U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
-------------- ------------------
Commission File No. 000-29994
ANYTHING INTERNET CORPORATION
-----------------------------------------------------
(Exact name of Registrant as specified in its charter)
Colorado 84-1425882
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
3020 North El Paso, Ste. 103, Colorado Springs, Colorado 80907
---------------------------------------------------------------
(Address of Principal Executive offices)
(719) 227-1903
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
------- -------
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at November 10, 1999
----- --------------------------------
Common Stock, no par value 3,080,400
<PAGE>
Transitional Small Business Disclosure Form (check one):
Yes No X
-------- --------
ANYTHING INTERNET CORPORATION
TABLE OF CONTENTS
FORM 10-QSB
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements, Unaudited
Unaudited Consolidated Balance Sheets
at September 30, 1999 and June 30, 1999
Unaudited Consolidated Statement of Operations
for the three months ended September 30, 1999 and 1998
Unaudited Consolidated Statement of Cash Flow for the
three months ended September 30, 1999 and 1998
Notes to Unaudited Consolidated Financial Statements
Item 2. Management's Discussion and Analysis or
Plan of Operation
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibits
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS
September 30, June 30,
1999 1999
(unaudited) (audited)
---------------- --------------
<S> <C> <C>
Current assets:
Cash $ 33,853 $ 1,454
Accounts receivable 106,045 188,689
Inventory 14,846 12,277
Prepaid expenses 8,141 8,091
Notes receivable 18,023 18,023
Other 1,153 3,938
---------------- --------------
182,061 232,472
---------------- --------------
Furniture and fixtures:
Office furniture and equipment 71,030 63,162
Less accumulated depreciation 19,247 (14,859)
---------------- --------------
51,783 48,303
---------------- --------------
Other assets:
Software development costs, less
Accumulated amortization of
$23,433 and $18,039, respectively 41,556 39,600
Deposits 2,741 2,741
---------------- --------------
44,297 42,341
---------------- --------------
$ 278,141 $ 323,116
================ ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' DEFICIT
September 30, June 30,
1999 1999
(unaudited) (audited)
------------- --------------
<S> <C> <C>
Current liabilities:
Accounts payable $504,660 $400,721
Accrued expenses 83,180 52,840
Bank reserve - 22,051
Notes payable - line of credit 57,228 29,054
Notes payable - related party 75,000 75,000
------------- --------------
720,068 579,666
------------- --------------
Stockholders' equity:
Common stock, Class A, no par value;
50,000,000 shares authorized;
3,048,900 and 3,040,400 issued
and outstanding, respectively 382,900 359,900
Common stock subscribed (34,000 shares) 63,000 68,000
Stock subscription receivable (63,000) (68,000)
Accumulated deficit (824,829) (616,450)
------------- --------------
(441,929) (256,550)
------------- --------------
$278,139 $323,116
============= ==============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
STATEMENT OF OPERATIONS
(unaudited)
- Three Months Ending -
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Sales $ 620,062 $ 877,944
Cost of sales 592,507 868,732
------------- -------------
Gross profit 27,555 9,212
Selling, general and
administrative expenses 234,763 180,912
(Loss) from operations (207,208) (171,700)
Other income (expense):
Interest expense (1,170) (250)
Income (loss) before provision for
income taxes (208,378) (171,950)
Provision for income tax - -
Net income (loss) (208,378) (171,950)
============= =============
Net income (loss) per share
(basic and fully diluted) ($0.07) ($2.52)
============= =============
Weighted average number of common
shares outstanding 3,040,407 68,207
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ANYTHING INTERNET CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
- Three-Months Ended -
September 30, September 30,
1999 1998
--------------- ---------------
<S> <C> <C>
Cash flows from operating
activities:
Net income (loss) ($208,378) ($171,950)
Adjustments to
Reconcile net income to
Net cash provided by (used for)
operating activities:
Depreciation and
Amortization 9,732 3,416
Net changes in operating
assets and liabilities:
Accounts receivable 82,644 (46,917)
Changes in deposits - -
Changes in other current
assets 166 (5,336)
Change in note receivable - (12,379)
Accounts payable 132,113 111,256
and accrued expenses -------- --------
Net cash used by (used for)
Operations activities 16,277 (121,910)
-------- --------
Cash flows from investing
activities:
Acquisition of office equipment (7,868) (11,029)
Software development costs (7,300) -
Net cash used by (used for) -------- --------
Investing activities (15,168) (11,029)
Cash flow from financing
activities:
Change in current liabilities 30,340 23,459
Change in bank reserve (22,051) -
Change in stock subscription
receivable 5,000
Change in capital stock equity 18,000 82,000
Net cash provided by (used for) -------- --------
financing activities 31,289 105,459
