================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to __________________.
Commission file number 0-28179
ABLEAUCTIONS.COM, INC.
(Exact name of small business issuer in its charter)
Florida Not applicable
- ------------------------------- -------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1963 Lougheed Highway
Coquitlam, British Columbia
V3K-3T8
(Address of principal executive offices)
(604) 521-2253
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
The number of outstanding common shares, no par value, of the Registrant
at March 31, 1999 was 19,549,517
================================================================================
<PAGE>
ABLEAUCTIONS.COM, INC.
INDEX TO THE FORM 10-QSB
For the quarterly period ended March 31, 2000
<TABLE>
Page
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets..............................................................3
Consolidated Statements of Operations....................................................4
Consolidated Statements of Cash Flows....................................................5
Consolidated Statements of Changes in Stockholder's Equity ..............................6
Notes to the Consolidated Financial Statements...........................................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.....................................................17
Item 3. Quantitative and Qualitative Disclosure About Market Risk...............................20
Part II - Other Information
Item 1. Legal Proceedings .....................................................................21
Item 2. Changes in Securities and Use of Proceeds..............................................21
Item 3. Defaults Upon Senior Securities .......................................................21
Item 4. Submission of Matters to a Vote of Security Holders....................................21
Item 5. Other Information......................................................................21
Item 6. Exhibits and Reports on Form 8-K.......................................................22
Signatures .........................................................................................23
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
================================================================================
<TABLE>
March 31, December 31,
2000 1999
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current
Cash and cash equivalents $ 1,452,826 $ -
Accounts receivable - trade 427,226 96,790
Accounts receivable - other 113,295 171,015
Inventory 1,326,617 486,572
Prepaid expenses 81,335 73,452
--------------- ---------------
Total current assets 3,401,299 827,829
Trademark 11,425 12,151
Capital assets (Note 3) 4,920,920 1,170,859
Web site development costs (Note 4) 94,479 95,805
Goodwill 1,246,268 655,155
--------------- ---------------
Total assets $ 9,674,391 $ 2,761,799
==============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Bank indebtedness $ - $ 60,916
Accounts payable and accrued liabilities 823,958 277,706
Promissory note - current (Note 6) 102,831 -
--------------- --------------
Total current liabilities 926,789 338,622
Promissory note (Note 6) 943,527 -
--------------- --------------
1,870,316 338,622
--------------- ---------------
Stockholders' equity
Capital stock (Note 7)
Authorized
62,500,000 common shares with a par value of $0.001
Issued and outstanding
March 31, 2000 - 19,549,517 common shares
with a par value of $0.001
December 31, 1999 - 18,310,001 common shares
with a par value of $0.001
Additional paid-in capital 10,288,562 3,740,108
Deficit (2,566,664) (1,346,686)
Accumulated other comprehensive income 62,628 11,445
--------------- ---------------
Total stockholders' equity 7,804,075 2,423,177
--------------- ---------------
Total liabilities and stockholders' equity $ 9,674,391 $ 2,761,799
==============================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
THREE MONTH PERIOD ENDED MARCH 31
================================================================================
<TABLE>
2000 1999
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
REVENUE
Sales $ 867,691 $ -
Commissions 232,436 -
--------------- --------------
1,100,127 -
COST OF GOODS SOLD 814,751 -
--------------- --------------
GROSS PROFIT 285,376 -
--------------- --------------
OPERATING EXPENSES
Accounting and legal fees 116,013 -
Advertising and promotion 154,288 -
Amortization of goodwill 14,692 -
Automobile 15,348 -
Bad debt (recovery) (3,696) -
Commission 16,053 -
Consulting fees 81,254 -
Depreciation and amortization 105,608 -
Investor relations and shareholder information 266,571 -
Licenses and permits 14,354 -
Management fees 1,607 -
Office and miscellaneous 62,913 -
Rent and utilities 185,335 -
Repairs and maintenance 24,062 -
Salaries and benefits 296,069 -
Telephone 24,686 -
Travel and entertainment 115,605 -
--------------- --------------
1,490,762 -
--------------- --------------
Loss before other items (1,205,386) -
--------------- --------------
OTHER ITEMS
Interest income 14,443 -
Foreign exchange loss (29,035) -
--------------- --------------
(14,592) -
--------------- --------------
Loss for the period $ (1,219,978) $ -
=================================================================================================
Basic and diluted loss per share $ (0.07) $ -
=================================================================================================
Weighted average number of shares outstanding 18,668,483 -
=================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
THREE MONTH PERIOD ENDED MARCH 31
================================================================================
<TABLE>
2000 1999
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Net loss $ (1,219,978) $ -
Other comprehensive income, net of tax:
Foreign currency translation adjustments 62,628 -
--------------- --------------
Consolidated comprehensive loss $ (1,157,350) $ -
=================================================================================================
Basic and diluted loss per share $ (0.07) $ -
=================================================================================================
Weighted average number of shares outstanding 18,668,483 -
=================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
================================================================================
<TABLE>
Accumulated
