<PAGE>
================================================================================
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, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission File Number: 0-28912
INNOPET BRANDS CORP.
----------------------------------------
(Name of small business issuer as specified in its charter)
Delaware 65-0639984
- ---------------------------------- ----------------------------------
(State of Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
1 East Broward Blvd., Suite 1100
Fort Lauderdale, Florida 33301
------------------------------------------------
(Address of Principal Executive Offices)
(954) 453-2400
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
------------------
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 ___
As of May 1, 1997, 4,465,878 shares of common stock of the issuer were
outstanding.
Transitional small business disclosure format (check one): Yes ___ No _X_
================================================================================
<PAGE>
INNOPET BRANDS CORP.
Index To Financial Statements And Financial Schedules
March 31, 1997
<TABLE>
<CAPTION>
Page
------
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of March 31, 1997 and December 31, 1996................................ 2.
Condensed Statements of Operations for the three months ended March 31, 1997, the period from
inception (January 11, 1996) to March 31, 1996 and the cumulative development stage period from
inception (January 11, 1996) to March 31, 1997..................................................... 3.
Condensed Statements of Cash Flows for the three months ended March 31, 1997, the period from
inception (January 11, 1996) to March 31, 1996 and the cumulative development stage period from
inception (January 11, 1996) to March 31, 1997..................................................... 4.
Notes to Financial Statements...................................................................... 6.
Item 2. Management's discussion and analysis of financial condition and results of operation...................... 8.
Part II. OTHER INFORMATION
Other Information.................................................................................. 10.
Signature.......................................................................................... 11.
</TABLE>
<PAGE>
INNOPET BRANDS CORP.
(A Development Stage Enterprise)
Balance Sheet
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
(Unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash............................................. $ 1,607,319 $ 4,614,312
Accounts receivable.............................. 418,207 219,011
Inventories...................................... 1,983,734 1,058,108
Prepaid expenses and other current assets........ 355,979 445,445
------------------- -------------------
Total current assets........................... 4,365,239 6,336,876
------------------- -------------------
Property and Equipment, net......................... 331,908 105,978
------------------- -------------------
Intangible Assets:
Deferred slotting fees, net of accumulated
amortization..................................... 238,204 496,367
Product formulae acquisition costs, net of
accumulated amortization........................ 244,463 251,413
Non-compete agreement, net of accumulated
amortization..................................... 186,869 212,351
------------------- -------------------
Total intangible assets........................ 669,536 960,131
------------------- -------------------
Other Assets........................................ 208,026 153,728
------------------- -------------------
Total Assets........................................ $ 5,574,709 $ 7,556,713
=================== ===================
Liabilities And Stockholders' Deficiency
Current Liabilities:
Accounts Payable:
Trade......................................... $ 1,065,823 $ 760,200
Slotting fees................................. 541,330 539,095
Parent........................................ 634,441 724,394
Current portion of long-term debt due to
InnoPet, Inc.................................. 200,000 200,000
------------------- -------------------
Total current liabilities................. 2,441,594 2,223,689
------------------- -------------------
Long-Term Debt:
Note payable to InnoPet, Inc., net of current
portion....................................... 800,000 800,000
------------------- -------------------
Commitments and Other Matters...................... -- --
Stockholders' Equity:
Preferred stock, $.01 par value; authorized
5,000,000 shares; none issued.................... -- --
Common stock, $.01 par value; authorized
25,000,000 shares; issued and outstanding
4,465,878 shares.............................. 44,658 44,658
Additional paid-in capital....................... 13,194,456 13,164,859
Deficit accumulated during the development stage. (8,718,212) (6,518,304)
Notes and interest receivable on sale of common
stock........................................... (2,186,333) (2,158,189)
Treasury stock at cost.......................... (1,454) --
-------------------- -------------------
Total Stockholders' Equity......................... 2,333,115 4,533,024
------------------- -------------------
Total Liabilities and Stockholders' Equity......... $ 5,574,709 $ 7,556,713
=================== ===================
</TABLE>
2
<PAGE>
INNOPET BRANDS CORP.
