UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
--------------------- ----------------------
March 31, 2000 0-22024
BAYWOOD INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 77-0125664
(state or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
14950 North 83rd Place, Suite 1
Scottsdale, Arizona 85260
(Address of principal office) (Zip code)
Registrant's telephone number, including area code: (602) 951-3956
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
$.001 par value common stock
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 and Exchange Act of 1934
during the preceding 12 months (or for such shorter periods 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 March 31, 2000, there were 26,966,259 shares of Baywood International,
Inc. common stock, $.001 par value outstanding.
<PAGE>
BAYWOOD INTERNATIONAL, INC.
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Balance Sheet as of March 31, 2000 3
Statements of Operations for the three months ended 4
March 31, 2000 and 1999
Statements of Cash Flows for the three months ended 5
March 31, 2000 and 1999
Statement of Information Furnished 6
Item 2 - Management's Discussion and Analysis or
Plan of Operation 7 - 11
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 12
Item 2 - Changes in Securities 12
Item 3 - Defaults Upon Senior Securities 12
Item 4 - Submission of Matters to a Vote of Security Holders 12
Item 5 - Other Information 12
Item 6 - Exhibits and Reports on Form 8-K 12
SIGNATURES 14
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<PAGE>
BAYWOOD INTERNATIONAL, INC.
BALANCE SHEET
March 31, 2000
ASSETS
CURRENT ASSETS
Cash and equivalents $ 71,462
Accounts receivable 212,884
Inventories 128,584
Prepaid expenses and other current assets 27,606
-----------
Total current assets 440,536
-----------
PROPERTY & EQUIPMENT
Furniture, fixtures, computers and equipment 55,479
-----------
OTHER ASSETS
Investment in BII Acquisition Company 75,000
-----------
Total other assets 75,000
-----------
Total assets $ 571,015
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 315,430
Interest payable 106,293
Accrued liabilities 182,795
-----------
Total current liabilities 604,518
-----------
NOTES PAYABLE 1,171,888
-----------
STOCKHOLDERS' DEFICIT
Preferred Stock, $1 par value,
10,000,000 shares authorized,
35,000 Class A shares issued and outstanding 35,000
20,000 Class D shares issued and outstanding 20,000
Common stock, $.001 par value, 50,000,000
shares authorized, 26,966,259 shares
issued and outstanding 26,966
Additional paid-in capital 6,707,387
Accumulated deficit (7,994,744)
-----------
Total stockholders' deficit (1,205,391)
-----------
Total liabilities and stockholders' deficit $ 571,015
===========
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<PAGE>
BAYWOOD INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
------------ ------------
<S> <C> <C>
NET SALES $ 359,082 $ 37,971
COST OF SALES 126,658 22,190
------------ ------------
Gross profit 232,424 15,781
------------ ------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Marketing expenses 309,251 123,507
General and administrative expenses 133,425 92,846
Depreciation and amortization 994 --
------------ ------------
Total selling, general and administrative
expenses 443,670 216,353
------------ ------------
Operating loss (211,246) (200,572)
------------ ------------
OTHER INCOME (EXPENSE):
Interest income 207 62
Miscellaneous expense (2,778) --
Miscellaneous income 15,183 337
Interest expense (37,508) (7,498)
Equity in net loss of investee -- (6,512)
------------ ------------
Total other (expense) (24,896) (13,611)
------------ ------------
LOSS BEFORE INCOME TAXES (236,142) (214,183)
PROVISION FOR INCOME TAXES -- --
------------ ------------
NET LOSS $ (236,142) $ (214,183)
============ ============
NET LOSS PER COMMON SHARE $ (0.01) $ (0.01)
============ ============
DILUTED NET LOSS PER COMMON SHARE $ -- $ --
============ ============
WEIGHTED AVERAGE OF COMMON SHARES OUTSTANDING 26,312,413 24,952,472
============ ============
</TABLE>
** not presented because the effect of such would be antidilutive
-4-
<PAGE>
BAYWOOD INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
2000 1999
--------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(236,142) $(214,183)
Adjustments to reconcile net loss
to cash used in operating activities:
Depreciation and amortization 994 --
Issuance of common stock for services performed -- 75,000
Equity in net loss of investee -- 6,912
Changes in assets and liabilities:
(Increase) in accounts receivable (65,477) (13,502)
Increase in interest payable 22,409 6,088
(Increase) decrease in inventory (78,822) 4,369
(Increase) in prepaid expenses (5,089) (7,001)
(Decrease) in accounts payable and accrued liabilities (3,591) (55,983)
--------- ---------
Net cash (used) by operating activities (365,718) (198,300)
--------- ---------
INVESTING ACTIVITIES:
Purchase of computers and fixtures (37,762) --
--------- ---------
Net cash (used) by investing activities (37,762) --
--------- ---------
FINANCING ACTIVITIES:
Issuance of common and preferred stock for cash -- 10,000
Fees paid in connection with offering of preferred stock -- (10,022)
Proceeds from exercise of stock options and warrants 222,200 13,000
Proceeds from notes payable 240,000 233,300
Principal payments on notes payable (2,500) (73,989)
--------- ---------
Net cash provided by financing activities 459,700 172,289
--------- ---------
CASH AND EQUIVALENTS PROVIDED
(USED) DURING PERIOD 56,220 (26,011)
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 15,242 40,869
--------- ---------
CASH AND EQUIVALENTS, END OF PERIOD $ 71,462 $ 14,858
========= =========
SUPPLEMENTAL DISCLOSURES AND CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 8,600 $ 1,410
</TABLE>
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<PAGE>
BAYWOOD INTERNATIONAL, INC.
