SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Quarterly Report Under Section 13
of the Securities Exchange Act of 1934
For the quarter ended October 31, 1998
Commission file number 0-24083
AMERICAN QUANTUM CYCLES, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2651232
- ------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
731 Washburn Road
Melbourne, Florida 32934
- --------------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 752-0008
---------------
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934 during
the preceding twelve 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 ____
Common stock outstanding at October 31, 1998 was 4,361,345 shares.
1
<PAGE>
AMERICAN QUANTUM CYCLES, INC.
Condensed Balance Sheets
<TABLE>
<CAPTION>
October 31, 1998 April 30, 1998
(Unaudited)
---------------- --------------
<S> <C> <C>
ASSETS
------
Current assets
Cash and cash equivalents $ 20,408 $ 8,768
Accounts receivable - trade (Note 8) 5,090,919 35,602
Inventory - raw materials (at FIFO) 138,646 682,575
Inventory - work in process 779,563 66,796
Inventory - finished goods 0 13,787
Prepaid expenses and other current assets 41,875 39,308
------------------ ---------------
Total current assets 6,071,411 886,836
Property and equipment, net 1,062,855 587,013
Patents and licenses, net (Note 4) 341,833 349,667
Other assets 41,767 40,700
------------------ ----------------
Total Assets $ 7,517,866 $ 1,864,216
================== ================
(See accompanying notes to condensed financial statements)
2
<PAGE>
October 31, 1998 April 30, 1998
(Unaudited)
---------------- --------------
LIABILITIES & STOCKHOLDERS' EQUITY
- ----------------------------------
Liabilities
Current liabilities
Accounts payable - trade $ 1,459,724 $ 370,658
Accrued compensation 32,141 21,921
Notes payable - bridge loan (Note 6) 700,000 650,000
Convertible debentures - 8% (Note 7) 1,579,500 1,524,500
Convertible debentures - 7% (Note 7) 699,500 143,000
Deferred income (Note 8) 4,728,308 0
Other accrued expenses and current liabilities 981,762 295,182
------------------ ----------------
Total current liabilities 10,180,935 3,005,261
Long term liabilities
Capitalized leases (Note 5) 76,825 99,604
Notes payable - bank 24,956 27,074
Notes payable - other 29,982 35,487
------------------ ----------------
Total long term liabilities 131,763 162,165
------------------ ----------------
Total Liabilities 10,312,698 3,167,426
------------------ ----------------
Shareholders' Equity
Preferred stock - $.001 par value; 2,500,000
shares authorized; no shares issued 0 0
Common stock - $.001 par value; 50,000,000
shares authorized; 4,361,345 shares and
2,471,045 shares issued and outstanding 4,361 2,471
Capital in excess of par value 2,550,273 1,328,664
Retained earnings (deficit) (5,349,466) (2,634,345)
------------------ ----------------
Total shareholders' equity (deficit) (2,794,832) (1,303,210)
------------------ ----------------
Total Liabilities & Shareholders' Equity $ 7,517,866 $ 1,864,216
================== ================
</TABLE>
(See accompanying notes to condensed financial statements)
3
<PAGE>
AMERICAN QUANTUM CYCLES, INC.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Three months ended Six months ended Six months ended
October 31, 1998 October 31, 1997 October 31, 1998 October 31, 1997
------------------ ------------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Net sales of tangible goods $ 305,999 $ 23,355 $ 474,023 $ 23,355
Cost of goods sold 369,123 37,422 644,316 37,422
--------------- -------------- ------------ ------------
Gross profit (deficit) (63,124) (14,067) (170,293) (14,067)
Selling, general and administrative expenses 745,691 311,810 1,977,436 523,972
--------------- -------------- ------------ ------------
Operating profit (deficit) (808,815) (325,877) (2,147,729 (538,039)
Other income (expense):
Interest expense (61,374) (26,246) (569,083) (26,246)
Loss on disposition of asset 0 (7,566) 0 (7,566)
Other income (Note 9) 197 317 1,691 321
--------------- -------------- ------------ ------------
Net Operating Loss $ (869,992) $ (359,372) $ (2,715,121) (571,530)
=============== ============== ============ ============
Weighted average shares outstanding 3,669,445 3,518,741 3,706,908 3,502,009
=============== ============== ============ ============
Loss per common share $ (0.237) $ (0.102) $ (0.732) $ (0.163)
=============== ============== ============ ============
Loss per Common Share-diluted $ (0.149) $ (0.102) $ (0.465) $ (0.163)
=============== ============== ============ ============
</TABLE>
(See accompanying notes to condensed financial statements)
4
<PAGE>
AMERICAN QUANTUM CYCLES, INC.