(A Development Stage Enterprise)
Statements of Operations
<TABLE>
<CAPTION>
Cumulative Development
Stage Period from
Inception (January Inception (January 11,
Three Months Ended 11, 1996) to 1996) to
March 31, 1997 March 31, 1996 March 31, 1997
------------------ ---------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Net sales.................................. $ 575,028 $ -- $ 2,434,964
------------------ ---------------- ---------------
Cost of Goods Sold......................... 383,574 -- 1,586,282
------------------ ---------------- ---------------
Gross Profit............................... 191,454 -- 848,682
------------------ ---------------- ---------------
Operating Expenses:
Sales expenses............................ 160,900 -- 673,728
Slotting allowances....................... 439,435 -- 1,534,280
Marketing expenses........................ 805,079 250,603 2,183,369
Product development....................... 103,783 214,929 688,759
General and administrative................ 896,287 564,894 3,129,012
----------------- ---------------- ---------------
Total operating expenses................ 2,405,484 1,030,426 8,209,148
----------------- ---------------- ---------------
Loss from operations....................... (2,214,030) (1,030,426) (7,360,466)
------------------ ---------------- ---------------
Other Income (Expenses):
Interest income........................... 36,930 -- 58,500
Interest expense and financing costs...... (22,808) (138,330) (1,205,481)
Costs in connection with unsuccessful
financing............................... -- -- (161,289)
Other expenses -- -- (49,476)
------------------- ---------------- ---------------
--
Total other income...................... 14,122 (138,330) (1,357,746)
------------------- ---------------- ---------------
Net loss................................... $ (2,199,908) $ (1,168,756) $ (8,718,212)
=================== ================ ===============
Net loss per common share.................. $ (.49) $ (.99) $ (3.39)
=================== ================ ===============
Shares used in per share calculations...... 4,465,878 1,182,432 2,568,376
=================== ================ ================
</TABLE>
3
<PAGE>
INNOPET BRANDS CORP.
(A Development Stage Enterprise)
Statement of Cash Flows
<TABLE>
<CAPTION>
Cumulative
Development Stage
Period from
Inception (January Inception (January
Three Months Ending 11, 1996) to 11, 1996) to
March 31, 1997 March 31, 1996 March 31, 1997
---------------- ---------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net loss.................................... $ (2,199,908) $ (1,168,756) $(8,718,212)
Adjustments to reconcile net loss to net
cash used in operating activities:
Costs and expenses paid on behalf of
Company by InnoPet Inc.................. -- 1,161,836 1,580,327
Depreciation.............................. 24,378 -- 51,732
Amortization:
Slotting fees............................ 439,435 -- 1,534,280
Financing Costs.......................... -- -- 872,759
Other.................................... 32,432 6,920 152,441
Offsets against accounts receivable for
slotting fees............................. (181,273) -- (1,062,390)
Interest paid from proceeds of public -- -- 61,944
offering..................................
Changes in Operating Assets and
Liabilities:
(Increase) Decrease in:
Accounts receivable...................... (199,196) -- (418,207)
Inventory................................ (925,626) -- (1,479,703)
Prepaid expenses......................... 89,466 -- (861,544)
Other assets............................. (54,298) -- (198,026)
Increase (Decrease) in:
Accounts payable, trade.................. 305,623 -- 1,065,823
Accounts payable slotting fees........... 2,235 -- 541,330
Account payable, InnoPet Inc............. (89,953) -- 634,441
-------------- ------------ -----------
Net cash used in operating activities.. (2,756,685) -- (6,243,005)
-------------- ------------ -----------
Cash Flows from Investing Activities:
Acquisition of property and equipment....... (250,308) -- (334,848)
-------------- ------------ -----------
Cash Flows from Financing Activities:
Proceeds from initial public offering...... -- -- 6,851,487
Proceeds of long-term financing from
InnoPet Inc., net........................ -- -- 202,014
Proceeds from private placement financing.. -- -- 1,672,236
Offering costs............................. -- -- (472,641)
Deferred financing costs................... -- -- (67,924)
-------------- ------------ -----------
Net cash provided by financing activities -- -- 8,185,172
-------------- ------------ -----------
Net Increase (Decrease) in Cash............... (3,006,993) -- 1,607,319
Cash, Beginning............................... 4,614,312 -- --
-------------- ------------ -----------
Cash, Ending.................................. $ 1,607,319 $ -- $ 1,607,319
============== ============ ===========
</TABLE>
4
<PAGE>
INNOPET BRANDS CORP.
