<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 33-89076
WEITZER HOMEBUILDERS INCORPORATED
---------------------------------
(Exact name of registrant as specified in its charter)
Florida 65-0502494
------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer I.D. No.)
incorporation or organization)
7270 NW 12th Street, Suite 410, Miami, Florida, 33126
------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(305) 599-8100
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the 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. X Yes No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Outstanding at
Class August 12, 1999
----- ---------------
Class A Common Stock, $.01 Par Value 11,288,825
Class B Common Stock, $.01 Par Value 1,500,000
1
<PAGE>
INDEX TO FORM 10-Q
Page
----
No.
---
PART I
ITEM-1 CONDENSED FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets- 3
June 30, 1999 (unaudited) and September 30, 1998
Condensed Consolidated Statements of Operations (unaudited)-
Three and Nine Months Ended June 30, 1999 and 1998 4
Condensed Consolidated Statements of Cash Flows (unaudited)-
Nine Months Ended June 30, 1999 and 1998 5
Notes to Condensed Consolidated Financial Statements 6
ITEM-2 MANAGEMENT'S DISCUSSION
Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II
ITEM-1 OTHER INFORMATION
Exhibits and other reports on Form 8-K 12
Signatures 12
2
<PAGE>
WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
------------------ -----------------
(Unaudited)
ASSETS
------
<S> <C> <C>
Cash $ 658,689 $ 482,879
Land and land development cost 15,863,769 22,773,115
Construction-in-progress 16,546,405 17,250,423
Model furnishings, net of accumulated
depreciation of $863,715 and $573,353 365,807 695,031
Deferred loan and organizational cost, net of
accumulated amortization of $741,384 and $32,520 221,618 690,352
Other assets 1,690,321 1,208,483
------------------ -----------------
$ 35,346,609 $ 43,100,283
================== =================
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Customer deposits $ 1,692,541 $ 1,334,428
Accounts payable and accrued liabilities 4,202,203 5,189,413
Acquisition, development and construction loans payable 22,607,509 27,814,542
14% convertible subordinate debentures 4,000,000 4,000,000
Notes and loans payable 256,735 421,028
------------------ -----------------
32,758,988 38,759,411
------------------ -----------------
Shareholders' equity:
Preferred Stock, $.01 par, 5,000,000 shares
authorized, none issued - -
Class A Common Stock, $.01 par, 40,000,000 shares
authorized, 4,145,968 shares issued and outstanding 41,460 41,460
Class B Common Stock, $.01 par, 1,500,000 shares
authorized, issued and outstanding 15,000 15,000
Additional paid-in-capital 11,313,093 11,313,093
Accumulated deficit (8,781,932) (7,028,681)
------------------ -----------------
2,587,621 4,340,872
------------------ -----------------
$ 35,346,609 $ 43,100,283
================== =================
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
June 30, June 30,
------------------------------------- --------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues:
Sale of homes $ 13,715,059 $ 12,530,092 $ 40,378,333 $ 36,463,283
Interest income 7,159 25,971 27,234 87,858
Other income 110,623 13,711 306,203 182,915
---------------- ----------------- ----------------- -----------------
13,832,841 12,569,774 40,711,770 36,734,056
---------------- ----------------- ----------------- -----------------
Operating cost and expenses:
Cost of homes sold 13,227,713 11,098,653 36,979,873 31,817,076
Selling expenses 914,857 1,195,882 2,948,306 3,115,363
General and administrative 555,971 635,849 1,501,948 1,824,420
Depreciation and amortization 644,287 107,440 1,017,029 277,978
Interest expense 6,809 6,075 17,865 17,570
---------------- ----------------- ----------------- -----------------
15,349,637 13,043,899 42,465,021 37,052,407
---------------- ----------------- ----------------- -----------------
Loss before income taxes (1,516,796) (474,125) (1,753,251) (318,351)
Provision for income taxes - - - -
---------------- ----------------- ------------------ ------------------
Net loss $ (1,516,796) $ (474,125) $ (1,753,251) $ (318,351)
================ ================= ================== ==================
Basic and diluted loss per common share $ (0.27) (0.12) $ (0.31) $ (0.08)
================ ================= ================= =================
Weighted average common shares
outstanding 5,645,968 3,860,254 5,645,968 3,860,254
================ ================= ================= =================
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
WEITZER HOMEBUILDERS INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
June 30,
---------------------------------------
1999 1998
------------------ -----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,753,251) $ (318,351)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation, amortization and other non-cash charges 1,017,029 717,921
Changes in assets and liabilities:
Restricted escrow funds - 72,105
Land, land development, and construction-in-progress 7,613,364 (2,475,453)