Common Stock Additional Other Total
-------------------------------- Paid-in Comprehensive Stockholders'
Shares Amount Capital Income Deficit Equity
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31,
1998 6,250,000 $ 6,250 $ - $ - $ (7,194) $ (944)
Common stock issued
for cash 1,094,057 1,094 3,499,886 - - 3,500,980
Common stock issued
for acquisition of
Able Auctions
(1991) Ltd. 1,843,444 1,843 71,895 - - 73,738
Common stock issued
for services 53,750,000 53,750 (45,150) - - 8,600
Common stock issued
for services 5,312,500 5,313 (4,463) - - 850
Return of shares to
treasury for
cancellation (50,000,000) (50,000) 50,000 - - -
Common stock issued
for assets of Ross
Auctioneers 60,000 60 167,940 - - 168,000
Translation adjustment - - - 11,445 - 11,445
Loss for the year - - - - (1,339,492) (1,339,492)
-------------- -------------- -------------- ------------- ------------ -------------
Balance, December 31,
1999 18,310,001 18,310 3,740,108 11,445 (1,346,686) 2,423,177
Common stock issued
for cash 1,000,000 1,000 4,999,000 - - 5,000,000
Share issuance costs - - (300,000) - - (300,000)
Common stock issued
for acquisition of
building 155,486 155 1,243,733 - - 1,243,888
Common stock issued
for acquisition of
assets of Falcon
Trading Inc. 53,405 53 360,752 - - 360,805
Common stock issued
for acquisition of
assets of Mesler's
Auction House 30,625 31 244,969 - - 245,000
Translation adjustment - - - 51,183 - 51,183
Loss for the period - - - - (1,219,978) (1,219,978)
-------------- -------------- -------------- ------------- ------------ -------------
Balance, March 31, 2000 19,549,517 $ 19,549 $ 10,288,562 $ 62,628 $(2,566,664) $ 7,804,075
==============================================================================================================================
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
6
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
THREE MONTH PERIOD ENDED MARCH 31
<TABLE>
================================================================================
2000 1999
- ------------------------------------------------------------------------------------ ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss for the period $ (1,219,978) $ -
Items not affecting cash:
Amortization of goodwill 14,692 -
Depreciation and amortization 105,608 -
Changes in non-cash working capital items:
Increase in accounts receivable (272,716) -
Increase in inventory (840,045) -
Increase in prepaid expenses (7,883) -
Increase in accounts payable and accrued liabilities 546,252 -
--------------- --------------
Net cash used in operating activities (1,674,070) -
--------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 5,000,000 -
Share issuance costs (300,000) -
--------------- --------------
Net cash provided by financing activities 4,700,000 -
--------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital assets (1,563,371) -
--------------- --------------
Net cash used in investing activities (1,563,371) -
--------------- --------------
Change in cash and cash equivalents for the period 1,462,559 -
Effect of exchange rates on cash 51,183 -
Cash and cash equivalents, beginning of period (60,916) -
--------------- --------------
Cash and cash equivalents, end of period $ 1,452,826 $ -
==================================================================================== ================
</TABLE>
Supplemental disclosures with respect to cash flows (Note 9)
The accompanying notes are an integral part of these consolidated
financial statements.
7
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized on September 30, 1996, under the laws of the
State of Florida, as J.B. Financial Services, Inc. On July 19, 1999, an
Article of Amendment was filed with the State of Florida for the change of
the Company's name from J.B. Financial Services, Inc. to Ableauctions.com,
Inc.
The Company is a high-tech business-to-business and consumer auctioneer
that conducts its auctions live and simultaneously broadcasts them over the
Internet. The Company liquidates a broad range of computers, electronics,
office equipment, furniture and industrial equipment that it acquires
through bankruptcies, insolvencies and defaults.
2. SIGNIFICANT ACCOUNTING POLICIES
Generally accepted accounting principles
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which include
only normal recurring adjustments) necessary to present fairly the
financial position, results of operations, comprehensive loss, changes in
stockholders' equity and cash flows at March 31, 2000 and for the period
then ended have been made. These financial statements should be read in
conjunction with the audited financial statements of the Company for the
year ended December 31, 1999. The results of operations for the period
ended March 31, 2000 are not necessarily indicative of the results to be
expected for the year ending December 31, 2000.
Principles of consolidation
These consolidated financial statements include the accounts of
Ableauctions.com, Inc. (formerly J.B. Financial Services, Inc.) and its
wholly owned subsidiaries, Able Auctions (1991) Ltd. and Ableauctions.com
(Washington) Inc. All significant inter-company balances and transactions
have been eliminated on consolidation.
Foreign currency translation
The Company accounts for foreign currency transactions and translation of
foreign currency financial statements under Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation" ("SFAS 52").
Transaction amounts denominated in foreign currencies are translated at
exchange rates prevailing at transaction dates. Carrying values of monetary
assets and liabilities are adjusted at each balance sheet date to reflect
the exchange rate at that date. Non-monetary assets and liabilities are
translated at the exchange rate on the original transaction date. Gains and
losses from restatement of foreign currency monetary and non-monetary
assets and liabilities are included in income. Revenues and expenses are
translated at the rates of exchange prevailing on the dates such items are
recognized in earnings.
Financial statements of the Company's Canadian subsidiary, Able Auctions
(1991) Ltd. are translated into U.S. dollars using the exchange rate at the
balance sheet date for assets and liabilities. The functional currency of
Able Auctions (1991) Ltd. is the local currency, the Canadian dollar.
Translation adjustments, if necessary, are recorded as a separate component
of Stockholders' Equity.
