U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT OR [ ] TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended April 30, 1996 Commission File No. 33-4460-NY
TASTY FRIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NEVADA 65-0259052
- ----------------------------- --------------------
State or other jurisdiction (I.R.S. Employer
incorporation or organization Identification No.)
650 Sentry Parkway, Suite One
BLUE BELL, PA 19422
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(610)941-2109
-------------------------------
(Registrant's telephone number,
including area code)
ADELAIDE HOLDINGS, INC.
11098 Biscayne Boulevard, Suite 403
Miami, Florida
(305) 899-0200
--------------------------------------------------
(Former name and address)
Check whether the registrant (1) filed all reports required to be filed
by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
As of June 1, 1996: 87,900,495 shares of common stock were
outstanding.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
Unaudited financial statements for the quarterly period covered by this
Report are attached hereto.
ITEM 2. PLAN OF OPERATION:
From 1993 the Registrant encountered significant delays in connection
with the production of its french fries vending machine (the "Machine") which
resulted from the necessity to design, develop and test a totally new Machine
commencing in late 1993. As a result, the Registrant was unable to ship its
Machine as originally anticipated by the end of 1993 or as intended in 1994.
The Registrant completed the initial engineering development of the Machine
during the last quarter of 1994 but continued to experience delays in the final
stages of development and testing throughout 1995, much of which resulted from
a material lack of working capital and the necessity to allocate a material
amount of the limited capital received from equity and debt investment for
litigation and related expenses, including payments mandated to be paid to
California Food & Vending, Inc. ("CFV") by the court order granting CFV's motion
to assign benefits granted on March 15, 1996 (the "Court Order"). The Registrant
anticipated that it would complete the testing of the Machine by September 1,
1995 based upon the expected delivery of the ten pre-production Machines in late
July, 1995, but actual testing did not commence until early December, 1995 due
to the delayed delivery of such pre-production Machines by Premier Design, Ltd.
("Premier"), the manufacturer of the pre-production Machines. As a result of
such testing, certain modifications to the Machine were made. Further, testing
occurred on a more limited basis than initially expected due to the lack of
working capital discussed herein. Accordingly, no Machines were shipped to
distributors in the fiscal year ended January 31, 1996 although a demonstration
Machine was shipped to CFV during the first quarter ended April 30, 1996
pursuant to the Registrant's February, 1995 Settlement Agreement with CFV.
Another demonstration Machine has been purchased by the Registrant's Israeli
distributor and it is currently in the process of being shipped to Israel. At
the present time, the Registrant expects to commence commercial production of
the Machine in September or October, 1996, although no assurances are given
that this date will be met.
In connection with the development of the Machine, the Registrant paid
$75,000 toward the first $150,000 of development
2
<PAGE>
costs as provided in the Manufacturing Requirements Agreement (the
"Manufacturing Agreement") with Premier. In April, 1994, the Registrant advanced
Premier $125,000 to be applied to the aggregate cost of manufacturing ten
pre-production Machines to be placed in strategic locations for beta testing to
gather data relating to, among other things, the Machine's performance,
marketing trends and customer satisfaction. From May to July, 1995, the
Registrant paid Premier an aggregate of an additional $250,000 ($35,000 for each
of ten pre-production Machines less the $125,000 paid in April, 1994). The cost
of these Machines was capitalized by the Registrant for $246,600; however, the
only revenue to be realized from the sale of the ten pre-production Machines
will be $7,000 per Machine or $70,000 in the aggregate. See "Unaudited Financial
Statements and Notes" thereto.
The ten pre-production Machines were placed at beta test sites located
at bowling alleys and corporate office centers in the greater Philadelphia area
and were monitored over a 90 day period by the Registrant. Testing of these
Machines was successful based upon customer acceptance and approval, taste,
price, convenience, Machine operation and the minimum down time experienced. The
testing enabled management to correct and improve the Machine in certain key
areas to enhance performance and operation. The Registrant is in the process of
tooling certain production parts of the Machine which will then be assembled by
a manufacturer being chosen by management for such purpose as Premier cannot
manufacture the Machine under the terms of the Amendment to the Manufacturing
Agreement dated December 30, 1994. Once the Registrant is able to order Machines
from a manufacturer for delivery to purchasers, the Registrant will require
payment from such purchasers on terms which management believes will cover its
cash payment requirements to the manufacturer so that the Registrant will not
have to advance cash for Machines or build an inventory, although no assurances
are given that this will occur. If management is incorrect, the Registrant will
be required to advance cash to the manufacturer. This will require the
Registrant to raise additional funds. There can be no assurances given that any
funding, including that which may be required to be advanced, will be available
or if available, on terms satisfactory to the Registrant.