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six months ended Six months ended
October 31, 1998 October 31, 1997
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (2,715,121) $ (571,530)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 118,153 12,105
Changes in assets and liabilities:
Receivables (463,311) 52,691
Inventories (155,051) (475,807)
Prepaid expenses and other 10,244 (36,398)
Accounts payable 1,089,066 66,725
Other accrued expenses and current liabilities 696,800 43,800
-------------- ---------------
Net cash used by operating activities (1,419,220) (908,414)
Cash flows from financing activities:
Loan proceeds 50,000 200,000
Convertible debenture proceeds 611,500 280,000
Retirement of prior debt 0 (325,000)
Payment of loan principal (30,401) (846)
Net capital and stock changes 1,341,088 1,092,378
-------------- ---------------
Net cash provided by financing activities 1,972,187 1,246,532
Cash flows from investing activities:
Additions to property and equipment (581,327) (234,759)
Additions to intangible assets (Note 4) 0 (235,000)
-------------- ---------------
Net cash used by investing activities (581,327) (469,759)
-------------- ---------------
Net (decrease) increase in cash (28,360) (131,641)
Cash at beginning of period 48,768 244,985
-------------- ---------------
Cash at end of period $ 20,408 $ 113,344
============== ===============
</TABLE>
(See accompanying notes to condensed financial statements)
5
<PAGE>
AMERICAN QUANTUM CYCLES, INC.
Notes to Condensed Financial Statements
(Unaudited)
(1) Basis of Presentation, General and Business
-------------------------------------------
American Quantum Cycles, Inc. ("The Company") is an early production stage
company that designs, produces, markets, distributes and sells American-made,
high performance V-twin engine cruiser and touring style motorcycles. These
motorcycle products include stock models and motorcycles built to customer
specified configurations. The Company was originally incorporated on March 20,
1986 as "Norbern, Inc." and was inactive until March 1997 when it began
developing and implementing its business and financing plans. On May 8, 1997 the
Company changed its name to American Quantum Cycles, Inc. and its fiscal year
end to April 30.
The accompanying interim financial statements are prepared in accordance with
the instructions to Form-10QSB, are unaudited and do not include all the
information and disclosures required by generally accepted accounting principles
for complete financial statements. All adjustments that, in the opinion of
management, are necessary for a fair presentation of the results of operations
for the interim periods have been made and are of a recurring nature unless
otherwise disclosed herein. The results of operations for such interim periods
are not necessarily indicative of results of operations for a full year.
(2) Concentration of Credit Risk
----------------------------
The Company occasionally maintains deposits in excess of federally insured
limits. Statement of Financial Accounting Standards No, 105 identifies these
items as a concentration of credit risk requiring disclosure, regardless of the
degree of risk. The risk is managed by maintaining all deposits in high quality
financial institutions.
(3) Transition from Development Stage Company to Production
-------------------------------------------------------
The Company has transitioned from a development stage company into an early
production ramp-up stage company. The Company has completed various activities
necessary for this transition including entering into dealership agreements, a
technology license agreement (see Note 4), leasing and upgrading facilities,
purchasing supplies and equipment, and hiring and training employees. The
Company anticipates that the current fiscal year ending April 30, 1999 will
sustain additional losses. Except for the historical information contained
herein, the matters set forth in this Form 10-QSB are forward looking and
involve a number of risks and uncertainties.
6
<PAGE>
Results of operations in the future will be influenced by numerous factors
including technological developments, competition, regulation, increases in
expenses associated with sales growth, market acceptance of the products of the
Company, the capacity of the company to expand and maintain the quality of its
motorcycles and related services, continued development of the dealer
organization, favorable sourcing of supplies, recruitment of highly skilled
employees and integration of such persons into a cohesive organization, and the
ability of the Company to raise funds and control costs.
