SECURITIES AND EXCHANGE COMMISSION
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 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 0-21361
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 April 30, 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
<TABLE>
<CAPTION>
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Balance Sheets as of March 31, 1999 (un-audited)
and December 31, 1998
Consolidated Statement of Operations for the three-month
periods ended March 31, 1999 and 1998 (un-audited)
Consolidated Statements of Cash Flows for the three month
periods ended March 31, 1999 and 1998 (un-audited)
Notes to Consolidated Financial Statements (un-audited)
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
2
</TABLE>
<PAGE>
ENSEC INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
See attached pages.
3
<PAGE>
ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1999 1998
--------------- --------------
(unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 10,193 $ 58,055
Accounts receivable 518,659 1,107,618
Social taxes and other receivables
Inventory 348,898 594,006
Prepaid expenses & other assets 121,754 154,022
------------ ------------
Total current assets 999,504 1,913,701
Property and equipment, net 1,630,636 1,668,711
Other assets 1,055,098 1,022,418
Total assets $ 3,685,238 $ 4,604,830
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short term loans $ 183,623 $ 166,185
Accounts payable 1,281,000 1,358,440
Accrued and other liabilities 678,289 1,132,449
Current portion of long term debt 667,371 1,092,243
------------ ------------
Total current liabilities 2,810,283 3,749,317
Long term debt - net of current portion 1,266,186 1,913,536
Stockholders' Equity
Additional paid-in capital 13,896,110 13,896,108
Accumulated other comprehensive gain (loss) 695,007 (132,036)
Retained Earnings (Accumulated deficit) (15,042,509) (14,882,258)
Common Stock 60,163 60,163
Total stockholders' equity (391,231) (1,058,023)
------------ ------------
Total liabilities and stockholders' equity $ 3,685,238 $ 4,604,830
============ ============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------
1999 1998
---- ----
<S> <C> <C>
Sales $ 580,591 $ 1,908,917
Cost of goods sold 355,581 1,093,296
----------- -----------
Gross profit 225,010 815,621
----------- -----------
Selling, general and
administrative expenses 545,581 823,026
Translation loss (gain) (13,000)
----------- -----------
Income (Loss) from Operations (320,571) 5,595
----------- -----------
Commission (Income)
Other (income) expenses
Interest income (8,109) (4,561)
Interest expense 128,123 210,260
Other Income (280,337) (384,488)
----------- -----------
(160,323) (178,789)
----------- -----------
Income (loss) from operations
before income taxes (160,248) 184,384
Net Income (loss) $ (160,248) $ 184,384
----------- -----------
Net Income (loss) per common share
$ (.027) $ .03
Comprehensive Gain (loss)
Net Income (loss) (160,248) 184,384
Other comprehensive gain
(loss)
Foreign currency
translation adjustment 695,007 0
Comprehensive Gain (loss) 534,759 184,384
----------- -----------
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
---------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (160,248) $ 184,384
Foreign Currency Translation gain (loss) 827,043
net cash (used in) operating activities:
Depreciation and amortization expense 65,955 45,467
Changes in assets and liabilities
Decrease (increase) in accounts receivable 588,959 (141,776)
Decrease (increase) in inventories 245,108 56,210
Decrease (increase) in interest receivable
Decrease (increase) in Prepaid & Other current assets 32,268 46,606
Decrease (Increase) in other assets (32,680) (262,000)
Increase (decrease) in accounts payable (77,440) (188,679)
Increase (decrease) in short term loans 17,438
Increase (decrease) in accrued and other liabilities (454,160) 42,781
----------- -----------
Net cash (used in) operating activities 1,052,243 (217,216)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets
Decrease in equipment under capital lease (27,883) 22,014
Proceeds on sale of fixed assets 16,770
----------- -----------
Net cash (used in) investing activities (27,883) 38,784
----------- -----------
Cash flows from financing activities:
Net borrowings (repayments) under credit line agreements 42,385
Net borrowings under short term loan agreements (281,282)
Repayment of long term debt (1,072,222) 133,966
Issuance of common stock 180,000
Decrease in capital lease obligation (16,418)
Offering Costs
----------- -----------
Net cash provided by financing activities (1,072,222) 58,651
----------- -----------
Net (decrease) increase in cash and cash equivalents (47,862) (119,781)
Translation (loss) gain on cash and cash equivalents (13,944)
Cash and cash equivalents at beginning of year 58,055 211,803
----------- -----------
Cash and cash equivalents at end of the end of the period $ 10,193 $ 78,087
Cash paid during the period for income tax. interest expenses and consultant services:
$ 0 $ 441,824
=========== ===========
</TABLE>
See notes to consolidated financial statements.
6
<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 intercompany 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.
7
<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
The 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
amend the Loan Agreement covering such debt, whereby the original principal
repayments will be paid over the same period, with a reduction during the period
of December 1998 through September 1999, with the possibility of liquidating the
debt in full in October 1999. The interest rate remains the same on the loan and
no other terms of the Loan Agreement were amended. The Company has not incurred
any cost in renegotiating the Loan Agreement.
8
<PAGE>
ENSEC INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. Issuing Common Stock
No common stock was issued in the quarter ending March 31, 1999.
5. Working Capital Requirements
Working capital deficit at March 31, 1999, decreased from $ 1,9 million
at December 31, 1998 to $ 1,8 million. This decrease is attributable to the
company's results for the period. The Company is actively seeking additional
sources of capital to permit the Company to continue to grow its 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 March 31,
1999.
9
<PAGE>
ENSEC INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
Item 2. Manager's Discussion and Analysis of Financial Condition and Results of
Operations.
10
<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.
