SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
EXCHANGE ACT
For the transition period from to
------------ -----------
Commission file number: 0-15224
ADVANCE DISPLAY TECHNOLOGIES, INC.
--------------------------------------
(Exact name of small business issuer as
specified in its charter)
COLORADO 84-0969445
---------------------- ----------------------
(State of incorporation) (IRS Employer ID number)
1251 South Huron Street, Unit C, Denver, Colorado 80223
-------------------------------------------------------
(Address of principle executive offices) (Zip Code)
(303) 733-5339
(Issuer's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
----- -----
As of November 10, 1997, 25,526,432 shares of Common Stock, $.001 par value per
share were outstanding.
Transitional Small Business Disclosure Format (check one):
YES NO X
----- -----
<PAGE>
ADVANCE DISPLAY TECHNOLOGIES, INC.
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets (unaudited) -
September 30, 1997 and June 30,1997................................3
Consolidated Statements of Operations (unaudited)
Three months ended September 30, 1997 and
September 30, 1996 and for the period from
March 15, 1995, inception, to September 30, 1997...................4
Consolidated Statements of Cash Flows (unaudited)
Three months ended September 30, 1997 and
September 30, 1996 and for the period from
March 15, 1995, inception, to September 30, 1997...................5
Notes to Consolidated Financial Statements (unaudited)...............6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition...................7-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................................10
Item 2. Changes in Securities...............................................10
Item 3. Defaults on Senior Securities.......................................11
Item 4. Submission of Matters to a Vote of
Security Holders..................................................11
Item 5. Other Information...................................................11
Item 6. Exhibits and Reports on Form 8-K....................................11
Signatures........................................................11
2
<PAGE>
ADVANCE DISPLAY TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30,
1997 1997
------------ -----------
ASSETS
------
CURRENT ASSETS:
Cash $ 28,082 $ 235,731
Inventory 109,811 51,819
Other current assets 31,057 10,191
------------ ------------
Total current assets 168,950 297,741
PROPERTY AND EQUIPMENT 84,210 77,674
Less: Accumulated depreciation (7,765) (2,260)
------------ ------------
Net Property and Equipment 76,445 75,414
------------ ------------
INTANGIBLE ASSETS, net of accumulated
amortization of $62,281 and
$42,750, respectively 510,084 529,615
------------ ------------
TOTAL ASSETS $ 755,479 $ 902,770
============ ============
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 528,654 $ 558,140
Notes payable to shareholders 65,000 ---
Convertible notes payable to shareholders 550,000 500,000
Other accrued liabilities 183,813 111,494
------------ ------------
Total current liabilities 1,327,467 1,169,634
SHAREHOLDERS' DEFICIT:
Preferred stock, $.001 par value, 100,000,000
shares authorized, 1,843,900 shares issued
and outstanding (liquidation preference of
$2,765,850) 1,844 1,844
Common stock, $.001 par value, 100,000,000
shares authorized, 21,343,923 shares issued
and outstanding 21,344 21,344
Additional paid-in capital 2,453,503 2,453,503
Deficit accumulated during the development
stage (3,048,679) (2,743,555)
------------ ------------
Total Shareholders' Deficit (571,988) (266,864)
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS'
DEFICIT $ 755,479 $ 902,770
============ ============
(See accompanying notes to unaudited consolidated financial statements)
3
<PAGE>
<TABLE>
<CAPTION>
ADVANCE DISPLAY TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
March 15, 1995
Three Months Ended (Inception) through
September 30, September 30,
1997 1996 1997
------------ ----------- -------------
REVENUE:
<S> <C> <C> <C>
Consulting $ 15,000 $ --- $ 15,000
Interest income - related party --- 26,159 162,761
------------ ----------- -------------
Total Revenue 15,000 26,159 177,761
COSTS AND EXPENSES:
Cost of goods 11,427 --- 11,427
General and administrative 259,287 1,026 398,642
Research and development 34,241 --- 2,579,181
Interest expense - related party 15,169 34,563 237,190
------------ ----------- -------------
Total costs and expenses 320,124 35,589 3,226,440
------------ ----------- -------------
NET LOSS $ (305,124) $ (9,430) $ (3,048,679)
============ =========== =============
NET LOSS PER COMMON SHARE $ ( .01) $ ( .01)
======= =======
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 21,343,923 784,236
========== =======
(See accompanying notes to unaudited consolidated financial statements)
4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ADVANCE DISPLAY TECHNOLOGIES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
March 15, 1995
Three Months Ended (Inception) through
September 30, September 30,
1997 1996 1997
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net loss $ (305,124) $ (9,430) $(3,048,679)
Adjustments to reconcile net loss
to net cash used in
operating activities:
Acquired research and development expense -- -- 2,536,494
Depreciation and amortization 25,036 -- 74,885
(Increase) decrease in:
Inventory (57,992) -- (103,763)
Interest receivable -- (19,038) (141,863)
Other current assets (20,866) -- (20,866)
(Decrease) increase in:
Accrued interest payable to members 14,646 27,441 217,770
Accounts payable (29,486) -- 82,812
