<PAGE>
================================================================================
================================================================================
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended June 30, 1996
-------------
Commission File Number 1-2982
------
ANCOR COMMUNICATIONS, INCORPORATED
----------------------------------
(Exact name of small business issuer as specified in its charter)
Minnesota 41-1569659
--------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
6130 Blue Circle Drive Minnetonka, Minnesota 55343
-----------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's Telephone number, including area code (612) 932-4000
--------------
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 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 [ ]
10,102,410
----------
(Number of shares of common stock of the
registrant outstanding as of August 13, 1996)
Transitional Small Business Issuer format: Yes [ ] No [X]
================================================================================
================================================================================
<PAGE>
ANCOR COMMUNICATIONS, INCORPORATED
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1996
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
- ------ ---------------------
ITEM 1: FINANCIAL STATEMENTS
Balance Sheets as of June 30, 1996 (unaudited)
and December 31, 1995 3
Statements of Operations for the three and six
month periods ended June 30, 1996
and 1995 (unaudited) 4
Statements of Cash Flows for the six
month periods ended June 30, 1996
and 1995 (unaudited) 5
Notes to Financial Statements 6
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 7
PART II - OTHER INFORMATION 9
- ------- -----------------
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
-----------------------------
ANCOR COMMUNICATIONS, INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ -----------
ASSETS (Unaudited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 64,163 $ 251,475
Short-term investments 5,565,864 1,300,178
Accounts receivable 3,438,633 1,822,883
Inventories 2,538,560 819,760
Other current assets 403,803 180,848
----------- -----------
Total current assets 12,011,024 4,375,144
Equipment, net of accumulated depreciation 1,628,727 1,140,899
Patents, Prepaid Royalties, and Other Assets,
net of accumulated amortization 292,048 256,982
----------- -----------
TOTAL ASSETS $13,931,799 $ 5,773,025
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current maturities of long-term debt $ 53,910 $ 1,540,000
Accounts payable 928,650 838,689
Accrued liabilities 210,976 435,264
----------- -----------
Total current liabilities 1,193,537 2,813,953
Long-Term Debt, less current maturities 215,565 199,653
Shareholders' Equity (Note 2)
Preferred stock, par value $.01 per share,
authorized 5,000,000 shares; issued and outstanding
1,030 shares in 1996 and none issued in 1995 $ 5 ---
Additional paid-in capital, preferred stock $ 4,713,979 ---
Common stock, par value $.01 per share,
authorized 20,000,000 shares; issued and outstanding
9,605,898 Shares in 1996 and 8,273,426 shares in 1995 96,059 82,734
Additional paid-in capital, common stock 21,398,130 14,656,203
Accumulated deficit (13,685,476) (11,979,519)
----------- -----------
Total shareholders' equity 12,522,697 2,759,418
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $13,931,799 $ 5,773,025
=========== ===========
</TABLE>
See Notes to Financial Statements
3
<PAGE>
ANCOR COMMUNICATIONS, INCORPORATED
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ -----------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Sales $2,095,982 $1,113,371 $3,511,748 $1,724,902
Cost of Sales 1,142,279 663,780 1,906,780 1,084,319
---------- ---------- ---------- ----------
Gross Profit 953,703 449,591 1,604,968 640,583
Operating Expenses
Selling, general and administrative 1,056,036 743,998 1,829,693 1,339,798
Research and development 808,924 569,604 1,551,543 1,200,472
---------- ---------- ---------- ----------
Total operating expenses 1,864,960 1,313,602 3,381,236 2,540,270
---------- ---------- ---------- ----------
Operating loss (911,257) (864,011) (1,776,268) (1,899,687)
Nonoperating Income (Expense)
Interest expense (32,826) (34,893) (63,623) (76,005)
Other, net 94,913 26,707 133,934 43,163
---------- ---------- ---------- ----------
Net Loss ($849,170) ($872,197) ($1,705,957) ($1,932,529)
========== ========== ========== ==========
Net loss per common share ($0.10) ($0.12) ($0.20) ($0.27)
========== ========== ========== ==========
Weighted average common and
common equivalent shares
outstanding 8,708,033 7,332,695 8,491,237 7,040,445
========== ========== ========== ==========
</TABLE>
See Notes to Financial Statements
4
<PAGE>
<TABLE>
<CAPTION>
ANCHOR COMMUNICATIONS, INCORPORATED
STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
-----------------------------
1996 1995
------------- -------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net loss ($1,705,957) ($1,932,529)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 166,712 129,411
Changes in current assets and liabilities:
Accounts receivable (1,615,750) 4,843
Notes receivable 0 240,000
Inventories (1,718,799) 35,205
Other current assets (222,955) (6,884)
Accounts payable 89,961 254,070