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 amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the period. Actual results could differ from these estimates.
8
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Cash and cash equivalents
The Company considers all investments with a maturity of three months or
less to be cash equivalents.
Inventory
Inventory is stated at the lower of cost and net realizable value.
Software development
The Company has adopted Statement of Position 98-1 ("SOP 98-1"),
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use", as its accounting policy for internally developed computer
software costs. Under SOP 98-1, computer software costs incurred in the
preliminary development stage are expensed as incurred. Computer software
costs incurred during the application development stage are capitalized and
amortized over the software's estimated useful life.
Capital assets and depreciation
Capital assets are recorded at cost less accumulated depreciation. The cost
of capital assets is depreciated using the declining balance method at the
following rates:
Building 4%
Computer equipment 30%
Computer software 30%
Furniture and fixtures 20%
Equipment 30%
Vehicles 30%
Leasehold improvements are depreciated using the straight-line method over
a period of 10 years.
Revenue recognition
The Company generally earns revenues from its auction activities either
through consignment sales, or through sales of inventory purchased by the
Company. For consignment sales, the Company earns auction fees charged to
consignees, and buyer's premiums charged to purchasers, determined as a
percentage of the sale price. For inventory sales, the Company earns a
profit or incurs a loss on the sale, to the extent the purchase price
exceeds or is less than the purchase price paid for such inventory.
For each type of auction revenue, an invoice is rendered to the purchaser,
and revenue is recognized by the Company, at the date of the auction. The
auction purchase creates a legal obligation upon the purchaser to take
possession of, and pay for the merchandise. This obligation generally
provides the Company with reasonable assurance of collection of the sale
proceeds, from which the Company's earnings are derived, including the fees
from consignees and purchasers, as well as resale profits.
Trademarks
The cost of the trademark acquired is being amortized on a straight-line
basis over its life of fifteen years.
Goodwill
Goodwill represents the excess of the cost of companies acquired over the
fair value of their net assets at dates of acquisition and is being
amortized on a straight-line basis over a period between 10-20 years.
9
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Advertising costs
The Company recognizes advertising expenses in accordance with Statement of
Position 98-7, "Reporting on Advertising Costs". As such, the Company
expenses the cost of communicating advertising in the period in which the
advertising space or airtime is used.
Loss per share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). Under SFAS 128, basic and diluted earnings per share are to be
presented. Basic earnings per share is computed by dividing income
available to common shareholders by the weighted average number of common
shares outstanding in the period. Diluted earnings per share takes into
consideration common shares outstanding (computed under basic earnings per
share) and potentially dilutive common shares.
Income taxes
Income taxes are provided in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes". A deferred tax
asset or liability is recorded for all temporary differences between
financial and tax reporting and net operating loss carryforwards. Deferred
tax expense (benefit) results from the net change during the year of
deferred tax assets and liabilities.
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.
10
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Stock-based compensation
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to account for stock-based compensation
using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee is required to
pay for the stock.
Accounting for derivative instruments and hedging activities
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133") which establishes
accounting and reporting standards for derivative instruments and for
hedging activities. SFAS 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. In June 1999, the FASB issued SFAS 137
to defer the effective date of SFAS 133 to fiscal quarters of fiscal years
beginning after June 15, 2000. The Company does not anticipate that the
adoption of the statement will have a significant impact on its financial
statements.
Comprehensive income
In 1998, the Company adopted Statement of Financial Accounting Standards
No. 130 ("SFAS 130"), "Reporting Comprehensive Income". This statement
establishes rules for the reporting of comprehensive income and its
components.
3. CAPITAL ASSETS
<TABLE>
====================================================================================================
Net Book Value
---------------------------------
Accumulated March 31, December 31,
Cost Depreciation 2000 1999
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Building $ 1,395,000 $ 1,750 $ 1,393,250 $ -
Computer equipment 1,019,257 218,616 800,641 843,713
Computer software 153,553 32,917 120,636 108,984
Furniture and fixtures 274,897 10,200 264,697 6,784
Land 2,105,000 - 2,105,000 -
Leasehold improvements 55,369 2,341 53,028 14,254
Equipment 168,000 18,428 149,572 161,700
Vehicles 47,961 13,865 34,096 35,424
--------------- --------------- --------------- --------------
$ 5,219,037 $ 298,117 $ 4,920,920 $ 1,170,859
====================================================================================================
</TABLE>
11
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
4. WEB SITE DEVELOPMENT COSTS
Web site development costs of $94,479 (net of amortization costs of
$18,900) (December 31, 1999 - $95,805) is comprised of hardware and
software costs incurred by the Company in developing its web site. The
Company's amortization policy concerning these costs is to amortize the
costs over a period of five years commencing from the date of operations.
5. BUSINESS COMBINATION
During the year ended December 31, 1999, the Company entered into an
acquisition agreement whereby the Company acquired all the outstanding
shares of Able Auctions (1991) Ltd. ("Able"). The Company issued 1,843,444
of its common shares at a deemed value of $73,738 and paid $545,305 to
acquire the shares of Able. The Company also paid an additional $504,695
for shareholders' loans.
