UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D. C. 20549
FORM 10-QSB
( X ) Quarterly report pursuant to Section 13 or 15(d) of the Securities
and Exchange Act of 1934.
For the quarterly period ended March 31, 1999.
( ) Transition report pursuant to Section 13 or 15(d) of the Exchange
Act for the transition period from _____
____________ to ____________ .
Commission File Number: 333-70663
CDBEAT.COM, INC
Formerly Known As SMD GROUP, INC.
(Exact name of registrant as specified in charter)
Delaware 06-1529524
(State of Incorporation) (I.R.S. Employer I.D. No)
444 Bedford Street, Suite 8s, Stamford, Connecticut 06901
(Address of Principal Executive Offices)
(203) 602-9994
(Registrant's Telephone Number, Including Area Code)
Check whether the registrant: (1) has filed all reports required to be filed by
Section 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 ( )
Indicate the number of shares outstanding of each of the issuer's classes of
stock as of July 29, 1999.
4,479,247 Common Shares
Transitional Small Business Disclosure Format:
YES ( ) NO (X)
1
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CDBEAT.COM, INC.
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Balance Sheets as of March 31, 1999 and December 31, 1998........... 3
Statements of Operations for the three-months ended March 31, 1999.. 4
Statement of Stockholders' Deficit for the three-months ended March
31, 1999............................................................ 5
Statements of Cash Flows for the three-months ended March 31, 1999.. 6
Notes to Financial Statements ...................................... 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ................................12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ................................................. 16
Item 2. Changes in Securities ............................................. 16
Item 3. Defaults Upon Senior Securities ................................... 16
Item 4. Submission of Matters to a Vote of Securities Holders ............. 16
Item 5. Other Information.................................................. 16
Item 6. Exhibits and Reports on Form 8-K .................................. 16
Signatures................................................................... 16
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CDBEAT.COM, INC.
(A Development Stage Enterprise)
BALANCE SHEETS AS OF
- ------------------------------------------------------------------------
March 31,
1999 December
(Unaudited) 31, 1998
------------ ----------
ASSETS
Cash and cash equivalents $ 104,904 $ 309,203
Employee advance 4,984 4,984
Prepaid product development costs 210,000 420,000
Computer equipment
(net of accumulated depreciation
of $104 and $26) 13,539 1,557
------------ ----------
TOTAL $ 333,427 $ 735,744
============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Accrued expenses $ 11,511 $ 32,511
Due to stockholder 84,759 279
---------- ----------
Total liabilities 96,270 32,790
------------ ----------
STOCKHOLDERS' EQUITY:
Convertible preferred stock - $.001 par value,
10,000,000 Shares authorized:
Class A preferred stock - 8.75 and 27.847
shares issued and outstanding,
liquidation value $0 0 0
Class B preferred stock - 0 and 100
shares issued and outstanding,
liquidation value $0 0 0
Class C preferred stock - 50,000 and
100,000 shares issued and outstanding,
liquidation value $50 50 100
Common stock - $.001 par value
20,000,000 shares
authorized; 4,396,647 and 4,313,600
shares issued and outstanding 4,397 4,314
Additional paid-in capital 844,456 822,614
Deficit accumulated during the
development stage (611,746) (124,074)
------------ ----------
Total stockholders' equity 237,157 702,954
------------ ----------
TOTAL $ 333,427 $ 735,744
============ ==========
- ------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
3
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CDBEAT.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
For the Three Months Ended March 31, 1999
(Unaudited)
- -------------------------------------------------------------------
EXPENSES:
Professional fees $ 75,992
Software development costs 328,000
Payroll and related taxes 77,777
Office and administration 7,773
Depreciation 78
-----------
Total expenses 489,620
OTHER INCOME-
Interest (1,948)
-----------
NET LOSS $ 487,672
===========
NET LOSS PER SHARE:
Basic $ 0.11
===========
Weighted average number of shares - basic 4,396,647
===========
Diluted $ 0.11
===========
Weighted average number of shares - diluted 4,405,397
===========
- -------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
4
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CDBEAT.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF STOCKHOLDERS' EQUITY
For the Three Months Ended March 31, 1999
(Unaudited)
- -----------------------------------------------------------------------------
Convertible Defecit
Preferred Additional Accumulated
Stock common stock Paid- During
Par Par In Development Total
Shares Value shares Value Capital Stage
------------ ------- --------------- ---------- --------
Balances, January 1 100,128$ 100 4,313,60$ 4,314$822,614 $(124,074) $702,954
1999
Conversion of preferred
Shares into common
Shares (128) 83,047 83 (83)