Other accrued liabilities 57,673 -- 27,008
----------- ----------- -----------
Net cash used in
operating activities (316,113) (1,027) (376,202)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (6,536) -- (21,635)
Advances to affiliates -- (54,473) (932,925)
Purchase of notes receivable and security
interest -- -- (225,000)
Cash received in acquisition -- -- 303,812
----------- ----------- -----------
Net Cash used in
investing activities (6,536) (54,473) (875,748)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions -- -- 103,127
Proceeds from notes payable to shareholders 65,000 -- 65,000
Proceeds from convertible notes payable
to shareholders 50,000 5,000 812,400
Proceeds from line-of-credit -- -- 299,505
----------- ----------- -----------
Net Cash provided by financing activities 115,000 5,000 1,280,032
----------- ----------- -----------
Increase (decrease) in cash (207,649) (50,500) 28,082
Cash and cash equivalents
at beginning of period 235,731 54,355 --
----------- ----------- -----------
Cash and cash equivalents at end
of period $ 28,082 $ 3,855 $ 28,082
=========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ -- $ 7,122 $ 25,824
=========== =========== ===========
Taxes $ -- $ -- $ --
=========== =========== ===========
Issuance of Common Stock for acquisition
of Display Group, LLC and Display
Optics, Ltd. and conversion of
convertible debt $ -- $ -- $ 2,199,026
=========== =========== ===========
(See accompanying notes to unaudited consolidated financial statements)
5
</TABLE>
<PAGE>
ADVANCE DISPLAY TECHNOLOGIES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1.
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with the instructions to Form 10-QSB and do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. The results of operations
for any interim period are not necessarily indicative of results for the entire
fiscal year. These statements should be read in conjunction with the financial
statements and related notes included in Form 10-KSB for Advance Display
Technologies, Inc. ("ADTI" or "the Company")for the year ended June 30, 1997, as
the notes to these interim financial statements omit certain information
required for complete financial statements.
Note 2.
Financial statements for the periods through May 31, 1997 have been
restated - See Management's Discussion and Analysis of Results of Operations and
Financial Condition.
Note 3.
Subsequent Events
- -----------------
Effective October 14, 1997, $550,000 of convertible promissory notes were
converted into shares of the Company's Common Stock at the rate of $0.1315 per
share or 4,182,509 shares. The interest due on these notes was converted into a
Convertible, Redeemable Promissory Note on November 5, 1997 pursuant to an
additional private placement as described below.
In October, 1997, a shareholder loaned the Company $95,000. These loans
together with previously outstanding loans of $65,000 and the interest on a
$50,000 loan were converted into Convertible, Redeemable Promissory Notes on
November 5, 1997 pursuant to an additional private placement as described below.
On October 10, 1997, the Company initiated an additional private placement
offered to accredited investors. The private placement provides for the issuance
of a minimum of $550,000 and a maximum of $1,000,000 of 10% Convertible,
Redeemable Promissory Notes (the "Notes") issuable in increments of $10,000. The
Notes are due October 15, 2000 and are convertible, at the option of the
noteholder, into shares of the Company's Common Stock at the rate of $0.1615 per
share. The Company has the right to call these Notes after one year and the
noteholders have 30 days in which to convert if these Notes are called by the
Company. The Company may elect to pay interest on any of these Notes converted
in cash or by issuance of additional shares of the Company's Common Stock.
On November 5, 1997, the Company completed the sale of $573,695 of the
Notes. Proceeds included the conversion of $160,000 of loans previously
outstanding, cash received of $390,000 and conversion of interest payable of
$23,695.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
---------------------------------------
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
---------------------------------------------
Special Note Regarding Forward Looking Statements
Certain statements contained herein constitute "forward looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such
forward looking statements include, without limitation, statements regarding the
Company's anticipated marketing and production, need for working capital, future
revenues and results of operations. Factors that could cause actual results to
differ materially include, among others, the ability of the Company to: obtain
sufficient capital, further develop and improve the manufacturing process for
its product, manufacture its product at a cost that would result in profitable
sales, sell a sufficient number of screens at a sufficient price to result in
positive operating margins, complete a marketing study and implement a marketing
plan, attract and retain qualified management and other personnel, and generally
to successfully execute a business plan that will take the Company from a
development stage entity to a profitable operating company. Many of these
factors are outside the control of the Company. Investors are cautioned not to
put undue reliance on forward looking statements. The Company disclaims any
intent or obligation to update publicly these forward looking statements,
whether as a result of new information, future events or otherwise.
