U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X Quarterly report pursuant to section 13 or 15(d) of the Securities
---- Exchange Act of 1934
For the quarterly period ended March 31, 1996
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 0-28058
BIG CITY BAGELS, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
New York 11-3137508
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation of Organization) Identification No.)
99 Woodbury Road, Hicksville, NY 11801
(Address of Principal Executive Offices)
(516) 932-5050
(Issuer's Telephone Number Including Area Code)
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15 (d) of the Exchange Act during the preceding 12
months (or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes No X
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: At June 19, 1996,
Issuer had outstanding 4,793,750 shares of Common stock, par value
$.001 per share.
Page 1 of 14 Pages
Exhibit Index - Page 13
<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIG CITY BAGELS, INC. AND
PUMPERNICKEL PARTNERS, L.P.
COMBINED BALANCE SHEET
<TABLE>
December 31, 1995 March 31, 1996
ASSETS Historical Pro-Forma
<S> <C> <C> <C>
Current Assets:
Cash ...................................................................... $ 37,991 $ 439,393 $ 439,393
Accounts Receivable ....................................................... 19,580 84,041 84,041
Inventory ................................................................. 47,933 48,014 48,014
Prepaid Expenses and Other Current Assets ................................. 9,572 33,322 33,322
------------ ----------- ----------
Total Current Assets .................................................. $ 115,076 $ 604,770 $ 604,770
Fixed Assets, Net of Accumulated
Depreciation .......................................................... 934,378 933,697 933,697
Intangible Assets, Net of Accumulated
Amortization .......................................................... 31,230 28,777 309,912
Deferred Registration Costs ................................................ 25,000 175,756 175,756
Security Deposits .......................................................... 31,947 31,947 31,947
------------ ----------- ----------
TOTAL ................................................................. $ 1,137,631 $ 1,774,947 $2,056,082
============ =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY AND PARTNERS' CAPITAL
Current Liabilities:
Bridge Loans Payable ...................................................... $ 742,941 $ 742,941
Stockholder and Partner Loans ............................................. $ 200,000 200,000 200,000
Notes Payable ............................................................. 87,712 19,851 19,851
Unearned Franchise Fee Income ............................................. 309,250 325,250 325,250
Accounts Payable .......................................................... 278,390 151,861 151,861
Accrued Expenses .......................................................... 35,660 63,149 63,149
------------ ----------- ----------
Total Current Liabilities ............................................. $ 911,012 $ 1,503,052 $1,503,052
Deferred Rent Payable ...................................................... 26,261 26,261 26,261
Loans Payable, Noncurrent .................................................. 11,044 5,653 5,653
Stockholder and Partner Loans, Noncurrent .................................. 262,468 262,233 262,233
------------ ----------- ----------
Total Liabilities ..................................................... $ 1,210,785 $ 1,797,199 $1,797,199
------------ ----------- ----------
Stockholders' Equity and Partners' Capital:
Preferred Stock $.001 par value; 1,000,000 shares
authorized; no shares outstanding
Common Stock $.001 par value; 10,000,000
shares authorized; 2,818,750 shares
issued and outstanding, historical,
December 31, 1995 and March 31, 1996;
3,000,000 shares issued and
outstanding, pro-forma March 31,1996 ..................................... 2,819 2,819 3,000
Additional Paid-In Capital ................................................. 972,181 1,655,723 255,883
Partners' Capital .......................................................... 255,456 220,368
Accumulated Deficit ........................................................ (1,303,610) (1,901,162)
------------ ----------- ----------
Total Stockholders' Equity(Deficiency)
and Partners' Capital ............................................ (73,154) (22,252) 258,883
------------ ----------- ----------
TOTAL ................................................................. $ 1,137,631 $ 1,774,947 $2,056,082
============= ============ ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
BIG CITY BAGELS, INC. AND
PUMPERNICKEL PARTNERS, L.P.