Issuance of Class A
preferred shares
in exchange for
consulting services: 8.75 21,875 21,875
Cancellation of
Class C preferred (50,000) (50) 50
shares
Net loss for the three
Months ended March 31,
1999 (487,672)(487,672)
------------- ------------------------ -----------------
Balances, March 31, 50,008 $ 50 4,396,64$ 4,397 $844,456 $(589,871)$237,157
1999 ============= ======================== ===================
- -----------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
5
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CDBEAT.COM, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
For the Three Months Ended March 31, 1999
(Unaudited)
- -------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(487,672)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 78
Non-cash professional fees 21,875
Change in assets and
liabilities, net:
Decrease in accrued expenses (21,000)
Decrease in prepaid product development costs 210,000
Increase in due to stockholder 84,480
---------
NET CASH USED IN OPERATING ACTIVITIES (192,239)
---------
CASH FLOWS USED IN INVESTING ACTIVITIES-
Purchase of equipment (12,060)
----------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES-
Proceeds from the issuance of common stock 0
----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 204,299
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD $ 309,203
----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 104,904
==========
Interest paid $ 0
==========
Taxes paid $ 0
==========
- -------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS.
6
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CDBEAT.COM, INC.
(A Development Stage Enterprise)
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
- ------------------------------------------------------------------------------
NOTE A - FORMATION AND OPERATIONS OF THE COMPANY
CDbeat.com, Inc. F/K/A SMD Group, Inc. (the "Company") was incorporated under
the laws of the state of Delaware on May 8, 1998. The Company, which is
considered to be in the development stage as defined in Financial Accounting
Standards Board Statement No. 7, intends to provide branded, interactive
information and programming as well as merchandise to music enthusiasts
worldwide. The planned principal operations of the Company have not commenced,
therefore accounting policies and procedures have not been established.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
The accompanying unaudited financial statements of the Company have been
prepared in accordance with generally accepted accounting principals for interim
financial information and the instructions to Form 10-QSB and Rule 10-1 of
Regulation S-X of the Securities and Exchange Commission (the "SEC").
Accordingly, these financial statements do not include all of the footnotes
required by generally accepted accounting principals. In the opinion of
management, all adjustments (consisting of normal and recurring adjustments)
considered necessary for a fair presentation have been included. Operating
results for the three months and ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the year ended December 31,
1999. The accompanying financial statements and the notes should be read in
conjunction with the Company's audited financial statements as of December 31,
1998 contained in its Amendment No. 4 Registration Statement on Form SB-2.
NOTE B - GOING CONCERN
The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company generated a net loss
of $487,672 for the three months ended March 31, 1999, and is anticipating
continued losses for the fiscal year ending December 31, 1999. In addition, the
Company will require a significant amount of capital to commence its planned
principal operations. Accordingly, the Company's ability to continue as a going
concern is dependent upon its ability to secure an adequate amount of capital to
finance its anticipated losses and planned principal operations. The Company's
plans include a public offering of its common stock (see Note F) and the
issuance of debt, however there is no assurance that we will be successful in
these efforts. In the event the Company receives minimal or no proceeds from the
7
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public offering, the Company will seek alternative funding sources and may
adjust its focus and expenditures required for implementing its planned
operations. These factors, among others, may indicate that the Company will be
unable to continue as a going concern for a reasonable period of time.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
NOTE C - PREPAID PRODUCT DEVELOPMENT COSTS
On December 31, 1998, the Company engaged a software development firm (the
"Developer") to develop a software application for the Company's planned
interactive Web site (the "Application"). Pursuant to terms of the agreement,
the Developer received total consideration of $420,000 through December 31,
1998; such consideration consisted of (1) cash of $42,000; (2) 96,000 shares of
the Company's common stock having a market value of $240,000; and (3) 100 shares
of the Company's convertible Class B preferred stock having a market value of
$138,000 (these shares were converted into 55,200 of the Company's common shares
in January 1999).
