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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-QSB
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(Mark One)
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________ to _____________________
Commission file number 0-22341
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AUGMENT SYSTEMS, INC.
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(Exact name of small business issuer as specified in its charter)
DELAWARE 04-3089539
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
790 Turnpike Street North Andover, MA 01845
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
978-725-8156
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(Registrant's telephone number, including area code)
Transitional Small Business Disclosure Format:
Yes No X
--- ---
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 requirement for the past 90 days. YES X NO
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
Stock, as of the latest practicable date: As of August 15, 1999,
Class Outstanding at November 15, 1999
- -------------------------------------- --------------------------------
Common Stock, $.01 par value per share 11,898,952
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<PAGE>
AUGMENT SYSTEMS, INC.
INDEX
<TABLE>
PAGES
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<S> <C>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Balance Sheets as of December 31, 1998
and September 30, 1999 3
Results of Operations for the three months and
Nine months ended September 30, 1999 and 1998 4
Statements of Cash Flows for the three months
And nine months ended September 30, 1999 and 1998 5
Notes to Financial Statements 6-8
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-11
PART II OTHER INFORMATION
Item 1 Legal Proceedings 12
Item 2 Changes in Securities 12
Item 3 Defaults Upon Senior Securities 12
Item 4 Submission of Matters to a Vote of Security-Holders 12
Item 5 Other Information 12
Item 6 Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
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<PAGE>
AUGMENT SYSTEMS, INC.
Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
(unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 87,360 $ 187,815
Accounts receivable, net of allowance
for doubtful accounts of $331,628 - -
- Inventory, net of allowance of $326,455 - -
-
Prepaid expenses 1,480 27,936
Assets held for sale 2,845 75,000
---------- -----------
Total assets $ 91,686 $ 290,751
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 59,468 $ 377,935
Accrued expenses 165,000 182,012
Bridge financing 1,500,000 1,395,701
Convertible promissory notes 7,252 20,743
Current portion of capital lease obligations 46,760 123,301
---------- -----------
Total liabilities 1,778,480 2,099,692
Commitments
Stockholders' Equity (deficit):
Common stock, $.01 par value; 30,000,000 shares
authorized; 11,898,952 shares issued and
outstanding at September 30, 1999, and December
31, 1998, respectively 118,989 118,989
Additional paid-in capital 21,750,867 21,750,867
Accumulated deficit (23,556,650) (23,678,797)
-----------------------------------
Total stockholders' equity (deficit) (1,686,794) (1,808,941)
------------ -----------
Total liabilities and stockholders' equity $ 91,686 $ 290,751
=========== ============
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<PAGE>
AUGMENT SYSTEMS, INC.
Statements of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
---------------------- ---------------------
<S> <C> <C> <C> <C>
Sales $ - $ 18,056 $ 175,000 $ 824,034
Cost of sales - 362,460 - 732,215
---- --------- ---------- ----------
Gross margin - (344,404) 175,000 91,815
Operating expenses:
Research and development - 538,724 - 1,956,190
General and administrative 4,500 361,586 239,469 1,058,520
Sales and marketing - 470,012 - 1,676,462
----- --------- ---------- ---------
Total cost and expenses $ 4,500 $1,370,322 $ 239,469 $4,691,172
------- ---------- ---------- ----------
Profit (loss) from operations $(4,500) $(1,714,726) $( 64,469) $(4,599,353)
-------- ------------ ----------- ------------
Other income (expense):
Net interest expense $(35,465) $(193,744) $ 186,616 $ (219,931)
--------- ---------- ---------- -----------
Total other expense, net $(35,465) $(193,744) $ 186,616 $ (219,931)
--------- ---------- ---------- -----------
Net profit (loss) $(39,965) $(1,908,470) $ 122,147 $(4,819,284)
--------- ------------ ---------- ------------
Net profit (loss) per common share - (0.16) .01 (0.44)
Weighted average common and common 11,898,952 11,898,952 11,898,952 10,851,138
equivalent shares outstanding
</TABLE>
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<PAGE>
AUGMENT SYSTEMS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net profit (loss) 122,147 (4,819,284)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization -- 197,221
(Increase) decrease in operating assets and liabilities:
Accounts receivable -- (60,781)
Inventory -- 568,378
Other assets 98,611 (63,470)
Accounts payable (318,467) (1,288,485)
Accrued expenses ( 2,746) (221,528)
--------- ---------
Net cash used in operating activities (100,455) (5,687,949)
--------- -----------
Cash flows from investing activities:
Purchase of property and equipment -- (40,211)
---------- --------
Net cash used for investing activities -- (40,211)
---------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock -- 6,057,886
Proceeds from issuance of short-term promissory notes -- --
Proceeds from bridge financing -- 1,500,000
Repayment of bridge financing -- (200,000)
Payments on short-term promissory notes -- (750,000)
Payment on long-term convertible promissory notes -- (20,753)
--------- ----------
Net cash provided by financing activities -- 6,587,133
--------- ---------
Net increase (decrease) in cash (100,455) 858,973
--------- -------
Cash at beginning of period 187,815 47,224
--------- ------
Cash at end of period 87,360 906,197
------ -------
The accompanying notes are an integral part of the financial statements.