The total purchase price of $1,123,738 has been allocated as follows:
Cash $ 347,474
Accounts receivable 140,982
Inventory 215,194
Prepaid expenses 36,114
Capital assets 780,551
Goodwill 667,127
Accounts payable and accrued liabilities (136,863)
Loan payable (878,377)
Obligation under capital lease (48,464)
--------------
$ 1,123,738
Goodwill is amortized on a straight-line basis over a 20 year period.
During the period, the Company amortized $8,339 of goodwill, leaving a
balance of $646,816 at March 31, 2000.
6. PROMISSORY NOTE
<TABLE>
==================================================================================================================
2000 1999
------------------------------------------------------------------------------- ----------------- ----------------
<S> <C> <C>
Promissory note, interest at 9% per annum, repayment at $8,569 per month
including principal and interest, secured by mortgage over
land and building, due July 24, 2028. $ 1,046,358 $ -
Less: Current portion (102,831) -
--------------- --------------
$ 943,527 $ -
==================================================================================================================
</TABLE>
12
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
7. CAPITAL STOCK
Stock split and dividend
a) On September 2, 1998, the Company implemented a 200:1 forward stock
split. On July 20, 1999, the Company effected a stock dividend of four
shares for every one share of record. On July 21, 1999, the Company
implemented a 5:1 forward stock split and on September 5, 1999, the
Company implemented a 4:1 reverse stock split. The consolidated
statements of changes in stockholders' equity have been restated to
give retroactive recognition of the stock splits and stock dividend
for all periods presented by reclassifying from common stock to
additional paid-in capital the par value of consolidated shares
arising from the splits and stock dividend. In addition, all
references to number of shares and per share amounts of common stock
have been restated to reflect the stock splits.
b) On March 26, 1999, the Company issued 53,750,000 shares at a deemed
value of $8,600 as payment of fees for services received.
c) On April 12, 1999, the Company issued 5,312,500 shares at a deemed
value of $850 as payment of fees for services received.
d) On July 19, 1999, the Company received from a shareholder 50,000,000
shares which were previously issued for services rendered, and
returned these shares to treasury for cancellation.
e) On August 24, 1999, the Company completed a private placement whereby
it issued 1,094,057 post consolidation units at a price of $3.20 per
unit for total consideration in the amount of $3,500,980. Each unit
consists of one restricted common share and half of a share purchase
warrant. Each whole warrant will entitle the holder to purchase an
additional restricted common share at a price of $3.20 per share until
August 24, 2000 and at $4.00 per share until August 24, 2001.
f) On October 18, 1999, the Company issued 60,000 shares at a deemed
value of $168,000 for the purchase of assets of Ross Auctioneers &
Appraisers Ltd.
g) On February 25, 2000, the Company completed a private placement of
1,000,000 units at a price of $5.00 per unit for total proceeds of
$4,700,000, net of issuance costs of $300,000. Each unit consists of
one share of common stock and one non-transferable share purchase
warrant. Each warrant entitles the holder to purchase one additional
share of common stock at a price of $5.00 until February 25, 2001 and
at a price of $6.00 until February 25, 2002.
h) On February 29, 2000, the Company issued 53,405 shares of common stock
at a deemed value of $360,805 to purchase the assets of Falcon Trading
Inc.
i) On March 20, 2000, the Company issued 155,486 shares of common stock
at a deemed value of $1,243,888, for the purchase of a building in
Scottsdale, Arizona.
j) On March 20, 2000, the Company issued 30,625 shares of common stock at
a deemed value of $245,000 to purchase the assets of Mesler's Auction
House.
13
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
8. STOCK OPTIONS AND WARRANTS
The following stock options were outstanding at March 31, 2000:
=======================================================================
Number Exercise
of Shares Price Expiry Date
-----------------------------------------------------------------------
802,500 $ 3.20 October 14,2004
82,500 5.00 January 18, 2005
30,000 8.00 February 29, 2005
75,000 6.756 February 29, 2005
=======================================================================
The following warrants were outstanding at March 31, 2000:
=======================================================================
Number Exercise
of Shares Price Expiry Date
-----------------------------------------------------------------------
547,029 $ 3.20 August 24, 2000
then at 4.00 August 24, 2001
1,000,000 5.00 February 25, 2001
then at 6.00 February 25, 2002
150,000 8.00 March 20, 2001
=======================================================================
9. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS
========================================================================
2000 1999
------------------------------------------------------- ----------------
Cash paid for income taxes $ - $ -
Cash paid for interest 10,762 -
========================================================================
The following non-cash operating, investing and financing transactions
occurred during the three month period ended March 31, 2000:
a) The Company issued 53,405 shares of common stock at a deemed value of
$360,805 to purchase the assets of Falcon Trading Inc.
b) The Company issued 155,486 shares of common stock at a deemed value of
$1,243,888 for the purchase of a building and land in Scottsdale,
Arizona.
c) The Company issued 30,625 shares of common stock at a deemed value of
$245,000 to purchase the assets of Mesler's Auction House.
14
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
9. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO CASH FLOWS (cont'd...)
d) The Company assumed a promissory note in the amount of $1,046,358 to
the purchase of a building and land in Scottsdale, Arizona.
There were no non-cash operating, investing and financing transactions
during the three month period ended March 31, 1999.