Accrued liabilities (224,289) 112,794
------------ ------------
Net cash used in operating activities (5,231,078) (1,671,230)
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of equipment (593,506) (102,389)
Short-term investments (4,265,686) (476,272)
Purchase of other assets (36,100) (101,819)
------------ ------------
Net cash used in investing activities (4,895,292) (680,480)
------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from borrowings 0 364,000
Loan repayments (1,530,178) (345,822)
Proceeds from preferred stock issuance 9,576,733 0
Proceeds from common stock issuance
and exercise of options 1,892,503 2,242,046
------------ ------------
Net cash provided by financing activities 9,939,058 2,260,224
------------ ------------
Net decrease in cash (187,312) (91,486)
Cash, at beginning of period 251,475 93,148
Cash, at end of period $64,163 $1,662
============ ============
Supplemental Schedule of Noncash Investing and Financing Activities:
Equipment acquired under capital lease $60,000 $0
============ ============
</TABLE>
See Notes to Financial Statements
5
<PAGE>
ANCOR COMMUNICATIONS, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
In the opinion of management, the interim financial statements include all
adjustments necessary for a fair presentation of the results of operations for
the interim periods presented. Operating results for the three and six months
ended June 30, 1996 are not necessarily indicative of the operating results to
be expected for the year ending December 31, 1996.
Certain information and footnote disclosures normally included in financial
statements in accordance with generally accepted accounting principles have been
condensed or omitted.
NOTE 2 - EQUITY FINANCING
Subsequent to the fiscal year end, the Board of Directors designated 1,100
shares of the Company's authorized preferred stock as Series A Preferred Stock.
This stock has a stated value of $10,000 per share, with an 8 percent per annum
conversion premium. The holders of Series A Preferred Stock are not entitled to
receive dividends.
On March 7, 1996, the Company sold 1,030 shares of Series A Preferred Stock
through a private placement at its stated value of $10,000 per share. Total net
proceeds from this private placement were $9,576,733, after reduction for
commissions and issuance costs of $723,267. Each holder of Series A Preferred
Stock is able to convert their preferred shares into shares of common stock
until February 23, 1999, at which time each outstanding preferred share will
automatically be converted to common stock. Each share of Series A Preferred
Stock is convertible into common stock based on its stated value of $10,000,
plus an 8 percent annualized premium for the period for which the Series A is
held, divided by a conversion price. This conversion price is the lesser of
$6.49 or 85 percent of the average closing bid price of the Company's common
stock for the five trading days preceding the conversion date.
Beginning on May 30, 1996, holders of warrants exercised their rights to acquire
442,728 shares of common stock. Total proceeds to the Company were $1,660,299,
after deducting expenses of issuance, including the cost of registering the
shares pursuant to registration rights held by such warrant holders.
6
<PAGE>
ITEM 2
------
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1996 AND 1995.
The following table sets forth, for the periods indicated, certain statements of
operations data as a percentage of net sales.
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30 Ended June 30
-------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
Cost of Goods Sold 54.5 59.6 54.3 62.9
Gross Profit 45.5 40.4 45.7 37.1
Operating Expenses:
Selling, general & admin. 50.4 66.8 52.1 77.7
Research & development 38.6 51.2 44.2 69.6
Total operating expenses 89.0 118.0 96.3 147.3
Operating loss (43.5) (77.6) (50.6) (110.1)
Other income (expense)
Interest expense (1.5) (3.1) (1.8) (4.4)
Other, net 4.5 2.4 3.8 2.5
------ ------ ------ -------
Net Loss (40.5)% (78.3)% (48.6)% (112.0)%
====== ====== ====== =======
</TABLE>
Net Sales. Net sales for the second quarter were approximately
$2,096,000 an increase of 88.3% from 1995 second quarter sales of approximately
$1,113,000. Net Sales for the six months ended June 30, 1996, were
approximately $3,512,000, an increase of 103.6% over the same period 1995 sales
of approximately $1,725,000. Fibre Channel product sales equaled approximately
$2,096,000 in the second quarter of 1996, the entirety of the second quarter
sales and an increase of $1,025,000 over the approximately $1,072,000 Fibre
Channel sales in the 1995 second quarter, due to the increased acceptance of
Fibre Channel technology and Ancor's product line. For the six months ended
June 30, 1996, Fibre Channel sales of approximately $3,510,000 increased 141.1%
or approximately $2,054,000 over the same period 1995 Fibre Channel sales of
approximately $1,456,000. There were no non-Fibre Channel sales in the 1996
second quarter, compared with 1995 second quarter non-Fibre Channel sales of
approximately $41,000. The non-Fibre Channel defense communications and
manufacturing data collection
7
<PAGE>
businesses were ceased in 1995, and carry over sales, if any, from these
discontinued businesses will not be significant in future quarters.