</TABLE>
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<PAGE>
AUGMENT SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Prior to January 15, 1999, Augment Systems, Inc., (the "Company")
designed, developed and sold fibre channel based network file server systems
designed to increase data transfer and file storage on computer networks. In
September 1998, the Company obtained $1,500,000 in bridge financing of secured
convertible promissory notes and common stock purchase warrants, in anticipation
of a private placement of the Company's Common Stock. The Company used a portion
of the proceeds of the bridge financing to repay in full its indebtedness to a
major lending institution. In November 1998, the Company was informed by the
investment bank that provided the bridge financing, that they would be unable to
secure the additional funding required to repay the outstanding bridge loan and
provide the Company with the necessary working capital to support implementation
of its business plan and ongoing operations. The Company began to seek
alternative financing, but, was unable to secure the funds or a commitment for
the additional funding necessary to maintain ongoing operations and transition
its products from a proprietary platform to standard hardware and software.
While the Company experienced initial success with the introduction of its
products to customers, long-term viability was dependent in part, on migrating
its technology to standard hardware and software. However, without additional
capital, the Company was unable to complete research and development, maintain a
sales force and requisite administrative support.
On January 15, 1999, the Board of Directors of the Company elected to
discontinue all ongoing operations, layoff all but one of its employees, seek
buyers for its technology and inventory and look for a merger partner. The
Company has ceased sales, marketing and distribution of its products. On March
31, 1999, two of the remaining three members of the Board of Directors resigned
to pursue other interests. As of August 15, 1999, the Company's Chief Financial
Officer, and only active board member, was engaged in the disposition of assets,
settlement of outstanding debts, sale of the Company's technology, and
exploration of potential mergers. There are substantial risks that the Company
will not be able to settle its debts or find a suitable merger transaction. The
Company may be compelled to voluntarily file for bankruptcy or be forced by its
creditors into an involuntarily bankruptcy.
On June 22, 1999, the Company signed a letter of intent with Bring Luck
Holdings Limited ("BLH"). Under the terms of the letter of intent, the Company
will sell to BLH, Series A Convertible Preferred Stock of the Company. Upon
conversion of the Preferred Stock, BLH would own 85% of the Company on a fully
diluted basis. The BLH transaction is subject to the execution of a definitive
agreement. In October 1999, Bring Luck Holdings Limited informed the Company
that they could not go forward with a definitive agreement. The Company
continues to seek additional buyers for the Company or its technology.
-6-
<PAGE>
AUGMENT SYSTEMS, INC.
NOTES TO FINANCIAL STATEMENTS
September 30, 1999
The accompanying unaudited financial statements are presented in
accordance with the requirements for Form 10-QSB and do not include all the
disclosures required by generally accepted accounting principles for complete
financial statements. Reference should be made to the Company's Form 10-KSB for
the fiscal year ended December 31, 1998 for additional disclosures including a
summary of the Company's accounting policies.
In the opinion of management of the Company, the financial statements
include all adjustments, consisting of only normal recurring accruals, necessary
for a fair presentation of the financial position of Augment Systems, Inc. The
results of operations for the three-month and nine-month period ended September
30, 1999 or any other interim period, are not necessarily indicative of the
results to be expected for the full year.
2. NET LOSS PER SHARE OF COMMON STOCK
The Company follows Statement of Financial Accounting Standards
("SFAS") No. 128, Earnings per Share, issued by the Financial Accounting
Standards Board.
3. STOCKHOLDERS' EQUITY
In December 1998, the Board of Directors authorized the issuance of an
additional 3,592,816 shares of Common Stock to sixty-six (66) accredited
investors who participated in private placements of the Company's Common Stock
during January and May 1998. The issuance of the shares was pursuant to specific
terms of the private placement relating to missing certain revenue milestones.
