,626
Notes payable to related parties 445,956 581,098
Other 422,382 476,263
------------ ------------
Total liabilities 7,735,025 14,280,547
Commitments and contingencies
Stockholders' equity:
Common stock 137,447 135,795
Additional capital 70,492,626 70,347,110
Accumulated deficit (64,645,859) (45,875,900)
Cumulative translation adjustment 12,482 51,193
Unrealized gain (loss) on investments 322 (5,811)
------------ ------------
Total stockholders' equity 5,997,018 24,652,387
============ ============
Total liabilities and stockholders' equity $ 13,732,043 $ 38,932,934
============ ============
</TABLE>
See accompanying notes.
3
<PAGE>
7TH LEVEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended Nine Months Ended Nine Months Ended
September 30, 1997 September 30, 1996 September 30, 1997 September 30, 1996
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Net revenues $ 3,271,245 $ 4,807,418 $ 8,432,817 $ 14,206,389
Cost of revenues 558,691 1,977,815 4,261,839 5,305,451
------------ ------------ ------------ ------------
Gross profit 2,712,554 2,829,603 4,170,978 8,900,938
------------ ------------ ------------ ------------
Operating expenses:
Research and product development 4,370,096 6,448,529 12,991,379 16,444,911
Sales and marketing 1,808,237 2,532,481 5,532,830 8,470,944
General and administrative 1,289,558 1,235,995 4,228,984 3,575,047
Amortization of intangible assets 453,529 28,466 507,848 84,174
------------ ------------ ------------ ------------
Total operating expenses 7,921,420 10,245,471 23,261,041 28,575,076
------------ ------------ ------------ ------------
Operating loss (5,208,866) (7,415,868) (19,090,063) (19,674,138)
Interest and other, net 30,433 234,965 311,226 1,007,275
============ ============ ============ ============
Net loss $ (5,178,433) $ (7,180,903) $(18,778,837) $(18,666,863)
============ ============ ============ ============
Loss per common share $ (0.38) $ (0.53) $ (1.38) $ (1.39)
============ ============ ============ ============
Weighted average common stock and
common equivalent shares 13,679,239 13,523,500 13,635,203 13,404,726
============ ============ ============ ============
</TABLE>
See accompanying notes.
4
<PAGE>
7TH LEVEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(18,778,837) $(18,666,863)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 3,097,171 1,781,972
Gain on sale of building (94,802) -
Gain on early retirement of debt (10,142) -
Change in operating assets and liabilities 4,553,338 156,515
------------ ------------
Net cash used in operating activities (11,233,272) (16,728,376)
------------ ------------
Cash flows from investing activities:
Acquisitions, net of cash acquired - 6,323
Capital expenditures (437,464) (7,455,382)
Proceeds from sale of building 5,594,010 -
Other investments - (400,000)
Sale (purchase) of short-term investments 3,791,162 (799,642)
------------ ------------
Net cash provided by (used in) investing activities 8,947,708 (8,648,701)
------------ ------------
Cash flows from financing activities:
Issuance of Common Stock under stock option
and stock purchase plans 254,288 521,595
Insuance of Common Stock 400 -
Borrowings (repayment) of bank line of credit (5,750,000) 6,000,000
------------ ------------
Net cash provided by (used in ) financing activities (5,495,312) 6,521,595
------------ ------------
Effect of exchange rate changes on cash (29,013) 4,509
------------ ------------
Net decrease in cash (7,809,889) (18,850,973)
Cash and cash equivalents, beginning of period 10,798,372 29,940,217
============ ============
Cash and cash equivalents, end of period $ 2,988,483 $ 11,089,244
============ ============
</TABLE>
See accompanying notes.
5
<PAGE>
7TH LEVEL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The condensed consolidated financial statements of 7th Level, Inc.
(the "Company") are unaudited and reflect all adjustments, consisting of normal
recurring adjustments, which are, in the opinion of management, necessary for a
fair presentation of the results for the interim periods. These condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 1996. The results of operations
for the three and nine months ended September 30, 1997 are not necessarily
indicative of the results for the entire year ending December 31, 1997.
