U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X Quarterly report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended March 31, 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 0-28058
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) filed all reports required to be filed by Section
13 or 15 (d) of the Exchange Act during the past 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 |X| No |_|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: At May 12, 1999, the issuer had
outstanding 7,899,225 shares of Common stock, par value $.001 per share.
<PAGE>
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BIG CITY BAGELS, INC. AND SUBSIDIARY
BALANCE SHEETS
<TABLE>
March 31, 1999 December 31, 1998
-------------------- ------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 685,943 $ 902,122
Accounts receivable 154,085 177,396
Inventory 43,212 49,403
Prepaid expenses and other current assets 51,990 50,753
-------------------- --------------------
Total current assets 935,230 1,179,674
Fixed assets, net of accumulated depreciation 410,488 537,392
Intangible assets, net of accumulated amortization 5,252 35,784
Security deposits and other assets 88,007 179,557
-------------------- --------------------
TOTAL $ 1,438,977 $ 1,932,407
==================== ====================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Capital lease obligations $ 77,383 $ 65,089
Unearned franchise fee income 141,000 201,000
Accounts payable 338,414 348,761
Accrued expenses 73,679 50,394
Obligation on abandoned lease 28,586 28,586
Store purchase deposit 55,000 55,000
-------------------- --------------------
Total current liabilities 714,062 748,830
Obligation on abandoned lease, noncurrent 209,290 215,876
Capital lease obligations, noncurrent 0 12,294
-------------------- --------------------
Total liabilities 923,352 977,000
-------------------- --------------------
Stockholders' equity:
Convertible (redeemable) preferred stock; $.001 par value; 1,000,000 shares
authorized; 0 and 247,504 shares issued and outstanding at March 31, 1999 and
December 31, 1998, respectively (liquidation value $0 and $3,093,800,
respectively) 0 247
Common stock; $.001 par value; 25,000,000 shares authorized;
7,964,504 and 1,511,107 shares issued and outstanding at
March 31, 1999 and December 31, 1998, respectively 7,964 1,511
Additional paid-in capital 10,325,651 10,127,706
Accumulated deficit (9,753,366) (9,094,711)
Treasury stock (65,279 and 132,579 shares at cost, (64,624) (79,346)
respectively)
-------------------- --------------------
Total stockholders' equity 515,625 955,407
-------------------- --------------------
TOTAL $ 1,438,977 $ 1,932,407
==================== ====================
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
BIG CITY BAGELS, INC. AND SUBSIDIARY
STATEMENTS OF OPERATIONS
<TABLE>
Three Months Ended
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
REVENUES:
Product sales by company-owned stores $ 204,060 $ 696,840
Product sales to franchisees and others 233,001 173,730
Franchise fees 60,000 60,500
Royalty income 52,486 44,569
Interest income 8,080 39,687
--------------------------- ---------------------------
Total revenues 557,627 1,015,326
--------------------------- ---------------------------
COSTS AND EXPENSES:
Cost of sales 262,545 427,530
Selling, general and administrative expenses 728,855 1,248,934
Interest expense 3,506 3,402
Loss on sale of assets 2,503 0
--------------------------- ---------------------------
Total costs and expenses 997,409 1,679,866
--------------------------- ---------------------------
NET (LOSS) $ (439,782) $ (664,540)
=========================== ===========================
Basic and diluted net (loss) per common share $ (0.08) $ (0.50)
=========================== ===========================
Weighted average common shares
outstanding 5,316,890 1,337,340
=========================== ===========================
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
BIG CITY BAGELS, INC. AND SUBSIDIARY
STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Preferred Stock Common Stock Treasury Stock
--------------- ---------------- Additional -------------------
Paid-In Accumulated
Shares Amount Shares Amount Capital Shares Amount Deficit Total
------ ------- --------- -------- ------------- --------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, January 1, 1999 247,504 $ 247 1,511,107 $ 1,511 $ 10,127,706 (132,579) $ (79,346) $ (9,094,711) $ 955,407
Cancellation of treasury
stock (67,300) (67) (14,655) 67,300 14,722 0
Preferred stock converted
to common stock (247,504) (247) 5,994,336 5,994 (5,747) 0
Stock dividends 526,361 526 218,347 (218,873) 0
Net loss (439,782) (439,782)
_________________________________________________________________________________________________________
BALANCE, March 31, 1999 0 $ 0 7,964,504 $ 7,964 $ 10,325,651 (65,279) $ 64,624 $ (9,753,366) $ 515,625
=========================================================================================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
BIG CITY BAGELS, INC. AND SUBSIDIARY
CASH FLOWS STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31,
<TABLE>