Gross Profit. Gross profit in the second quarter of 1996 increased to
$953,703, or 45.5% of sales, from $449,591, or 40.4% of sales, in the second
quarter of 1995. Gross profit in six months ended June 30, 1996, of $1,604,968,
or 45.7% of sales, increased 150.5% from $640,583, or 37.1% of sales, in the
same period 1995. These increases were the result of overall higher sales
levels and greater amount of higher margin Fibre Channel switch sales than 1995
which had a greater proportion of lower margin adapter sales.
Operating Expense. The Company's operating expenses for the second quarter
of 1996 were approximately $1,865,000, or 89.0% of net sales, compared to
approximately $1,314,000, or 118.0% of net sales, in the second quarter of 1995.
Operating expenses for the six months ended June 30, 1996, were approximately
$3,381,000, or 96.3% of net sales, compared with approximately $2,540,000, or
147.3% for the prior year. While the percent to sales decreased in 1996 due to
increased sales volume, the dollar increase in operating expense was primarily
due to the addition of planned sales, engineering and management personnel
resulting from the Company's increased focus on the marketing of its Fibre
Channel products.
Net Loss. Net loss equaled approximately $849,000 in the second quarter
of 1996, a 2.6% decrease from the net loss of approximately $872,000 in the
same period of the prior year. For the six months ended June 30, 1996, net loss
decreased 11.7% to approximately $1,706,000 from approximately $1,933,000 for
the same period 1995. The decreases in net loss were primarily due to higher
sales. Interest expense in the six months ended June 30, 1996, was lower than
1995 due to lower average borrowing. Interest income in the six months ended
June 30, 1996, was above 1995 levels due to the higher level of short-term
investments in the 1996 period.
LIQUIDITY AND CAPITAL RESOURCES.
- --------------------------------
The Company's cash, cash equivalents and short-term investments were
approximately $5,630,000 as of June 30, 1996, compared to approximately
$1,552,000 as of December 31, 1995. Cash flow used in operating activities
totaled approximately $5,231,000, primarily due to the operating loss, as well
as increases in both accounts receivable and inventories, which, in turn, were
the result of increased sales and increased stocking in preparation for upcoming
sales. Cash flow used in investing activities totaled approximately $4,895,000
as a result of purchasing short-term investments and, to a lesser extent,
equipment purchases. The short-term investments were purchased with the proceeds
from the issuance of convertible preferred stock and from the conversion of
warrants. During the first six months of 1996, the Company completed an off
shore private placement of 1,030 shares of convertible preferred stock with a
stated value of $10,000 per share, resulting in net proceeds to the Company of
approximately $9,577,000 after deducting selling commissions and offering
expenses. Additionally, during the quarter ended June 30, 1996, certain warrant
holders elected to convert those warrants to 442,728 shares of common stock,
resulting in net proceeds to the Company of approximately $1,660,000, after
deducting expenses of issuance, including the cost of registering the shares
pursuant to registration rights held by such warrant holders. The proceeds of
these equity transactions were used to repay $1,500,000 of indebtedness to IBM
due in June 1996, and will be used to fund sales and marketing efforts to
8
<PAGE>
accelerate penetration of the Company's products into OEM, system integrator and
reseller accounts, to fund research and development efforts needed to maintain
technological leadership and broaden the Company's product line, and for working
capital. Management believes its cash, cash equivalents and short term
investments will meet the needs of the Company at least through 1996.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Securities Holders.