2. Loss per Share
Primary loss per share is computed by dividing the net loss by the
weighted average common shares outstanding. Warrants and options to purchase
common stock have been excluded from the loss per share computation because the
effect would be anti-dilutive. Fully diluted loss per share has not been
presented because the result of the computation would be anti-dilutive.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following information should be read in conjunction with the financial
statements and the notes thereto and in conjunction with Management's Discussion
and Analysis of Financial Condition and Results of Operations in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996. This analysis
is provided pursuant to applicable Securities and Exchange Commission
regulations and is not intended to serve as a basis for projections of future
events.
OVERVIEW
After announcing a new strategy to leverage the Company's core technology
and to position the Company to benefit from the assets and technologies it has
developed, the Company has moved aggressively to implement the new strategy. The
Company is pursuing opportunities to benefit from the utilization of its
technology and integrated studio capacity in conjunction with other content
owners, developers and marketers, and is seeking to leverage its assets and
technology through key strategic relationships.(1) During the third quarter, the
Company closed satellite offices in Munich, San Francisco and Tokyo, dismantling
its international distribution and localization business and continued its
transition out of the game publishing business in the U.S. The Company sold one
interactive software title in the final stages of development, Dominion, for
$1,800,000, in September under an agreement which also included a license of its
TopGun development technology to the purchaser. In addition, in November, the
Company entered a master distribution agreement with Take-Two Interactive
Software, Inc. ("Take-Two") to distribute Meaning of Life, its third Monty
Python title which was completed in early November. The Company expects to stay
in the Python business and is currently in negotations with respect to
publishing and distributing future Python titles with Take-Two. The Company is
also engaged in negotiations for the sale of its other major title in
production, Return to Krondor, including the sale of its wholly owned 3D game
subsidiary, PyroTechnix.
In three successive Tamagotchi contracts with Bandai Digital Entertainment
Corporation, the Company has demonstrated its technical capabilities in
delivering high quality digital content in a variety of media. The Company
completed a CD ROM title using Bandai characters in less than three months,
created an IE 4.0 Tamagotchi channel on Microsoft's internet channel using the
same assets and finally, entered a contract to provide a Tamagotchi video.
The Company continues to use cash and operate at a significant loss, (See
"Liquidity and Capital Resources") however the Company has significantly reduced
expenses. Staffing decreased from 220 employees at the end of the second quarter
of 1997 to just over 90 in early November 1997. The Company believes actions
taken in the third quarter and early fourth quarter will reduce expenses by over
$12 million on an annual basis, to less than one half the rate experienced in
the first half of 1997. Management continues to review, evaluate and revise the
Company's operations and priorities.(1)
In early November, the Company announced it was negotiating a possible
merger with a technology development company focused on building tools for
interactive online and other digital platforms. While there can be no assurances
the negotiations will be completed or that if completed, the merger will be
successfully concluded, the Company believes the proposed merger will
significantly accelerate and enhance the implementation of its strategy to
become a provider of integrated solutions, tools and technology.
The Company expects that its operating results will fluctuate as a result
of a variety of factors, including customer demand for licensing its
technologies, its ability to achieve and maintain technological and quality
leadership by anticipating and developing new technologies in a timely and cost
efficient manner, management and control of expenses, consumer market acceptance
for products developed for strategic partners and the seasonal nature of the
market for consumer software with the peak demand in the fourth calendar quarter
or holiday selling season.(1)
RESULTS OF OPERATIONS
Three Month Periods Ended September 30, 1997 and September 30, 1996
7
<PAGE>
In the three months ended September 30, 1997, 7th Level net revenues were
$3,271,245, including $1,800,000 for the sale of the Dominion title, compared to
the $4,807,418 achieved in the three months ended September 30, 1996. The
Company launched no new titles and experienced low sales on titles in the back
catalog during the three months ended September 30, 1997. By contrast, in the
three months ended September 30, 1996 the Company had substantial development
revenue from a new Disney Interactive title and other third parties and also
experienced strong sales of existing titles such as Monty Python's Quest for the
Holy Grail, which has been one of the Company's most successful titles. In the
third quarter of 1997, approximately 55% of net revenues related to the Dominion
sale, 23% of net revenues related to other product sales and the remaining 22%
was from licensing, OEM and development contracts. In comparison, the
composition of net revenues in the third quarter of 1996 included approximately
65% of revenues from product sales and 35% from licensing, OEM and development
contracts.