(A Development Stage Enterprise)
Statement of Cash Flows
(Continued)
<TABLE>
<CAPTION>
Cumulative
Development Stage
Period from
Inception (January Inception (January
Three Months Ending 11, 1996) to 11, 1996) to
March 31, 1997 March 31, 1996 March 31, 1997
---------------- ---------------- ----------------
(Unaudited) (Unaudited)
<S> <C> <C> <C>
Supplemental Disclosure of Cash Flow Information:
Non-Cash Investing and Financing Activities:
Expenditures for various assets paid on behalf
of Company by InnoPet Inc.:
Product formulae, non-compete agreement
and inventory.......................... $ -- $ 308,773 $ 1,072,772
============== ============ ============
Deferred financing costs................. $ -- $ 198,429 $ 227,071
============== ============ ============
Deferred slotting fees................... $ -- $ -- $ 291,957
============== ============ ============
Property and equipment and other assets.. $ -- $ -- $ 195,732
============== ============ ============
Deferred financing costs paid from
proceeds of private placement financing.. $ -- $ -- $ 327,764
============== ============ ============
Offering costs paid from proceeds of initial
public offering.......................... $ -- $ -- $ 1,436,611
============== ============ ============
Notes payable paid from proceeds of
public offering.......................... $ -- $ -- $ 2,000,000
============== ============ ============
</TABLE>
5
<PAGE>
INNOPET BRANDS CORP.
(A Development Stage Enterprise)
Notes to Financial Statements
(Unaudited)
1. These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions to Form 10-QSB. The financial statements should be read in
conjunction with the audited financial statements of the Company from
inception (January 11, 1996) to December 31, 1996 for a description of the
significant accounting policies, which have continued without change, and
other footnote information.
2. All adjustments which are, in the opinion of management, necessary for a
fair presentation of financial position, results of operation and cash flow
have been included. For purposes of interim financial reporting, the Company
uses the standard cost method in determining the estimate of the lower of
cost or market for inventory valuation. The results of the interim period
are not necessarily indicative of the results for the full year.
3. The Company was incorporated on January 11, 1996, and, since that time, has
been primarily involved in organizational activities, developing a strategic
plan for the marketing and distribution of its pet food products, and
raising capital. Planned Operations, as described above, have commenced, but
revenue therefrom generated to date is not considered significant in
relation to the Company's strategic plan. Accordingly, the Company is
considered to be in the development stage, and the accompanying interim
financial statements represent those of a development stage enterprise.
The accompanying interim financial statements have been presented in
accordance with generally accepted accounting principles, which assume the
continuity of the Company as a going concern. However, as discussed above,
the Company is in the development stage and, therefore has generated little
revenue to date. As reflected in the accompanying interim financial
statements, the Company has incurred a net loss and reflects a deficit
accumulated during the development stage of $8,718,212 for the period from
inception (January 11, 1996) through March 31, 1997. This condition raises
substantial doubt as to the ability of the Company to continue as a going
concern.