General
- -------
In December 1993, Advance Display Technologies, Inc. ("ADTI" or "the
Company") and individual investors organized a limited partnership, Display
Optics, Ltd. (the "Partnership" or "DOL"), to obtain capital and to continue
development of the fiber optic video technology and other related display screen
technology. The Company acts as a general partner and the Partnership is managed
by Display Group, LLC. Display Group was formed by the limited partners of the
Partnership and other individuals and entities to manage and partially fund
operations of the Partnership.
The Company conducted substantially all of its business through the
Partnership until the completion of the exchange effective May 21, 1997 (see
below). Based on an analysis of the Partnership Agreement and generally accepted
accounting principles, a research and development arrangement existed between
the Partnership and the Company which required ADTI to record the expenses
incurred by the Partnership as a liability.
Effective May 21, 1997, the Company entered into an exchange agreement (the
"Exchange") with Display Group, DOL and the owners of Display Group and DOL (the
"Investors"). Under the terms of the Exchange and previously existing
agreements, all member interests in Display Group, partnership interests in DOL,
convertible notes totaling $1,799,026, and Series B Preferred Common Stock held
by the Investors were exchanged for 17,509,868 shares of ADTI Common Stock and
1,843,900 shares of Series C Preferred Stock issued to the Investors. The
Exchange resulted in Display Group and DOL becoming wholly-owned subsidiaries of
ADTI whereby the operations of Display Group and DOL were consolidated with
those of the Company. The Exchange resulted in the Investors acquiring in the
aggregate a direct interest in Common Stock equal to approximately eighty two
percent (82%) of the Company's issued and outstanding Common Stock.
The Exchange was accounted for using the purchase method of accounting. As
the former members of Display Group acquired a majority of the Company's Common
Stock, for financial statement reporting purposes, the Exchange was treated as a
reverse acquisition whereby Display Group was considered the acquiring entity.
7
<PAGE>
Therefore, the financial statements for periods through May 31, 1997 have been
restated to reflect only the results of operations of Display Group. Subsequent
to May 31, 1997, the financial statements reflect the combined operations of the
Company, DOL and Display Group.
Results of Operations
- ---------------------
For the fiscal quarter ended September 30, 1997, the Company reported a net
loss of ($305,124) as compared to ($9,430) for the fiscal quarter ended
September 30, 1996. The increase in 1997 from 1996 is primarily due to the
restatement of the financial statements reporting only Display Group activity
through May 31, 1997 and the inclusion of operational activity of the combined
entities for the first quarter of the current fiscal year.
The Company reported total revenue of $15,000 for the fiscal quarter ended
September 30, 1997 which consisted entirely of consulting fees pursuant to an
agreement with Toshiba Lighting and Technology Corporation ("TLT") effective
July 1, 1997. The agreement calls for the Company to provide technical support
for an outdoor product of TLT and to provide market research information for
consideration of $5,000 per month. The Company reported total revenue of $26,159
for the fiscal quarter ended September 30, 1996, which consisted entirely of
interest income from loans made by Display Group to the Partnership. These loans
were converted to equity of the Company effective May 21, 1997 pursuant to the
Exchange described above. Therefore, there was no interest income reported for
the fiscal quarter ended September 30, 1997. There were no sales of the
Company's products to report for either fiscal quarter.
During the fiscal quarter ended September 30, 1997, the Company
manufactured one 7' x 9' fiber optic screen which it now holds in inventory.
Actual costs incurred to build the screen exceeded projections due to various
difficulties experienced during the manufacturing process which also affected
the overall quality of the screen. Therefore, the cost of the screen exceeded
the anticipated proceeds from the sale of the screen and the inventory value of
this screen was reduced by approximately $11,400 which was reported as cost of
goods.
