As filed with the Securities and Exchange Commission on August 13, 1999
=======================================================================
Washington, D.C. 20549
F O R M 10-QSB
[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
For the transition period from to
--------------- -------------
Commission File Number 0-21361
ENSEC INTERNATIONAL, INC.
-------------------------
(Exact name of small business issuer as specified in its charter)
Florida 65-0654330
------- ----------
(State or other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
352 Seventh Avenue, Suite 1040, New York, NY 10001
(Address of principal executive offices) (zip code)
(212) 967-6611
--------------
Registrant's telephone number, including area code
Not applicable
---------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the issuer (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
requirements for the past 90 days.
YES [ X ] NO [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
As of August 13, 1999 the registrant had 6,016,250 shares of common stock issued
and outstanding.
Transitional Small Business Disclosure Format: Yes [ ] No [ X ]
<PAGE>
ENSEC INTERNATIONAL, INC.
INDEX TO FORM 10-QSB
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets as of June 30, 1999 (unaudited)
and December 31, 1998
Consolidated Statement of Operations for the six month
periods ended June 30, 1999 and 1998 (unaudited)
Consolidated Statements of Cash Flows for the six month
periods ended June 30, 1999 and 1998 (unaudited)
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II - OTHER INFORMATION
Item 3. Exhibits and Reports on Form 8-K
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
See attached pages.
Page 2 of 18
<PAGE>
INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------- -------------
(un-audited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 25,905 $ 58,055
Accounts receivable 778,418 1,107,618
Social taxes and other receivables
Inventory 328,563 594,006
Prepaid expenses & other assets 100,917 154,022
------------ ------------
Total current assets 1,233,803 1,913,701
Property and equipment, net 1,564,567 1,668,711
Other assets 1,024,200 1,022,418
Total assets $ 3,822,570 $ 4,604,830
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $
Short term loans 558,430 166,185
Accounts payable 1,361,441 1,358,440
Accrued and other liabilities 836,496 1,132,449
Current portion of long term debt 781,047 1,120,782
------------ ------------
Total current liabilities 3,537,414 3,777,856
Long term debt - net of current portion 1,094,791 1,884,997
Stockholders' Equity
Additional paid-in capital 13,896,110 13,896,108
Accumulated other comprehensive gain (loss) 865,073 (132,036)
Retained Earnings (Accumulated deficit) (15,630,981) (14,882,258)
Common Stock 60,163 60,163
Total stockholders' equity (809,635) (1,058,023)
------------ ------------
Total liabilities and stockholders' equity 3,822,570 $ 4,604,830
============ ============
</TABLE>
See notes to consolidated financial statements
Page 3 of 18
<PAGE>
ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Un-audited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30 June 30
------------------------------ ------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $ 974,070 $ 3,643,416 393,479 1,734,499
Cost of goods sold 579,664 2,174,047 224,083 1,080,751
----------- ----------- ----------- -----------
Gross profit 394,406 1,469,369 169,396 653,748
----------- ----------- ----------- -----------
Selling, general and
administrative expenses 1,057,052 1,630,919 511,471 807,893
Translation loss (gain) (59,195) (46,195)
----------- ----------- ----------- -----------
Income (Loss) from Operations (662,646) (102,355) (342,075) (107,950)
----------- ----------- ----------- -----------
Commission (Income)
Other (income) expenses
Interest income (55,736) (4,865) (47,627) (304)
Interest expense 486,014 425,667 357,891 215,407
Other Income (344,204) (774,364) (63,867) (389,876)
----------- ----------- ----------- -----------
86,074 (353,562) 246,397 (174,773)
----------- ----------- ----------- -----------
Income (loss) from operations
before income taxes (748,720) 251,207 (589,472) 66,823
Net Income (loss) $ (748,720) $ 251,207 (589,472) 66,823
----------- ----------- ----------- -----------
Net Income (loss) per common share
(.124) $ 0.05 (0.098) 0.01
Comprehensive Gain (loss)
Net Income (loss) (748,720) 251,207 (589,472) 66,823
Other comprehensive gain
(loss)
Foreign currency 865,073 170,066
translation adjustment
Comprehensive Gain (loss) 116,353 251,207 (419,406) 66,823
----------- ----------- ----------- -----------
</TABLE>
See notes to consolidated financial statements
Page 4 of 18
<PAGE>
ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Un-audited)
<TABLE>
<CAPTION>
Six Months Ended
June 30
--------------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (748,721) $ 251,207
Foreign Currency Translation gain (loss) 997,109
Net cash (used in) operating activities:
Depreciation and amortization expense 132,024 116,488
Changes in assets and liabilities
Decrease (increase) in accounts receivable 329,200 (14,451)
Decrease (increase) in inventories 265,443 155,379
Decrease (increase) in interest receivable 0 0