Management's plans with regard to this matter encompass the following
actions:
Business Plan
The Company has adopted, and is in the process of implementing, a
business plan intended to define the Company's strategy for growth. In
June 1996, the Company commenced sales of its dog food to supermarkets
located in the Greater Metropolitan New York area. As of March 31, 1997,
the Company is selling product into the following markets: the Greater
Metropolitan New York area, the Philadelphia, Pennsylvania area and other
areas in Pennsylvania; the Baltimore, Maryland/Washington, DC area; North
Carolina; Georgia; and the Tampa Bay Florida and South Florida areas.
During the next twelve months, the Company anticipates that it will begin
implementation of its national distribution.
During 1997, the Company expects to expand its line of dog foods with the
introduction of lamb and rice products. The Company also plans to
introduce a line of dry cat foods by the end of the fourth quarter of
1997.
The Company plans to expand its marketing programs in 1997 to include
such programs as: radio and newspaper advertising, in-store coupons,
floor walker displays, direct sampling programs (including newspaper
pouch samples) and in-store demonstrations. Additionally, the Company
plans to participate in several cause-related programs to increase
consumer awareness of the Company and its products.
6
<PAGE>
Equity Infusion
On April 29, 1997, the Company completed a $2.5 million private placement
(the "Private Placement"). The shares were purchased by Entrepreneurial
Investors, Ltd., a Bahamian company. The Private Placement consisted of
the sale of 625,000 shares of Series A 4% Cumulative Convertible
Preferred Stock, par value $.01 per share (the "Preferred Stock"), of the
Company at $4.00 per share. The Company anticipates using the net
proceeds of the Private Placement (approximately $2 million) for general
corporate purposes. A Current Report on Form 8-K with respect to such
sale was filed with the Securities and Exchange Commission on May 12,
1997.
The eventual outcome, or success of management's plans cannot be
ascertained with any degree of certainty. The accompanying financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
From time to time, including in this Quarterly Report on Form 10-QSB, InnoPet
Brands Corp. (the "Company") may publish forward-looking statements relating to
such matters as anticipated financial performance, business prospects, future
operations, new products, research and development activities, and similar
matters. The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for such forward-looking statements. In order to comply with the terms of
the safe harbor, the Company notes that a variety of factors could cause the
Company's actual results to differ materially from the anticipated results or
other expectations expressed in the Company's forward-looking statements. The
risks and uncertainties that may affect the operations, performance, development
and results of the Company's business include the following: changes in the pet
food industry; the Company's ability to manage growth effectively; the Company's
ability to sell premium pet foods through supermarkets and grocery stores; the
entrance into the supermarket distribution channel of an existing or new premium
pet food; the ability of the Company's manufacturers and other suppliers to meet
the Company's performance and quality specifications; and the ability of the
Company to control the cost of raw materials, manufacturing, packaging,
warehousing and distribution.
General
The Company produces, markets and sells premium dog food through supermarkets
and grocery stores under the name InnoPet Veterinarian Formula(TM) Dog Food
("InnoPet Foods"). The Company began marketing InnoPet Foods in March 1996. In
June 1996, it commenced sales of its dog food to supermarkets located in the
Greater Metropolitan New York area. As of March 31, 1997, the Company has sold
products into the following markets: the Greater Metropolitan New York area; the
Philadelphia, Pennsylvania area and other areas in Pennsylvania; the Baltimore,
Maryland/Washington, D.C. area; North Carolina; Georgia; and the Tampa Bay,
Florida and South Florida areas. The Company's objective is to become a national
provider of premium pet foods through supermarket and grocery store retail
outlets.
During the next twelve months, the Company anticipates that it will continue to
sell products in the areas it is currently supplying and that it will initiate
sales throughout the majority of the eastern United States. The Company expects
to continue to incur losses at least through the second quarter of 1997. The
Company's ability to achieve a profitable level of operations will depend in
large part on the market acceptance of its products. There can be no assurance
that the Company will achieve profitable operations.