Net increase (decrease)
in cash 32,399 (27,480)
Cash at beginning of the
Period 1,454 42,114
-------- --------
Cash at end of the period $ 33,853 $ 14,633
======== ========
</TABLE>
<PAGE>
Schedule of Non-Cash Investing and Financing Activities:
- --------------------------------------------------------
Repay $10,000 note payable: ($10,000.00)
Repay $10,500 with 1,950 shares
of Common Stock in August 1998: 10,500.00
Receive $25,000 from promissory note: 25,000.00
<TABLE>
<CAPTION>
Anything Internet Corporation
Consolidated Statement of Stockholders' Equity
For the Period From July 1, 1999 to September 30, 1998
(Unaudited)
Common Stock Preferred Stock Common Stock Subscribed
Class A Class A Stock ----------------------- Stock-
Number Number Subscription Number Accumulated holders'
of Shares Amount of Shares Amount Receivable of Shares Amounts Deficit Equity
---------- ---------- ---------- -------- ------------ --------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30,
1999 3,040,400 $ 359,900 - $ - $ (68,000) 34,000 $ 68,000 $(616,450) $(256,550)
Purchase of stock
warrants 6,000 18,000 18,000
Purchase of stock
subcriptions 2,500 5,000 5,000 (2,500) (5,000) 5,000
Net loss for period (208,379) (208,379)
---------- ---------- ---------- -------- ------------ --------- -------- ---------- ----------
Balance at September
30, 1999 3,048,900 $ 382,900 $ - $ - $ (63,000) 31,500 $ 63,000 $(824,829) $(441,929)
========== ========== ========== ======== ============ ========= ======== ========== ==========
</TABLE>
ANYTHING INTERNET CORPORATION
NOTES TO FINANCIAL STATEMENTS
(audited)
For the period from July 1, 1999 to September 30, 1999
NOTE 1: BASIS OF PRESENTATION:
The accompanying unaudited financial statements have been prepared in accordance
with the instructions to Form 10-QSB and do not include all of the information
and disclosures required by generally accepted accounting principles for
complete financial statements. All adjustments which are, in the opinion of
management, 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 operations for a full year.
NOTE 2: ORGANIZATION, OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES:
Anything Internet Corporation ('Anything Internet", the "Company"), was
incorporated in the State of Colorado on August 15, 1997. The Company markets
and distributes computers and related accessory products by using the Internet
as the exclusive distribution channel. On August 28, 1998, Anything, Inc.
<PAGE>
changed its name to Anything Internet Corporation, which was made effective
through an amendment to its Articles of Incorporation filed with the Secretary
of State of Colorado on August 31, 1998.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Income tax
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss
carryforwards and deferred tax liabilities are recognized for taxable temporary
differences. Temporary differences are the differences between the reported
amounts of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. Deferred tax assets and liabilities are adjusted for the effects of
changes in tax laws and rates on the date of enactment.
Cash and cash equivalents
The Company considers all highly liquid investments with an original maturity of
three months or less as cash equivalents.
Net income (loss) per share
The net income (loss) per share is computed by dividing the net income (loss) by
the weighted average number of shares of common outstanding. Warrants, stock
options, and common stock issuable upon conversion of the Company's preferred
stock are not included in the computation if the effect of such inclusion would
be anti-dilutive and would increase the earnings or decrease loss per share.
Inventory
Inventory consists of consigned finished goods. Inventories are valued at the
lower of cost or market using the first-in, first-out (FIFO) method.
Property and equipment
Property and equipment are recorded at cost and depreciated under accelerated
methods over an estimated life of five to seven years.
Software development costs
It is the Company's policy to capitalize major software development activities
to reflect the value of the software over its anticipated useful life. The
Company amortizes this software over a three year period from the implementation
of the software.
<PAGE>
Accounts receivable
The Company reviews accounts receivable periodically for collectability and
establishes an allowance for doubtful accounts and records bad debt expense when
deemed necessary.
Products and services, geographic areas and major customers
Company sales were derived from marketing and distributing computers and related
products over the Internet, were to external customers, and were domestic. The
Company had no one major customer accounting for over 10% of its sales. The
Company's long term assets are all held domestically.
Revenue Recognition
The Company recognizes revenue when a product is shipped to customers either
from the Company's inventory or when shipped from distributors' warehouses
directly to the customer. The Company assumes title to the product when it is
shipped either to the Company or directly to the Company's customer.