1999 1998
--------- -------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (439,782) $ (664,540)
------------------- ------------------
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 17,522 47,217
Loss on sale of assets 2,503 0
Issuance of common stock for compensation and
professional services 0 34,000
(Increase) Decrease in:
Accounts receivable 23,311 (83,385)
Inventory 6,191 (4,939)
Prepaid expenses and other current assets (1,237) (79,791)
Increase (Decrease) in:
Unearned franchise fee income (60,000) (25,000)
Deferred rent payable 0 (2,862)
Accounts payable (26,309) (83,434)
Accrued expenses 23,285 48,229
Obligations on abandoned lease (6,586) 0
------------------- ------------------
Total adjustments (21,320) (149,965)
------------------- ------------------
Net cash used in operating activities (461,102) (814,505)
------------------- ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of fixed and intangible assets (28,027) (320,989)
Proceeds from sale of stores 271,000 50,000
Decrease (Increase) in security deposits 1,950 (70,183)
------------------- ------------------
Net cash provided (used) in investing activities 244,923 (341,172)
------------------- ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Registration costs 0 (24,836)
Repayment of notes payable 0 (9,192)
------------------- ------------------
Net cash used by financing activities 0 (34,028)
------------------- ------------------
NET DECREASE IN CASH (216,179) (1,189,705)
Cash, beginning of period $ 902,122 $ 4,118,031
=================== ==================
Cash, end of period $ 685,943 $ 2,928,326
=================== ==================
</TABLE>
The accompanying notes are an integral part of the financial statements.
(Continued on next page)
5
<PAGE>
BIG CITY BAGELS, INC. AND SUBSIDIARY
CASH FLOWS STATEMENTS (CONTINUED)
FOR THE THREE MONTHS ENDED MARCH 31,
Supplemental disclosure of non cash activities:
1999 1998
---- ----
Cash paid during the year for:
Interest $ 559 $ 3,402
Income taxes 1,749 5,650
In January and March 1999, the Company sold all of the assets of three
retail stores for the following:
Net sales price $ 278,938
Less: liabilities assumed (7,938)
------------
Proceeds from sale $ 271,000
============
Included in accounts payable is a $10,000 commission for the sale of the 41st
street store.
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
BIG CITY BAGELS, INC. AND SUBSIDIARY
NOTES TO FINANCIAL STATEMENTS
(NOTE A) - The Company and Basis of Presentation
The Company operates and franchises retail bagel stores and sells
its products wholesale to commercial accounts and food service
operators.
The Company has experienced recurring losses from operations
since inception. The Company is implementing plans to reduce its
operating losses and negative cash flows. Those plans include
selling the remaining company-owned stores and evaluating the
desirability of discontinuing its commissary/wholesale
operations that require the use of the Company's resources. There
is no assurance, however, that the Company's efforts will
ultimately be successful. In February 1999, the Company reached
an agreement in principle to merge with two companies, one of
which is an Internet service provider and the other is a systems
integration firm providing network services and Internet
messaging and security products (the "Acquirees"). The Company
expects to issue a combination of common stock and voting
convertible preferred stock to the Acquirees in an amount which,
after conversion of the preferred stock into common stock, will
approximate 90% of the Company's outstanding shares of common
stock following the transaction and conversion. There can be no
assurance that the proposed merger agreement will be executed
or that, if executed, the transaction will be completed. The
consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The financial
statements do not include any adjustments based on the
realizability of the Company's assets or the amounts and
classification of liabilities that might result from the outcome
of this uncertainty.
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 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,
1999 are not necessarily indicative of the results of operations
for the full year ending December 31, 1999. These statements
should be read in conjunction with the Company's financial
statements for the year ended December 31, 1998 appearing in the
Company's Annual Report on Form 10-KSB.
On June 23, 1998, the Company effected a one-for-five reverse
stock split of the Company's common stock (the "Reverse Split").
All per-share data and references to number of shares have been
retroactively restated in these financial statements. The Reverse
Split affected the holders of each class of warrants and options
outstanding insofar as the exercise price of each warrant was
adjusted upward by a factor of five and the number of shares of
common stock issuable upon exercise of each warrant were reduced
by a factor of five.
(NOTE B) - Sales
In January and March 1999, the Company sold all the assets of
three of its company-owned stores for $181,000, $80,000 and
$7,938 respectively, net of selling costs.