The Company reported general and administrative ("G&A")expenses of $259,102
and $1,026 for the quarters ended September 30, 1997 and 1996, respectively. The
Company also reported research and development ("R&D") expenses of $34,241 and
$0 for the quarters ended September 30, 1997 and 1996, respectively. These
increases in fiscal 1997 from amounts reported in fiscal 1996 were primarily due
to the restatement of the financial statements reporting only Display Group
activity through May 31, 1997 and the inclusion of operational activity of the
combined entities for the first quarter of the current fiscal year. G&A expenses
for the fiscal quarter ended September 30, 1997 included: 1) depreciation and
amortization of approximately $24,000; 2) promotional and travel expenses of
approximately $11,000; 4) general office expense of approximately $26,000; 5)
employee salaries and expenses of approximately $73,000; and 6) professional and
consulting fees of approximately $125,000 (primarily due to legal fees incurred
in connection with the Exchange transaction and ongoing litigation, and
accounting fees in connection with the audit of the Company's financial
statements for the fiscal year ended June 30, 1997 and the audit of financial
statements of DOL and Display Group in connection with the Exchange).
Interest expense decreased from $34,563 for the fiscal year ended September
30, 1996 to $15,169 for the same period of the current fiscal year. This change
was primarily due to the elimination of funds advanced from outside investors to
Display Group as a result of the Exchange which was partially offset by the
interest expense on loans received by ADTI after the Exchange.
8
<PAGE>
Liquidity and Capital Resources
- -------------------------------
Due to significant costs associated with development and marketing of the
Company's products and the lack of material sales to date, the Company has
experienced a continuing need for financing since the 1980's. This need became
particularly acute beginning in 1989, following protracted litigation over the
Company's technology. The Company's operations were essentially dormant from
approximately 1990 to 1993. In fiscal 1994, ADTI formed the Partnership to
obtain capital to continue development of its technology. (See General, above)
The Company and its subsidiaries have been totally dependent on financing
from outside sources to fund operations for nearly four years. At September 30,
1997, the Company reported negative net worth of $571,988 and negative working
capital of $1,158,517. The Company will require additional capital for
administrative expenses, continued development of the product, further
automation of the manufacturing process, marketing costs and other costs.
Management believes that the Company's continued existence is dependent upon its
ability to: 1) perfect and further automate the manufacturing process; 2)
successfully market the product; 3) obtain additional sources of funding through
outside sources; and 4) achieve and maintain profitable operations. Although
management is attempting to achieve these objectives, there can be no assurance
that the Company will be able to obtain sufficient additional capital or
manufacture or sell its products on terms and conditions satisfactory to the
Company.
Cash flows from financing activities for the fiscal quarter ended September
30, 1997 consisted entirely of loans to the Company from two shareholders
totaling $115,000.
During the first quarter of fiscal 1998, the Company completed a private
placement of its securities to a single accredited investor (the "Accredited
Investor"). The Company sold 10% convertible promissory notes in the aggregate
principal amount of $550,000, of which $500,000 was received during the fiscal
year ended June 30, 1997 and $50,000 was received during the fiscal quarter
ended September 30, 1997. These notes and interest thereon were payable upon the
earliest to occur of completion of a subsequent private placement or December
31, 1997.
In August, 1997, the Accredited Investor loaned the Company an additional
$50,000 at 10% per annum due the earlier to occur of completion of a subsequent
private placement or November 6, 1997. In September a shareholder (the
"Shareholder") loaned the Company $15,000.
In October, 1997, the Shareholder loaned the Company an additional $95,000.
These loans totaling $160,000 payable to the Accredited Investor and the
Shareholder, and the interest on the $50,000 loan were converted into
Convertible, Redeemable Promissory Notes on November 5, 1997 pursuant to an
additional private placement as described below.
Proceeds from financing activities received during the fiscal quarter ended
September 30, 1997 were primarily used for manufacturing a 7'x9' screen, ongoing
product development, marketing efforts, operating expenses and investments in
capital equipment of approximately $6,536.
For the fiscal quarter ended September 30, 1996, cash flows from financing
activities related entirely to a loan of $5,000 from a single investor to
Display Group. Additionally, the cash flows used in investing activities of
$54,473 related to advances from Display Group to DOL.
Effective October 14, 1997, the $550,000 of 10% convertible promissory
notes were converted into shares of the Company's Common Stock at the rate of
9
<PAGE>
$0.1315 per share or 4,182,509 shares. The interest due on these notes was
converted into a Convertible Redeemable Promissory Note on November 5, 1997
pursuant to an additional private placement as described below.