NOTE 3. RELATED PARTY TRANSACTIONS
On December 31, 1998 the Company loaned Robert C. Schick, an officer, $18,023 at
a rate of 3% per annum. The note matures and is payable in full on December 31,
1999.
On June 16, 1999, the Company borrowed $75,000 from a related corporation with
an ownership interest in Anything Internet Corporation. The short-term loan was
made at a rate of 12% per annum, and comes due July 30, 1999.
NOTE 4. LEASE COMMITMENT
Effective June 3, 1999, the Company extended its lease agreement for office
space in Colorado Springs, Colorado, and effective March, 1999, entered into a
lease agreement for office space in Tampa, Florida. Both leases are far a period
of twelve-months and can be renewed at terms and conditions to be established at
expiration date. Lease expense incurred for the year ended September 30, 1999
was approximately $19,000. The remaining minimum future rental payments, all in
1999, are $26,569.
NOTE 5. LINES OF CREDIT
The Company has also established a $50,000 line of credit with US Bank of
Colorado Springs, Colorado. Payments are due on the 15th of each month and
interest accrues at the rate of 10.45% per annum. At September 30, 1999 the
Company's outstanding balance on this credit line was $57,228.
NOTE 6. INCOME TAXES
Deferred income taxes arise from the temporary differences between financial
statement and income tax recognition of net operating losses. These loss
carryovers are limited under the Internal Revenue Code should a significant
change in ownership occur.
<PAGE>
At September 30, 1999 the Company had approximately $825,000 of unused federal
net operating loss carryforwards, which begin to expire in the year 2019. A
deferred tax asset has been offset by 100% valuation allowance. The Company
accounts for income taxes pursuant to SPAS 109. The components of the Company's
assets and liabilities as follows:
<TABLE>
<CAPTION>
September 30,1999 September 30, 1998
----------------- ------------------
<S> <C> <C>
Deferred tax liability $ - $ -
Deferred tax asset arising from:
Net operating loss carryforwards 75,717 321,933
----------------- ------------------
75,717 321,933
Valuation allowance (75,717) (321,933)
----------------- ------------------
Net Deferred Taxes $ - $ -
The income tax (benefit) consists of the following:
Current:
Federal $ - $ -
State - -
----------------- ------------------
Deferred: ($66,882) ($280,417)
Federal (9,835) (41,491)
State ----------- ---------
($75,717) ($321,933)
</TABLE>
No difference exists between these amounts and amounts computed at federal and
state statutory rates. The net change in 1999 in the total valuation allowance
was $81,516.
NOTE 7. STOCKHOLDERS' EQUITY
Common stock
The Company as of September 30, 1999 had 50,000,000 shares of authorized common
stock, no par value, with 3,048,900 shares issued and outstanding.
In Nay, 1998 an officer provided the company with $1,400 in cash and web page
design and development valued at $16,600. In August, 1998 the Company exchanged
1,950 shares of common stock for debt cancellation by an officer in the amount
of $10,500. Later in August, 1998, the Company retired all its 7,750 currently
outstanding shares, in addition to 4,200 retired earlier in the year, in
exchange for 500,000 shares of new Class A common stock. Also in August, 1998,
the Company purchased 200,000 Class A common shares of Banyan Corporation valued
at $40,000 in exchange for 1,000,000 Class A common shares of the Company. In
addition the Company issued 1,300,000 shares of Class A common stock for
management consulting, legal and investor relations services valued at $52,000
to parties unrelated to the Company or Banyan Corporation. In September, 1998,
the Company issued to the members of its Board of Directors 20,000 shares of
Class A common stock for services. In December, 1998 and January, 1999 the
Company sold 200,000 shares of Class A common stock for $200,000 in a private
placement. In January, 1999 the Company issued 20,400 common shares to directors
and others for compensation valued at $20,400.
<PAGE>
Warrants
As of September 30, 1999, the Company had 200,000 Common Stock Purchase Warrants
outstanding (the 'Warrants'), issued in conjunction with a private placement
completed in January, 1999. Each Warrant entitles the holder to purchase one
share of the Company's Class A common stock at an exercise price of $3.00 per
share through January 15, 2000, at which time the Warrants expire. The Company
may redeem the Warrants at a price of $0.01 per Warrant, at any time through
January 15, 2000 upon not less than 30 days, nor more than 60 days, prior
written notice, provided that the closing bid quotation for the common stock as
reported by any quotation service on which the common stock is quoted is at
least $4.00 for ten consecutive trading sessions ending on the two days prior to
the day on which notice is given. During the first quarter, 6,000 have been paid
for and issued.