(NOTE C) - Conversion of Preferred Stock
During the quarter ended March 31, 1999, all 247,504 shares of
preferred stock outstanding as of December 31, 1998 were
connverted into 6,520,697 shares of the Company's common stock
including 526,361 shares issued in payment of cumulative stock
dividends aggregating $218,347.
7
<PAGE>
(NOTE D) - Common Stock Options
Pursuant to the Company's 1996 Performance Equity Plan ("1996
Plan"), on March 31st of each calendar year during the term of
the 1996 Plan, assuming there are enough shares then available
for grant under the 1996 Plan, each person who is then a director
of the Company will be awarded stock options to purchase 2,000
shares of common stock at the fair market value thereof (as
determined in accordance with the 1996 Plan), all of which
options are immediately exercisable as of the date of grant and
have a term of ten years. These are the only awards which may be
granted to a director of the Company under the 1996 Plan. On
March 31, 1999, the directors of the Company received this
automatic grant of options to purchase an aggregate of 10,000
shares of common stock at an exercise price of $0.9375 per share.
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.
Forward-Looking Statements
When used in the Form 10-QSB and in future filings by the Company with the
Securities and Exchange Commission, the words or phrases "will likely result,"
"management expects" or "the Company expects," "will continue," "is
anticipated," "estimated" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance
on any such forward-looking statements, each of which speak only as of the date
made. Such statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from historical earnings and those
presently anticipated or projected. The Company has no obligation to publicly
release the result of any revisions which may be made to any forward-looking
statements to reflect anticipated or unanticipated events or circumstances
occurring after the date of such statements.
Results of Operations
Revenues for the three months ended March 31, 1999 were $557,627, a 45%
decrease from revenues of $1,015,326 for the three months ended March 31, 1998.
This net decrease was primarily attributable to reductions in store sales and
interest income; however, commissary product sales and royalty income increased.
Store sales decreased by $492,780, or approximately 71%, to $204,060 for the
three months ended March 31, 1999 from $696,840 for the three months ended March
31, 1998. This decrease was primarily due to the Company selling and closing
unprofitable Company-owned retail stores. Commissary product sales increased to
$233,001 for the three months ended March 31, 1999, an increase of $59,271 or
approximately 34% from $173, 730 for the three months ended March 31, 1998. This
increase was primarily attributable to the growth of the wholesale business and
increased sales to franchise stores. However, on April 8, 1999, one of the
Company's wholesale clients, Northwest Airlines, Inc. ("Northwest"), notified
the Company that it intends to terminate the agreement between Northwest and the
Company effective June 7, 1999. During the year ended December 31, 1998 and the
quarter ended March 31, 1999, approximately $300,000 and $119,000 of the
Company's revenues, respectively, were generated by Northwest.
There were $60,000 of franchise fee revenues for the three months ended
March 31, 1999, as compared with $60,500 of franchise fee revenues for the three
months ended March 31, 1998. Two new franchise stores opened during the first
quarter of 1999. Revenue under franchise agreements is generally recognized when
the franchise stores are opened. The Company has unearned franchise fee income
of $141,000 at March 31, 1999, compared to $253,500 at March 31, 1998. Unearned
franchise fee income represents non-refundable franchise fees which will be
recognized as revenue as the related franchise stores are opened. Royalty income
increased by $7,917 or 18% to $52,486 for the three months ended March 31, 1999,
from $44,569 for the three months ended March 31, 1998. This was primarily due
to the maturing of operations of existing franchise stores and the commencement
of operations of new franchise stores.
Interest income for the three months ended March 31, 1999 was $8,080, a 80%
decrease from the interest income for the three months ended March 31, 1998.
This decrease in interest income resulted from reductions in the Company's cash
balances due to the Company's need to fund its operations. During the three
months ended March 31, 1999, the Company entered into no new franchise
agreements.
8
<PAGE>
Cost of sales were $262,545, representing 60% of net sales for the three
months ended March 31, 1999, compared to $427,530 or 49% for the three months
ended March 31, 1998. The increase in cost of sales as a percentage of sales was
primarily attributable to an increase in the percentage of sales from the
commissary/wholesale business, which generally represents a lower gross profit
percentage. The decrease in cost of sales of $164,985 was primarily due to the
Company selling and closing four of its Company-owned retail stores.