STATEMENT OF INFORMATION FURNISHED
The accompanying financial statements have been prepared in accordance
with Form 10-QSB instructions and in the opinion of management contain all
adjustments (consisting of only normal and recurring accruals) necessary to
present fairly the financial position as of March 31, 2000 and the results of
operations for the three months ended March 31, 2000 and 1999 and the cash flows
for the three months ended March 31, 2000 and 1999. These results have been
determined on the basis of generally accepted accounting principles and
practices applied consistently with those used in the preparation of the
Company's 1999 Annual Report on Form 10-KSB.
Certain information and footnote disclosures normally included in
financial statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that the accompanying
financial statements be read in conjunction with the financial statements and
notes thereto incorporated by reference in the Company's 1999 Annual Report on
Form 10-KSB.
-6-
<PAGE>
BAYWOOD INTERNATIONAL, INC.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
Baywood International, Inc. (the "Company"), develops, markets and
distributes natural-based consumer products. Currently, the Company's natural
consumer products consist of two dietary supplement lines, PURECHOICE(TM) and
SOLUTIONS(TM). Prior to 1998, the Company's product lines consisted of dietary
supplements and skin care products which were distributed into international
markets such as the Pacific Rim and European Countries. During that time prior
to 1998, the Company's product line had not been expanded in order to capture
the domestic market. As a result, the Company relied on the continued
distribution of one main product to one major customer in China. In March of
1998, due to governmental restrictions in China, this customer discontinued its
purchases which caused a dramatic decrease in the Company's sales for 1998.
Throughout 1998 and the first six months of 1999, the Company
completely revamped its corporate strategy to turn itself around from a
primarily internationally focus with no proprietary brand lines to a domestic
focus with identifiable brands across retail channels. The result of this
turn-around strategy was a fundamentally different company with a new corporate
image, product lines, marketing campaign, and distribution channels. At this
time, the Company is continually exploring the international market, but has
focused on strengthening the domestic marketing and sales of its new branded
product lines, PURECHOICE(TM) and SOLUTIONS(TM) in the United States.
The Company's principal executive offices are located at 14950 North
83rd Place, Suite 1, Scottsdale, Arizona 85260 and its telephone number is (480)
951-3956.
COMPANY OVERVIEW
The direction the Company takes in carrying out its objective is based
upon the following mission and will remain as the primary focus by the Company's
management:
MAKE LIFE BETTER(TM) THROUGH THE DEVELOPMENT OF HIGH QUALITY NATURAL
CONSUMER PRODUCTS THAT PEOPLE WANT AND NEED WHILE PROVIDING THE
HIGHEST ACCESSIBILITY AMONGST ALL CONSUMER CHANNELS.
PRODUCTS
Currently, the Company's natural consumer products consist of two
dietary supplement lines, PURECHOICE(TM) and SOLUTIONS(TM). Although there may
be a fixed number of different products within each line at any time, variable
factors such as counts and sizes of each product make the total number of SKU's
(Shelf Keeping Units) available within each line subject to change at any time.
In addition, the Company often incorporates product displays for its products
that hold from six (6) to twenty (20) bottles of each product as a marketing aid
to help its retail customers display and sell the products to their consumers.
Since the launch of the PURECHOICE(TM) and SOLUTIONS(TM) lines, the Company has
developed five (5) products. The total number of SKU's totals approximately
twenty-six (26).
SOLUTIONS(TM). This line of products is formulated with what the
Company considers the most effective ingredients and dosages to target specific
needs and conditions of consumers. SOLUTIONS(TM) currently includes the
following products:
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<PAGE>
BAYWOOD INTERNATIONAL, INC.