Decrease (increase) in Prepaid & Other current assets 53,105 (751,003)
Decrease (Increase) in other assets (1,782) 250,307
Increase (decrease) in accounts payable 3,001 (107,687)
Increase (decrease) in short term loans 392,245 0
Increase (decrease) in accrued and other liabilities (295,953) 16,643
----------- -----------
Net cash (used in) operating activities 1,125,671 (83,207)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets
Decrease in equipment under capital lease (27,880) (9,218)
Proceeds on sale of fixed assets 0 22,013
----------- -----------
Net cash (used in) investing activities ((27,880) 12,795
----------- -----------
Cash flows from financing activities:
Net borrowings (repayments) under credit line agreements Net borrowings
under short Term loan agreements
Repayment of long term debt (1,129,941) 0
Issuance of common stock 0 180,000
Decrease in capital lease obligation 0 (16,418)
Offering Costs 0 0
----------- -----------
Net cash provided by financing activities (1,129,941) 163,582
----------- -----------
Net (decrease) increase in cash and cash equivalents (32,150) 93,170
Translation (loss) gain on cash and cash equivalents 0 (161,600)
Cash and cash equivalents at beginning of year 58,055 211,803
----------- -----------
Cash and cash equivalents at end of the end of the period $ 25,905 $ 143,373
Cash paid during the period for income tax. Interest expenses and consultant
services:
$ 0 $ 180,680
=========== ===========
</TABLE>
See notes to consolidated financial statements.
Page 5 of 18
<PAGE>
ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Significant Accounting Policies
The quarterly consolidated financial statements herein have been
prepared by Ensec International, Inc., a Florida corporation (the "Company"),
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission and in accordance with the requirements of Regulation S-B
promulgated under the Securities Exchange Act of 1934, as amended. Certain
information and footnote disclosures which would otherwise be included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. Although the Company's management believes the disclosures are
sufficient to make the information not misleading, it is suggested that these
quarterly consolidated financial statements be read in conjunction with the
Company's audited annual consolidated financial statements and footnotes thereto
contained in its Form 10-KSB/A, as filed with the Commission on April 15, 1999.
Principles of Consolidation - The consolidated financial statements
include the accounts of Ensec International and its wholly-owned subsidiaries.
All significant inter-company balances and transactions have been eliminated in
consolidation.
Foreign Currency Translation - The consolidated financial statements of
Ensec S.A. have been translated into U.S. dollars in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency
Translation". SFAS No 52 provides that all balance sheet accounts are translated
at year-end exchange rates, except for equity accounts which are translated at
historical rates, if the local currency is the functional currency. Income and
expense accounts and cash flows are translated at the average currency exchange
rates in effect during the year.
Prior to January 1, 1998, Ensec S.A. regarded the U.S. dollar as its
functional currency as per the prescribed accounting method for companies
subject to hyper-inflationary economies. As a result, a combination of current
and historical currency exchange rates were used in translating assets and
liabilities. The resulting translation adjustments were included in operations.
Beginning on January 1, 1998, Ensec S.A. was no longer considered to be
operating in a hyper-inflationary economy and thus the Company began to
translate the financial statements of Ensec S.A. using the local currency as the
functional currency. The resulting translation adjustments are included in
accumulated other comprehensive income.
Page 6 of 18
<PAGE>
ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited interim of consolidated financial statements
include all adjustments (consisting only of those of a normal recurring nature)
necessary for a fair statement of the results of the interim period.
2. Earnings Per Common Share
Financial Accounting Standards Board recently issued Statement No. 128,
"Earnings Per Share" ("SFAS No. 128"). This statement is effective for periods
ending after December 15, 1998 and supersedes APB Opinion No. 15. The effect of
the adoption of SFAS No. 128 on the Company's earnings per share for each of the
periods presented has not been determined.
3. Long-term Debt
Commencing in December 1998, the Company started to amortize the
principal amount of $3.0 million of long term due to FINEP, a Brazilian
Financial Institution. On April 15, 1999, the Company initiated negotiations to
amendment the Loan Agreement covering such debt, whereby the original principal
repayments will be paid during the same time frame, with a reduction of the
principal amounts by 80% through September 1999. The interest rate remains the
same on the loan and no other terms of the agreement were amended. The Company
has not incurred any cost in renegotiating the agreement.