Stock options
As of September 30, 1999, the Company made a stock option award to directors and
others and adopted an employee stock benefit plan, which are described below.
The Company applies ADS Opinion 25 and related Interpretations in accounting for
stock options.
Accordingly, no compensation cost has been recognized for its stock option award
to directors and its employee stock benefit plan, nor was any compensation cost
charged against income under the award or plan in 1999. Had compensation cost
for the Company's stock option award and employee stock benefit plan been
determined based on the fair value at The grant dates for awards under the stock
option award and employee stock benefit plan consistent with the method of FASS
Statement 123, the Company's net income and earnings per share would have been
reduced to the pro forma amounts indicated below:
1999
----------
Net income (loss) As reported ($591,688)
Pro forma ($1,497,389)
Basic and fully diluted earnings per share As reported ($0.24)
Pro form ($0.61)
Stock option award
In August, 1998, the Company granted stock options, exercisable immediately
(except as noted below), to certain officers and directors as compensation for
services, to purchase common shares of the Company as follows:
<TABLE>
<CAPTION>
Amount Price/Share Expiration Date
- ------ ----------- ---------------
<C> <C> <S>
500,000 $ 1 February 29, 2000
50,000 $ 40 April 1, 2002
25,000 $ 75 April 1, 2002
25,000 $ 100 April 1, 2002
*10,000 $ 3 March 31, 2003
<FN>
* Option vests over 3 years.
</TABLE>
<PAGE>
Employee stock option plan
On June 4, 1999 the Company awarded stock options to four employees under an
employee stock option plan. 200,000 common shares were reserved under the plan,
which expires in June, 2007. Each employee received options to purchase 2,500
common shares (10,000 shares total). The options vest at 500 shares per year
per employee, beginning June 4, 2000, at an exercise price of $3 per share.
A summary of the status of the Company's stock options as of June 30, 1999, and
changes during the year ending on that date is presented below:
<TABLE>
<CAPTION>
September 30, 1999
-----------------------
Weighted Avg.
Options Shares Exercise Price
------- ------ --------------
<S> <C> <C>
Outstanding at beginning of period - $ -
Granted 620,000 $ 11.19
Exercised - -
Forfeited - -
------- ------
Outstanding at end of period 620,000 $ 11.19
Options exercisable at period end 603,333
Weighted average fair value of
Options granted during the
Period $ 1.48
</TABLE>
The following table summarizes information about stock options outstanding at
September 30, 1999.
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------- -------------------
Weighted Avg. Weighted Weighted
Range of Number Remaining Avg. Number Avg.
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices at 9/30/99 Life Price at 9/30/99 Price
- ------------- ----------- ------------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
1.00-$100.00 620,000 13.2 months $ 11.19 603,333 $ 11.44
</TABLE>
Item 2. Management's Discussion and Analysis or Plan of Operation
Three Months Ending September 30, 1999 Compared to Three Months Ending September
30, 1998
Results of Operations
Net sales for the fiscal quarter ending September 30, 1999 were $620,062, a
decrease of 29% over $877,944 for the same period a year ago. All of these
sales were a result of sales generated primarily through the Company's Internet
storefronts AnythingPC.com, AnythingMAC.com and AnythingUNIX.com; sales from the
Company's newest storefront AnythingCoffee.com were minimal. The decrease in
sales was the result of Management's focusing on more profitable sales with the
goal of improving gross margins.
<PAGE>
Gross profits for the fiscal quarter ending September 30, 1999 were $27,554.
This represents an increase in gross profits of 199% over $9,212 for the same
period a year ago. Gross profit margins increased from 1.0% of sales to 4.4% of
sales as a result of focusing more on profitable sales and turning away marginal
sales. Historically, gross profit margins have been significantly lower than
traditional brick-and-mortar retailers as a result of the deep price discounts
typically offered to Internet customers.
Selling, general and administrative (SG&A) expenses for the fiscal quarter
ending September 30, 1999 $234,763 which represents a 30% increase from $180,912
for the same period a year ago. The major components of these expenses for the
fiscal year were the hiring of additional staff to satisfy increased site
maintenance requirements and opening the new Internet storefront
AnythingCoffee.com.
The net loss for the fiscal quarter ending September 30, 1999 amounted to
($208,379), or ($0.07) a share. This represents and increase of 21% compared to
($171,950), or ($2.52) a share, for the same period a year ago. The increase in
net loss was the result of lower sales and increases cost of operations from
expansion activities. There were 3,080,400 shares issued and outstanding as of
November 10, 1999.