PRODUCT NAME TARGETED FUNCTION
------------ -----------------
Dr. Harris' Original Snore Formula Relief of Snoring
Dr. Harris' Original Allergy Formula Relief of Allergies
N-Cal(TM) Weight Loss
PURECHOICE(TM). This line is composed of high quality single
ingredient products that target those needs of the consumer for a specific
product in the marketplace. Where the SOLUTIONS(TM) line may combine a variety
of ingredients to target a specific condition, PURECHOICE(TM) may include only
one component for the consumer to choose. Single ingredients may include, but
are not limited to, vitamins, minerals, herbs, botanical extracts or other
organic sulfur and non-sulfur compounds. PURECHOICE(TM) currently includes the
following products:
PRODUCT NAME FUNCTION
------------ --------
SAMe (S-Adenosyl-Methionine) Joint and Emotional Health
Colostrum IgG30 1000 Immune System Support and Energy
The Company intends to develop other new products and SKU's within
these lines in the future. Management believes that there may be products that
are developed outside of these lines that need their own separate identity. In
addition, there may be products that are developed internally that are part of
different categories and products that are attained through acquisition that
have already established their brand identity within the marketplace. Management
can provide no assurances as to the continued viability of any current products
within the marketplace or the expected marketability of any future products that
the Company may develop or acquire.
INTERNATIONAL
Certain of the Company's products are sold in Canada. Sales in Canada
are conducted through distributors who service various retail outlets in their
respective territories.
RESULTS OF OPERATIONS
Net sales for the three months ended March 31, 2000 were $359,082
compared to net sales of $37,971 for the same period last year, an increase of
$321,111 or 845.7%. This increase is due to sales of the Company's new product
lines that were launched in July 1999, PURECHOICE(TM) and SOLUTIONS(TM). The
Company's objective is to become a recognized leader in the provision of high
quality brand name natural products that are marketed in niche market segments
in which its products can be among the market leaders in their respective
categories. The Company's potential for growth at this time involves the
continued development of niche products within the PURECHOICE(TM) and
SOLUTIONS(TM) lines and the establishment of other branded lines that can be
marketed and sold into retail channels. Retail channels include health food,
pharmacy, grocery and drug chains, mail order and internet distribution. The
Company considers its biggest potential to involve the development and marketing
of a broad base of consumer products that are based on natural compounds rather
than a specific category of natural products. Through consistent active
involvement in the trends that affect consumers, the Company will attempt to
focus on building brand identity for each of the types of product lines it
develops either internally or attains through acquisitions of other natural
product companies. Additionally, the Company strives to achieve its objective by
identifying brands with favorable demographic appeal, quickly modifying products
and promotions in response to changing consumer demands, and developing creative
and cost-effective marketing and advertising programs.
The Company's gross profit margin for the three months ended March 31,
2000 was 64.7% compared to 41.6% for the same period last year. The variation in
-8-
<PAGE>
BAYWOOD INTERNATIONAL, INC.
gross profit margin is due to the dramatic change in the Company's product lines
that are currently being sold in 2000 compared to prior periods. In addition to
this change in product lines, the significant shift in distribution channels has
impacted and will continue to impact the Company's gross profit margins in the
future based on such factors as discounts and promotions that are often utilized
as part of the Company's marketing programs.
Selling, general and administrative expenses for the three months ended
March 31, 2000 were $443,670 compared to $216,353 for the same period last year,
an increase of 105.1%. Overall corporate expenditures as a percentage of sales
have decreased compared to the same period last year while marketing
expenditures have increased including advertising, sales salaries, commissions,
royalties and new product development expenses. Advertising, promotions,
royalties and expenses related to new products and program development were the
largest portion of selling, general and administrative expenses for the three
months ended March 31, 2000 totaling approximately $193,000.
There is no income tax benefit recorded because any potential benefit
of the operating loss carryforwards has been equally offset by an increase in
the valuation allowance on the deferred income tax asset.
Net loss for the three months ended March 31, 2000 was $(236,142) or
$(.01) per share compared to a net loss of $(214,183) or $(.01) per share for
the same period last year.
For the three months ended March 31, 2000, the "Year 2000 Issue" did
not present any operational problems for the Company and did not materially
effect the Company's relationships with customers, vendors and others. The "Year
2000 Issue" arose because many existing computer programs use only the last two
digits to refer to a year. Therefore, these computer programs do not properly
recognize a year that begins with "20" instead of the familiar "19". If not
corrected, many computer applications could fail or create erroneous results.