Other assets (481,838) 113,648
Customer deposits 358,113 23,590
Accounts payable and accrued liabilities (987,210) 1,057,559
------------------ -----------------
7,519,458 (490,630)
------------------ -----------------
Net cash provided by (used in) operating activities 5,766,207 (808,981)
------------------ -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale (purchase) of property and equipment 21,059 (398,514)
------------------ -----------------
Net cash (used in) provided by investing activities 21,059 (398,514)
------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Acquisition, development and construction loan borrowings 24,380,911 26,842,779
Payment on acquisition, development and construction loans (29,587,944) (25,403,158)
Deferred loan cost payments (240,130) -
Notes payable borrowings - 425,000
Payments on notes payable (164,293) (234,601)
------------------ -----------------
Net cash (used in) provided by financing activities (5,611,456) 1,630,020
------------------ -----------------
NET INCREASE IN CASH 175,810 422,525
CASH BEGINNING OF PERIOD 482,879 236,523
------------------ -----------------
CASH END OF PERIOD $ 658,689 $ 659,048
------------------ -----------------
Supplemental disclosure:
------------------ -----------------
Cash paid for interest, net of amount capitalized $ 17,865 $ 17,570
================== =================
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION AND BUSINESS
Weitzer Homebuilders Incorporated (the "Company"), organized in Florida in 1994,
is engaged primarily in the design, construction and sale of single family homes
and townhomes in Dade and Broward counties located in South Florida. The Company
offers a wide variety of moderately priced homes that are designed to appeal to
the entry level and first time move-up buyers.
The accompanying unaudited condensed consolidated financial statements of the
Company have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions for Form
10-Q and Rule 10-01 of Regulation S-X. These financial statements do not include
all information and notes required by generally accepted accounting principles
for complete financial statements, and should be read in conjunction with the
audited financial statements and notes thereto included in the Company's annual
report on Form 10-K for the year ended September 30, 1998. The September 30,
1998 fiscal year end condensed balance sheet data was derived from audited
financial statements but does not include all disclosures required by generally
accepted accounting principles. The financial information furnished reflects all
adjustments, consisting only of normal recurring accruals which are, in the
opinion of management, necessary for a fair presentation of the financial
position, results of operations and cash flows for the periods presented. The
results of operations are not necessarily indicative of results of operations
which may be achieved in the future.
NOTE 2 - Earnings per share
Basic earnings per share ("Basic EPS") is computed by dividing net income by the
weighted average number of common shares outstanding during each period
presented. Diluted earnings per share ("Diluted EPS") is computed by dividing
net income by the weighted average of common stock and common stock equivalents
during the period presented; outstanding warrants and stock options are
considered common stock equivalents and are included in the calculation using
the treasury stock method. Diluted EPS excluded the impact of warrants and stock
options as such amounts are anti-dilutive.
<TABLE>
<CAPTION>
For the Three Month Period Ended For the Nine Month Period Ended
June 30, 1999 June 30, 1999
Amount Amount
Loss Shares Per Share Loss Shares Per Share
------------------------------------- --------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net loss $ (1,516,796) 5,645,968 $ (0.27) $ (1,753,251) 5,645,968 $ (0.31)
Less: Preferred stock dividend - - - -
------------------------------------- --------------------------------------
Basic and Diluted EPS (1,516,796) 5,645,968 (0.27) (1,753,251) 5,645,968 (0.31)
</TABLE>
6
<PAGE>
NOTE 3 - CAPITAL STOCK
Prior to the Company having earned an aggregate of $7.5 million of adjusted
operating income (as defined), the holders of Common Stock are entitled to
receive dividends, to the extent funds are legally available, at the rate of
$0.325 per share per annum for Class A Common Stock and $0.001 per share per
annum for Class B Common Stock, payable on a quarterly basis. Since August 1996,
the Board of Directors of the Company has elected to forego the regularly
scheduled cash dividend payments on its outstanding shares of Class A Common
Stock and Class B Common Stock. Cash dividends on the Class A and Class B Common
Stock are cumulative, and accordingly, the amount of such dividends would inure
for the benefit of the Company's shareholders. The Company accrues such
dividends on its financial statements only if and when the Company's Board of
Directors declares such dividends. As of June 30, 1999, dividends in arrears
amounted to approximately $2,885,800.