COMBINED STATEMENT OF OPERATIONS
<TABLE>
Three Months Ended
March 31, 1995 March 31, 1996
<S> <C> <C>
REVENUES:
Product Sales by Company-Owned Stores $ 300,133 $ 334,295
Product Sales to Franchisees and Others 44,819 77,565
Franchise Fees 120,000
Royalty Income 3,952 20,217
Other Income 538 12,847
--------- ----------
Total Revenues $ 349,442 $ 564,924
--------- ----------
COSTS AND EXPENSES:
Cost of Sales $ 109,995 $ 173,452
Selling, General and Administrative Expenses 415,584 567,080
Amortization of Debt Discount on Bridge Loans 426,483
Interest Expense 7,491 30,552
Total Costs and Expenses 533,070 1,197,567
NET LOSS $ (183,628) $ (632,643)
============ ===========
Pro Forma Net Loss per Common Share $ (.06) $ (.21)
============= ===========
Pro Forma Weighted Average Common Shares
Outstanding 3,000,000 3,000,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
BIG CITY BAGELS, INC. AND
PUMPERNICKEL PARTNERS, L.P.
CASH FLOWS STATEMENT
<TABLE>
Three Months Ended March 31,
1995 1996
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net Loss (183,628) (632,643)
Adjustments to Reconcile Net Loss to Net
Cash (Used in) Operating Activities:
Depreciation and Amortization 28,163 33,488
Amortization of Debt Discount on Bridge Loans 426,483
(Increase) Decrease in:
Accounts Receivable 3,347 (64,461)
Inventory 12,105 (81)
Prepaid Expenses and Other Current Assets (6,518) (8,750)
(Decrease) Increase in:
Unearned Franchise Fee Income 75,500 16,000
Deferred Rent Payable 1,242 0
Accounts Payable (45,655) (126,529)
Accrued Expenses 13,173 27,489
-----------------------------------------
Net Cash (Used in) Operating Activities (102,271) (329,004)
-----------------------------------------
Cash Flows from Investing Activities:
Purchases of Fixed Assets (1,399) (30,351)
Increase in Security Deposits (1,922) 0
-----------------------------------------
(3,321) (30,351)
-----------------------------------------
Cash Flows from Financing Activitites:
Stockholders' Loans 108,683 (235)
Promissory Note Receivable 0 (15,000)
Proceeds from Bridge Loan 0 1,000,000
Deferred Registration Costs 0 (150,756)
Payment of Note Payable 0 (73,252)
-----------------------------------------
Net Cash Provided by Financing Activities 108,683 760,757
-----------------------------------------
Net Increase in Cash and Cash Equivalents 3,091 401,402
Cash and Cash Equivalents, Beginning of Period 51,594 37,991
-----------------------------------------
Cash and Cash Equivalents, End of Period 54,685 439,393
=========================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
BIG CITY BAGELS, INC. AND
PUMPERNICKEL PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - The Company and Basis of Presentation:
Big City Bagels, Inc. ("Big City") operates and franchises
retail bagel stores and sells its products wholesale to
commercial accounts and food service operators. Pumpernickel
Partners, L.P. ("Pumpernickel") operates two such bagel
stores. The combined financial statements include the accounts
of Big City and Pumpernickel (collectively, the "Company"),
which were under common control at March 31, 1995 and 1996 as
the principal stockholders of Big City are also the principal
stockholders of Bagel Partners, Inc. ("Bagel Partners"), the
general partner of Pumpernickel. The Company commenced
operations in 1993. All significant intercompany balances and
transactions have been eliminated. Bagel Partners had no
assets or liabilities other than its interest in Pumpernickel,
which if the financial statements of Bagel Partners were
combined herewith, would have been eliminated.
The Company has incurred losses since inception and has a
working capital deficit of $898,282 at March 31, 1996. In
January 1996 the Company raised $1,000,000 through a bridge
financing (Note C). In addition in May 1996, the Company
consummated an initial public offering (the "Offering") of its
securities (Note F).