The Company hired a Vice President and Chief Marketing Officer in January 1997
completing its management team. It is expected that staffing of the sales
department will be increased to manage anticipated growth in sales. Other minor
increases in staffing will also be needed.
Results of Operations
The three months ended March 31, 1997 compared to the period from inception
(January 11, 1996) through March 31, 1996.
Revenues. Revenues for the three months ended March 31, 1997 totaled $575,028
compared with no revenues for the period from inception (January 11, 1996)
through March 31, 1996.
Cost and Expenses. Cost of goods sold for the three months ended March 31, 1997
totaled $383,574 compared with no cost of goods sold for the period from
inception (January 11, 1996) through March 31, 1996. Cost of goods sold for the
first three months of 1997 were 67% of sales, providing a gross margin of 33%
for the period.
Sales expenses for the three months ended March 31, 1997 totaled $160,900
compared with no sales expense for the period from inception (January 11, 1996)
through March 31, 1996. Sales expenses for the first quarter of 1997 totaled 28%
of sales. These costs consist of broker commissions (5% of sales), and the
Company's in-house sales force.
Slotting allowances for the three months ended March 31, 1997 totaled $439,435,
compared with no cost for the period from inception (January 11, 1996) through
March 31, 1996. Slotting fees are fees charged manufacturers by retailers in
order to facilitate the introduction of new products. The fees represent charges
for warehouse space (slots) to be used to store a manufacturer's products,
charges for retail shelf space and related shelf sets to make room for the
products and reimbursement of retailer expenses (entering new items into their
computer systems and in some cases marketing support provided by the
8
<PAGE>
retailer). The practice by retailers of charging slotting fees is a standard
industry practice. The Company expects to continue to incur slotting fees as it
expands its geographic territory and as new products are introduced.
Marketing expenses for the three months ended March 31, 1997 totaled $805,079,
an increase of $554,476 over the period from inception (January 11, 1996)
through March 31, 1996. Marketing expenses for the first quarter of 1997
reflected initial implementation of the Company's marketing program, and
included items such as advertising (approximately $164,000), directed sampling
programs (via direct mail and delivery with newspapers, approximately $209,000),
and in store demonstrations (approximately $45,000).
Product development costs for the three months ended March 31, 1997 totaled
$103,783, a reduction of $111,146 as compared to the period from inception
(January 11, 1996) through March 31, 1996. The first quarter 1997 expense level
reflects expenses associated with the ongoing management of manufacturers and
co-packers, and ongoing research and development. During the period from
inception through March 31, 1996 much of the product development costs were
costs associated with testing of newly acquired formulations (e.g., palatability
and bio-availability), expenses associated with locating manufacturers and
certifying their facilities and processes.
General and Administrative expenses for the three months ended March 31, 1997
totaled $896,287, an increase of $331,393, or 59% over the period from inception
(January 11, 1996) through March 31, 1996. The increase resulted from increased
logistics costs (approximately $162,000); increased legal, accounting and
professional fees (approximately $100,000) associated with strategic planning,
SEC compliance and other matters; increased rent (approximately $21,000);
increased amortization costs; and increases in general office expenses.
Interest income net of interest expense and financing costs totaled $14,122 for
the three months ended March 31, 1997, an improvement of $152,452 over the
period inception (January 11, 1996) through March 31, 1996. The expense during
the prior year period reflected amortization of financing costs associated with
the start up of the business. These costs were fully amortized during 1996 and
are non-reoccurring.
Net Loss. Net loss for the three months ended March 31, 1997 totaled $2,199,908,
an increase of $1,031,152 over the period from inception through March 31, 1996.
The increase was due primarily to initial expenditures associated with the
implementation of the Company's marketing plans combined with slotting fees.
Liquidity and Capital Resources
Working Capital. At March 31, 1997 the Company had working capital of
$1,923,695, compared to working capital of $4,113,187 at December 31, 1996. This
change in working capital was primarily due to the loss incurred in the current
period.
