FORM 10-QSB - Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the period ended: March 31, 2000 or [ ] Transition
Report Pursuance to Section 13 or 15(d) of the Securities Exchange act of 1934.
For the transition period from to
Commission File Number 33-16820-D
--------------
ARETE INDUSTRIES, INC.
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(Exact name of registrant as specified in its charter)
Colorado 84-1063149
----------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2955 Valmont Road, Suite 310, Boulder, CO 80301
------------------------------------------ -------------
(Address of principal executive offices) (Zip Code)
(303) 247-1313
-------------------------------------------------
(Registrant's telephone number, including area code)
2305 Canyon Blvd, Suite 103, Boulder, Colorado 80302
-------------------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report.)
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.
[ X ] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS:
Indicated by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[ X ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of May 15, 2000, Registrant had 325,075,040 shares of common stock, No par
value, outstanding.
<PAGE>
ARETE INDUSTRIES, INC. AND SUBSIDIARY
INDEX
Page No.
--------
Consolidated Financial Statements:
Consolidated Balance Sheet 2
Consolidated Statements of Operations 3
Consolidated Statement Stockholders' (Deficit) 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
<PAGE>
ARETE INDUSTRIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
March 31, 2000 and December 31, 1999
(Unaudited)
2000 1999
---- ----
Current assets:
Cash and cash equivalents $ 88,202 $ 15,844
Restricted cash - 25,000
Accounts receivable, less allowance for
doubtful accounts of $0 445 519
Prepaid expenses - 1,200
------- --------
Total current assets 88,647 42,563
Furniture and equipment, at cost net of accumulated
depreciation of $349 (2000) and $233 (1999) 1,980 2,096
Investment in and advances to Aggression Sports
(Note 2) 237,665 40,560
-------- --------
$328,292 $ 85,219
======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable (Note 3) $180,628 $204,318
Accrued expenses 32,358 34,409
Accrued payroll taxes (Note 3) 152,539 146,130
Notes payable 5,000 24,500
Convertible note payable - officer 81,021 81,021
Stock subscription payment received 7,333 7,333
---------- ----------
Total current liabilities 458,879 497,711
Commitments and contingencies (Notes 1, 3 and 6)
Stockholders' deficit (Note 4):
Redeemable preferred stock; 100,000,000 shares
authorized:
Convertible Class A; $10 par value, 100,000
shares authorized, 3,000 shares issued and
outstanding (liquidation preference $32,475) - 30,000
Common stock, $.0001 par value; 500,000,000 shares
authorized, 321,575,040 (2000) and 301,397,155
(1999) shares issued and outstanding 7,805,377 7,414,758
Accumulated deficit (7,935,964) (7,857,250)
---------- ----------
Total stockholders' deficit (130,587) (412,492)
---------- ----------
$ 328,292 $ 85,219
========= ==========
See accompanying notes.
2
<PAGE>
ARETE INDUSTRIES, INC. AND SUBSIDIARY
STATEMENT OF OPERATIONS
For the three months ended March 31, 2000 and 1999
(Unaudited)
2000 1999
---- ----
Sales $ 8,035 $257,484
Cost of goods sold 7,515 226,151
------- --------
Gross profit 520 31,333
Operating expenses:
Depreciation 116 -
Rent 6,440 23,765
Salaries 30,028 64,805
Stock issued for services (Note 4) 10,000 -
Other operating expenses 24,456 63,796
------- --------
Total costs and expenses 71,040 152,366
------- --------
Net loss from discontinued operations (Note 1) (70,520) (121,033)
Other income (expense):
Equity in loss of Aggression Sports (Note 2) (2,000) -
Gain on sale of equipment - 40,061
Interest expense (6,757) (1,647)
Interest and miscellaneous income 563 312
-------- --------
Total other income (expenses) (8,194) 38,726
-------- --------
Net loss (Note 5) $(78,714) $(82,307)
======== ========
Basic and diluted loss per share $ * $ *
======== ========
Weighted average common shares outstanding 265,404,922 249,864,804
=========== ===========
* - Less than $.01 per share
See accompanying notes.