The Annual Meeting of Shareholders of Ancor Communications, Incorporated
was held on May 22, 1995. Shareholders holding 7,197,590 shares, or
approximately 87.0% of the outstanding shares, were represented at the
Meeting in person or by proxy. Matters submitted at the meeting for vote
by the shareholders were as follows:
a. Election of Director.
Thomas F. Hunt was elected to serve as a director of the Company for a
term of three years by a vote of 7,149,840 shares for and 47,750
shares withholding.
b. Amend the Company's 1994 Long-Term and Incentive Stock Option Plan.
Shareholders approved an amendment to the Company's 1994 Long Term and
Incentive Stock Option Plan
. to increase the number of shares of Common Stock authorized to be
available for issuance thereunder, from 1 1/2% of the number of
shares outstanding as of December 31 of each year plus the number
of shares available in previous years and not granted, to an
overall limitation equal to 10% of the then outstanding shares of
Common Stock of the Company; and
. to increase the number of shares for which incentive stock options
may be granted over the life of the plan by 1,000,000 shares,
with a vote of 4,585,138 shares for, 145,345 shares against, 69,860
shares abstaining and 2,397,247 shares representing broker non-votes.
9
<PAGE>
c. Ratification of selection of McGladrey & Pullen.
Shareholders ratified the selection of McGladrey & Pullen as the
Company's independent auditors for the fiscal year ending December 31,
1996 with a vote of 7,105,160 shares for 72,100 shares against, and
20,330 shares abstaining.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a.) Exhibits
4.1 /a/ Loan and Warrant Purchase Agreement, dated as of June
24, 1992, between Ancor Communications, Incorporated
and International Business Machines Incorporated.
4.2 /a/ Agreement and Amendment to Loan and Warrant Purchase
Agreement, dated March 10, 1994, by and among Ancor
Communications, Incorporated, International Business
Machines Corporation and IBM Credit Corporation.
4.3 /b/ Second Amendment to Loan and Warrant Purchase Agreement
dated April 25, 1994, by and among Ancor
Communications, Incorporated, International Business
Machines Corporation and IBM Credit Corporation.
4.4 /a/ Shareholders Agreement, dated as of June 24, 1992,
among Ancor Communications, Incorporated, International
Business Machines Incorporated and the shareholders of
the Company named on the signature page thereto.
4.5 /c/ Representative's Warrant.
4.6 /a/ Form of Warrant issued November 8, 1993.
4.7 /f/ Form of Warrant issued April 28, 1995.
4.8 /g/ Form of Warrant issued to Andcor Human Resources on
August 28, 1995.
4.9 /g/ Form of Warrant issued to John G. Kinnard & Company on
October 23, 1995.
10
<PAGE>
4.10 /h/ Certificate of Designation of Series A Preferred
Stock.
4.11 /h/ Form of Warrant issued to Swartz Investments, Inc.
on March 7, 1996.
10.1 /a/ Form of Promissory Note, dated June 24, 1992, made
by Ancor Communications, Incorporated in favor of
IBM Credit Corporation in connection with the Loan
and Warrant Purchase Agreement referenced in Exhibit
4.2 above.
10.2 /a/ Ancor Communications, Incorporated 1990 Stock Option
Plan.
10.3 /a/ Ancor Communications, Incorporated 1994 Long-Term
Incentive and Stock Option Plan.
10.4 /a/ Employment Agreement, dated January 1, 1994, between
Ancor Communications, Incorporated and Dale C.
Showers.
10.5 /a/ Employment Agreement, dated January 1, 1994, between
Ancor Communications, Incorporated and Stephen C.
O'Hara.
10.6 /a/ Employment Agreement, dated June 30, 1992, between
Ancor Communications, Incorporated and Terry M.
Anderson.
10.7 /a/ Employment Agreement, dated June 30, 1992, between
Ancor Communications, Incorporated and Robert S.
Cornelius.
10.8 /a/ Sublease, dated March 29, 1988, by and between
Anderson Cornelius and Unisys Corporation, formerly
known as Burroughs Corporation.
10.9 /a/ Sublease, Amendment Agreement, dated March 8, 1989,
by and between Anderson Cornelius and Unisys
Corporation, formerly known as Burroughs Corporation.
10.10 /a/ Sublease, Amendment Agreement, dated August 31, 1992,
by and between the Company and Unisys Corporation,
formerly known as Burroughs Corporation.