10. ACCUMULATED OTHER COMPREHENSIVE LOSS
Total comprehensive loss for the three month period ended March 31, 2000
and 1999 were $1,157,350 and $Nil respectively. The only item included in
other comprehensive loss is foreign currency translation adjustments in the
amounts of $62,628 for the three month period ended March 31, 2000 and $Nil
for the three month period ended March 31, 1999.
<TABLE>
=================================================================== =================
Foreign Accumulated
Currency Other
Translation Comprehensive
Adjustment Income
- ------------------------------------------------------------------- -----------------
<S> <C> <C>
Balance, December 31, 1998 and March 31, 1999 $ - $ -
================= =================
Balance, December 31, 1999 $ 11,445 $ 11,445
Current period change 51,183 51,183
---------------- ----------------
Balance, March 31, 2000 $ 62,628 $ 62,628
=================================================================== =================
</TABLE>
11. INCOME TAXES
The Company's total deferred tax asset is as follows:
<TABLE>
==============================================================================
March 31, December 31,
2000 1999
----------------------------------------------------------- ----------------
<S> <C> <C>
Tax benefit relating to net operating
loss carryforwards $ 1,173,771 $ 610,361
Valuation allowance (1,173,771) (610,361)
--------------- ---------------
$ - $ -
==============================================================================
</TABLE>
The Company has a net operating loss carryforward of approximately
$2,500,000 which expires in the year 2006. The Company provided a full
valuation allowance on the deferred tax asset because of the uncertainty
regarding realizability.
15
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
12. STOCK BASED COMPENSATION EXPENSE
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation", encourages but does not require companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to account for stock-based compensation
using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees". Accordingly, compensation cost for stock options is
measured as the excess, if any, of quoted market price of the Company's
stock at the date of grant over the option price. No stock based
compensation has resulted from the use of this standard.
Following is a summary of the status of the plan during 2000 and 1999:
<TABLE>
=================================================================================================
Weighted
Average
Number Exercise
of Shares Price
--------------------------------------------------------------------------------- ---------------
<S> <C> <C>
Outstanding at December 31, 1998 and March 31, 1999 - $ -
============= =============
Outstanding at December 31, 1999 812,500 $ 3.20
Granted 207,500 6.07
Forfeited (30,000) 4.40
Exercised - -
-------------
Outstanding at March 31, 2000 990,000 $ 3.77
=================================================================================================
Weighted average fair value of options granted during the period $ 4.58
=================================================================================================
</TABLE>
Following is a summary of the status of options outstanding at March 31,
2000:
<TABLE>
=====================================================================================================================
Outstanding Options Exercisable Options
------------------------------------------- -------------------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Contractual Exercise Exercise
Exercise Price Number Life Price Number Price
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$ 3.20 802,500 4.54 $ 3.20 642,500 $ 3.20
5.00 82,500 4.80 5.00 82,500 5.00
8.00 30,000 4.91 8.00 - 8.00
6.76 75,000 4.91 6.76 - 6.76
=====================================================================================================================
</TABLE>
16
<PAGE>
ABLEAUCTIONS.COM, INC.
(formerly J.B. Financial Services, Inc.)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 31, 2000
================================================================================
12. STOCK BASED COMPENSATION EXPENSE (cont'd.....)
Compensation
Had compensation cost been recognized on the basis of fair value pursuant
to Statement of Financial Accounting Standards No. 123, net loss and loss
per share would have been adjusted as follows:
<TABLE>
=========================================================================== ===============
2000 1999
- --------------------------------------------------------------------------- ---------------
<S> <C> <C>
Loss for the period
As reported $ (1,219,978) $ -
=============== ===============
Pro forma $ (1,689,477) $ -
=============== ===============
Basic and diluted loss per share
As reported $ (0.07) $ -
=============== ===============
Pro forma $ (0.09) $ -
=========================================================================== ===============
</TABLE>
The fair value of each option granted is estimated using the Black Scholes
Model. The assumptions used in calculating fair value are as follows:
======================================================= ===============
1999 1998
- ------------------------------------------------------- ---------------
Risk-free interest rate 6.23% -
Expected life of the options 2 years -
Expected volatility 189% -
Expected dividend yield - -
======================================================= ===============
13. SUBSEQUENT EVENT
The following transactions occurred subsequent to March 31, 2000:
a) The Company completed a private placement of 1,210,240 units at a
price of $5.00 per unit for total proceeds of $5,234,288, net of share
issuance costs of $816,912. Each unit consists of one share of common
stock and one non-transferable share purchase warrant. Each warrant
entitles the holder to purchase one additional share of common stock
at a price of $6.00 until April 28, 2001.
b) The Company has signed a Letter of Intent to acquire Ehli's Auctions
for $1,250,000, which will be payable by $900,000 in cash and the
balance of $350,000 by issuing shares of the Company's common stock at
a deemed price of $7.00 per share. On closing, the Company will grant
stock options to purchase 80,000 shares of common stock of the Company
at the market price per share at the time of closing, subject to
performance based vesting criteria.
17
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
We were incorporated in the State of Florida on September 30, 1996 under the
name "J.B. Financial Services, Inc. On August 24, 1999, we acquired all of the
issued and outstanding shares of Able Auctions (1991) Ltd. pursuant to a share
purchase agreement with Dexton Technologies Corporation, the sole shareholder of
Able Auctions (1991) at that time. We are an early stage company. Before our
acquisition of Able Auctions (1991), we were a shell company with no material
revenues, expenses, assets or liabilities.