Cost of revenues for the quarter ended September 30, 1997 was $558,691 or
17% of net revenue, including product development, manufacturing, and royalty
and licensing costs of $194,866, $166,129 and $197,696, respectively. For the
quarter ended September 30, 1996, cost of revenues was $1,977,815 or 41% of net
revenues. The significant decrease in cost of revenues in the 1997 period as a
percentage of net revenues is due to various factors including a very low cost
associated with the Dominion sale and lower royalty expenses corresponding to
the decreased product revenues. The Company expects fluctuations in gross
margin in the future as changes occur in the composition of the revenues and the
associated cost of revenues.(1)
Research and product development expenses were $4,370,096 and $6,448,529
for the three months ended September 30, 1997 and 1996, respectively. Research
and product development costs decreased in the 1997 period as the Company
continued to reduce headcount and related expenditures. Approximately $250,000
related to the closing of the international localization studios is included in
the 1997 amount. Results from the 1996 period include spending for
approximately ten titles in active production, compared to about five titles in
the 1997 period. In the three months ended September 30, 1997 and 1996,
research and product development expenses include $1,608,337 and $3,482,090 for
production costs, $1,071,323 and $1,565,436 for software research and
development, and $1,690,436 and $1,401,003, respectively, for expenses of the
companies acquired in 1995 and 1996 to provide expertise in the development of
3D technology and graphics design and to provide the capabilities needed to
expand into the Asia Pacific market.
Sales and marketing expenses were $1,808,237 and $2,532,481 for the
quarters ended September 30, 1997 and 1996, respectively. Sales and marketing
expenses included $446,321 and $1,228,525 of expenses for advertising, marketing
and public relations and $1,361,916 and $1,303,956 of expenses related to
internal staffing for the three months ended September 30, 1997 and 1996,
respectively. Internal staffing costs for the 1997 period included
approximately $675,000 related to closing of the international sales offices in
Tokyo and Munich. The decrease in sales and marketing expenses is due to
minimal advertising and marketing costs associated with no new titles and a
reduction of internal staffing in the third quarter of 1997.
General and administrative expenses for the three months ended September
30, 1997 were $1,289,558 compared with $1,235,995 for the three months ended
September 30, 1996. Amortization for the 1997 period includes a write off of
the goodwill associated with the San Francisco-based Lanpro entities acquired in
December 1995.
Net interest income and other was $30,433 for the three months ended
September 30, 1997 compared to $234,965 for the three months ended September 30,
1996. The decrease in interest income was due to lower average cash balances in
the third quarter of 1997 compared to 1996.
8
<PAGE>
Nine Month Periods Ended September 30, 1997 and September 30, 1996
For the nine months ended September 30, 1997, net revenues totaled
$8,432,817 compared to $14,206,389 for the nine months ended September 30, 1996.
Product sales decreased 56% in the nine months ended September 30, 1997 compared
to the nine months ended September 30, 1996. Additionally, the Company
experienced declines in licensing, OEM and development revenues resulting in an
overall 41% decrease between the two periods.
Cost of revenues during the nine months ended September 30, 1997 was
$4,261,838 or 51% of net revenue. For the nine months ended September 30, 1996
cost of revenues was $5,305,451 or 37% of net revenue. The gross margin was
negatively impacted by changes in the revenue mix for the nine months ended
September 30, 1997, through the inclusion of substantial returns and price
protection adjustments and development revenue, which has a higher cost of
revenue than product sales or OEM licensing revenue.