Page 7 of 18
<PAGE>
ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. Issuing the Common stock
No common stock was issued in the quarter ending June 30, 1999.
5. Working Capital Requirements
Deficit working capital at June 30, 1999, reached $ 2.3 million, a
deficit increase of $ 0.4 million, up from a deficit working capital of $ 1.9
million at December 31, 1998. This increase is attributable to the companies
results for the period.. The Company is actively seeking additional sources of
capital to permit the Company to regain it's growth of operations in Brazil. The
only credit lines made available are those where receivables or contracts are
put up in collateral, thus reducing the Companies ability to invest over and
above the normal growth of sales.
Should the Company become unable to obtain additional financing, it
would result in additional financial difficulties in Brazil.
The Company has no commitments for capital expenditures as of June 30,
1999.
Page 8 of 18
<PAGE>
ENSEC INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
Item 2. Manager's Discussion and Analysis of Financial Condition and Results of
Operations.
Page 9 of 18
<PAGE>
ENSEC INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Amounts presented herein have generally been rounded to the nearest
hundred thousand dollars and the related dollar and percentage fluctuations are
calculated based on such rounding.
This Management's Discussion and Analysis contains certain statements
which are forward-looking and the accuracy of which are based upon certain
uncertainties in the Company's future operations and results. For a discussion
of important factors that could cause the actual results to differ materially
from those contained in such forward-looking statements, see "Forward-Looking
Statements" below.
Overview
The Company, through its operating company Ensec Engenharia e Sistemas
de Seguranca, S.A. (Ensec, S.A.), a Brazilian subsidiary, designs, develops,
assembles, sells, installs and services security systems for large commercial or
governmental facilities ranging from single function installations to high-end
integrated security systems. The Company's high-end integrated systems are based
on its proprietary software and related hardware which permit multiple devices
or systems to be combined into a unified system covering multiple sites. Since
its inception, the Company has installed approximately 400 systems, nearly all
of which have been in Brazil, for large corporations (such as Bosch, EDS,
Caterpillar, IBM and Texaco) and government agencies (such as the Brazilian
Bureau of Mint and Engraving, the Central Bank of Brazil and the NY & NJ Port
Authority).
The Company is a Florida corporation which was formed in April of 1996,
as a holding company for Ensec Inc., a Florida corporation ("Ensec Inc."), and
Ensec Engenharia e Sistemas de Seguranca, S.A. ("Ensec, S.A."), a Brazilian
corporation.
While the Company believes that the security systems market presents
many opportunities for the sale of its EnWork family products in the U.S., it
has experienced tremendous difficulty overcoming the cost of market entry
primarily as a result of insufficient capital required for the sales and
marketing efforts that create customer knowledge, sales opportunities and
product acceptability.
The Company is party to various legal actions involving alleged
employment law claims. In the opinion of the Company's management, based upon
their experience with these types of claims, the resolution of these matters
will not have a material adverse effect on the financial position, results of
operations or cash flow of the Company.
Page 10 of 18
<PAGE>
The Company is actively seeking sources of capital to allow the Company
to continue its operations in Brazil. The Company renegotiated and signed a new
letter of intent on October 28, 1998, with the underwriter's Donald & Company
Securities Inc., for a merger and other combinations among Ensec International
and SenTech EAS Corp., and a new Public Offering expected to be underwritten by
Donald & Co., during the third quarter of 1999. There is no assurance that this
financing will be completed. Should the Company become unable to complete such
merger, it would result in additional financial difficulties in Brazil.
The proposed company resulting from the merge, Global Security
Technologies, Inc., has had it's form S-4 registration statement filed with the
SEC on June 28, 1999, and currently is awaiting for the SEC's comments on said
registration statement.
The Company's business strategy is based on two objectives which the
Company believes will allow it to better serve each of its geographic markets:
In Brazil, in addition to selling the EnWorks family of products the
Company also sells a broad range of security products and services such as, data
security, time and attendance and CCTV. These products are being marketed to the
existing customer base, the general market and the Brazilian market through
Ensec S.A.'s established direct sales force and indirect sales channels. The
Company's sales, services and maintenance of the third party products has not
resulted as expected, and some third party products has been discountinued and
due to the devaluation of the Real, our proprietary system, the En2000 has
become more competitive. The Company has experienced a high renewal rate of
maintenance contracts and sales of one particular type of product may in any
given quarterly period account for a significant majority of sales and decreases
thereafter.