The Registrant presently estimates, based upon current distribution
agreements, that it will provide a minimum of up to approximately 2,400 Machines
to its existing and possible new distributors during the 12 months following
delivery of the first commercial production Machines. This number of Machines is
subject to the Registrant receiving adequate funding from purchasers of the
Machines, as to which no assurances are given. Further, although management
currently anticipates that commercial production will commence in September or
October,\ 1996, no assurance can be given
3
<PAGE>
that this timetable will be met, when such Machines will be shipped or the
number that will ultimately be shipped in the next 12 months. If a lesser number
of Machines is purchased, the Registrant's financial condition and operations
will be materially and adversely effected.
The Registrant has expanded its distributor base during the past several
months which currently includes several foreign countries (see below), has
reacquired certain distributorships for stock and options and is negotiating the
reacquisition of others. Over the last several months, management has been in
discussions with parties, who have seen the Machine in its final development
stages, for distributorships in South America, the Far East and the Middle East.
To date, distribution agreements for Brazil, Israel, Egypt and Jordan have been
executed and there are negotiations for other territories. The Registrant has,
however, changed its marketing focus and anticipates operating in other
territories directly rather than through distributorships with third parties. No
assurances are given, however, that the Registrant will continue in this
direction or that other distribution agreements or joint venture agreements will
not be entered into for other territories.
It is management's intention to work closely with its distributors as
they take delivery and install and maintain the Machines. This working
relationship has been postponed due to the persistent delays in testing and
developing a totally new Machine. Further, the Registrant's financial condition
may be materially and adversely effected if any current distributors breach
their respective distribution agreements and fail to accept delivery and pay for
Machines as required by such agreements. As of this date, however, management is
not aware that any existing agreements are currently in breach; however, this
may not remain the case if information currently being received and collected
from distributors indicates otherwise. Notwithstanding the foregoing, management
believes that there may be other channels to distribute the Machine and related
products of the Registrant, including joint venture agreements, which could be
as effective and profitable as the existing distribution network is expected to
be, although no assurances can be given. Management will continue to seek the
most efficient and profitable ways to market and distribute the Machines and the
products.
As of June 1, 1996 the Registrant had a total of five (5) full-time
employees and expects to hire Leonard Klarich, currently a director of the
Registrant who has provided consulting services to the Registrant over the last
several months, in June, 1996. Mr. Klarich, experienced in operating larger
companies than the Registrant, will serve as Executive Vice President
responsible for marketing, distribution and administrative matters which will
4
<PAGE>
enable Mr. Kelly to concentrate on tooling, production and assembly of the
Machine and to secure regulatory approvals and design enhancements. Additional
employees are expected to be hired during the next 12 months if the Registrant's
proposed plan of operation is successful and there is sufficient cash flow from
operations, if any, which remains constant to support such additional expense,
as to which there are no assurances. Such additional employees may include a
food technician, a chief operating officer with significant experience in the
vending machine business, a chief financial officer, and sales and marketing
personnel. At the present time, management is unable to estimate how many
employees will be needed during the next 12 months, if any.
Due to the continued and significant lack of working capital and the
restrictions on cash expenditures resulting from the CFV Court Order in the
first quarter of the current fiscal year, the Registrant had been unable to
finalize new and expansive marketing literature to assist it and its
distributors in marketing its Machines. Management believes that it has resolved
the severe financial problems it has experienced in the past and that the
Registrant will now be able to move forward with its marketing efforts. In this
regard, the Registrant has completed all marketing and warranty materials and
the necessary technical manuals relative to the operation of the Machine.
Further, it has finalized its training program and completed an instructional
video for distributors and the technicians who will service the Machine. Several
technicians representing distributors have already attended the Registrant's
training program. In the past, the Registrant had retained and may in the future
retain consultants with significant experience in marketing and advertising and
in the food vending business to assist the Registrant with its marketing efforts
as well as other related matters. On May 23, 1996 the Registrant entered into a
consulting agreement with LBI, Group, Inc. ("LBI") to provide certain business
consulting services, including marketing, for a 12 month period, subject to
prior termination by either party upon at least 30 days prior notice. In
consideration thereof, the Registrant has agreed to grant an option to LBI to
purchase 4,000,000 (pre-split) shares of free-trading common stock at an
exercise price of $.05 per share.
Since its inception, the Registrant has had no revenues from operations
and has relied almost exclusively on shareholder loans, distribution deposits
and private securities transactions to raise working capital to fund operations.