On our acquisition of Able Auctions (1991), we acquired all of the assets and
the auction business of Able Auctions (1991), and we undertook the process of
designing, building and testing an Internet based e-commerce web site to
broadcast auctions over the Internet. We launched our web site for public
viewing in September 1999, and conducted our first live broadcast of an auction
on our web site in January, 2000.
Our principal activity to date has been expanding our auction business through
developing the business of Able Auctions (1991) and acquiring other auction
businesses. During 1999, we acquired the business assets and hired the employees
of Ross Auctioneers & Appraisers Ltd located in British Columbia, Canada.
During the first quarter of 2000, we acquired the business assets and hired the
employee of Falcon Trading, Inc in Washington State, and we acquired Mesler's
Auction House located in Arizona.
We believe that our historic spending levels are not indicative of future
spending levels because we are entering a period in which we will increase
spending on research and development, marketing, staffing and other general
operating expenses. We also believe that the historic results of operation of
Able Auctions (1991), Ross Auctioneers, Falcon Trading, and Mesler's Auction
House are not indicative of future results of operations because we believe that
our expenses, losses, and deficit accumulated during our development stage will
increase significantly before we generate material revenues or profits from our
operations.
Management's Discussion and Analysis
The information contained in this Management's Discussion and Analysis contains
"forward looking statements." Actual results may materially differ from those
projected in the forward looking statements as a result of certain risks and
uncertainties set out in this report
Although management believes that the assumptions made and expectations
reflected in the forward looking statements are reasonable, there is no
assurance that the underlying assumptions will, in fact, prove to be correct or
that actual future results will not be different from the expectations expressed
in this statement. Our actual results could differ materially from the results
projected in the forward-looking statements as a result of our ability to:
o achieve the objectives of our business strategy;
o accelerate or defer operating expenses;
o achieve revenue from our operations; and
o hire new personnel.
The following discussion is qualified by the more complete financial information
contained in our audited financial statements for the year ended December 31,
1999, contained in the our annual report on Form 10-KSB filed on April 13, 2000,
and our interim financial statements for the three-month period ended March 31,
2000. Our financial statements have been prepared in accordance with United
States generally accepted accounting principles.
The following discussion of our results of operations should be read in
conjunction with our unaudited interim consolidated financial statements and the
related notes.
18
<PAGE>
Results of Operations
Three months ended March 31, 2000 compared to the corresponding period in 1999.
We were not in operations during 1999 until we acquired Able Auctions (1991) on
August 24, 1999. During the three months ended March 31, 2000, we had revenues
of $1,100,127 attributable substantially to the business operations of our
wholly owned Canadian subsidiary Able Auctions (1991). Operations in Washington
and Arizona were acquired February 29 and March 20, 2000, respectively. Our
operating expenses continue to reflect start up costs associated with our
acquisitions and start up and the maintenance costs relating to our web
business. During the quarter ended March 31, 2000, our expenses were $1,490,762,
including accounting and legal fees of $116,013 incurred primarily in connection
with regulatory filings, acquisitions and due diligence; advertising and
promotion expenses of $154,288 related to promoting our auction business and web
site; depreciation and amortization expenses of $120,300; investor relations,
travel and corporate development expenses of $382,176 related to our financing
efforts; rent and building occupancy costs which included new facilities of
$209,397 and salaries and management fees of $297,676. Our net losses for the
period were $1,219,978 or $0.07 per share.
We anticipate net operating losses to increase for the foreseeable future as a
result of our planned efforts to expand and diversify our auction business in
addition to anticipated development costs related to our web site. We also
expect costs related to consulting and management fees, salaries, rent,
marketing and promotion, and general overhead to increase during 2000.
In addition, we anticipate that our general and administrative expenses will
also significantly increase as a result of the growth in our research,
development, testing and business development programs. The actual levels of
research and development, administrative and general corporate expenditures are
dependent on the cash resources available to us.
Liquidity and Capital Resources
Our working capital position at March 31, 2000 was $2,474,510. Cash flow for
operating activities required $1,674,070 and cash flow for investing activities
required $1,563,371 relating primarily to the cash component of our acquisition
in Arizona that included a large building. Net cash flow from financing
activities were $4,700,000 from a private placement of $1,000,000 units at $5
per unit after deducting finance fees.
During the quarter ended March 31, 2000, we completed the following
transactions:
On February 25, 2000, the Company completed a private placement of
1,000,000 units at a price of $5.00 per unit for total proceeds of
$4,700,000, net of issuance costs of $300,000. Each unit consists of one
share of common stock and one non-transferable share purchase warrant. Each
warrant entitles the holder to purchase one additional share of common
stock at a price of $5.00 until February 25, 2001 and at a price of $6.00
until February 25, 2002.
On February 29, 2000, the Company issued 53,405 shares of common stock at a
deemed value of $360,805 to purchase the assets of Falcon Trading Inc.
On March 20, 2000, the Company issued 155,486 shares of common stock at a
deemed value of $1,243,888, for the purchase of a building in Scottsdale,
Arizona.
On March 20, 2000, the Company issued 30,625 shares of common stock at a
deemed value of $245,000 to purchase the assets of Mesler's Auction House.