3
<PAGE>
<TABLE>
ARETE INDUSTRIES, INC. AND SUBSIDIARY
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
For the three months ended March 31, 2000
(Unaudited)
<CAPTION>
Class A preferred stock Common stock Accumulated
Shares Amount Shares Amount deficit
------ ------- ------ ------ -----------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1999 3,000 $30,000 301,397,155 $7,414,758 $(7,857,250)
Conversion of Series A preferred
stock to common (Note 4) (3,000) (30,000) 2,600,000 30,000 -
Issuance of common stock for
services (Note 4) - - 2,377,885 46,410 -
Issuance of common stock for
transfer of certificate of deposit
and accrued interest (Note 4) - - 8,750,000 33,152 -
Sale of common stock - - 450,000 31,500 -
Common stock issued upon exercise
of options (Note 4) - - 6,000,000 66,000 -
Interest in sale of Arete common stock
be equity-method investee (Note 2) - - - 183,557 -
Net loss for the three months ended
March 31, 2000 - - - - (78,714)
------ ------- ----------- ---------- -----------
Balance, March 31, 2000 - $ - 321,575,040 $7,805,377 $(7,935,964)
======= ======= =========== ========== ===========
</TABLE>
See accompanying notes.
4
<PAGE>
ARETE INDUSTRIES, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS
For the three months ended March 31, 2000 and 1999
(Unaudited)
2000 1999
---- ----
Cash flows from operating activities:
Net loss $ (78,714) $ (82,307)
Adjustments to reconcile net loss to net
cash provided by (used in) operating activities:
Depreciation and amortization 116 -
Equity in loss of Aggression Sports 2,000 -
Stock issued for services 46,410 54,127
Changes in assets and liabilities:
Accounts receivable 74 (5,413)
Prepaid expenses 1,200 (8,437)
Accounts payable (23,690) (135,933)
Accrued expenses 4,358 210,006
Customer deposits - (3,517)
-------- --------
Total adjustments 30,468 110,833
-------- --------
Net cash provided by (used in) operating activities (48,246) 28,526
Cash flows from investing activities:
Investments in and advances to Aggression Sports (15,548) -
Proceeds from certificate of deposit 25,000 -
Net cash provided by investing activities 9,452 -
Cash flows from financing activities:
Proceeds from issuance of common stock 64,652 42,050
Proceeds from exercise of stock options 66,000 -
Payments on long term debt (19,500) (48,800)
-------- --------
Net cash provided by (used in) financing activities 111,152 (6,750)
-------- --------
Net increase in cash and cash equivalents 72,358 21,776
Cash and cash equivalents at beginning of period 15,844 20,047
-------- --------
Cash and cash equivalents at end of period $ 88,202 $ 41,823
======== ========
See accompanying notes.
5
<PAGE>
ARETE INDUSTRIES, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS
For the three months ended March 31, 2000 and 1999
(Unaudited)
(Continued from previous page)
Supplemental disclosure of cash flow information:
Interest paid during the period $507 $3,839
==== ======
Income taxes paid during the period $ - $ -
==== ======
Supplemental disclosure of non-cash investing and financing activities:
During the quarter ended March 31, 2000, the Company issued common stock
valued at $15,548 to employees of Aggression Sports and treated such issuance
as an advance.
See accompanying notes.
6
<PAGE>
ARETE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
1. Summary of significant accounting policies
Basis of presentation:
The accompanying financial statements have been prepared by the Company,
without audit. In the opinion of management, the accompanying unaudited
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary for a fair presentation of the financial
position as of December 31, 1999 and March 31, 2000, and the results of
operations and cash flows for the periods ended March 31, 1999 and 2000.
Discontinued operations:
During March 2000, the Company abandoned the direct mail and coupon business
and shifted its focus toward Aggression Sports, Inc. (Aggression Sports) (see
Note 2). The direct mail coupon business continued until March 2000 and is
not expected to generate a loss during 2000. The Company provided executive
support to help Aggression Sports get prepared to start its own operations.
Aggression Sports is in the process of developing a web site to market its
proprietary outdoor products.
Basis of presentation:
The financial statements have been prepared on a going concern basis which
contemplates the realization of assets and liquidation of liabilities in the
ordinary course of business. As shown in the accompanying financial
statements, the Company has incurred significant losses and at March 31,
2000, the Company has a working capital deficit of $370,232 and a
stockholders' deficit of $130,587. In addition, the Company is delinquent on
payment of payroll taxes and creditor liabilities pursuant to the plan of
reorganization, and is being investigated by the Securities and Exchange
Commission for alleged securities law violations (see Note 6). As a result,
substantial doubt exists about the Company's ability to continue to fund
future operations using its existing resources.
The Company plans to assist Aggressions Sports set up its web site to market
a line of specialty sporting goods. Subsequent to year end, Aggression Sports
entered into an agreement to issue 30% of its outstanding common stock in
exchange for the right, title and interest in approximately 30 products in
various stages of development and various stages of the patenting process,
and generated cash of $417,000 through the sale of Arete's common stock.