In January 1999, the scope of the engagement was amended whereby additional
services will be provided by the Developer for $240,000. These costs, along with
the $420,000 of prepaid product development costs in the accompanying balance
sheet, will be expensed as the services are provided. During the three months
ended March 31, 1999 the Company expensed approximately $210,000 of the prepaid
product development costs.
NOTE D - SHAREHOLDER'S EQUITY
Convertible Preferred Stock
The following transactions occurred during the three months ended March 31,
1999:
a. 311.75 shares of Class A preferred stock, convertible into 311,750 shares of
the Company's common stock, were issued to certain consultants for services
related strategic consulting advice and services relating to positioning,
guidance and introductions to music and entertainment individuals and
companies. Some assistance relating to the re-writing of business plan was
also provided. The Company terminated one of the agreements that provided for
303 shares of Class A preferred stock. The fair market value of the remaining
8.75 shares of $21,875 has been recorded as professional fees.
b. 50,000 of the 100,000 shares of Class C, which were issued in 1998 to two
employees were canceled as a result of the separation from the Company of one
of its employees. The remaining 50,000 Class C shares may, under certain
conditions, be converted to 500,000 shares of the Company's common stock. The
preferred shares have been placed into a voting trust that is administered by
the Company's president. Pursuant to terms of the voting trust agreements,
one thirty-sixth of the preferred shares are to be released each month,
subject to the limitation that for every share released, the Company on a
cumulative basis must have met certain software download goals. As such, it
8
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is possible that some or all of these shares will not be converted into
common shares, and accordingly, the Company has not recorded compensation
expense to date. Rather, the Company will record compensation expense equal
to the fair market value of the common shares on the date any such shares are
earned. The agreement, which is irrevocable, has an initial term of three
years and may be renewed indefinitely.
Each of the above classes consists of the following rights and preferences: (1)
no stated dividends, (2) non-voting, (3) no preferential dividends, (4) no
redemption rights, (5) liquidation preference equal to its par value and
assuming the required conditions are met, convertible into common shares at any
time prior to December 31, 2010. The conversion rates described above are
subject to proportional adjustment in the event of a stock split, stock dividend
or similar recapitalization event effecting such shares.
Common Stock
On January 11, 1999, we issued to consultants a total of 27,847 shares of common
stock for the conversion of 27.847 shares of preferred stock Class A.
On January 12, 1999, we issued to Cadnetics, Inc., a software development firm
for the Company, 55,200 shares of common stock for the conversion of 100 shares
of preferred stock class B. There are no other class b preferred shares that
have been issued.
Warrants
During the three months ended March 31, 1999, the Company issued 110,530
warrants to purchase common shares at a price of $2.50 per share. 79,030 were
issued for general corporate advice and guidance on corporate strategies and
plans and 31,500 were issued for business consulting and strategic partner
introductions provided. As of March 31, 1999, the Company had outstanding
warrants to purchase 128,377 shares of common stock for a price of $2.50 per
share (which, based on recent sales, the Board of Directors believes is the fair
market value of the stock).