The Class A Common Stock and the Class B Common Stock vote together as a single
class and are entitled to one vote per share. Each share of Class B Common Stock
can be converted into one share of Class A Common Stock if the Earnings
Achievements Date (as defined) has occurred and all accumulated and unpaid
dividends on the Class A Common Stock have been declared and paid in full.
NOTE 4 - SUBSEQUENT EVENT
On August 2, 1999, Chai Capital Ltd. ("Chai") converted an aggregate $4,000,000
Convertible Subordinated Debentures into 7,142,857 shares of the Company's Class
A Common Stock pursuant to the Form of Debenture.
On August 2, 1999, Century Partners Group, Ltd. ("Century"), a Florida limited
partnership, acquired control of Weitzer Homebuilders Incorporated ("Weitzer").
Century purchased an aggregate of 8,855,000 shares of Class A and Class B Common
Stock from Chai, Weitzer's principal shareholder. Century paid Chai $10,000,000
consisting of $5,000,000 in cash and a $5,000,000 short-term promissory note
secured by irrevocable letters of credit.
As part of the transaction, Century acquired options with an exercise price of
$1.13 per share to purchase 22,123,893 shares of Weitzer's Class A Common Stock
(the "Options") directly from Weitzer in consideration for $1,130,998, which
Century paid to Weitzer at the closing. The Options may be exercised at any time
prior to the expiration thereof. 12,123,893 of the Options expire on September
2, 1999, 5,000,000 of the options expire on November 2, 1999, and the balance of
5,000,000 of the options, expire on February 2, 2000. The Options may be
exercised by paying Weitzer either cash or conveying to Weitzer real estate
assets and/or partnership interests owned by Century having a fair market value
equal to the exercise price of the Options that are being exercised.
The transaction required the consents of certain lenders. In connection with the
granting of these consents, payments on certain acquisition, development and
construction loans payable were accelerated and are payable by December 31,
1999.
7
<PAGE>
Due to the acceleration of the loan payments, the Company also accelerated the
amortization of the associated deferred loan costs. This resulted in a write-off
of approximately $340,000, which is included in "Depreciation and amortization"
in the accompanying condensed financial statements. The Company also incurred
expenses of approximately $350,000 in connection with the transaction, which are
included in "General and administrative" in the accompanying condensed financial
statements. These expenses were recorded on June 22, 1999, the date of the
transaction agreement.
ITEM - 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This discussion should be read in conjunction with the Notes to the Consolidated
Financial Statements contained herein and Management's Discussion and Analysis
of Financial Condition and Results of Operations appearing in the Company's
Form-10K for the year ended September 30, 1998. Management of the Company
believes that quarterly comparisons may not give a true indication of overall
trends and changes in the Company's operations. The Company's sales and net
income are subject to significant variability based on, among other things, the
phase of development of its projects, the cyclical nature of the homebuilding
industry, changes in governmental regulations, changes in prevailing interest
rates, changes in product mix, changes in the costs of materials and labor and
other economic factors.
Except for the historical information contained herein, the matters discussed in
this Form 10-Q are forward looking statements which involve risks and
uncertainties, including, but not limited to, economic, competitive,
governmental, and technological factors affecting the Company's operations,
markets, products, services, and prices and other factors discussed in the
Company's other filings with the Securities and Exchange Commission.
Results of Operations
General
- -------
The following table sets forth for the periods presented certain items of the
Company's consolidated financial statements expressed as a percentage of their
respective total revenues:
<TABLE>
<CAPTION>
Three Months Three Months
Ended June 30, Ended June 30,
1999 1998
------------------ ------------------
<S> <C> <C>
Revenues 100.0% 100.0%
Cost of homes sold 95.6 88.3
Selling, general and administrative expenses 10.6 14.6
Depreciation, amortization, organization and interest 4.7 0.9
------------------ ------------------
Net loss (10.9) (3.8)
================== ==================
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended June 30, Ended June 30,
1999 1998
---------------------- ----------------------
<S> <C> <C>
Revenues 100.0% 100.0%
Cost of homes sold 90.8 86.6
Selling, general and administrative expenses 10.9 13.5
Depreciation, amortization, organization and interest 2.5 0.8
---------------------- ----------------------
Net loss (4.2) (0.9)
====================== ======================
</TABLE>
Backlog and Available Lots for Sale or Under Option or Contract
- ---------------------------------------------------------------
The following table sets forth the Company's backlog, the available lots for
sale and the available lots for construction for the periods presented. The
backlog consists of homes under sales contracts and includes homes under
construction, as well as homes, which have been sold but not started. At June
30, 1999, approximately 87% of the homes in backlog were under construction. The
available lots for sale refer to the number of lots the Company has acquired on
which it plans to construct homes and exclude homes under sales contracts
included in backlog. There can be no assurance that settlements of homes subject
to sales contracts will occur or that homes will be built on all of the
available lots for sale.