Immediately prior to the closing of the Offering, the limited
partners of Pumpernickel and the stockholders of Bagel
Partners, Inc., exchanged their partnership interests and all
their capital stock, respectively, for 181,250 shares of the
Company's common stock. This transaction was accounted for as
a purchase of the interests of the unaffiliated limited
partners in Pumpernickel. The common stock issued to the
stockholders of Bagel Partners and the affiliated limited
partners of Pumpernickel will be valued at their respective
equity interests in Pumpernickel. The excess of the fair value
of the shares of common stock (144,535 shares) issued to such
limited partners over the book amount of their interest in
Pumpernickel has been assigned to the franchise costs and
included with intangible assets in the accompanying pro-forma
balance sheet($281,135). The accompanying pro-forma balance
sheet reflects this transaction as if it had occurred on March
31, 1996. In addition, In February 1996 the Company amended
its certificate of incorporation, increasing its authorized
shares, and in March 1996 the Company effected a 28,187.5 for
1 stock split of its common stock in the form of stock
dividend payable at the closing of the Offering to
shareholders of record on April 1, 1996. The accompanying
financial statements reflect these transactions retroactively.
5
<PAGE>
BIG CITY BAGELS, INC. AND
PUMPERNICKEL PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - The Company and Basis of Presentation (continued):
The information herein is unaudited. However, in the opinion
of management, such information reflects all adjustments
(consisting only of normal recurring accruals) necessary to
make the financial statements not misleading. Additionally, it
should be noted that the accompanying combined financial
statements do not purport to contain complete disclosures in
conformity with generally accepted accounting principles.
The results of operations for the three months ended March 31,
1996 are not necessarily indicative of the results of
operations for the full fiscal year ending December 31, 1996.
These combined statements should be read in conjunction with
the Company's financial statements for the fiscal year ended
December 31, 1995 appearing in the Company's Prospectus dated
May 7, 1996.
(NOTE B) - Net (Loss) Per Share:
Net (loss) per share is computed on the basis of the weighted
average number of common shares outstanding during each period
adjusted for the 28,187.5 to 1 stock split and as if the
exchange described in Note A had occurred on January 1, 1995.
(NOTE C) - Bridge Financing:
In January 1996, the Company completed a bridge financing,
pursuant to which it issued (i) an aggregate of $1,000,000
principal amount of promissory notes, which bear interest at
the rate of 8% per annum and (ii) the right to receive upon
the completion of the Offering an aggregate of 500,000 bridge
units and 500,000 Class B redeemable common stock purchase
warrants ("Class B warrants"). Each bridge unit consists of
one share of common stock and one warrant identical to the
Class A warrants described in Note F. Two Class B warrants,
together, will entitle the holder to purchase one share of
common stock for $8.00 during the three-year period commencing
one year after the completion of the Offering. The bridge
units and Class B warrants contain registration rights and the
Company registered such securities simultaneously with the
Offering. The units and warrants have been valued at $684,000
and have been accounted for as a debt
6
<PAGE>
BIG CITY BAGELS, INC. AND
PUMPERNICKEL PARTNERS, L.P.
NOTES TO FINANCIAL STATEMENTS
(NOTE C) - Bridge Financing (continued):
discount increasing the effective interest rate on the notes
to 169%. For the three months ended March 31, 1996
approximately $426,000 of amortization on the debt discount
has been charged to expense. The promissory notes were repaid
with the proceeds of the Offering.
(NOTE D) - Stockholder and Partner Loans:
Stockholder and partner loans are payable $200,000 upon
closing of the Offering, $175,000 from the first proceeds to
the Company from the exercise of the underwriter's's
over-allotment option in the Offering, and the balance monthly
with interest at 10% commencing January 1997.
(NOTE E)- Common Stock:
The Company adopted its 1996 Performance Equity Plan (the
"Plan") which provides for the issuance of awards of up to
350,000 shares of common stock to employees, officers,
directors and consultants. The awards may consist of incentive
stock options, nonqualified options, restricted stock awards,
deferred stock awards, stock appreciation rights and other
awards as described in the Plan. The Company has granted
options to purchase 7,500 shares of common stock to each of
two independent consultants of the Company, at exercise prices
of $4.00 per share. The Company also has granted a restricted
stock award of 15,000 shares of common stock, that will vest
in two years, to an employee.