NOTE E - INCOME TAXES
During the three months ended March 31, 1999 and the period May 8, 1998 (date of
incorporation) to December 31, 1998, the Company recognized losses for both
financial and tax reporting purposes. Accordingly, no deferred taxes have been
provided for in the accompanying statement of operations. The significant
components of the deferred tax asset as of March 31, 1999, assuming an effective
income tax rate of 34%, are approximately as follows:
Deferred Income Tax Asset:
Net operating loss carryforwards $ 208,000
---------
Deferred income tax asset 208,000
Less valuation allowance (208,000)
Total deferred income tax asset - net $ 0
9 ==========
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The Company established a valuation allowance to fully reserve the deferred
income tax asset as of March 31, 1999 as the realization of the asset did not
meet the required asset recognition standard established by Financial Accounting
Standards Statement No. 109 "Accounting for Income Taxes."
At March 31, 1999 and December 31, 1998, the Company had net operating loss
carryforwards of approximately $488,000 and $124,000 for income tax purposes.
These carryforwards will be available to offset future taxable income through
the year 2019 and 2018.
NOTE F - LOSS PER SHARE
The Company computes net loss per share in accordance with SFAS No. 128
"Earnings per Share" ("SFAS No. 128") and SEC Staff Accounting Bulletin No. 98
("SAB 98"). Under the provisions of SFAS No. 128 and SAB 98, basic net loss per
share is computed by dividing the net loss available to common stockholders for
the period by the weighted average number of common shares outstanding during
the period. Diluted net loss per share is computed by dividing the net loss for
the period by the number of common and common equivalent shares outstanding
during the period. Common equivalent shares, composed of incremental common
shares issuable upon the conversion of Class A convertible preferred stock, are
included in diluted net income per share to the extent such shares are dilutive.
During the three months ended March 31, 1999, the Company's Class B preferred
stock holders converted all their shares into shares of common stock and are
included in the basic calculation. In addition, Warrants and Class C preferred
stock have been excluded from the loss per share calculations because they
currently are not dilutive. The following table sets forth the computation of
basic and diluted net loss per share:
Numerator
Net loss available to common
stockholders $487,672
=========
Denominator
Weighted average shares 4,396,647
---------
Denominator for basic calculation 4,396,647
Weighted average effect of dilutive securities:
Class A Preferred Stock 8,750
---------
Denominator for diluted calculation 4,405,397
=========
Net loss per share:
Basic $ 0.11
=========
Diluted $ 0.11
=========
10
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NOTE G - PROPOSED COMMON STOCK OFFERING
On May 17, 1999, the Company began offering subscriptions for the sale of up to
4,000,000 shares of its common stock, including 479,000 of which are being
offered by existing shareholders, for $2.50 per share. The offering is on a best
efforts, no minimum basis. As such, there will be no escrow of any of the
proceeds of the offering and the Company will have the immediate use of such
funds to finance its planned operations.
NOTE H - RELATED PARTY TRANSACTIONS
During the three months ended March 31, 1999, the Company's president
provided a portion of his home for office space for no consideration. The value
of such office space provided is not considered significant and as such no
expenses have been recorded.
- ------------------------------------------------------------------------------
11
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Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATION
OVERVIEW
The following discussion and analysis should be read in conjunction with the
balance sheet as of December 31, 1998 and the financial statements as of and for
the three months ended March 31, 1999 included with this Form 10-QSB. We
incorporated May 8, 1998 and this analysis does not include any discussion as of
and for the comparative period in 1998.
We are considered to be in the development stage as defined in Financial
Accounting Standards Board Statement No. 7, and we intend to provide branded,
interactive information and programming as well as merchandise to music
enthusiasts worldwide.
Readers are referred to the cautionary statement, which addresses
forward-looking statements made by the Company.
RESULTS OF OPERATIONS
For the three months ended March 31, 1999 we did not generate any
operating revenues and incurred a cumulative net loss of $487,672. Our operating
expenses consist of software development costs, professional fees, payroll, and
office.
o Software development costs of $328,000 consisted principally of the
development of our software applications. Of these expenses, $210,000 were
recorded as prepaid at December 31, 1998 and expensed as incurred during the
three months ended March 31, 1999.
o Professional fees of $75,992 consisted principally of general business
consulting, business development, legal and accounting fees.
o Payroll expenses of $77,777 consisted principally of related taxes and
salaries paid to employees in administrative, public relations and support
functions.
o Office expenses of $7,773 consisted principally of office supplies,
photocopies, postage, telephone, fax, cellular and Internet access.