As of November 15, 1999, the Company had not issued those shares.
In December 1998, the Board of Directors authorized the issuance of
warrants to purchase 359,282 shares of Common Stock to the underwriter involved
in private placements of the Company's Common Stock during January 1998 and May
1998. The issuance of the warrants was pursuant to specific terms of the private
placement relating to missing certain revenue milestones. As of November 15,
1999, the Company had not issued those warrants.
-7-
<PAGE>
AUGMENT SYSTEMS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Three and nine months ended September 30, 1999 compared to the three and nine
months ended September 30, 1998
INTRODUCTION
Prior to January 15, 1999, Augment Systems, Inc., (the "Company")
designed, developed and sold fibre channel based network file server systems
designed to increase data transfer and file storage on computer networks. In
September 1998, the Company obtained $1,500,000 in bridge financing of secured
convertible promissory notes and common stock purchase warrants, in anticipation
of private placement of the Company's Common Stock. The Company used a portion
of the proceeds of the bridge financing to repay in full its indebtedness to a
major lending institution. In November 1998, the Company was informed by the
investment bank that provided the bridge financing, that they would be unable to
secure the additional funding required to repay the outstanding bridge loan and
provide the Company with the necessary working capital to support implementation
of its business plan and ongoing operations. The Company began to seek
alternative financing, but, was unable to secure the funds or a commitment for
the additional funding necessary to maintain ongoing operations and transition
its products from a proprietary platform to standard hardware and software.
While the Company experienced initial success with the introduction of its
products to customers, long-term viability was dependent in part, on migrating
its technology to standard hardware and software. However, without additional
capital, the Company was unable to complete research and development, maintain a
sales force and requisite administrative support.
On January 15, 1999, the Board of Directors elected to discontinue all
ongoing operations, layoff all but one of its employees, seek buyers for its
technology and inventory and look for a merger partner. The Company has ceased
sales, marketing and distribution of its products. On March 31, 1999, two of the
remaining three members of the Board of Directors resigned to pursue other
interests. As of April 15, 1999, the Company's Chief Financial Officer, and only
active board member, was engaged in the disposition of assets, settlement of
outstanding debts, sale of the Company's technology, and exploration of
potential mergers. There are substantial risks that the Company will not be able
to settle its debts or find a suitable merger transaction. The Company may be
compelled to voluntarily file for bankruptcy or be forced by its creditors into
an involuntarily bankruptcy.
Prior to January 15, 1999, Augment Systems, Inc. designed, developed
and sold fibre channel-based network file server systems designed to increase
data transfer and file storage on computer networks. The Company's products
addressed the increasing demand for the rapid transfer and efficient storage of
very large image and text files within computer networks. The Company's initial
target market was the electronic printing and publishing industry which is
rapidly converting to digital technology, but suffered from critical workflow
bottlenecks due to the very large file sizes of color images which cannot be
efficiently transported over conventional networks. The Company sold fibre
channel-based network file server systems which included (i) one or more
end-to-end high speed fibre channel arbitrated loop ("FC-AL") interfaces; (ii) a
file server, the AFX 410, that performs a central file management function, high
speed large capacity storage, and high speed interconnects to the FC-AL
interfaces; and (iii) PCI cards and software for each client workstation to be
connected to the file server.
On June 22, 1999, the Company signed a letter of intent with Bring Luck
Holdings Limited ("BLH"). Under the terms of the letter of intent, the Company
will sell to BLH, Series A Convertible Preferred Stock of the Company. Upon
conversion of the Preferred Stock, BLH would own 85% of the Company on a fully
diluted basis. The BLH transaction is subject to the execution of a definitive
agreement. In October 1999, Bring Luck Holdings Limited informed the Company
that they could not go forward with a definitive agreement. The Company
continues to seek additional buyers for the Company or its technology.
-8-
<PAGE>
RESULTS OF OPERATIONS
During the three and nine-month period ended September 30, 1999, the Company
recognized $0 in revenues as compared to $18,056 and $824,034 in revenues for
the three and nine-month period ended September 30, 1998. The Company does not
anticipate shipping any product for the foreseeable future and is concentrating
its efforts on the disposition of assets, settlement of outstanding debts, sale
of the Company's technology, and exploration of potential mergers. The revenues
recognized by the Company during the first nine months of 1999 were the result
of a sale of software license rights. The Company does not anticipate any
additional sales of software to any third party.