On October 10, 1997, the Company initiated an additional private placement
offered to qualified investors. The private placement provides for the issuance
of a minimum of $550,000 and a maximum of $1,000,000 of 10% Convertible,
Redeemable Promissory Notes (the "Notes") issuable in increments of $10,000. The
Notes are due October 15, 2000 and are convertible, at the option of the
noteholder, into shares of the Company's Common Stock at the rate of $0.1615 per
share. The Company has the right to call these Notes after one year and the
noteholders have 30 days in which to convert if these Notes are called by the
Company. The Company may elect to pay interest on any of these Notes converted
in cash or by issuance of additional shares of the Company's Common Stock. On
November 5, 1997, the Company completed the sale of $573,695 of the Notes.
Proceeds included the conversion of $160,000 of loans previously outstanding (as
discussed above), cash received of $390,000 and conversion of interest payable
of $23,695 due to the Accredited Investor (as discussed above).
ADTI reported a working capital deficit position at September 30, 1997.
Current liabilities exceeded current assets by $1,158,517. At September 30,
1997, current liabilities consisted of trade payables and accrued expenses of
$712,467 primarily due to litigation costs, costs of the Exchange and costs
associated with the subsequent private offerings.
The Company's efforts will continue to be focused on further development of
the FiberVision Screen and pursuing engineering expertise for the design and
development of a further automated manufacturing system. The Company is also
planning to create a current marketing study and a detailed marketing plan. In
addition, the Company will continue efforts on raising additional capital
through private placements or other sources. There can be no assurances that the
Company will be able to acquire the capital needed or be successful in achieving
these objectives.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
- --------------------------
None.
ITEM 2. CHANGES IN SECURITIES.
- ------------------------------
On July 11, 1997, the Company completed a private placement of its
securities in a transaction exempt from the registration requirements of the
1933 Act. The Company sold 10% convertible promissory notes in the aggregate
principal amount of $550,000 to a single accredited investor, of which $500,000
was received prior to June 30, 1997 and $50,000 was received on July 11,1997.
These notes were sold pursuant to the provisions of Regulation D, Rule 506 of
the 1933 Act. On October 14, 1997, the investor converted these notes into
shares of the Company's Common Stock at a conversion rate of $.1315 per share or
4,182,509 shares. This transaction was exempt from the registration requirements
pursuant to the provisions of Section 3(a)(9) of the 1933 Act.
On August 11, 1997, the same investor loaned the Company an additional
$50,000. In addition, a shareholder of the Company loaned the Company $110,000
in September and October, 1997.
10
<PAGE>
On November 5, 1997, the Company completed an additional private placement
of its securities in a series of transactions exempt from the registration
requirements of the 1933 Act. The Company sold 10% Convertible, Redeemable
Promissory Notes in the aggregate principal amount of $573,695 to accredited
investors pursuant to the provisions of Regulation D, Rule 506 of the 1933 Act.
Proceeds included the conversion of $160,000 of loans previously outstanding,
cash of $390,000 and conversion of interest of $23,695 due to an investor. The
notes will be due October 15, 2000 and will be convertible, at the option of the
noteholder, into shares of the Company's Common Stock at the rate of $0.1615 per
share. The Company will have the right to call these notes after one year and
the note holders will have 30 days in which to convert if these notes are called
by the Company. The Company may elect to pay interest on any of these notes
converted in cash or by issuance of additional shares of the Company's Common
Stock.
The Company will continue to offer the 10% Convertible, Redeemable
Promissory Notes up to the maximum amount under the same terms and conditions
for a limited time subsequent to November 5, 1997.
ITEM 3. DEFAULTS ON SENIOR SECURITIES.
- --------------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
- ------------------------------------------------------------
None.
ITEM 5. OTHER INFORMATION.
- --------------------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- -----------------------------------------
Advance Display Technologies, Inc. filed a Form 8-K dated May 21, 1997 to report
a Change in Control of the Registrant. The Company filed an amendment on Form
8-K/A-1 on September 29, 1997.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report on Form 10-QSB to be signed on its behalf by the undersigned,
thereunto duly authorized.
ADVANCE DISPLAY TECHNOLOGIES, INC.
(Registrant)
Date: November 14, 1997 /S/ Kenneth P. Warner
----------------- -----------------------------------------
Kenneth P. Warner
President and Chief Executive Officer
(Chief Executive and Financial Officer)
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 28,082
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 109,811
<CURRENT-ASSETS> 168,950
<PP&E> 84,210
<DEPRECIATION> 7,765
<TOTAL-ASSETS> 755,479
<CURRENT-LIABILITIES> 1,327,467
<BONDS> 0
0
1,844
<COMMON> 21,344
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 755,479
<SALES> 0
<TOTAL-REVENUES> 15,000
<CGS> 0
<TOTAL-COSTS> 320,124
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,169
<INCOME-PRETAX> (305,124)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (305,124)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