The results of operations for the period ended March 31, 1999 are not
necessarily indicative of the results for any future interim period or for the
year ending December 31, 1999. We expect to expand our business and user base,
which will require us to increase our personnel, develop software, purchase
equipment and license content, which will result in increasing expenses.
12
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Liquidity and Capital Resources
Our operating and capital requirements have exceeded our cash flow from
operations as we have been building our business. Operating activities during
the three months ended March 31, 1999 created a net use of cash of $192,239,
which have been primarily funded by sales of our common stock in 1998 and
$84,480 in borrowings, during the three months ended March 31, 1999, from our
management. At March 31, 1999 we had cash and cash equivalents of $104,904.
We expect to make expenditures of approximately $2,465,000 during the
twelve months following the closing of this offering. These expenditures will be
used to continue software development, expand our web site, hire additional
personnel, sales and marketing, licensing content, purchase equipment and
general working capital.
On May 17, 1999, we began offering subscription for the sale of up to
3,521,000 shares of our common stock at $2.50 per share. We need the proceeds of
this offering to expand our operations and finance our future working capital
requirements. Based upon our current plans and assumptions relating to our
business plan, we anticipate that $2,465,000 in net proceeds from this offering
will satisfy our capital requirements for at least twelve months following the
closing of this offering. If our plans change or our assumptions prove to be
inaccurate, we may need to seek additional financing sooner than currently
anticipated or curtail our operations.
YEAR 2000 READINESS DISCLOSURE
OUR STATE OF READINESS
We have defined Year 2000 compliance as follows:
Information technology time and date data processes, including, but not limited
to, calculating, comparing and sequencing data from, into and between the 20th
and 21st centuries contained in our software and services offered through the
us, will function accurately, continuously and without degradation in
performance and without requiring intervention or modification in any manner
that will or could adversely affect the performance of such products or the
delivery of such software and services as applicable at any time.
Our internal systems include both information technology systems and
non-information technology systems. We have initiated an assessment of our
proprietary information technology systems, and expect to complete any
remediation and testing of all information technology systems during 1999. With
respect to information technology systems provided by third-party vendors, we
have sought assurances from such vendors that their technology is Year 2000
compliant. All of our material information technology system vendors have
replied to inquiry letters sent by us stating that they either are Year 2000
compliant or expect to be so in a timely manner.
We are evaluating our non-information technology systems for Year 2000
compliance. We have not, to date, discovered any material Year 2000 issues with
respect to our non-information technology systems.
13
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We are in the process of contacting our material suppliers whose products or
services are sold through us to determine if they are Year 2000 compliant. To
date, all such suppliers have stated that they are, or expect to be, Year 2000
compliant in a timely manner. Our customers are individual Internet users, and,
therefore, we do not have any individual customers who are material to an
evaluation of Year 2000 compliance issues.
THE COSTS TO ADDRESS YEAR 2000 ISSUES
We have expensed amounts incurred in connection with Year 2000 compliance since
its formation through March 31, 1999. Such amounts have not been material. The
additional costs to make any other software or services Year 2000 compliant by
mid-1999 will be expensed as incurred, but are not expected to be material.
We are not currently aware of any material operational issues or costs
associated with preparing our systems for the Year 2000. Nonetheless, we may
experience material unexpected costs caused by undetected errors or defects in
the technology used in our systems or because of the failure of a material
supplier to be Year 2000 compliant.
RISKS ASSOCIATED WITH YEAR 2000 ISSUES
Notwithstanding our Year 2000 compliance efforts, the failure of a material
system or vendor used in our software and service, or the Internet generally, to
be Year 2000 compliant could harm the operation of our software and services or
prevent us from generating advertising or commerce sales through our software,
or have other unforeseen, adverse consequences to the company.