Our operating and capital budget for the year ending December 31, 2000 is
approximately $15 million, to be used primarily for expenses related to the
acquisition of new auction facilities, expansion of our inventories, continually
developing and upgrading our technologies, launching a marketing campaign in the
United States and Canada, and purchasing additional servers and operating
systems.
19
<PAGE>
Outlook
We have entered a period of rapid expansion and growth. In their independent
auditor's report related to our financial statements for the year ended December
31, 1999 dated March 24, 2000, Davidson & Co. expressed doubt about our ability
to continue as a going concern due to our lack of working capital for our
planned business activities. In February 2000, we successfully raised $5 million
and a further $6 million in April 2000 for net proceeds of $9.9 million. We
anticipate we will be required to raise an additional $5 million to adequately
fund our operating and capital budget for the year 2000.
We intend to meet our cash requirements through revenues generated from our
operations and private or public placements of our equity or debt. We are
currently seeking such financing by presenting our business plan to merchant and
investment banks, fund managers and investment advisors. We cannot assure you
that we will successfully raise any additional financing on acceptable terms, if
at all, and our failure to meet our cash requirements will force us to abandon
some of our plans of operation, sell some of our assets or certain business
operations or liquidate our business, all of which will have a material adverse
effect on our business and results of operations.
We cannot assure you that our actual expenditures for this period will not
exceed our estimated operating and capital budget. Actual expenditures will
depend on a number of factors, some of which are beyond our control, including,
among other things, timing of our web site launch, the revenues from our auction
operations, the success of our geographical expansion, the availability of
financing on acceptable terms, reliability of the assumptions of management in
estimating cost and timing, costs related to the development of our web site and
technologies, economic conditions and competitive factors in the auction
industry.
Plan of Operation
Our plan of operation is based on the operating histories of Able Auctions
(1991) Ltd., Ross Auctioneers, Falcon Trading, and Mesler's Auction House; our
experience in the industry; our discussions with third parties; the SEC filings
of our competitors and the decisions of our management. Set out below is a
summary of our plan of operation and operating and capital budget for the next
fiscal year ending December 31, 2000.
GENERATE REVENUES THROUGH AUCTIONS AND INCREASE OUR VOLUME OF SALES BY
INCREASING THE NUMBER OF LIVE AUCTIONS AT OUR EXISTING LOCATIONS.
We will continue to operate auctions at our four locations in Surrey and
Coquitlam, British Columbia; Redmond, Washington; and Scottsdale, Arizona. We
intend to increase the number of auctions we currently hold at each of our
locations to four per month beginning in summer of 2000.
INCREASE REVENUES BY BROADCASTING OUR AUCTIONS ON THE INTERNET AND BY SELLING
MERCHANDISE ON OUR WEB SITE
We launched our web site for public viewing in September 1999 and broadcasted
our first live auction in January 2000. We are in the process of further
refining the technologies related to broadcasting live auctions on our web site.
Visitors to our web site may also purchase items from our Retail Store and bid
on items in our Silent Auction.
Initially, we intend to host live auctions alternating between our locations in
British Columbia, Washington, and Arizona. We may add auctions of other auction
houses if we acquire additional auction locations or if we develop strategic
affiliations with other auction houses to broadcast their auctions.
CONTINUE RESEARCH AND DEVELOPMENT TO IMPROVE OUR WEB SITE AND AUCTION
BROADCASTING TECHNOLOGIES
We plan to continue our research and development efforts by improving our web
site and auction broadcasting technologies. We are in the process of refining
our live auction broadcasting technologies and intend to develop software and
systems that will allow us to improve graphical presentations, the speed of our
bidding process, the preview of merchandise and the method of registering
bidders. We anticipate that we will spend approximately $750,000 on research and
development efforts during 2000.
20
<PAGE>
INSTALL THE LIVE BROADCAST TECHNOLOGY AT REGIONAL AUCTION SITES
We plan to install live broadcast technology at all of our auction locations
during 2000. We estimate the costs of installing broadcast equipment will be
approximately $125,000 to $150,000 per location.
COMMENCE GEOGRAPHIC EXPANSION PROGRAM BY ACQUIRING OR ENTERING INTO STRATEGIC
AFFILIATIONS WITH AUCTION COMPANIES
We intend to offer an Internet broadcasting service that will allow other
auction houses in a variety of locations throughout North America to broadcast
their auctions on our web site. We have also begun to acquire other auction
companies. Our management will continue to identify possible auction companies
to approach regarding acquisition by us. We expect the focus of our geographic
expansion during 2000 will be in Ontario, Canada; Seattle; New York and Southern
California.
HIRE ADDITIONAL KEY PERSONNEL
We plan to hire personnel and employ consultants with Internet e-commerce
experience to complement our current management who are experienced in the
auction industry. We anticipate adding up to 15 new employees with e-commerce,
software development, and software maintenance experience during 2000.