The Company recognized a net loss of approximately $39,965 for the three-month
period ending September 30, 1999 and net income of $122,147 for the nine-month
period ending September 30, 1999 as compared to a net loss of $1,908,470 and
$4,819,284 for the three and nine months ended September 30, 1998, respectively.
The recognition of net income is the result of settling debts with creditors
below the amount recognized at the time of indebtedness, and a one-time sale of
a software license.
Research and development costs for the three and nine-month periods ended
September 30, 1999 were $0 as compared to $538,724 and $1,956,190, respectively,
the three and nine-month periods ended September 30, 1998. The Company is
currently not conducting any research and development activities and does not
anticipate any such efforts in the foreseeable future.
General and administrative costs for the three and nine-month periods ended
September 30, 1999 were $4,500 and $239,469, respectively, as compared to
$361,586 and $1,058,520, respectively, for the three and nine-month periods
ended September 30, 1998. The decrease is a result of a reduction of headcount
during the first quarter of 1999. The Company currently has one employee in
administration and expects further reductions in spending.
Selling and marketing costs for the three and nine-months period ended September
30, 1999 were $0 as compared to $470,012 and $1,676,462, respectively, for the
three and nine-month periods ended September 30, 1998. The Company is currently
not conducting any sales and marketing activities and does not anticipate any
such efforts in the foreseeable future.
The Company currently has one full-time employee engaged in the disposition of
assets, settlement of outstanding debts, sale of the Company's technology, and
exploration of potential mergers.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations since October 1995, principally
from a combination of debt and equity financings totaling approximately
$22,975,000. Prior to May 1997, the Company issued convertible promissory notes
in the aggregate principal amount of approximately $864,000. Approximately
$802,000 of the principal balance of these notes plus accrued interest was
converted into shares of Common Stock in November 1996 at a conversion price of
$4.00 per share. In December 1996 and February 1997, the Company raised gross
proceeds of $3,585,000 in a private placement of promissory notes and common
stock purchase warrants. The promissory notes, bearing interest at 12% per
annum, were repaid from the proceeds of its initial public offering. In
addition, from September 1995 through August 1996, the Company issued 1,653,623
shares of its Common Stock for approximately $3,372,000 in gross proceeds.
On May 16, 1997, the Company completed its initial public offering of
1,800,000 shares of its Common Stock at a price of $5.50 per share and 2,070,000
Redeemable Common Stock Purchase Warrants at $.15 per warrant. Each Redeemable
Common Stock Purchase Warrant entitles the holder to purchase one share of
Common Stock for $6.60 during the four-year period commencing May 12, 1998. The
net proceeds from the Company's initial public offering, after deducting
underwriting discounts and commissions and estimated expenses payable by the
Company, were approximately $8,220,000.
-9-
<PAGE>
In October 1997, the Company obtained a $750,000 loan from Fleet
National Bank. The loan was secured by all of the Company's assets, bore
interest at Fleet National Bank's prime rate plus 2% and was originally payable
by December 31, 1997 or upon completion of a financing resulting in net proceeds
to the Company of at least $5,000,000. Pursuant to the terms of the loan, the
Company issued detachable warrants to purchase 100,000 shares of Common Stock at
an exercise price of $1.00 per share exercisable over five years. This loan was
extended through and until July 31, 1998. On July 31, 1998, the Company made a
payment in the amount of $300,000 to Fleet National Bank and the final $450,000
balance was retired on August 31, 1998.
During December 1997 and January 1998, the Company secured $1,000,000
in bridge financing from institutional and private investors in anticipation of
the private placement of the Company's Common Stock. The bridge financing
promissory notes accrued interest at 8% per annum with interest and principal
payable at maturity on the initial closing of the private placement. In
addition, the Company issued to bridge investors five year warrants to purchase
up to 750,000 shares in the aggregate of the Company's Common Stock at $1.00 per
share. In February 1998, the Company repaid $200,000 of these promissory notes
plus interest and the holders of $800,000 of these promissory notes converted
their notes into shares of the Company's Common Stock at $1.00 per share. In
January 1998, the Company closed on an initial amount of $6,180,000 of a private
placement initiated in December 1997. In early May 1998, the Company closed on
an additional $575,000 and terminated the offering started in December 1997. The
aforementioned funds were used to repay outstanding accounts payable debts
incurred during 1997 of approximately $1.400,000, repay bridge financing of
approximately $200,000 and bank debt of approximately $300,000, support research
and development expenses of approximately $2,000,000, sales and marketing
expenses of approximately $1,700,000, and $675,000 in administrative and other
expenses.