(4) Patents, Licenses and Certificates
----------------------------------
In August 1997, the Company entered into a license agreement (the "Agreement")
with Feuling whereby the Company, as licensee, obtained a license to use certain
proprietary technologies including among other things, patents trade secrets,
techniques, tooling designs, product designs, and trademarks. Pursuant to the
terms of the Agreement, so long as the Company complies with certain other
provisions including non-disclosure of the proprietary technology, the Company
has an exclusive license, for motorcycle applications, in perpetuity for the
4-Valve technology. This technology will be used in connection with the Company
motorcycles and bolt-on kits for the Harley Davidson motorcycles which feature
the evolution engine, evolution big twin, other Harley Davidson clones and
aftermarket parts. An American Quantum Motorcycle with its 4-Valve engine
successfully passed EPA testing and was awarded an EPA certificate for 49 states
(less California). American Quantum will submit a second motorcycle for further
testing aimed at a 50 state certificate in the early spring of 1999.
(5) Capitalized Leases
------------------
The Company has executed capital leases with Nations Commercial Credit
Corporation for purchasing manufacturing and production equipment, and for
computer equipment to expand and improve the Company's network infrastructure.
All leases provide a $1 purchase buy-out provision at the end of the term of the
lease.
(6) Bridge Loan Financing
---------------------
Notes payable consist of nine (9) unsecured promissory notes dated March 30,
1998 to individuals providing bridge loan financing. The principal aggregate is
$700,000 with interest payable at 10% at maturity on September 30, 1998. The
Company also contracted to issue a total of 142,000 shares of common stock to
these individuals at maturity in order to obtain a favorable interest rate and
repayment terms. Loan costs are expensed as incurred.
The Company has received extensions until a secondary offering on all notes and
these note holders have been offered an updated agreement tied to the contracted
secondary offering expected to be completed during March 1999, however no
assurance can be given that the secondary offering will be completed. The note
holders will be repaid by converting principle plus interest (accrued through
the date of secondary completion) into American Quantum stock at the opening
stock price of the secondary offering plus two warrants (at the same share price
as the original conversion) for each share resulting from the note conversion.
As of the date of this filing 6 note
7
<PAGE>
holders representing $249,999 of original note loans have executed agreements to
convert to American Quantum stock at time of completion of the secondary.
(7) Convertible Debentures
----------------------
As part of its equity funding and financing, the Company has issued two separate
series of convertible notes to investors: Beginning in October 1997, the Company
issued thirty-four (34) 8% Subordinated Notes, for an aggregate of $1,579,500.
The notes mature one year from date of issue, convertible at $2.00 per share,
with no warrants attached. Interest is convertible at the same rate as the
principal, at the discretion of the note holder.
The Company has received extensions until a secondary offering on all notes and
these note holders have been issued an updated agreement tied to the contracted
secondary offering expected to be completed during March 1999. These note
holders have been offered the choice of being repaid via principle, interest
(accrued through to the time of completion of the secondary offering) and
American Quantum incentive shares or to be repaid by converting principle plus
interest (accrued through the date of secondary completion) into American
Quantum stock at the opening stock price of the secondary offering plus one
warrant (at the same share price as the original conversion) for each share
resulting from the note conversion. As of the date of this filing 11 note
holders representing $579,000 of original note loans have executed agreements to
convert to American Quantum stock at time of completion of the secondary.
Beginning in April 1998, the Company issued twenty-nine (29) 7%
Subordinated Notes, for an aggregate of $699,500. The notes mature one year from
the date of issue, convertible at $8.00 per share. Interest is payable in cash
or convertible at the same rate as the principal, at the discretion of the
Company. A warrant is attached at 10% above the final price of a secondary
offering.