Research and product development expenses were $12,991,379 for the
nine months ended September 30, 1997 compared to $16,444,911 for the nine months
ended September 30, 1996. Research and product development expenses decreased
21% over the same period of the prior year, although the Company continues to
experience higher costs than expected on several titles.
Sales and marketing expenses were $5,532,830, or 66% of revenues, for
the nine months ended September 30, 1997, compared to $8,470,944, or 60% of
revenues, for the nine months ended September 30, 1996. Excluding costs for
closing the Company's international sales offices, internal staffing expenses
decreased approximately $700,000 or 30% as a result of various cost savings
measures including staff reductions. Costs for advertising, marketing and
public relations decreased 52% in the first nine months of 1997 compared to the
first nine months of 1996.
General and administrative expenses were $4,228,984 for the nine
months ended September 30, 1997, compared with $3,575,047 for the nine months
ended September 30, 1996. Approximately $400,000 of the increase in the 1997
period was associated with expenses related to employee resignations in the
first quarter of 1997.
While the Company has continued to reduce total operating expenses
over the last three quarters, the Company has maintained a high capacity in a
number of departments to retain a high degree of flexibility to pursue new
business opportunities. The Company has taken actions to significantly reduce
this capacity and these expenses in the third and early fourth quarter of 1997.
In addition, the Company is seeking offers for The Gatherer, a game title being
developed for the Company by Future Endeavors, which the Company has funded
through advance royalties which represent approximately 50% of the other current
asset balance at September 30, 1997.
Net interest income and other was $311,226 for the nine months ended
September 30, 1997 compared to $1,007,275 recognized in the nine months ended
September 30, 1996. The decrease is primarily because of lower cash balances
available for investment along with higher average debt outstanding.
LIQUIDITY AND CAPITAL RESOURCES
As noted in the previous quarterly report, in March 1997 there was a
substantial change in the Company's management. During the last eight months
management has been re-examining the Company's business and assets, and is
aggressively moving to establish a strategy to benefit the Company and its
shareholders. The Company retained a financial advisor to provide consulting
services and assist the Company in evaluating its business opportunities,
resources and requirements. Management has announced and is in the process of
implementing a strategy with a view to generating capital through the
utilization of its technology assets by pursuing strategic combinations, joint
ventures and
9
<PAGE>
other potential arrangements with a variety of potential partners. The Company
is also seeking to realize value and capital resources by capitalizing on its
educational and entertainment assets with a variety of marketing and other
partners. In mid-November, the Company entered a master distributor agreement
with Take-Two to distribute Meaning of Life, its third Monty Python title.
During the third quarter, the Company sold one game title in the final stages of
development and is currently in discussions on another. Although discussions
continue to progress, there can be no assurance that any of these arrangements
will be consummated on terms acceptable to the Company, if at all.
Cash and short term investments decreased $11,594,918 during the first
nine months of the year to $3,688,924 at September 30, 1997. The decrease is
primarily the result of the net loss of $18,778,837 in the nine months ended
September 30, 1997 offset by the positive impact from the management of cash
receipts and payments as well as the non-cash depreciation and amortization
expenses. In the quarter ended September 30, 1997, the Company's cash balance
decreased $3,294,191 which benefited from the $1,800,000 proceeds from the sale
of the Dominion title. The Company has significantly curtailed capital
expenditures, with disbursements of $158,208, net of the office building, in the
first nine months of 1997 compared to $7,455,382 in the same period of 1996.
Capital expenditures for the balance of 1997 are anticipated to be in line with
the year to date expenditure rate(1), however, the Company continues to use cash
and operate at a loss.
The Company has taken steps to significantly reduce its cash usage and
operating expenses. The Company believes that the actions taken, coupled with
the anticipated sale of PyroTechnix will reduce operating expenses and cash
requirements by over $12 million on an annual basis to one half the current rate
of $2 million per month by December, 1997. The Company's cash balance is
anticipated to increase by $1.5 million in mid-November with the receipt of the
advance for Meaning of Life. The Company anticipates while the price is expected
to be less than the advance received against the Python properties, the sale of
Return to Krondor and other game titles will also be significant and will
provide an important addition to operating funds in the fourth quarter of 1997.