In the United States, the Company intends to complete the merger with
SenTech EAS Corp. that will bring not only a penetration in the Electronic Asset
Surveillance /EAS market in the U.S., as well as internationally, but will also
get Donald & Co. underwriting support for the new Company's stock and a new
financial structure will be implemented for the future of our operations in the
U.S.A.
The Company has no commitments for capital expenditures as of June 30,
1999.
Year 2000 Compliance
Many existing computer systems and applications, and other control
devices, use only two digits to identify a year in the date code field, and were
not designed to account for the upcoming change in the century. As a result,
such systems and applications could fail or create erroneous results unless
corrected so that they can process data related to the year 2000. The Company
Page 11 of 18
<PAGE>
relies on its systems, applications and devices in operating and monitoring all
major aspects of its business, including financial systems (such as general
ledger, accounts payable and accounts receivable modules), inventory and
receivables systems, customer services, infrastructure, embedded computer chips,
networks and telecommunications equipment and end products. The Company also
relies, directly and indirectly, on systems of external business enterprises
such as distributors, suppliers, creditors, financial organizations, and
governmental entities, for accurate exchange of data. Although the Company is in
contact with its suppliers to assess their compliance, there can be no assurance
that there will not be a material adverse affect on the Company if third parties
do not convert their systems in a timely manner and in a way that is compatible
with the Company's systems, as the Company could be affected through disruptions
in the operation of the enterprises with which the Company interacts. Based on
the information currently available, the Company believes that the costs
associated with the year 2000 issue, and the consequences of incomplete or
untimely resolution of the year 2000 issue, will not have a material adverse
effect on its business, financial condition and results of operations in any
given year; however, there can be no assurance that year 2000 issues will not
have a material adverse effect on the Company's business, financial condition or
results of operations.
Results of Operations
Second Quarter 1999 Compared with the Second Quarter 1998
Sales. Total sales for the three months ended June 30, decreased $ 1.3
million, or 77.3%, to $ 0.4 million from $1.7 million in the prior year period.
This decrease was largely attributable to the first quarter economic crisis
Brazil suffered, with a 58% devaluation of the currency. This crisis postponed
most investments during the first half of this fiscal year. The Company
anticipates that its overall 1999 sales in Brazil will be lower than those
obtained in 1998.
Cost of Goods Sold. Cost of goods sold for the three months ended June
30, 1999 decreased $ 0.9 million, or 79.3%, to $ 0.2 million from $ 1.1 million
in the prior year's period. The decrease in the cost of goods sold resulted
primarily from the decrease in sales. The resulting gross profit and gross
profit percentage for the three months ended June 30, 1999, were $ 0.2 million
and 43.1%, compared to $ 0.7 million and 37.7%, respectively for the prior year
period.
Selling, General and Administrative Expenses. Selling general and
administrative expenses for the three months ended June 30, 1999, decreased $
0.3 million or 36.7%, to $ 0.5 million from $ 0.8 million in the prior year
period. As a percentage of Net Sales, SGA expenses in the second quarter of 1999
represented 130% of net sales, compared to 46.6% in the same period of 1998.
This increase in the level of SGA expenses as a percentage compared to net sales
is due to the decrease of sales during the period.
Other Income and Expenses
Interest Income for the second quarter of 1999 increased by 1,556.7%
from $ 304.00
Page 12 of 18
<PAGE>
to $47,627.00 in 1999. This increase was the result of a stricter policy of
charging interest on late payments by customers.
Interest Expenses increased $ 0.1 million or 66,1%, up from $ 0.2
million during the second quarter of 1998. This increase was the result of
having to increase the Company's borrowings. Borrowings during the second
quarter of 1999 was $ 0.6 as compared to $ 0.2 in 1998.
Other Income decreased during the second quarter of 1999 when compared
to the second quarter of 1998 by $ 0.3 million or 83.6%, mostly due to the
termination of the commissions contract between De La Rue Limitada - Brazil and
Ensec S/A - Brazil.
Liquidity and Capital Resources
Net cash used in operating activities for the three months ended June
30, 1999, was $ 0,2 million, which resulted primarily from the Company's results
from operations, a decrease in accruals and other liabilities, a decrease in
inventories, and a decrease in accounts receivables.
The Company currently does not have any line of credit or other
short-term credit facilities established with U.S. banks. In Brazil, the Company
has a credit line of $ 500,000 with Banco Bradesco, a Brazilian bank. Another
credit line of $ 300,000, but not fully used, was renewed by Banco Union, a
Venezuelan bank. Both lines of credit are guaranteed with collateral of the
companies accounts receivables or open sales contracts. The Company obtained
it's long-term debt financing from a Brazilian bank. This loan bears interest at
a rate of 12% per annum, plus an inflation adjustment, which in 1997 was around
8%.