10.11 /a/ Development and License Agreement between the Company
and International Business Machines Corporation dated
June 4, 1992, as amended on February 8, 1993, May 10,
1993 and October 5, 1993 (a request for
confidentiality of certain portions of this agreement
has been granted).
11
<PAGE>
10.12 /c/ Underwriting Agreement.
10.13 /d/ Amendment No. 1 to Employment Agreement dated
November 4, 1994 between the Company and Dale C.
Showers amending the Employment Agreement dated
January 1, 1994 between the Company and Mr. Showers
filed as exhibit No 10.4
10.14 /e/ Form of Change of Control Agreement dated January 1,
1995 between the Company and each of Lee B. Lewis,
Timothy W. Donaldson and William F. Walker.
10.15 /f/ Agency Agreement between the Company and John G.
Kinnard and Company, Incorporated dated April 20,
1995.
10.16 /g/ Agency Agreement between the Company and John G.
Kinnard & Company, Inc. dated October 23, 1995.
10.17 /g/ Ancor Communications, Inc. 1995 Employee Stock
Purchase Plan.
10.18 /g/ Ancor Communications, Inc. Non-Employee Director
Stock Option Plan.
10.19 /h/ Form of Subscription Agreement between the Company
and Purchasers of the Company's Series A Preferred
Stock (March 1996).
10.20 /h/ Registration Rights Agreement dated March 7, 1996
between the Company, Swartz Investments, Inc. and
Purchasers of the Company's Series A Preferred
Stock.
10.21 /h/ Letter Agreement between the Company and Swartz
Investments, Inc. dated February 1996.
10.22 /i/ Separation and General Release Agreement between the
Company and William F. Walker.
27.1 /j/ Financial Data Schedule.
- ----------------
/a/ Incorporated by reference to the Company's Registration Statement on form
SB-2 filed March 11, 1994.
12
<PAGE>
/b/ Incorporated by reference to Amendment No. 2 to the Company's Registration
Statement on form SB-2 Filed April 28, 1994.
/c/ Incorporation by reference to the Company's Form 10-QSB filed for the
quarterly period ended March 31, 1994.
/d/ Incorporated by reference to the Company's Form 10-QSB filed for the
quarterly period ended September 30, 1994.
/e/ Incorporated by reference to the Company's Form 10-KSB filed for the fiscal
year ended December 31, 1994.
/f/ Incorporated by reference to the Company's form 10-QSB filed for the
quarterly period ended March 31, 1995.
/g/ Incorporated by reference to the Company's form 10-QSB filed for the
quarterly period ended September 30, 1995.
/h/ Incorporated by reference to the Company's Form 10-KSB filed for the fiscal
year ended December 31, 1995.
/i/ Incorporated by reference to the Company's form 10-QSB filed for the
quarterly period ended March 31, 1996.
/j/ Included herewith.
(b.) Reports on Form 8-K
None.
13
<PAGE>
SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ANCOR COMMUNICATIONS, INCORPORATED
----------------------------------
Dated: August 13, 1996 By /s/ STEPHEN C. O'HARA
---------------------------
Stephen C. O'Hara
President &
Chief Executive Officer
Dated: August 13, 1996 By /s/ LEE B. LEWIS
---------------------------
Lee B. Lewis
Vice President &
Chief Financial Officer
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 64,163
<SECURITIES> 5,565,864
<RECEIVABLES> 3,488,633
<ALLOWANCES> (50,000)
<INVENTORY> 2,538,560
<CURRENT-ASSETS> 12,011,024
<PP&E> 3,156,971
<DEPRECIATION> (1,528,244)
<TOTAL-ASSETS> 13,931,799
<CURRENT-LIABILITIES> 1,193,537
<BONDS> 0
<COMMON> 96,059
0
5
<OTHER-SE> 12,426,633
<TOTAL-LIABILITY-AND-EQUITY> 13,931,799
<SALES> 2,095,982
<TOTAL-REVENUES> 2,095,982
<CGS> 1,142,279
<TOTAL-COSTS> 1,142,279
<OTHER-EXPENSES> 1,864,960
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,826
<INCOME-PRETAX> (849,170)
<INCOME-TAX> 0
<INCOME-CONTINUING> (849,170)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (849,170)
<EPS-PRIMARY> (0.098)
<EPS-DILUTED> (0.098)
</TABLE>