The Company also relies on standard office productivity software which is
represented as being Y2K compliant.
The Company implemented various modifications to ensure that its
computer applications and equipment functioned properly in the Year 2000 and
beyond. (For this purpose, the term "computer equipment and applications"
includes systems commonly referred to as information technology systems ("IT
Systems"), such as data processing, accounting, telephone, and other
miscellaneous systems as well as systems that are not commonly referred to as IT
Systems such as fax machines, etc.
All internal and external costs associated with the Company's Year 2000
compliance activities were expensed as incurred. The Company believes that the
costs of addressing the Year 2000 issue did not have a material impact on the
Company's financial position.
OTHER INFORMATION
Interest Expense was $37,508 in three months ended March 31, 2000. The
increase is due to the Company's interest expense incurred from interest on
notes payable to officers, directors and other third parties.
In order to compensate certain officers and key employees, the Board of
Directors has granted options to purchase the Company's common stock. The Board
of Directors granted 3,750,000 options in 1999. The exercise price of those
options is $0.15 per share and vest according to certain performance guidelines
as set forth by the Board of Directors. Further details of these option grants
are incorporated herein by reference to the Company's 1999 Definitive Proxy
Statement dated June 29, 1999.
-9-
<PAGE>
BAYWOOD INTERNATIONAL, INC.
Under the terms of note payable agreements with certain officers,
directors and third parties, the Company has granted warrants to purchase the
Company's common stock. In most cases, the warrants accrue to the noteholders
after the six month term of the notes and are thereafter exercisable by the
noteholders at prices ranging from $0.08 to $0.24 per share. As of March 31,
2000, approximately $958,000 has been borrowed from these noteholders and
approximately 1,916,000 warrants have so far been accrued under them.
Interest income for the three months ended March 31, 2000 of $207 was
generated from the Company's invested cash balance in interest-bearing money
market accounts.
The Company expects its expenditures for marketing costs to increase as
it attempts to diversify its customer base and expand in the domestic market.
The Company will be selective in its expenditures for marketing related items
and intends to begin advertising and promoting more heavily in domestic
programs.
The market for natural products industry is highly competitive in each
of the Company's existing and anticipated product lines and methods of
distribution. Numerous manufacturers and distributors compete with the Company
for customers throughout the United States and internationally in the packaged
nutritional supplement industry selling products to retailers such as mass
merchandisers, drug store chains, independent pharmacies and health food stores.
Many of the Company's competitors are substantially larger and more experienced
than the Company, have longer operating histories and have materially greater
financial and other resources than the Company. Many of these competitors are
private companies, and therefore, the Company cannot compare its revenues with
respect to the sales volume of each competitor. There can be no assurance that
the Company will be able to compete successfully with its more established and
better capitalized competitors.
CAPITAL EXPENDITURES
During the three months ended March 31, 2000 and 1999, the Company
incurred $35,930 and zero in capital expenditures for computers, equipment and
fixtures, respectfully. As of March 31, 2000, the Company had no material
commitments for capital expenditures.
LIQUIDITY AND CAPITAL RESOURCES
As of the three months ended March 31, 2000, the Company had $440,536
in current assets of which $284,346 or 64.5% was cash and receivables. Total
current liabilities including notes payable for the same period totaled
$1,776,406. This represents a ratio of current assets to current liabilities of
.25 at March 31, 2000. The Company has extended payment terms with certain
vendors and has borrowed funds from certain officers and directors. The terms of
the debt with the officers and directors are such that it is classified as
current liabilities as of March 31, 2000
Management is currently exploring alternatives for raising debt or
equity financing in order to properly fund the Company's working capital needs
and to significantly increase the Company's sales growth of new products into
new distribution channels. Certain officers, directors and third parties have
funded operations throughout 1999 and the first quarter of 2000 through loans to
the Company. In addition, certain officers have elected to defer the payment of
their salaries to conserve cash. These deferred salaries have been accrued and
are properly reflected in the financial statements of the Company. Management
intends to pay these deferred salaries in the future when the Company is able to
maintain a higher cash balance. It is expected that the Company will require
$750,000 to $1,000,000 in debt or equity financing within the next six to nine
months to support its operations. In addition, another $500,000 may be required
as officer and director notes become due and payable. Management believes that
it will be successful in raising the funds required to meet its obligations.
However, there can no assurances that the cash can be successfully raised. If
the Company cannot raise the capital, the effect may be that the Company will
not meet its projections for growth.
-10-
<PAGE>
BAYWOOD INTERNATIONAL, INC.