Working capital deficit at June 30, 1999, increased to $ 2,3 million,
up from $ 1,9 million in the same period of 1998.
The Company is actively seeking sources of capital to allow the company
to continue to grow it's operation in Brazil. The only credit lines made
available thus far are those where receivables or sales contracts are put up as
collateral, thus reducing the companies ability to invest over and above its
normal sales growth.
The Company received an ongoing concern qualification from its outside
independent auditors on its fiscal 1998 audit financial statements. Management
believes the Company's ability to continue as a going concern is dependent upon
securing adequate financing to fund it's operations until the time the Company
is able to generate sufficient revenues to be self sustaining. There can be no
assurance the Company will be successful in achieving these goals.
As of June 30, 1999, the Company has 13 outstanding labor claims, all
originating in Brazil, in the aggregate amount of $1,330,000. The Company has
accrued $200,000 to cover future
Page 13 of 18
<PAGE>
losses from such claims and although there can be no assurance as to the outcome
of such claims, the Company believes the ultimate resolution of these claims
will not materially adversely effect the Company.
Forward-Looking Statements
The foregoing Management's Discussion and Analysis of Financial
Condition and Results of Operations contains various "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended,
which represent the Company's expectations or beliefs concerning future events,
including without limitation the following: the possibility of fluctuations in
the Brazilian economy and currency and the effects thereof, if any, on the
Company; the ability of the Company to sell it's Brazilian real estate facility,
maintain the size of Brazilian workforce in conjunction with sales; the ability
to maintain or surpass past or current levels of profitability; the Company's
ability to secure additional credit facilities, sources of financing, investment
capital or complete other transactions in the U.S. and Brazil and the
sufficiency of the Company's cash provided by operating, investing and financing
activities for the Company's future liquidity and capital resource needs.
The Company cautions that these statements are further qualified by
important factors that could cause actual results to differ materially from
those in the forward-looking statements, including without limitation the
following: general economic conditions; specific economic conditions relating to
the production of integrated security systems (including software); the
economic, social and political conditions in Brazil; the demand for the
Company's products; the size and timing of future orders and new contracts;
specific feature requests by customers; production delays or manufacturing
inefficiencies; management decisions to commence or discontinue product lines;
the Company's ability to procure and introduce new products on a cost-effective
and timely basis; the maintenance of present and the availability of future
strategic alliances and joint marketing or servicing agreements; the ability to
complete the proposed merger between Ensec International and SenTech EAS Corp.;
the introduction of new products and product enhancements by the Company or its
competitors; the budgeting cycle of customers; changes in the proportion of
revenues attributable to license fees and maintenance and support services;
changes in the level of operating expenses; and the present and future level of
competition in the industry. Results actually achieved thus may differ
materially from expected results included in these statements.
Page 14 of 18
<PAGE>
PART II - OTHER INFORMATION
Item 3. Exhibits and Reports on Form 8-K.
None
Page 15 of 18
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has caused this feport to be signed on its behalf by the undersigned, thereunto
duly authorized.
ENSEC INTERNATIONAL, INC.
---------------------------------------
(Registrant)
DATE: August 13, 1999 By: /s/ Charles N. Finkel
--------------------------------
Charles N. Finkel
Chairman and Chief Executive Officer
DATE: August 13, 1999 By: /s/ Theodore O. Pemberton
----------------------------------
Theodore O. Pemberton
Chief Financial Officer
Principal Accounting Officer
Page 16 of 18
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 25,905
<SECURITIES> 0
<RECEIVABLES> 778,418
<ALLOWANCES> 0
<INVENTORY> 328,563
<CURRENT-ASSETS> 1,233,803
<PP&E> 1,696,591
<DEPRECIATION> 132,024
<TOTAL-ASSETS> 3,822,570
<CURRENT-LIABILITIES> 3,537,414
<BONDS> 0
0
0
<COMMON> 60,163
<OTHER-SE> (869,798)
<TOTAL-LIABILITY-AND-EQUITY> 3,822,570
<SALES> (974,070)
<TOTAL-REVENUES> 1,374,010
<CGS> 579,564
<TOTAL-COSTS> 1,065,678
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 486,014
<INCOME-PRETAX> (748,720)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (748,720)
<EPS-BASIC> (0.124)
<EPS-DILUTED> (0.124)
</TABLE>