At April 30, 1996 the Registrant had approximately $188,744 in cash. Until the
most recent investment aggregating $1,250,000, as described below, funding had
been substantially inadequate to allow the Registrant to complete its plan of
operation. Accordingly, the Registrant has raised additional funds through the
sale of restricted common stock
5
<PAGE>
to the extent possible (see below). The Registrant expects that it will be
required to seek additional funding for marketing and related purposes but
anticipates, although no assurances can be given, that working capital, from
revenues produced by the anticipated sale and distribution of Machines sold in
the current fiscal year, will help to fund this need. No assurances can be given
that the Registrant will be able to secure adequate financing from any source to
pursue its current plan of operation, to meet its obligations or to expand
marketing over the next 12 months.
In September, 1995, the Registrant entered into an agreement with Acumen
Services, Ltd. an off-shore Abaco, Bahamas company ("Acumen"), to purchase an
aggregate of 21,500,000 shares of common stock of the Registrant for a purchase
price of no less than $.10 per share payable pursuant to the terms of a
Promissory Note from Acumen providing for payment of the purchase price on the
earlier to occur of (i) the date that commercial production of the Machine
commences or (ii) January 2, 1996. In late November, 1995 when it was apparent
that the delayed beta testing was about to commence, management and Acumen
agreed to provide for payment of the purchase price to occur solely upon
commercial production of the Machine. The 21,500,000 shares were held in escrow
until October, 1995 when the Registrant agreed to the transfer of 3,900,000
shares from Acumen to its Trustee (an off-shore, non-U.S. person pursuant to
Regulation S) subject to payment in full for all shares so transferred as
agreed. The Trustee and Acumen executed Regulation S representation letters and
the Trustee also executed a Guaranty and Indemnity in favor of the Registrant
agreeing to return the shares or pay for them upon the written request of the
Registrant. In January, 1996 the Registrant agreed to the transfer of an
additional 3,000,000 shares by Acumen to the Trustee in the same manner and new
Regulation S representation letters were executed by both parties and a Guaranty
and Indemnity relative to such shares was executed by the Trustee. During the
last quarter of the fiscal year ended January 31, 1996, Acumen transferred
2,000,000 of such shares to two non-U.S. persons in two separate off-shore
transactions in conformity with Regulation S. Such non-U.S. persons thereafter
directly paid the Registrant for these shares, in the aggregate amount of
$100,000 (USD), representing a decrease in the price to be paid by Acumen to
$.05 per share, based upon the then current market price of the Registrant's
common stock. The balance of the shares issued to Acumen were cancelled and
returned to the Registrant's treasury in late May, 1996. A written request for
either the return of 3,900,000 shares transferred to the Trustee or payment
therefore was sent to the Trustee on May 30, 1996 but as of the date hereof, the
shares have not been returned or paid for. The Registrant is currently
determining what action it will take.
6
<PAGE>
On April 30, 1996 the Registrant entered into a Stock Purchase Agreement
with an accredited investor to purchase an aggregate of 25,000,000 shares of
restricted common stock at a purchase price of $.05 per share for aggregate
gross proceeds to the Registrant of $1,250,000 payable (i) $500,000 on April 30,
1996 for 10,000,000 shares and (ii) the balance of $750,000 payable on or before
May 30, 1996. An aggregate of $1,250,000 was paid to the Registrant on or before
May 31, 1996. The Stock Purchase Agreement, among other things, also provides
for (i) the investor to receive 250,000 (post-split) shares of restricted common
stock in consideration for the investment after the reverse split is effective,
(ii) the appointment of a nominee to the Board of Directors, and (iii) the
purchase of up to an additional $1,000,000 of restricted common stock promptly
after a reverse stock split is approved by a majority of the Registrant's issued
and outstanding shares of voting stock. As of the date hereof, neither the date
of the vote on the reverse stock split nor the reverse stock split ratio have
been set. Assuming the approval of the reverse stock split by the shareholders,
the number of post-split shares to be purchased by the investor for the
$1,000,000 shall be determined by dividing $1,000,000 by the average of the bid
and asked price of the common stock on the effective date of the reverse split.