Finally, we are also subject to external Year 2000-related failures or
disruptions that might generally affect industry and commerce, such as utility
or transportation company Year 2000 compliance failures and related service
interruptions. Moreover, participating vendors in our services might experience
substantial slow-downs in business if consumers avoid products and services such
as air travel both before and after January 1, 2000 arising from concerns about
reliability and safety because of the Year 2000 issue. All of these factors
could have a material adverse effect on our business, financial condition and
results of operations.
CONTINGENCY PLANS
We are engaged in an ongoing Year 2000 assessment and the development of
contingency plans. The results of our Year 2000 simulation testing and the
responses received from third-party vendors and service providers will be taken
into account in determining the nature and extent of any contingency plans. We
have identified our worst-case scenario as the interruption of our business
resulting from Year 2000 failure of the electric company or our Internet service
providers to provide services. We have not yet completed our worst-case scenario
contingency plan. Without a worst-case scenario contingency plan we may not have
enough time to complete remedial measures and implement contingency planning for
the worst-case scenario. We do plan to complete our contingency plan in
accordance with our compliance plan and under the guidance of our consultants in
the third quarter of 1999.
14
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CAUTIONARY STATEMENT
This Form 10-QSB, press releases and certain information provided periodically
in writing or orally by the Company's officers or its agents contain statements
which constitute forward-looking statements within the meaning of Section 27A of
the Securities Act, as amended and Section 21E of the Securities Exchange Act of
1934. The words expect, anticipate, believe, goal, plan, intend, estimate and
similar expressions and variations thereof if used are intended to specifically
identify forward-looking statements. Those statements appear in a number of
places in this Form 10-QSB and in other places, particularly, Management's
Discussion and Analysis of Financial Condition and Results of Operations, and
include statements regarding the intent, belief or current expectations of the
Company, its directors or its officers with respect to, among other things: (i)
the Company's liquidity and capital resources; (ii) the Company's financing
opportunities and plans and (iii) the Company's future performance and operating
results. Investors and prospective investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, and that actual results may differ materially from
those projected in the forward-looking statements as a result of various
factors. The factors that might cause such differences include, among others,
the following: (i) any material inability of the Company to successfully develop
and integrate its software at reasonable and anticipated costs to the Company;
(ii) any material inability of the Company to successfully internally develop
its products; (iii) any adverse effect or limitations caused by Governmental
regulations; (iv) any adverse effect on the Company's continued positive cash
flow and abilities to obtain acceptable financing in connection with its growth
plans; (v) any increased competition in business; (vi) any inability of the
Company to successfully conduct its business in new markets; and (vii) other
risks including those identified in the Company's filings with the Securities
and Exchange Commission. The Company undertakes no obligation to publicly update
or revise the forward looking statements made in this Form 10-QSB to reflect
events or circumstances after the date of this Form 10-QSB or to reflect the
occurrence of unanticipated events.
- -------------------------------------------------------------------------------
15
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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 Securities Holders
NONE
Item 5. Other Information
NONE
Item 6. Exhibits and Reports on Form 8-K
NONE
SIGNATURES
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, thereunto duly authorized.
7/29/199 /s/ Joel Arberman
---------- ------------------------
Date Joel Arberman, President
16
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 104,904
<SECURITIES> 0
<RECEIVABLES> 4,984
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 109,888
<PP&E> 13,643
<DEPRECIATION> 104
<TOTAL-ASSETS> 333,427
<CURRENT-LIABILITIES> 96,270
<BONDS> 0
0
50
<COMMON> 4,397
<OTHER-SE> 844,456
<TOTAL-LIABILITY-AND-EQUITY> 333,427
<SALES> 0
<TOTAL-REVENUES> 1,948
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 489,620
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (487,672)
<INCOME-TAX> 0
<INCOME-CONTINUING> (487,672)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (487,672)
<EPS-BASIC> (.11)
<EPS-DILUTED> (.11)
</TABLE>