(NOTE F) - Initial Public Offering:
On May 13, 1996 the Company completed an initial public
offering of its securities. In connection therewith, the
Company raised gross proceeds of $5,175,000. The Offering
consisted of 1,293,750 units (including the underwriters
over-allotment option of 168,750 units), at a price of $4.00
per unit, each unit consisting of one share of common stock
and one Class A warrant which entitles the holder thereof to
purchase one share of common stock at $4.50 per share for a
three-year period commencing one year after the effective date
of the Offering.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Company's financial statements and the notes thereto. The discussion of
results, causes and trends should not be construed to imply any conclusion that
such results or trends will necessarily continue in the future.
RESULTS OF OPERATIONS
Revenues for the three months ending March 31, 1996, were $564,924, a
62% increase from revenues of $349,442 for the three months ended March 31,
1995. This increase is attributable to gains in the following areas: Store and
commissary sales, franchise fees, royalty income, marketing income, and interest
income. Store and commissary product sales increased $66,908, or over 19%, to
$411,860 for the three months ended March 31, 1996 from $344,952 for the three
months ended March 31, 1995. This is due to the maturing of Company-owned retail
operations, the growth of the wholesale business, and increased commissary sales
to franchise stores which opened in 1996. Franchise fee revenues were $120,000
for the three months ended March 31, 1996. There were no franchise fee revenues
during the quarter ended March 31, 1995. Revenue under franchise agreements is
generally recognized when the franchise stores are opened. The Company has
unearned franchise fee income of $325,250 at March 31, 1996, which represents
non-refundable franchise fees which will be recognized as revenue as the related
franchise stores are opened. The increase in franchise fee revenue of $120,000
and the increase in unearned franchise income of $194,750 from the corresponding
quarter in 1995 are due to the opening of four new franchise stores in the 1996
quarter, with no such store openings in the 1995 quarter, and the selling of
additional franchises in the last three quarters of 1995 and in 1996. In the
first quarter of 1996, the Company has entered into a single store franchise
agreement and a 12 store area development agreement. Royalty income increased by
$16,265, or 412%, to $20,217 from $3,952 in 1995, due to the maturing of
operations of existing franchise stores and the opening and initial operations
of three franchise stores in the first quarter ending March 31, 1996.
Cost of sales increased by $63,457, or 58%, to $173,452 in the first
quarter of 1996 from $109,995 in the first quarter of 1995. This increase is
primarily due to the opening of new franchise stores resulting in increased
purchases for the commissary. Cost of sales increased as a percentage of product
sales to 42% in 1996 from 32% in the first quarter of 1995.
Selling general and administrative expenses increased by $151,496, or
36%, to $567,080 in the first quarter 1996, from $415,584 in the first quarter
ended March 31, 1995. This change is primarily attributable to the following
factors: (i) Salaries, excluding officers' salaries, increased by $10,539, or
6%, to $174,882 in 1996 from $164,343 in 1995; (ii) Rents increased by $1,843,
or 4%, to $45,993 in the first quarter ending March 31, 1996, from $44,150 in
1995, this change was due to annual increases in rent as per lease arrangements;
(iii) Promotion materials increased by $10,990 or 2,266%, to $11,475 in the
first quarter of
8
<PAGE>
1996 from $485 in 1995 this is attributable to two factors, (a) the Company
increasing its promotional activity to grow name and brand recognition, and (b)
the Company purchasing promotional material in bulk quantities to obtain volume
discounts for the entire chain of stores; (iv) Advertising increased by $1,356,
or 5%, to $30,507 in the first quarter ending March 31, 1996 from $29,151 in
1995, which is primarily due to efforts to promote franchise sales and public
relations activity; (v) Insurance increased by $13,216, or 1,961%, to $13,890 in
the first quarter ending March 31, 1996 from $674 in 1995, which is attributable
to increased insurance coverage.; (vi) Professional fees increased by $24,551,
or 128%, to $43,721 in the first quarter ending March 31, 1996 from $19,170 in
1995, primarily due to the additional financial reporting requirements that the
Company needed; (vii) Repairs and maintenance increased by $10,477, or 207%, to
$15,545 in the first quarter ending March 31, 1996 from $5,068 in 1995, due to
higher volume usage of equipment at the commissary, and the Company entering
into service contracts for equipment/cash register systems at the Company owned
stores; (viii) Office expense increased by $3,287, or 41%, to $11,365 in the
first quarter ending March 31, 1996 from $8,078 in 1995, which is attributable
to the increase in franchise activity; (ix) Travel increased by $15,648, or
377%, to $19,801 in first quarter ending 1996 from $4,153 in 1995, primarily due
to costs attributable to the opening of additional franchise stores and visiting
proposed sites for new franchise stores; and (x) Officers' salaries increased by
$54,508, or 237%, to $77,500 in the first quarter ending March 31, 1996, from
$22,992 in 1995, due to the commencement of salaries to Messrs. Mark Weinreb and
Jerry Rosner, pursuant to their employment agreements.