In September 1998, the Company obtained $1,500,000 in bridge financing
of secured convertible promissory notes and common stock purchase warrants. The
Company used a portion of the proceeds of the bridge financing to repay in full
its indebtedness to Fleet National Bank. The convertible promissory notes were
due and payable upon the earlier of the closing of a financing of a minimum of
$4,000,000 or in September 1999. In November 1998, the Company was informed by
the investment bank, that provided the bridge financing, that they would be
unable to secure the additional funding required to repay the outstanding bridge
loan and provide the Company with the necessary working capital to support its
business plan and ongoing operations. The Company began to seek alternative
financing, but, was unable to secure the funds necessary. On January 15, 1999,
the Board of Directors decided to shut down operations, lay-off all but one of
its employees, liquidate assets, seek buyers for the Company's technology and
look for merger partners.
These factors raise substantial doubt about the Company's ability to
continue as a going concern. The Company is dependent on its ability to settle
substantially all debts with creditors, attract purchasers of the Company's
technology and attract potential merger partners, which will undoubtedly result
in substantial dilution to existing shareholders. Although the Company has
effectively ceased operations, there are numerous secured and unsecured
creditors who could commence litigation against the Company.
The Company is authorized to issue up to 50,000,000 shares of its
Common Stock and up to 2,000,000 shares of Preferred Stock. As of November 15,
1999, there were 11,898,952 shares of the Company's Common Stock issued and
outstanding and no Preferred Stock issued and outstanding. The Company is
obligated to issue additional 3,592,816 shares of Common Stock to certain
investors who participated in private placements of the Company's Common Stock
during January 1998 and May 1998. The shares had been authorized for issuance by
the Board of Directors during 1998.
The Company does not have any material commitments for capital expenditures at
this time.
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<PAGE>
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements that describe the Company's
business prospects. These statements involve risks and uncertainties including,
but not limited to, rapid technology changes, regulatory uncertainty, level of
demand for the Company's products and services, product acceptance, industry
wide competitive factors, timing of completion of major equipment projects and
political, economic or other conditions. Furthermore, market trends are subject
to changes that could adversely affect future results.
-11-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In March 1998, the Company's former President and CEO, Lorrin Gale,
left the Company at the request of the Board of Directors. On May 29, 1998, Mr.
Gale filed a complaint against the Company in the Superior Court of the
Commonwealth of Massachusetts seeking relief for breach of an employment
contract. In September 1998, the Company reached a settlement with Mr. Gale,
which required that the Company pay $150,000 in severance pay and an additional
$45,000 in increments of $15,000 over the next three years commencing in July
1999. In the event the Company does not make payments under the terms of the
settlement agreement or is unable to work out an arrangement for payment, Mr.
Gale could obtain a judgement against the Company, which would have a material
adverse affect on the prospects of the Company.
The Company is not involved in any other material legal proceedings.
Although the Company has effectively ceased operations, there are numerous
secured and unsecured creditors who could commence litigation against the
Company. In the event that the Company has insufficent funds to settle or defend
these matters, the Company or its creditors could cause the filing of a
bankruptcy proceeding.
ITEM 2. CHANGES IN SECURITIES
None
----
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
----
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
----
ITEM 5. OTHER INFORMATION
None
----
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) There were no Form 8-Ks filed during the quarter ended
September 30, 1999.
-12-
<PAGE>
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.
AUGMENT SYSTEMS, INC.
Date: November 15, 1999 By: /s/ Duane A. Mayo
--------------------------------------------
Duane A. Mayo
Chief Financial Officer, Treasurer and Director
(Principal Financial & Accounting Officer)
-13-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
STATEMENTS FOR THE PERIOD ENDED SEPTEMBER 30, 1999, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 87,360
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 91,686
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 91,686
<CURRENT-LIABILITIES> 1,778,480
<BONDS> 0
0
0
<COMMON> 118,989
<OTHER-SE> (1,805,783)
<TOTAL-LIABILITY-AND-EQUITY> 91,686
<SALES> 175,000
<TOTAL-REVENUES> 175,000
<CGS> 0
<TOTAL-COSTS> 239,469
<OTHER-EXPENSES> (186,616)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 122,147
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 122,147
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