Cash Flow. During the three months ended March 31, 1997, the Company had net
cash used by operating activities of $2,756,685. The primary uses of cash were
the net loss incurred for the quarter combined with increased inventories and
accounts receivable.
The Company had net cash used in investing activities of $250,308. The primary
use of cash during this period was for capital expenditure including meat
handling equipment to be used by one of the Company's manufacturers.
Subsequent Events
On April 29, 1997, the Company completed a $2.5 million private placement (the
"Private Placement"). The shares were purchased by Entrepreneurial Investors,
Ltd., a Bahamian company. The Private Placement consisted of the sale of 625,000
shares of Series A 4% Cumulative Convertible Preferred Stock, par value $.01 per
share (the "Preferred Stock"), of the Company at $4.00 per share. The Company
anticipates using the net proceeds of the Private Placement (approximately $2
million) for general corporate purposes.
9
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities:
On April 29, 1997, the Company completed a $2.5 million private
placement (the "Private Placement"). The shares were purchased by
Entrepreneurial Investors, Ltd., a Bahamian company which serves as an
investment vehicle for a group of private European investors. The
Private Placement consisted of the sale of 625,000 shares of Series A
4% Cumulative Convertible Preferred Stock, par value $.01 per share
(the "Preferred Stock"), of the Company at $4.00 per share. In
connection therewith, on April 28, 1997, the Company filed a
Certificate of Designation of Series A Preferred Stock (the
"Certificate of Designation"). The Certificate of Designation
authorizes the issuance of up to 687,500 shares.
Each share of Preferred Stock converts, at the holder's option, into
one share of common stock, par value $.01 per share (the "Common
Stock"), of the Company. The Preferred Stock bears a cumulative
dividend of four percent (4%) per annum, payable quarterly. The
dividend shall be paid by the issuance of Common Stock of the Company.
The number of shares of Common Stock to be issued as a dividend shall
be determined based on the average closing bid price for shares of the
Common Stock as reported by the NASDAQ SmallCap Market for the twenty
(20) trading days preceding the record date for the declaration of the
dividend.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of matters to a Vote of Security Holders.
None.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. See Exhibit 27.
(b) Reports on form 8-K:
A Current Report on Form 8-K (Date of Event April 29, 1997) was
filed with the Securities and Exchange Commission on May 12, 1997.
The Current Report was filed for Item 2 above relating to the sale
of Preferred Stock.
Both the Current Report and the Certificate of Designation filed as
Exhibit 3.1 thereto are incorporated herein by reference in their
entirety.
10
<PAGE>
SIGNATURES
In accordance with 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.
InnoPet Brands Corp.
Date: May 15, 1997 By: /s/ Marc Duke
-----------------------------------------
Marc Duke, Chairman of the Board and CEO
Date: May 15, 1997 By: /s/ Robin Hunter
-----------------------------------------
Robin Hunter, Vice President and CFO
(Chief Accounting Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF OPERATIONS AND
CONSOLIDATED STATEMENT OF CASH FLOWS INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE
PERIOD ENDING MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,607
<SECURITIES> 0
<RECEIVABLES> 418
<ALLOWANCES> 0
<INVENTORY> 1,983
<CURRENT-ASSETS> 4,365
<PP&E> 384
<DEPRECIATION> 52
<TOTAL-ASSETS> 5,575
<CURRENT-LIABILITIES> 2,442
<BONDS> 0
0
0
<COMMON> 45
<OTHER-SE> 2,288
<TOTAL-LIABILITY-AND-EQUITY> 5,575
<SALES> 575
<TOTAL-REVENUES> 575
<CGS> 384
<TOTAL-COSTS> 384
<OTHER-EXPENSES> 2,368
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23
<INCOME-PRETAX> (2,200)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,200)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,200)
<EPS-PRIMARY> (.49)
<EPS-DILUTED> (.49)
</TABLE>