Selling, general and administrative expenses (SG&A) were $728,855 for the
three months ended March 31, 1999, a 42% decrease from $1,248,934 for the three
months ended March 31, 1998. This reduction was primarily a result of a $311,648
decrease in salaries, a $36,741 decrease in rent and a $76,722 decrease in
advertising due to the Company selling and closing some of its retail stores,
reducing corporate personnel and discontinuing advertising expenses relating to
franchising.
The net loss for the three months ended March 31, 1999 was $439,782,
compared to a net loss of $664,540 for the three months ended March 31, 1998.
The primary reason for the decrease in the current period loss was due to the
Company selling or closing unprofitable Company-owned stores and reducing
administrative personnel.
Liquidity and Capital Resources
Cash and cash equivalents at March 31, 1999 were $685,943, compared to
$902,122 at December 31, 1998. This decrease was primarily attributable to the
Company funding its operating losses for the three months ended March 31, 1999.
Accounts receivable decreased to $154,085 at March 31, 1999, from $177,396
at December 31, 1998. This decrease was primarily due to a decrease in sales.
Inventory decreased to $43,212 at March 31, 1999, from $49,403 at December
31, 1998, due to the sales of Company-owned retail stores.
Fixed assets, net of accumulated depreciation, decreased to $410,488 at
March 31, 1999 from $537,392 at December 31, 1998, as a result of the sale of
Company-owned stores and the normal depreciation of Company assets during the
quarter ended March 31, 1999.
Intangible assets, net of accumulated amortization, decreased to $5,252 at
March 31, 1999 from $35,784 at December 31, 1998, resulting from the sale of the
Company-owned New York City store.
Security deposits and other assets decreased to $88,007 at March 31,1999
from $179,557 at December 31, 1998, resulting from sale of the Company-owned New
York City store and the sale of a lease at another New York City location.
The current portion of capital lease obligations increased to $77,383 at
March 31, 1999 from $65,089 at December 31, 1998, as a result of the Company not
making the required payments during this period.
The combination of accounts payable and accrued expenses increased to
$412,093 at March 31, 1999 from $399,155 at December 31, 1998. This increase was
primarily due to the increase in acquisition related fees.
At March 31, 1999, the Company had $221,168 of working capital and a
current ratio of 1.3 to 1.
The Company's operating activities used net cash of $461,102 during the
three months ended March 31, 1999, as compared to net cash used in operations of
$814,505 for the corresponding period of the prior year. This decrease was
primarily due to the reduction of the Company's net loss.
During the quarter ended March 31, 1999, all 247,504 shares of the
Company's convertible preferred stock still outstanding were converted into
6,520,697 shares of common stock, including 526,361 shares issued in payment of
cumulative stock dividends aggregating $218,347.
In June 1998, management determined that the Company's business of
operating Company-owned retail stores no longer provided the opportunity for
growth or profitability. Accordingly, to reduce costs and losses and to
9
<PAGE>
replenish capital needed for operations, the Company decided to sell
Company-owned stores, preferably to new or existing franchisees, or to close
stores that could not be timely sold. To date, the Company has sold or closed
all of its Company-owned stores except for two in California. The Company
expects to sell or close its remaining stores by the end of May 1999. To further
reduce costs, in March 1999, the Company relocated its commissary to a facility
in Santa Ana, California that it shares with an existing baked goods
manufacturing business.
Although the Company may maintain its core business as a franchisor and
operator of a commissary that supplies retail stores and wholesale accounts with
bagel products, the Company recognized that this remaining core business would
not generate sufficient revenues to achieve profitability. Accordingly, since
June 1998, the Company has been actively engaged in exploring possible
acquisitions or mergers with profitable companies, including companies outside
the food industry.
In February 1999, the Company reached an agreement in principle to merge
with VillageNet, Inc. ("VillageNet") and Intelligent Computer Solutions, Inc.
("ICS"). VillageNet, founded in June 1995, is a community-oriented Internet
service provider specializing in educational and family-based Internet services
with a local emphasis on business advertising and shopping, chat rooms and
parent/student/teacher interaction. ICS, founded in October 1994, is a systems
integration firm specializing in network design, implementation and maintenance
and providing Internet/intranet messaging and security products.
The Company expects to issue a combination of common stock and voting
convertible preferred stock to the shareholders of VillageNet and ICS in an
amount which, after conversion of the preferred stock into common stock (which
is expected to be conditioned upon the Company amending its Certificate of
Incorporation to increase the number of shares of common stock that the Company
is authorized to issue), will approximate 90% of the outstanding shares of
Common Stock following the transaction and conversion. Management of the Company
is expected to be assumed by the management of VillageNet and ICS after the
transaction.