The Company has received extensions until a secondary offering on all notes and
these note holders have been issued an updated agreement tied to the contracted
secondary offering expected to be completed during March 1999. These note
holders have been offered the choice of being repaid via principle, interest
(accrued through to the time of completion of the secondary offering) and
American Quantum incentive shares or to be repaid by converting principle plus
interest (accrued through the date of secondary completion) into American
Quantum stock at the opening stock price of the secondary offering plus one
warrant (at the same share price as the original conversion) for each share
resulting from the note conversion. As of the date of this filing 11 note
holders representing $245,000 of original note loans have executed agreements to
convert to American Quantum stock at time of completion of the secondary.
(8) Recognition of Income
---------------------
Orders received from the Company's dealers are booked as received in Account
Receivable, with an offset in Deferred Income. As the motorcycle proceeds
through the production process, revenue is recognized based on "percentage of
completion."
8
<PAGE>
AMERICAN QUANTUM CYCLES, INC.
Management's Discussion, Analysis and Plan of Operation
The following discussion and analysis should be read in conjunction
with the financial statements of the Company and the notes thereto appearing
elsewhere.
Results of Operation
- --------------------
The Company has transitioned from a development stage company into an early
production operation. The Company was originally incorporated on March 20, 1986
as "Norbern, Inc." and was inactive until March 1997 when it began developing
and implementing its business and financing plans. On May 8, 1997 the Company
changed its name to American Quantum Cycles, inc. and its fiscal year end to
April 30.
As the Company was inactive prior to March 1997, there was no income and
onlyincidental supply costs and the accrued interest expense from seven
promissory notes totaling $250,000 in principal. The fiscal year ended April 30,
1997 had a deficit carried forward of ($2,634). During the fiscal year ended
April 30, 1998 the Company's efforts have been principally devoted to research,
development and design of products, marketing activities and raising capital,
and has sustained cumulative losses of ($2,634,345). These losses have resulted
primarily from expenditures for general and administrative activities, including
salaries and professional fees for outside services in the amount of $1,164,291,
travel and marketing expenses of $457,590, and accrued interest expense of
$187,232 from the bridge loan and convertible debentures issued.
The company sustained continuing losses in the second quarter of this fiscal
year in the amount of ($869,992). These losses include $745,691 in general and
administrative activities, representing significant increases in personnel and
the outside professional services necessary for production ramp-up, and $61,374
in accrued interest expense.
The Company sustained continuing losses in the first six months of this fiscal
year in the amount of ($2,715,121). These losses include $1,977,436 in general
and administrative activities, representing significant increases in personnel
and the outside professional services necessary for production ramp-up, and
$569,083 in accrued interest expense. The Company sustained
9
<PAGE>
losses in the first six months of the last fiscal year in the amount of
($571,530). These losses include $523,972 in general and administrative
activities, representing training and development of personnel and process
necessary in a development stage operation, and $26,246 in accrued interest
expense.
Revenues in the fiscal year ended April 30, 1998 of $192,856 resulted from the
sale of the initial ten motorcycles produced plus some after-market 4-Valve
engine parts. An additional eight motorcycles were produced, of which two were
used for engineering and regulatory testing, and the remaining six are used for
marketing purposes. An additional 14 motorcycles have been produced during this
fiscal year to-date, and an additional 230 motorcycles have been booked into
production slots from 23 dealers. Eighty-six of these bikes have been scheduled
for delivery during the January-March timeframe of 1999. The Company expects
after-market 4-Valve engine and part sales to increase significantly during this
fiscal year.
While the Company anticipates that the current fiscal year ending April 30, 1999
will sustain additional losses with operations improving in the 4th quarter, the
last two months of the FY (March and April of 1999) are expected to improved.
Results of operations in the future will be influenced by numerous factors
including technological developments, competition, regulation, increases in
expenses associated with sales growth, market acceptance of the products of the
Company, the capacity of the company to expand and maintain the quality of its
motorcycles and related services, continued development of the dealer
organization, favorable sourcing of supplies, recruitment of highly skilled
employees and integration of such persons into a cohesive organization, and the
ability of the Company to raise funds and control costs.
Liquidity and Capital Resources
- -------------------------------
As part of its equity funding and financing, the Company has issued two separate
series of convertible notes to investors:
Beginning in October 1997, the Company issued thirty-four (34) 8%
Subordinated Notes, for an aggregate of $1,579,500. The notes mature one year
from date of issue, convertible at $2.00 per share, with no warrants attached.