Further, the Stock Purchase Agreement provides that Edward Kelly, President of
the Registrant, shall be issued 1,500,000 post-split shares of common stock for
past, present and future services to the Registrant, exclusive of any salary,
bonus or other compensation in any form received or to be received by Mr. Kelly,
based upon a reverse split resulting in no greater than 6,000,000 shares of the
Registrant's common stock to be outstanding. All shares received by the investor
and Mr. Kelly will be restricted and will be registered in a registration
statement, together with the shares underlying the warrants described below, to
be filed with the Commission within 60 days from the date of payment for all
25,000,000 shares purchased by the investor. Both the investor and Mr. Kelly
have agreed not to sell such shares purchased by the investor for 60 days from
the effective date of such registration statement. The investor and Mr. Kelly
shall also receive anti-dilution warrants to purchase the lesser of (i)
5,000,000 shares of restricted common stock or (ii) such amount of shares to
ensure that each of them shall maintain ownership of no less than 25% of the
issued and outstanding common stock of the Registrant at any time for a period
of three years from May 29, 1996 at an exercise price equal to the average of
the bid and asked price per share on the effective date of the reverse split.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
7
<PAGE>
See Item 3 of the Registrant's Annual Report on Form 10-KSB for the
fiscal year ended January 31, 1996, filed by the Registrant on June 24 1996,
which is incorporated herein by this reference.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
See Item 1 above.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
27 Financial Data Schedule
REPORTS ON FORM 8-K
A Form 8-K dated February 21, 1996 was filed with the Securities and
Exchange Commission.
8
<PAGE>
TASTY FRIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE Registrant)
FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(Unaudited)
9
<PAGE>
TASTY FRIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE Registrant)
CONSOLIDATED BALANCE SHEETS
ASSETS
April 30, January 31,
1996 1996
----------- -----------
(Unaudited)
Current Assets:
Cash $ 188,744 $ 5,273
Machines 70,000 70,000
Subscriptions receivable 2,070,000 2,092,000
Loan receivable, officer 50,000 50,000
----------- -----------
Total current assets 2,378,744 2,217,273
Property and equipment, net 28,706 30,515
----------- -----------
$ 2,407,450 $ 2,247,788
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current Liabilities:
Notes payable $ 125,000 $ 25,000
Note payable, shareholder/officer 50,000 50,000
Accounts payable and accrued expenses 640,424 549,283
Deposit 188,000
Unearned revenue 356,000 356,000
----------- -----------
Total current liabilities 1,359,424 980,283
----------- -----------
Stockholders' Deficiency:
Common stock, $.01 par value; authorized
100,000,000 shares; issued and outstanding
77,500,495 shares at April 30, 1996 and
76,000,495 at January 31, 1996 775,005 760,005
Additional paid-in capital 5,189,270 5,129,270
Deficit accumulated in development stage (4,916,249) (4,621,770)
----------- -----------
1,048,026 (1,267,505)
----------- -----------
$ 2,407,450 $ 2,247,788
=========== ===========
See notes to consolidated financial statements
10
<PAGE>
TASTY FRIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE Registrant)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(Unaudited)
1996 1995
---- ----
Revenues $ 0 $ 0
------------ ----------
Costs and expenses:
Machine and product development 6,300
Selling, general and administrative 293,219 146,222
------------ ----------
293,219 152,522
------------ -----------
Net income (loss) before interest and taxes (293,219) (152,522)
Interest expense 1,260 10,876
------------ -----------
Net loss $ (294,479) $(163,398)
============ ===========
Net loss per share of common stock ($0.04) ($0.01)
=========== ===========
Weighted average shares outstanding 77,225,375 32,234,918
=========== ==========
See notes to consolidated financial statements
11
<PAGE>
TASTY FRIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE Registrant)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(Unaudited)
1996 1995
---- ----
Cash flows from operating activities:
Net loss $(294,479) $(163,398)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation 1,809 1,580
Subscriptions receivable 22,000
Other assets (4,000)
Unearned revenue 20,000
Accounts payable and accrued expenses 91,141 (237,768)
---------- -----------
Net cash used by operating activities (179,529) (383,586)
---------- -----------
Cash flows from investing activities:
Purchase of furniture and equipment (5,604)
---------- ----------
Cash flows from financing activities:
Deposit for sale of common stock 188,000
Sale of common stock 849,500
Issuance of common stock for services 75,000 80,210
Proceeds from loan 100,000 50,000
Repayment of loan - shareholder (79,947)
---------- ----------
Net cash provided by financing activities 363,000 899,763
---------- ----------
Net increase (decrease) in cash 183,471 510,573
Cash, beginning balance 5,273 305
---------- ----------
Cash, ending balance $ 188,744 $ 510,878
========== ==========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 1,260 $ 9,576
========== ===========
Non-cash financing activity:
Issuance of common stock for services $ 75,000 $ 80,210
========== ===========
See notes to consolidated financial statements
12
<PAGE>
TASTY FRIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE Registrant)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(Unaudited)
1. Basis of presentation:
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions for Form
10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of 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.