Liquidity and Capital Resources
The Company's operations to date have concentrated on developing its Internet
storefronts, building brand recognition and a loyal customer following, and
securing the financing necessary to fund the development, operations and
expansion of its business.
As of September 30, 1999, the Company had $33,853 cash on hand, accounts
receivable, including some "term" sales, of $106,045, and receivable notes of
$81,023. The Company also had bank credit lines aggregating $50,000 which was
overdrawn by $7,228. In addition, the Company had several supplier-based
revolving lines of credit, including Tech Data, $150,000; Ingram Micro,
$150,000; Merisel, $65,000; and Pinacor, $5,000. Additionally, Reseller Credit
Corporation finances corporate purchase orders on behalf of the Company for
products supplied by Ingram Micro.
Net cash used by operating activities for the fiscal quarter ending September
30, 1999 totaled $16,277 compared to ($171,950) for the same period a year ago.
The majority of the improvement in cash flow used in these operating activities
was the result of improvements in collecting accounts receivables.
Net cash used by investing activities totaled ($15,168) for the fiscal quarter
ending September 30, 1999 compared to ($11,029) for the same period a year ago.
The increases in investing activities was the result of higher office equipment
acquisition costs and expanded software development activities relating to the
Company's Internet storefronts.
Net cash provided by financing activities totaled $54,340 for the fiscal quarter
ending September 30, 1999 compared to $105,459. The cash provided for by
financing activities was primarily the result of borrowing activities and
utilizing existing credit facilities as well as payments received on notes
outstanding.
<PAGE>
The Company expects to continue making significant investments in the future to
support its overall growth. Currently, it is anticipated that ongoing
operations will be sufficiently financed from the net proceeds of the
anticipated exercise of the warrants the common stock that were registered this
year, cash on hand, accounts receivable, the various credit facilities available
to the Company, from internally generated funds, and from outside funding
borrowing and sales of equity. The Company is also exploring expanded funding
activities at the divisional level. However, as indicated in the Company's most
recent financial statements available herein, while operating activities provide
some cash flow, the Company is currently cash flow negative. There can be no
assurances that the Company's ongoing operations will begin to generate a
positive cash flow or that unforeseen events may not require more working
capital than the Company currently has at its disposal.
Year 2000 Compliance
Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. This could result in system failures or miscalculations
causing disruptions of operations, including, among other things, a temporary
inability to process transactions, send invoices or engage in similar normal
business activities. As a result, many companies' software and computer systems
may need to be upgraded or replaced in order to comply with such "Year 2000"
requirements. The Company utilizes third-party equipment and software that it
believes is Year 2000 compliant, which include Year 2000 compliant BIOS
technology, operating systems and mission critical software. The Company has
conducted an audit of its third-party suppliers and distributors, namely Ingram
Micro and Tech Data, as to the Year 2000 compliance of their systems and is
satisfied their critical systems are Year 2000 compliant. The Company does not
believe it will incur significant costs in order to comply with Year 2000
requirements. However, failure of the Company's internal computer systems or of
such third-party equipment or software, or of systems maintained by the
Company's suppliers, to operate properly with regard to the Year 2000 and
thereafter could require the Company to incur unanticipated expenses to remedy
any problems.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
In the quarter ending September 30, 1999 the Company received $5,000 as
payment for common stock subscribed, but unpaid for, on January 26, 1999. The
price of the shares was $2.00 a share. For additional details see Item 26 of
the Company's registration statement on Form SB-2 filed with the Securities and
Exchange Commission on February 4, 1999.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits
--------
27.1 Financial Data Schedule
<PAGE>
(B) Reports on Form 8-K
- -------------------
The Company filed current reports on Form 8-K on August 5, 1999 and
September 24, 1999.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Anything Internet Corporation
(Registrant)
Dated: November 15, 1999 By: /s/ Lawrence Stanley
------------------------------------
Lawrence Stanley
Interim President and CEO
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 33853
<SECURITIES> 0
<RECEIVABLES> 106045
<ALLOWANCES> 0
<INVENTORY> 14846
<CURRENT-ASSETS> 164037
<PP&E> 71030
<DEPRECIATION> 19247
<TOTAL-ASSETS> 278140
<CURRENT-LIABILITIES> 720069
<BONDS> 0
0
0
<COMMON> 382900
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 278140
<SALES> 620062
<TOTAL-REVENUES> 620062
<CGS> 592507
<TOTAL-COSTS> 827270
<OTHER-EXPENSES> 1170
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (208379)
<INCOME-TAX> 0
<INCOME-CONTINUING> (208379)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (208379)
<EPS-BASIC> (.07)
<EPS-DILUTED> (.07)
</TABLE>