Interest is convertible at the same rate as the principal, at the discretion of
the note holder.
The company has received extensions until a secondary offering on all notes and
these note holders have been issued an updated agreement tied to the contracted
secondary offering (see Note 8) expected to be completed during March 1999.
These note holders have been offered the choice of being repaid via principle,
interest (accrued through to the time of completion of the secondary offering)
and American Quantum incentive shares or to be repaid by converting principle
plus interest (accrued through the date of secondary completion) into American
Quantum stock at the opening stock price of the secondary offering plus one
warrant (at the same share price as the original conversion) for each share
resulting from the note conversion. As of the date of this filing 11 note
holders representing $579,000 of original note loans
10
<PAGE>
have executed agreements to convert to American Quantum stock at time of
completion of the secondary.
Beginning in April 1998, the Company issued twenty-nine (29) 7%
Subordinated Notes, for an aggregate of $699,500. The notes mature one year from
the date of issue, convertible at $8.00 per share. Interest is payable in cash
or convertible at the same rate as the principal, at the discretion of the
Company. A warrant is attached at 10% above the final price of a secondary
offering.
The Company has received extensions until a secondary offering on all notes and
these note holders have been issued an updated agreement tied to the contracted
secondary offering (see Note 8) expected to be completed during March 1999.
These note holders have been offered the choice of being repaid via principle,
interest (accrued through to the time of completion of the secondary offering)
and American Quantum incentive shares or to be repaid by converting principle
plus interest (accrued through the date of secondary completion) into American
Quantum stock at the opening stock price of the secondary offering plus one
warrant (at the same share price as the original conversion) for each share
resulting from the note conversion. As of the date of this filing 11 note
holders representing $245,000 of original note loans have executed agreements to
convert to American Quantum stock at time of completion of the secondary.
Also, notes payable consist of nine (9) unsecured promissory notes dated March
30, 1998 to individuals providing bridge loan financing. The principal aggregate
is $700,000 with interest payable at 10% at maturity on September 30, 1998. The
Company also contracted to issue a total of 142,000 shares of common stock to
these individuals at maturity in order to obtain a favorable interest rate and
repayment terms. Loan costs are expensed as incurred.
The Company has received extensions until a secondary offering on all notes and
these note holders have been offered an updated agreement tied to the contracted
secondary offering (see Note 8) expected to be completed during March 1999. The
note holders will be repaid by converting principle plus interest (accrued
through the date of secondary completion) into American Quantum stock at the
opening stock price of the secondary offering plus two warrants (at the same
share price as the original conversion) for each share resulting from the note
conversion. As of the date of this filing 6 note holders representing $249,999
of original note loans have executed agreements to convert to American Quantum
stock at time of completion of the secondary.
American Quantum Cycles has a letter of intent with an investment banker firm
for a public secondary offering for a minimum of $6 million. The company is in
the process of completing a private bridge program targeted at 1.5 million
dollars. The terms of the bridge program are to repay the principle plus
interest (at 7%) plus incentive shares at the time of the completion of the
secondary offering. American Quantum will use these funds for operating expenses
and production rampup through to the time of the completion of the secondary.
Through this period of time (November 1998 through March 1999), American Quantum
expects to deliver and collect monies on 50-80 motorcycles. Money from the sale
and delivery of motorcycles is expected to allow America Quantum to become cash
flow positive before the completion of the secondary offering. However no
assurances can be given that the secondary offering will be completed. In the
11
<PAGE>
event the secondary offering is not completed, American Quantum will need to
arrange alternative financing sources.
The proceeds from the Company's fund raising efforts have been used for
investment in inventory, equipment, licenses and intellectual rights for an
aggregate out-lay during the fiscal year ended April 30, 1998 of $978,182 and to
supply working capital for the Company's operations to-date.
Plan of Operation
- -----------------
The Company has made and projects significant investments in plant and people
which will support a significant ramp-up in monthly production of motorcycles
and engines during the next six months. Investment in plant includes
manufacturing equipment, materials handling equipment along with computer
hardware and software (enterprise resource planning software including
integration with the Company's Dealer oriented Intranet). During this same
period, the Company's headcount (number of full time employees) is projected to
increase from 44 to over 70. Most of the increase in headcount will be in
production and key support functions such as quality control, procurement and
inventory management.