SUMMARY OF OPERATING AND CAPITAL BUDGET
Set forth below are our estimated cash operating and capital budgets for
operations, technology purchases, research and development and implementing our
expansion strategy for the fiscal year ending December 31, 2000:
Marketing $ 5,000,000
Ongoing research and development 750,000
Expansion of inventories 3,000,000
Servers and operating systems 1,250,000
Geographic expansion 5,000,000
------------------
Required Capital: $ 15,000,000
Our operating and capital budget for the fiscal year ending December 31, 2000 is
estimated to be approximately $15 million. We anticipate that our revenues from
operation and our current working capital will be sufficient to finance our plan
of operations through to September 2000. We will be required to raise additional
capital during the second to third quarter 2000 to meet our anticipated cash
needs and to fund our plan of operation through to December 31, 2000. See
"Liquidity and Capital Resources." We cannot assure you that our actual
expenditures for that period will not exceed our estimated operating budget.
Actual expenditures will depend on a number of factors, some of which are beyond
our control, including, among other things, the availability of financing on
acceptable terms, acquisition and/or expansion costs, reliability of our
assumptions in estimating costs, certain economic factors, the timing related to
development of our technology and launch of our web site and cost associated
with operating our auctions.
We will be required to raise additional capital during the second quarter 2000
to meet our anticipated cash needs. If we are unable to raise additional
financing on acceptable terms, we may be forced to delay the implementation of
certain portions of our plan of operation, which may adversely affect our
business and results of operations.
ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We believe that we do not have any material exposure to interest or commodity
risks. We are exposed to certain economic and political changes in international
markets where we compete, such as inflation rates, recession, foreign ownership
restrictions, domestic and foreign government spending, budgetary and trade
policies and other external factors over which we have no control.
Our financial results are quantified in U.S. dollars and a majority of our
obligations and expenditures with respect to our operations are incurred in U.S.
dollars. In the past the majority of our revenues were derived from the business
operations of our wholly-owned subsidiary, Able Auctions (1991) Ltd., whose
operations are conducted in British Columbia, Canada and in Canadian dollars.
Although we do not believe we currently have any materially significant
21
<PAGE>
market risks relating to our operations resulting from foreign exchange rates,
if we enter into financing or other business arrangements denominated in
currency other than the U.S. dollar or the Canadian dollar, variations in the
exchange rate may give rise to foreign exchange gains or losses that may be
significant.
We currently have no material long-term debt obligations. We do not use
financial instruments for trading purposes and we are not a party to any
leverage derivatives. In the event we experience substantial growth in the
future, our business and results of operations may be materially affected by
changes in interest rates and certain other credit risk associated with its
operations.
Part II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
As of the date hereof, there is no material litigation pending against the
Company. From time to time, the Company is a party to litigation and claims
incidental to the ordinary course of our business. While the results of
litigation and claims cannot be predicted with certainty, we believe that the
final outcome of such matters will not have a material adverse effect on our
business, financial condition, results of operations and cash flows.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Our business activities, including operations and capital expenditures during
the quarter have been funded through the issuance of shares of our common stock
in the following transactions:
<TABLE>
Summary of Transactions Number of Shares Amount
($)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Balance as of December 31, 1999 18,310,001 3,758,418
Issued for cash at $5.00 per share(1) 1,000,000 4,700,000
Issued as consideration for the assets of Falcon Trading, Inc. 53,405 360,805
Issued as partial consideration for the assets of Mesler's Auction 30,625 245,000
House of Scottsdale, LLC(2)
Issued as partial consideration for certain assets of C&C Capital 155,486 1,243,888
Investment, Inc.
----------------- ---------------
TOTAL, as of March 31, 2000 19,549,517 10,308,111
- --------------------------------------------------------------------------------------------------------------
</TABLE>
(1) We issued units consisting of one common share and one common share
purchase warrant. Each warrant is exercisable to acquire an additional
common share at $5.00 until February 25, 2001 and at $6.00 until February
25, 2002. Finance fees of $300,000 were paid in connection with this
financing.
(2) We also issued a common share purchase warrant entitling Mesler's to
purchase 150,000 common shares at $8.00 per share until March 20, 2001.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
22
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
27.1 Financial Data Schedule
b) Reports on Form 8-K
Form 8-K dated April 4, 2000
<PAGE>
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.
ABLEAUCTIONS.COM INC.
Date: May 15, 2000 By: /s/ ABDUL LADHA
---------------------------------
Name: Abdul Ladha
Title: President & Chief Executive
Officer
Principal Executive Officer)
Date: May 15, 2000 By: /s/ N.H. (Nosh) Vellani
---------------------------------
Name: N.H. (Nosh) Vellani
Title: Chief Financial Officer
(Principal Financial Officer)
23
<PAGE>
EXHIBIT INDEX
-------------
Exhibit
Number Description
- ------ -----------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> JAN-01-2000
<CASH> 1,452,826
<SECURITIES> 0
<RECEIVABLES> 540,521
<ALLOWANCES> 0
<INVENTORY> 1,326,617
<CURRENT-ASSETS> 3,401,299
<PP&E> 0
<DEPRECIATION> 105,608
<TOTAL-ASSETS> 9,674,391
<CURRENT-LIABILITIES> 926,789
<BONDS> 0
0
0
<COMMON> 19,549
<OTHER-SE> 10,288,562
<TOTAL-LIABILITY-AND-EQUITY> 9,674,391
<SALES> 867,691
<TOTAL-REVENUES> 1,100,127
<CGS> 814,751
<TOTAL-COSTS> 1,490,762
<OTHER-EXPENSES> 14,592
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (14,443)
<INCOME-PRETAX> (1,219,978)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,219,978)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