"CAUTION REGARDING FORWARD-LOOKING STATEMENTS"
CERTAIN STATEMENTS CONTAINED IN THIS REPORT THAT ARE NOT RELATED TO
HISTORICAL RESULTS, INCLUDING, WITHOUT LIMITATIONS, STATEMENTS REGARDING THE
COMPANY'S BUSINESS STRATEGY AND OBJECTIVES AND FUTURE FINANCIAL POSITION, ARE
FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE EXCHANGE ACT AND INVOLVE RISKS AND UNCERTAINTIES.
ALTHOUGH THE COMPANY BELIEVES THAT THE ASSUMPTIONS ON WHICH THESE
FORWARD-LOOKING STATEMENTS ARE BASED ARE REASONABLE, THERE CAN BE NO ASSURANCE
THAT SUCH ASSUMPTIONS WILL PROVE TO BE ACCURATE AND ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT
COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO,
THOSE SET FORTH IN THE FOLLOWING SECTION, AS WELL AS THOSE DISCUSSED ELSEWHERE
IN THIS REPORT. ALL FORWARD-LOOKING STATEMENTS CONTAINED IN THIS REPORT ARE
QUALIFIED IN THEIR ENTIRETY BY THIS CAUTIONARY STATEMENT.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company believes that results of operations in any quarterly period
may be impacted by factors such as delays in the shipment of new or existing
products, difficulty in the manufacturer acquiring critical product components
of acceptable quality and in required quantity, timing of product introductions,
increased competitions, the effect of announcements and marketing efforts of new
competitive products, a slower growth rate in the Company's target markets, lack
of market acceptance of new products and adverse changes in economic conditions
in any of the countries in which the company does business. Due to the factors
noted above, the Company's future earnings and stock price may be subject to
significant volatility. Any shortfall in revenues or earnings from levels
expected by the investing public or securities analysts could have an immediate
and significant adverse effect on the trading price of the Company's common
stock.
-11-
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 2 - CHANGES IN SECURITIES
None
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit Method of
Number Exhibit Name Filing
------ ------------ ------
3.1 Articles of Incorporation, as amended *
3.2 By-Laws **
4.1 Specimen Common Stock Certificate ***
4.2 Description of Common Stock ****
4.3 Certificates of Designation for Preferred *****
Shares
4.4 Certificates of Designation for Class D ******
Redeemable Convertible Preferred Stock
27.1 Financial Data Schedule Exhibit filed
herewith
- ----------
* Incorporated by reference to Exhibit 3.1 of annual report on Form
10-KSB (file no. 0-22024) filed on April 18, 1996.
** Incorporated by reference to Exhibit 3 of Registration Statement on
Form S-1 (file no. 33-10236) filed on January 27, 1987, and declared
effective on February 14, 1988.
*** Incorporated by reference to Exhibit 1 of Registration Statement on
Form 8-A (File no. 022024) filed on July 2, 1993, and declared
effective on July 9, 1993.
**** Incorporated by reference to page 31 of Registration Statement on Form
S-1 (file no. 33-10236) filed on January 27, 1987, and declared
effective on February 14, 1988.
***** Incorporated by reference to Exhibit 4.3 of quarterly report on Form
10-QSB (file no. 0-22024) filed on August 11, 1997.
****** Incorporated by reference to Exhibit 4.4 of quarterly report on Form
10-QSB (file no. 0-22024) filed on May 17, 1999.
(b) Reports on Form 8-K
None
-12-
<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.
BAYWOOD INTERNATIONAL, INC.
(Registrant)
By: /s/ Neil Reithinger Date: May 15, 2000
------------------------------------
Neil Reithinger
Chairman of the Board, President, C.E.O.
and Principal Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 806175
<NAME> BAYWOOD INTERNATIONAL, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 71,462
<SECURITIES> 0
<RECEIVABLES> 231,698
<ALLOWANCES> 18,814
<INVENTORY> 128,584
<CURRENT-ASSETS> 440,536
<PP&E> 55,479
<DEPRECIATION> 0
<TOTAL-ASSETS> 571,015
<CURRENT-LIABILITIES> 604,518
<BONDS> 0
0
55,000
<COMMON> 26,966
<OTHER-SE> (1,287,357)
<TOTAL-LIABILITY-AND-EQUITY> 571,015
<SALES> 359,082
<TOTAL-REVENUES> 359,082
<CGS> 126,658
<TOTAL-COSTS> 443,670
<OTHER-EXPENSES> (12,612)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,508
<INCOME-PRETAX> (236,142)
<INCOME-TAX> 0
<INCOME-CONTINUING> (236,142)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (236,142)
<EPS-BASIC> (0.01)
<EPS-DILUTED> 0
</TABLE>