Backlog of Homes and Available Lots for Sale
- --------------------------------------------
<TABLE>
<CAPTION>
June 30, September 30, June 30,
1999 1998 1998
---------------- ---------------- ----------------
<S> <C> <C> <C>
Number of homes in backlog 322 237 241
Aggregate sales value of
homes in backlog $ 40,851,000 $ 30,652,000 $ 30,205,000
Available lots for sale 338 743 861
</TABLE>
Comparison of the Three Months Ended June 30, 1999 and 1998
- -----------------------------------------------------------
The Company's revenue from home sales were approximately $13.7 million for the
three months ended June 30, 1999, as compared to approximately $12.5 million for
the three months ended June 30, 1998. The increase is mainly attributed to the
product mix as well as to an increase on the average sales price. During the
three months period ended June 30, 1999 the Company sold 100 homes; 63% of the
homes sold were townhome units with an average sales price of $104,050 and 37%
of the homes sold were single family units with an average sales price of
$230,965. In contrast, for the same period ended June 30, 1998 the Company sold
113 homes; 85% of the homes sold were townhome units with an average sales price
of $104,670 and 15% of the homes sold were single family units with an average
sales price of $160,400.
The Company's cost of homes sold were approximately $13.2 million for the three
months ended June 30, 1999 as compared to $11.1 million for the three months
ended June 30, 1998. Cost of homes sold for the period ended June 30, 1999 also
included
9
<PAGE>
an impairment charge of approximately $800,000 related to the Company's
assessment of the recoverability of certain projects.
Selling, general and administrative ("SG&A") expenses were approximately $1.5
million for the three months ended June 30, 1999 as compared to $1.8 million for
the three months ended June 30, 1998. This is attributed to the reduction in
several expense categories including closing costs, marketing and advertising,
consulting fees and travel and entertainment. SG&A as a percentage of total
revenues decreased from 14.6% during the three months ended June 30, 1998 to
10.6% during the three months ended June 30, 1999, notwithstanding that the
Company incurred $350,000 in expenditures related to the change in control
transaction.
Depreciation, amortization and interest expenses increased from approximately
$113,000 for the three months ended June 30, 1998, to approximately $651,000 for
the three months ended June 30, 1999. This increase is attributed to the
acceleration in the amortization of certain capitalized loan fees, which
amounted to approximately $340,000, as discussed in Note 4 to the Condensed
Consolidated Financial Statements in this Form 10-Q.
Net loss for the three months ended June 30, 1999 was approximately $1.5 million
compared to a net loss of approximately $474,000 for the three months ended June
30, 1998. The increase is mainly attributed to the impairment charges assessed,
as well as the acceleration of the amortization of certain capitalized loan fees
as discussed above.
Comparison of the Nine Months Ended June 30, 1999 and 1998
- ----------------------------------------------------------
The Company's revenue from home sales were approximately $40.4 million for the
nine months ended June 30, 1999, as compared to approximately $36.5 million for
the nine months ended June 30, 1998. The increase is mainly attributed to the
product mix as well as to an increase of the average sales price of the units
sold. During the nine months ended June 30, 1999, the Company sold 320 homes;
69% of the homes sold were townhome units with an average sales price of
$103,200 and 31% of the homes sold were single family units with an average
sales price of $176,770. In contrast, for the same period ended June 30, 1998,
the Company sold 318 homes; 76% of the homes sold were townhome units with an
average sales price of $101,000 and 24% of the homes sold were single family
units with an average sales price of $124,000.
The Company's cost of closed homes was approximately $37 million for the nine
months ended June 30, 1999 as compared to approximately $32 million for the nine
months ended June 30, 1998. Also included in cost of homes sold in the nine
month period ended June 30, 1999 is an impairment charge of approximately
$800,000 related to the Company's assessment of the recoverability of certain
projects.