During the remainder of calendar year 1998 the Company anticipates producing 300
additional motorcycles. This projection is based on a plan to ramp production
through refinement of the assembly process and investment in jigs, fixtures and
material handling equipment such as pneumatic hoists, lifts and conveyor belts.
The total monthly production is projected to increase from 60 in February with
the addition of a second assembly line and starting two shift operations.
Production is projected to be increased to 100 motorcycles per month from
January through April 1999.
The Company will invest in the research and development of two new product lines
during the next six months: a Touring motorcycle and a 96 cubic inch engine. The
Touring motorcycle will be a second product line to the existing Cruiser model
and will include saddle bags and windshields/fairings. The Touring motorcycle is
targeted at one of the fastest growing market segments. A prototype of the
Touring product has been built and was featured at the Sturgis Motorcycle Rally
in July of 1998. The Dealer and consumer response was very favorable with a
number of orders being placed at the show. The 96 cubic inch engine will use the
same 4-Valve technology as the Company's present 88 cubic inch engine. The
Company has built a 96 cubic inch engine and has put it through extensive
testing including over 4,000 miles of road testing and dynamometer tests. The
dynamometer tests established improvement in peak foot-pounds of torque at over
10% more than available from the 88 cubic inch engine. American Quantum's
4-Valve engine design is one of the industry leaders in high torque at low and
mid-range speeds. This is important to riders in giving excellent acceleration
for increasing speed to merge onto highway traffic from onramps and passing
trucks safely. Neither the Touring motorcycle nor the 96 cubic inch engine are
required product introductions in the next twelve months in order to achieve the
Company's business plan and financial objectives.
Year 2000 disclosure
- --------------------
Computers, software and other equipment using microprocessors have been utilized
that will accurately process date-based information, and are "Year 2000"
compliant. Specifically, our operating systems are Windows NT 4.0 based and our
manufacturing software (MfgPro) and engineering software (ProE) are all "Year
2000" compliant. Our usage of "Year 2000" compliant applications enables us to
perform necessary business operations without the possible adverse impact that
non-compliant software could cause.
12
<PAGE>
AMERICAN QUANTUM CYCLES, INC.
PART II
Other Information
Item 1. Legal Proceedings - None
-----------------
Item 2. Changes in Securities - None
---------------------
Item 3. Defaults upon Senior Securities - None
-------------------------------
Item 4. Submission of Matters to a Vote of Security Holders - None
---------------------------------------------------
Item 5. Other Information - None
-----------------
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits - 27.1 Data sheet
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the three
months ended October 31, 1998.
13
<PAGE>
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned as both a duly authorized officer and as the principal financial
officer by the Registrant.
AMERICAN QUANTUM CYCLES, INC.
Date: December 18, 1998 By: /s/ Richard K. Hagen
------------------ ---------------------
Richard K. Hagen
Chairman of the Board of Directors,
Chief Executive Officer,
Chief Financial Officer and President
Officer of Registrant
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 20,408
<SECURITIES> 0
<RECEIVABLES> 5,090,919
<ALLOWANCES> 0
<INVENTORY> 918,209
<CURRENT-ASSETS> 6,071,411
<PP&E> 1,235,660
<DEPRECIATION> 172,805
<TOTAL-ASSETS> 7,517,866
<CURRENT-LIABILITIES> 10,180,935
<BONDS> 0
0
0
<COMMON> 4,361
<OTHER-SE> 2,550,273
<TOTAL-LIABILITY-AND-EQUITY> 7,517,866
<SALES> 305,999
<TOTAL-REVENUES> 306,196
<CGS> 369,123
<TOTAL-COSTS> 1,114,814
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 61,374
<INCOME-PRETAX> (869,992)
<INCOME-TAX> 0
<INCOME-CONTINUING> (869,992)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (869,992)
<EPS-PRIMARY> (0.237)
<EPS-DILUTED> (0.149)
</TABLE>