The Company has completed its due diligence regarding this transaction and
is continuing to negotiate with ICS and VillageNet. However, there can be no
assurance that definitive transaction documents will be executed or, if
executed, that the transaction will be completed.
If the Company is unable to complete this transaction, the Company
anticipates that it will not have sufficient capital to continue its operations
through the end of 1999.
Year 2000 Compliance
Many computer systems currently in use were designed to use only two digits
in the date field and thus may experience difficulty processing dates beyond the
Year 1999. Consequently, some computer hardware and software will need to be
modified prior to the Year 2000 to remain functional. The Company's own systems
are Year 2000 compliant, which means that the systems will accurately process
date/time date regardless of whether the date is in the twentieth century or the
twenty-first century.
The Company is also in the process of assessing its vendors, utilities,
banks and others with whom it does business to determine whether the failure of
any of the foregoing to be Year 2000 compliant would have a material adverse
effect on the Company. Management believes that the likelihood of such adverse
effect is immaterial. The Company's operations utilize relatively little
electronic data interchange with vendors and other third parties. However, to
the extent that such third parties, particularly utilities and banks, may not be
Year 2000 compliant, the Company may be adversely affected, although the
magnitude of such effect cannot be estimated. The cost to the Company of making
its third-party Year 2000 compliance assessment is not expected to be material.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
On November 3, 1998, in the Arizona Superior Court, County of Maricopa,
Girardi-Riva Enterprises, Inc. a former franchisee, commenced a lawsuit against
the Company, seeking an unspecified amount of damages. On March 29, 1999, the
court granted the Company's motion for summary judgment. On April 27, 1999, the
plaintiff filed a motion for reconsideration of the court's prior order granting
the Company's motion for summary judgment.
ITEM 2. Changes in Securities and Use of Proceeds
(c) Recent Sales of Unregistered Securities
During the quarter ended March 31, 1999, the Company made the following
sales of unregistered securities which have not been disclosed in prior filings:
<TABLE>
<CAPTION>
------------------ --------------------- --------------- --------------------- ------------------ ------------------
Consideration
Received and
Description of If Option,
Underwriting or Warrant or
Other Discounts to Convertible
Market Price Exemption from Security, Terms
Afforded to Registration of Exercise or
Date of Sale Title of Security Number Sold Purchasers Claimed Conversion
------------------ --------------------- --------------- --------------------- ------------------ ------------------
<S> <C> <C> <C> <C> <C>
3/31/99 options to purchase 10,000 options granted - 4(2) exercisable for
Common Stock no consideration ten years from
granted to directors received by Company date of grant at
until exercise an exercise
price of
$0.9375 per
share
------------------ --------------------- --------------- --------------------- ------------------ ------------------
</TABLE>
ITEM 5. Other Information
On March 11, 1999, the Company's common stock was delisted from the Nasdaq
SmallCap Market because the Company did not meet the requirements for continued
listing. The Company's common stock currently is traded on the OTC Bulletin
Board.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (3/31/99)
(b) Reports on Form 8-K
None
11
<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.
Big City Bagels, Inc.
---------------------------
(Registrant)
Dated: May 13, 1999 By:/s/ Mark Weinreb
-----------------------------
Mark Weinreb, Chairman, and Chief
Executive Officer
By:/s/ Howard J. Fein
-----------------------------
Howard J. Fein, Chief Financial
Officer
(and principal accounting officer)
12
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
27 Financial Data Schedule (3/31/99)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-1-1999
<PERIOD-END> MAR-31-1999
<CASH> 685,943
<SECURITIES> 0
<RECEIVABLES> 154,085
<ALLOWANCES> 0
<INVENTORY> 43,212
<CURRENT-ASSETS> 935,230
<PP&E> 745,409
<DEPRECIATION> 334,921
<TOTAL-ASSETS> 1,438,977
<CURRENT-LIABILITIES> 714,062
<BONDS> 0
<COMMON> 7,964
0
0
<OTHER-SE> 507,661
<TOTAL-LIABILITY-AND-EQUITY> 1,438,977
<SALES> 437,061
<TOTAL-REVENUES> 557,627
<CGS> 262,545
<TOTAL-COSTS> 997,409
<OTHER-EXPENSES> 728,855
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,506
<INCOME-PRETAX> (439,782)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (439,782)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