Amortization of debt discount on Bridge Loans was $426,483 in the
quarter ended March 31, 1996. There was no such amortization for the quarter
ended March 31, 1995. The total debt discount related to the Bridge Financing
was $683,542. The remaining discount at March 31, 1996 of $257,059 will be
expensed upon repayment of the Bridge Loans on May 13, 1996.
Interest expense increased by $23,061, or 308%, to $30,552, in the
first quarter ending March 31, 1996, from $7,491 in 1995, primarily due to
interest on the $1,000,000 of Bridge Notes.
The net loss for the three months ended March 31, 1996, was $632,643
which was a 245% increase as compared to a net loss of $183,628 for the three
months ended March 31, 1995, due primarily to the amortization of debt discount
on the bridge loan and increases in officers' salaries and interest expense.
LIQUIDITY AND CAPITAL RESOURCES
The Company requires significant capital to fund its working capital
needs and capital expenditures required for expansion. Revenues are not yet
sufficient to support the Company's operating expenses and are not expected to
reach such a level in 1996. Cash used by operating activities in the first
quarter of 1996 was $329,004 and capital expenditures were $30,351. Cash and
cash equivalents at March 31, 1996 aggregated $439,393 and the working capital
deficit was $898,282. The Company has funded its first quarter 1996 operating
losses and capital expenditures primarily through a Bridge Financing that was
made in anticipation
9
<PAGE>
of the Company completing its initial public offering.
In January 1996, the Company completed its Bridge Financing, pursuant
to which it issued an aggregate of (i) $1,000,000 principal amount of Promissory
Notes which bear interest at the rate of 8% per annum and (ii) the right to
receive upon completion of this Offering an aggregate of 500,000 Bridge Units
and 500,000 Class B redeemable Common Stock Purchase Warrants. Each Bridge Unit
consists of one share of Common Stock and one Warrant identical to the Class A
Warrant described in the notes to the financial statements. Two Class B Warrants
together, will entitle the holder to purchase one share of Common Stock for
$8.00 per share during the three-year period commencing one year after the
completion of this Offering. The proceeds from the Bridge Financing were used by
the Company to purchase equipment for the Company's commissary in California,
for general working capital purposes and to partially pay expenses of the
initial Public Offering .
In May, 1996, the Company completed its public offering at which time
the Company received the net proceeds of the Offering (approximately $4,100,000)
and repaid the $1,000,000 bridge notes in their entirety with interest as well
as a portion of the shareholder's loans ($375,000).
The Company anticipates increasing revenues and thereby generating
operating cash flow in the future by implementing the following actions:
. Increasing Product Sales. The Company intends to open new
Company-owned retail stores and expects increased sales from its
commissary in California to new franchise stores. The Company
continuously develops new products to increase sales and provide a
variety of products offered. The Company is currently servicing
many wholesale accounts and expects this business to grow
due to an increase in name recognition, product acceptance and
additional sales efforts.