11
<PAGE>
The Company is actively seeking sources of capital to allow the Company
to continue its operations in Brazil. The Company negotiated and signed a Merger
Agreement on October 28, 1998, for a merger among Ensec International and
SenTech EAS Corp. In connection with the merger, the Company will seek public
financing to carry out its business plan. 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 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 anticipates that the sale, service and maintenance of the third party
products has and will continue to account for a majority of the Company's total
sales. The Company's sales growth from distribution revenue of third party
security products will also increase revenue by obtaining the maintenance
contracts related to such sales. 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 proceed with the merger
with SenTech EAS Corp. that is expected to result in a penetration in the
Electronic Asset Surveillance /EAS market in the U.S., as well as
internationally. The merger will result in shareholders of the Company owning
60% of the combined company's common stock.
On May 12, 1998, NASDAQ delisted the Company, since the Company failed
to meet the minimum requirements to be on the NASDAQ Small Cap Market and
presently, its shares are listed on the OTC Bulletin Board. This delisting by
NASDAQ may adversely affect the Company's ability to raise additional financing.
The Company has no commitments for capital expenditures as of September
30, 1998.
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,
12
<PAGE>
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
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
First Quarter 1999 Compared with First Quarter 1998
Sales. Total sales for the three months ended March 31, decreased $ 1,3
million, or 69.6%, to $ 0,6 million from $1,9 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 this period.
Cost of Goods Sold. Cost of goods sold for the three months ended March
31, 1999 decreased $ 0,7 million, or 67.5%, to $ 0.500 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 March 31, 1999, were $ 0,2
million and 38,8%, compared to $ 0,8 million and 42,7%, respectively for the
prior year period.
Selling, General and Administrative Expenses. Selling general and
administrative expenses for the three months ended March 31, 1999, decreased $
0,3 million or 33.7%, to $ 0,5 million from $ 0,8 million in the prior year
period. As a percentage of Net Sales, SGA expenses in the first quarter of 1999
represented 94% of net sales, compared to 48,4% in the same period of 1998. This
increase in the level of SGA expenses as a percent compared to net sales is due
to the decrease of sales during the first three months of 1999.
13
<PAGE>
Other Income and Expenses
Interest Income for the first quarter of 1999 increased by 77,8% from $
4,561.00 when compared to the same period of 1998. This increase was the result
of a stricter policy of charging interest on late payments by customers.
Interest Expenses decreased $ 0,1 million or 39,1%, down from $ 0,2
million during the first three months of 1999 when compared to the same period
of 1998. This decrease was the result of having liquidated one loan in February
1999, and the result of a devaluation of the Brazilian Real in January 1999.
Other Income decreased during the first quarter of 1999 when compared
to the first quarter of 1998 by $ 0,1 million or 27,1%. Included in this quarter
results, are the profits earned on the sale of Ensec SA's shares in DLRS
(Brazil). These shares generated $ 261,000.00 income in February 1999.
Liquidity and Capital Resources
Net cash used in operating activities for the three months ended March
31, 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 $0,300 million with Banco Bradesco, a Brazilian bank.
Another credit line of $1,0 million, but not fully used, was made available 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 its 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 1998 were around 8%.
Working capital deficit at March 31, 1999, was reduced by $ 0.1 million
to $ 1.8 million.
The Company is actively seeking sources of capital to allow the company
to continue to grow its 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 a going 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.
14
<PAGE>
As of April 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 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 comparable to
1998; 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 has implemented a new sales strategy in Brazil, to
distribute its products through " value added resellers and representatives" and
is looking for other niches of market as the parking system control, and,
mainly, electronic article surveillance businesses to bring more sales volumes
and continuous revenues. There can be no assurance that the Company in Brazil
will be able to compete successfully only as a systems integrator in the near
future, against existing and potential international competitors, mainly due to
the poor financial conditions and the difficulties to resolve its cash flow
requirements and long term debts.
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.
15
<PAGE>
PART II - OTHER INFORMATION
Item 3. Exhibits and Reports on Form 8-K.
The Company filed a Form 8-K on February 13, 1999 - Item 4 - Change in
Registrant's Certified Public Account
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
Registrant hereby certifies that it has caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.
ENSEC INTERNATIONAL, INC.
-------------------------
(Registrant)
DATE: May 10, 1999 By: /s/ Charles N. Finkel
------------------------------------------
Charles N. Finkel
Chairman and Chief Executive Officer
DATE: May 10, 1999 By /s/Theodore O. Pemberton
------------------------------------------
Theodore O. Pemberton
Chief Financial Officer
DATE: May 10, 1999 By /s/Charles N. Finkel
------------------------------------------
Charles N. Finkel
Director, Chairman and Chief
Executive Officer
DATE: May 10, 1999 By /s/Flavio R. da Silva
------------------------------------------
Flavio R. da Silva
Director
DATE: May 10, 1999 By /s/Raymond E. List
------------------------------------------
Raymond E. List
Director
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1999
<PERIOD-START> Jan-01-1999
<PERIOD-END> Mar-31-1999
<CASH> 10,193
<SECURITIES> 0
<RECEIVABLES> 518,659
<ALLOWANCES> 0
<INVENTORY> 348,898
<CURRENT-ASSETS> 999,504
<PP&E> 1,696,591
<DEPRECIATION> 65,955
<TOTAL-ASSETS> 1,630,636
<CURRENT-LIABILITIES> 2,810,283
<BONDS> 0
0
0
<COMMON> 60,163
<OTHER-SE> (391,231)
<TOTAL-LIABILITY-AND-EQUITY> 3,685,238
<SALES> 580,591
<TOTAL-REVENUES> 869,027
<CGS> 355,581
<TOTAL-COSTS> 483,704
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 128,123
<INCOME-PRETAX> (160,248)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (160,248)
<EPS-PRIMARY> (0.027)
<EPS-DILUTED> (0.027)
</TABLE>