Operating results for the three months ended April 30, 1996 are not
necessarily indicative of the results that may be expected for the year
ended January 31, 1997. The unaudited consolidated financial statements
should be read in conjunction with the consolidated financial statements
and footnotes thereto included in the Registrant's annual report on Form
10-K for the year ended January 31, 1996.
2. Description of Business and Significant Accounting Policies:
The Registrant is a development stage company since it has not
completed designing, testing, and manufacturing its sole product, a
vending machine which will cook and dispense french fries. From the
corporation's date of inception, October 18, 1985, to date it has
engaged in various business activities that were unprofitable. The
Registrant had no revenues from operations since inception and its
ability to continue as a going concern is dependent on the continuation
of equity financing to fund the expenses relating to successfully
marketing the vending machine and resolving existing litigation (Note
5).
All intercompany accounts and transactions have been eliminated.
3. Issuance of Common Stock:
The total shares issued during the quarter ended April 30, 1996,
1,500,000 shares, were issued in payment for legal services.
In April 1996, the Registrant sold 10,000,000 shares of common stock to
an investor for $500,000 of which $188,000 was received in April and the
balance was received in May, 1996. The shares were not issued until the
balance was received in May 1996. The financing enabled the Registrant
to comply with a Temporary Protective Order filed by California Food &
Vending, Inc. (see Note 5 below). The same investor purchased 15,000,000
shares of common stock in June 1996 for $750,000.
13
<PAGE>
TASTY FRIES, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE Registrant)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
FOR THE THREE MONTHS ENDED APRIL 30, 1996 AND 1995
(Unaudited)
4. Litigation:
On October 25, 1994 the Registrant received a copy of the award of the
arbitrator in the American Arbitration Association matter of California
Food & Vending, Inc. (CFV) vs. Tasty Fries, Inc. et al. An award was
rendered against the Registrant in the aggregate amount of $279,500 for
domestic and international distribution fees owed to the plaintiff and
$249,500 in compensatory damages. The award and compensatory damages
totaling $529,000 have been recorded in the financial statements as of
October 31, 1994. Payment pursuant to a settlement agreement which
supersedes the award began in February,1995 and was satisfied in full in
May, 1996.
The arbitration award also ordered (a) the enforcement of the terms of
the Memorandum of Understanding dated March 17, 1992 and Joint Venture
Agreement dated May 14, 1991 which, generally, provide for the payment
by the Registrant of certain royalties, fees and profits to CFV in
connection with future sales of Registrant vending machines and related
products, and (b) the issuance of the Registrant to CFV of an option for
the purchase of 2,000,000 shares of the Registrant's common stock at an
exercise price of $2.00 per share through March 17, 1997.
In connection with the foregoing, an award was entered in favor of
cross-claimant, which requires, among other things, that the Registrant
issue 1,000,000 shares of unrestricted common stock to him. The
financial statements do not reflect the issuance of these shares.
On January 5, 1995 the arbitrator in the case of California Food and
Vending, Inc. (CFV) vs. the Registrant awarded CFV and a cross-claimant
legal fees amounting to $94,963 and $4,099, respectively. The total of
$99,062 is recorded in the financial statements as of January 31, 1995.
Payment pursuant to a settlement agreement which supersedes the award
began in February, 1995 and was satisfied in full in May, 1996.
On March 15, 1996, the Federal District Court for the Central District
of California issued a Temporary Protective Order (TPO) against the
Registrant since the Registrant defaulted on its February, 1996
installment payment to CFV. The TPO provided that any monies received by
the Registrant currently were to be paid to CFV until all monies due CFV
were paid in full. The Registrant satisfied, in full, the CFV judgment
in April and May, 1996 and rendered the TPO void.
The Registrant is a defendant in several lawsuits arising from normal
business activities. Management has reviewed pending litigation with
legal counsel and believes that those actions are without merit or that
the ultimate liability, if any, resulting from them will not materially
affect the Registrant's financial position.
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TASTY FRIES, INC.
Date: June 21, 1996 /s/ EDWARD KELLY
-------------------------------
Edward Kelly, President
and Principal Financial Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
NOW
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-START> FEB-01-1996
<PERIOD-END> APR-30-1996
<CASH> 188,744
<SECURITIES> 0
<RECEIVABLES> 2,120,000
<ALLOWANCES> 0
<INVENTORY> 70,000
<CURRENT-ASSETS> 2,378,744
<PP&E> 28,706
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,407,450
<CURRENT-LIABILITIES> 1,359,424
<BONDS> 0
0
0
<COMMON> 775,005
<OTHER-SE> 273,021
<TOTAL-LIABILITY-AND-EQUITY> 2,407,450
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 293,219
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,260
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (294,479)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> 0
</TABLE>