. Expanding Franchise Operations. The Company will utilize capital to
increase franchise sales by (i) hiring an advertising firm to prepare
marketing and promotional material, (ii) advertising in national and
regional publications and business magazines and (iii) possibly
hiring additional sales personnel. The Company expects to increase
its franchise sales by opening Company-owned flagship stores in
markets that would generate interest for experienced multi- store
developers to enter into area development agreements. Additional
franchise revenue should be realized as stores open. The Company may
choose to develop a new franchising opportunity by introducing a
"satellite" concept for its stores to serve other markets.
. Making Acquisitions. The Company intends to acquire other bagel
stores or complementary types of retail outlets which provide entry
into new markets. It is contemplated that over a period of time,
these acquisitions will increase revenues significantly.
10
<PAGE>
Although these actions will require significant costs and expenditures,
the Company anticipates, based on current plans and assumptions relating to its
operations, that the proceeds that it received from the Public Offering,
together with existing resources and cash generated from operations, if any,
will enable the Company to accomplish its immediate goals of increasing product
sales and expanding franchise operations, although there can be no assurance of
this. If the Company derives significant revenues from increasing product sales
and expanding franchise operations, the Company should not require any capital
beyond that provided by the Public Offering to achieve its current business
plans. However, if the Company were to seek to expand its operations through the
acquisition of existing bagel stores or chains and possibly other retail
enterprises that the Company believes will complement and enhance its operations
or if the expansion of the Company's retail and franchise operations requires
more funds than the Company currently anticipates, the Company could require
capital beyond that provided by this Offering.
FUTURE CAPITAL EXPENDITURES
As the Company grows and more stores are opened, it may become
essential to relocate and expand the Costa Mesa, California commissary and, as
new regions are developed, to open additional commissaries to service these
areas. Additional equipment, computers and leasehold improvements will be needed
for the commissaries, the new retail Company-owned stores and the administrative
offices. In May 1996, the Company hired a director of operations, and in June,
1996, the Company hired a training facilitator manager. As the Company expands,
it expects to hire a chief financial officer. The Company has engaged the
services of an outside consulting firm to evaluate its current commissary
operations and to help set up a strategic plan to support the Company's growth
and expansion. In June 1996, The Company hired an advertising agency to help
increase franchise sales and to prepare advertisements to increase store
revenues. The Company engaged the services of a public relations firm in the
last quarter of 1995 and expects to increase efforts to promote the Big City
Bagels name to gain stronger national recognition.
PART II - OTHER INFORMATION
Item 6 - Exhibits and Reports on From 8-K.
(a) Exhibits.
27. Financial Data Schedule (3/31/96).
(b) Reports on Form 8-K.
None
11
<PAGE>
SIGNATURE
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.
Big City Bagels, Inc. (Registrant)
Dated: June 21, 1996 By: /s/ Mark Weinreb
------------------------------------------
Mark Weinreb, Chairman, and Chief Executive
Officer and Chief Financial Officer (and
principal accounting officer)
12
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- -----
27 Financial Data 14
Schedule (3/31/96)
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 439,393
<SECURITIES> 0
<RECEIVABLES> 84,041
<ALLOWANCES> 0
<INVENTORY> 48,014
<CURRENT-ASSETS> 604,770
<PP&E> 1,132,294
<DEPRECIATION> 198,597
<TOTAL-ASSETS> 1,774,947
<CURRENT-LIABILITIES> 1,503,052
<BONDS> 0
<COMMON> 2,819
0
0
<OTHER-SE> (25,071)
<TOTAL-LIABILITY-AND-EQUITY> 1,774,947
<SALES> 411,860
<TOTAL-REVENUES> 564,924
<CGS> 173,452
<TOTAL-COSTS> 1,197,567
<OTHER-EXPENSES> 993,563
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,552
<INCOME-PRETAX> (632,643)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (632,643)
<EPS-PRIMARY> (.21)
<EPS-DILUTED> (.21)
<PAGE>
</TABLE>