Selling, general and administrative ("SG&A") expenses were approximately $4.5
million for the nine months ended June 30, 1999, as compared to $4.9 million for
the nine months ended June 30, 1998. This is attributed to the reduction in
several expense categories, including closing costs, marketing and advertising,
consulting fees and travel and entertainment. SG&A as a percentage of total
revenues decreased from
10
<PAGE>
13.5% during the nine months ended June 30, 1998 to 10.9% during the nine months
ended June 30, 1999, notwithstanding that the Company incurred $350,000 in
expenditures related to the change in control transaction.
Depreciation, amortization and interest expense increased from approximately
$300,000 for the nine months ended June 30, 1998 to approximately $1 million for
the nine months ended June 30, 1999. The increase is primarily attributed to the
acceleration in the amortization of certain capitalized loan fees, which
amounted to approximately $340,000, as discussed in Note 4 to the Condensed
Consolidated Financial Statements in this Form 10-Q.
Liquidity and Capital Resources
General
- -------
On June 30, 1999, the Company had borrowings from banks and third parties
aggregating approximately $26.9 million, as compared to $32.2 million at
September 30, 1998. The Company believes that it will be able to fund its
ongoing operations in the short-term from cash on hand, cash flow from home
sales and existing construction and development financing.
At June 30, 1999, the Company had an aggregate of $21.3 million of available
credit under the Company's acquisition, development and construction loans,
which the Company will use to finance the construction and development of homes
at Harmony Lakes, Los Castillos at Windsor Palms, Malibu Bay, Tesoro at Forest
Lake, Lago del Sol and Fiesta projects.
On August 2, 1999, Chai Capital Ltd. ("Chai") converted an aggregate $4,000,000
Convertible Subordinated Debentures into 7,142,857 shares of the Company's Class
A Common Stock pursuant to the Form of Debenture. Also, on August 2, 1999,
Century Partners Group, Ltd. paid the Company $1,130,998 in consideration for
the acquisition of the option to purchase 22,123,893 shares of the Company's
Class A Common Stock.
Cash Flows
- ----------
During the nine months ended June 30, 1999, the Company had generated
approximately $6.1 million in cash from operating activities, primarily as a
result of a $7.6 million decrease in inventory. The Company also expended
$350,000 in connection with the change in control of the Company, as discussed
in Note 4 of the Consolidated Financial Statements included in this Form 10-Q.
During this same period, the Company used approximately $5.6 million in
financing activities, primarily arising from the repayment of acquisition,
development and construction loans.
For the nine month period ended June 30, 1999, the Company experienced a
combined positive cash flow of approximately $175,000.
11
<PAGE>
PART II. OTHER INFORMATION
EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 - Financial Data Schedule.
(b) The Company has not filed a report on Form 8-K during the quarter for which
this report is being filed.
SIGNATURES
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.
Date: August 12, 1999 /s/ Sergio Pino
---------------
Sergio Pino
Chairman of the Board, President,
and Chief Executive Officer
(Principal Executive Officer)
Date: August 12, 1999 /s/ Emiliano de la Fuente, Jr.
------------------------------
Emiliano de la Fuente, Jr., CPA
Vice President, Chief Financial Officer
and Treasurer
(Principal Accounting Officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1999 SEP-30-1999
<PERIOD-START> APR-01-1999 OCT-01-1998
<PERIOD-END> JUN-30-1999 JUN-30-1999
<CASH> 658,689 658,689
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 32,410,174 32,410,174
<CURRENT-ASSETS> 1,911,939 1,911,939
<PP&E> 1,229,522 1,229,522
<DEPRECIATION> (863,715) (863,715)
<TOTAL-ASSETS> 35,346,609 35,346,609
<CURRENT-LIABILITIES> 32,758,988 32,758,988
<BONDS> 0 0
0 0
0 0
<COMMON> 56,460 56,460
<OTHER-SE> 2,531,161 2,531,161
<TOTAL-LIABILITY-AND-EQUITY> 35,346,609 35,346,609
<SALES> 13,715,059 40,378,333
<TOTAL-REVENUES> 13,832,841 40,711,770
<CGS> 13,227,713 36,979,873
<TOTAL-COSTS> 13,227,713 36,979,873
<OTHER-EXPENSES> 2,115,115 5,467,283
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 6,809 17,865
<INCOME-PRETAX> (1,516,796) (1,753,251)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1,516,796) (1,753,251)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,516,796) (1,753,251)
<EPS-BASIC> (0.27) (0.31)
<EPS-DILUTED> (0.27) (0.31)
</TABLE>