In August, the Company announced an immediate and near-term objective
to generate additional capital necessary to implement its new business strategy.
The Company is pursuing this objective through the sale of its titles and by
signing a new master distribution agreement. In addition, in concert with the
announced merger discussions, one of the Company's immediate priorities is to
identify funding for the new business, and that while the merger may or may not
be completed, the Company plans to pursue additional capital. In the event that
the Company is unable to generate capital from the strategic activities
described above, or is unable to adequately reduce its usage rate, current
assets alone, including an approximate $2.3 million balance of cash and short-
term securities available at October 31, 1997, may be insufficient to satisfy
the Company's capital requirements for the next four months (1). As articulated
above, the Company's main focus in addressing its liquidity needs is the pursuit
of various strategic transactions which are the subject of ongoing discussions.
RECENTLY ISSUED ACCOUNTING PRINCIPLES
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
No. 128"). SFAS No. 128 specifies the computation, presentation and disclosure
requirements for earnings per share ("EPS") for entities with publicly held
common stock or potential common stock. SFAS No. 128 is effective for financial
statements issued for periods ending after December 15, 1997 and earlier
application is not permitted. Upon adoption, all prior period per-share
information must be restated. The adoption of SFAS No. 128 is not expected to
affect the Company's previously reported loss per share amounts.
- ------------------------------------
(1) Certain statements contained herein including those indicated by (1) are
forward looking statements that involve risks and uncertainties.
Accordingly, no assurance can be given that the actual events and results
will not be materially different than the anticipated results described in
the forward looking statement. There are a number of important factors
that could cause actual results to differ materially from those expressed
in any forward looking statements made by the Company. These factors
include the Company's ability to generate cash income in the fourth quarter
of 1997, the success of the Company's cost reduction strategy, the ability
to attract and retain strategic partners,
10
<PAGE>
the ability to leverage intangible assets in its technology, the ability to
complete new projects at planned costs and on planned schedules and the
market acceptance of the Company's products. See the discussion of the
Company's business and a description of the various factors that could
materially affect the ability of the Company to achieve the anticipated
results described in the forward looking statement which is included in
Item 1. of the Company's Report on Form 10-K for the year ended December
31, 1996.
11
<PAGE>
7TH LEVEL, INC.
Part II. Other Information
Item 2. Changes in Securities
On August 8, 1997, Zolfo Cooper, LLC was issued 40,000 shares of
Common Stock in a private placement as payment in kind for partial
compensation for their services as financial advisor to the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - none
(b) Reports on Form 8-K - none
12
<PAGE>
7TH LEVEL, INC.
Signature
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
7TH LEVEL, INC.
Date: November 14, 1997 By: /s/ DAVID W. CRAIG
---------------------------------------
David W. Craig
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997
<PERIOD-START> JUL-01-1997 JAN-01-1997
<PERIOD-END> SEP-30-1997 SEP-30-1997
<CASH> 2,988,483 0
<SECURITIES> 700,441 0
<RECEIVABLES> 1,255,314 0
<ALLOWANCES> 0 0
<INVENTORY> 126,762 0
<CURRENT-ASSETS> 1,689,036 0
<PP&E> 6,190,883 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 13,732,043 0
<CURRENT-LIABILITIES> 6,772,137 0
<BONDS> 0 0
0 0
0 0
<COMMON> 137,447 0
<OTHER-SE> 5,859,571 0
<TOTAL-LIABILITY-AND-EQUITY> 13,732,043 0
<SALES> 3,271,245 8,432,817
<TOTAL-REVENUES> 0 0
<CGS> 558,691 4,261,839
<TOTAL-COSTS> 7,921,420 23,261,041
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (30,433) (311,226)
<INCOME-PRETAX> (5,178,433) (18,778,837)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,178,433) (18,778,837)
<EPS-PRIMARY> (.38) (1.38)
<EPS-DILUTED> 0 0
</TABLE>