2. Investment in and advances to Aggression Sports
During 1998, the Company acquired a 44% ownership interest in Aggression
Sports in exchange for 30,000,000 shares of the Company's common stock valued
at $150,000. Due to the uncertainty related to the ultimate realization of
this carrying value, the $150,000 was written off during the nine months
ended December 31, 1998. During the three months ended March 31, 2000,
Aggression Sports sold 26,490,000 shares of Arete for gross proceeds of
$417,175. Arete's 44% interest in the proceeds of $183,557 has been recorded
as additional paid-in capital.
7
<PAGE>
ARETE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
2. Investment in and advances to Aggression Sports (continued)
In January 2000, Aggression Sports entered into an agreement to issue 30% of
its outstanding common stock in exchange for the right, title and interest in
approximately 30 products in various stages of development and various stages
of the patenting process. As a result of this agreement, the Company's
interest in Aggression Sports was reduced to 31%.
During the three months ended March 31, 2000, the Company paid salaries of
$15,548 for services performed by certain individuals on Agression Sports
behalf. The investment in Aggression Sports has been reduced by the Company's
44% share of Aggression Sports' loss for the three months ended March 31,
2000 exclusive of the gain on the sale of Arete common stock.
3. Delinquent amounts payable
As of March 31, 2000, the Company is delinquent on payments of various
amounts to creditors including payroll taxes and $62,316 to creditors
required to be paid under the terms of its plan of reorganization. Failure to
pay these liabilities could result in liens being filed on the Company's
assets and may result in assets being attached by creditors resulting in the
Company's inability to continue operations.
4. Stockholders' equity
During the three months ended March 31, 2000, (1) an officer and a former
officer of the Company converted their Class A preferred stock into 2,600,000
shares of the Company's common stock, (2) the Company issued 2,377,885 shares
of common stock for services valued at $46,410 ($.02 per share), (3) the
Company issued 8,750,000 shares of common stock in exchange for a $25,000
certificate of deposit, accrued interest and for guaranting a note payable of
the Company and (4) the Company issued 6,000,000 shares of common stock upon
the exercise of stock options at $.011 per share.
In January 2000, the board of directors adopted, subject to shareholder
approval, the 2000 Omnibus Stock Option and Incentive Plan which designates
and reserves 50,000,000 shares of common stock to be issued under the Plan.
In January 2000, the board of directors authorized the issuance of options to
purchase 65,000 shares of Class A preferred stock for $10 per share to five
individuals. The options are first exercisable between May and July 2000 and
are exercisable for a period of one year from those dates. The Class A
preferred stock is convertible into the Company's common stock at $.025 per
share. The board also approved compensatory common stock grants of 7,750,000
shares in the aggregate to six individuals for services to be performed
valued at $77,500.
8
<PAGE>
ARETE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
5. Income taxes
The book to tax temporary differences resulting in deferred tax assets and
liabilities are primarily net operating loss carryforwards of $1,838,000
which expire in years through 2020.
As of March 31, 2000 and December 31, 1999, total deferred tax assets,
liabilities and valuation allowances are as follows:
2000 1999
---- ----
Deferred tax asset resulting from loss
carryforwad $ 367,600 $ 352,000
Valuation allowance (367,600) (352,000)
--------- ---------
Net deferred tax asset $ - $ -
========= =========
A 100% valuation allowance has been established against the deferred tax
assets, as utilization of the loss carryforwards and realization of other
deferred tax assets cannot be reasonable assured.
The Company's net operating losses are restricted as to the amount which may
be utilized in any one year. The Company's net operating loss carryforwards
expire as follows:
December 31, 2015 $ 458,000
2016 224,000
2017 304,000
2018 614,000
2019 161,000
2020 77,000
----------
$1,838,000
==========
6. Commitments and contingencies
Securities and Exchange Commission investigation:
The Company received a letter from the Securities and Exchange Commission
dated March 30, 1998 indicating that the staff of Securities and Exchange
Commission pursuant to a formal order of private investigation was conducting
an investigation of certain matters. On October 23, 1998, the Securities and
Exchange Commission sent another letter to the Company indicating that the
staff of the Central Regional Office of the Securities and Exchange
Commission intends to recommend to the Commission that an enforcement action
be instituted against the Company and two former officers of the Company. The
staff proposed to allege that based on facts developed in their investigation
that misleading press releases regarding the acquisition of a private
company, that company's business relationships, and sales projections were
released. The proposed action would allege that these press releases included
material misstatements and/or omitted to disclose material facts in
connection with the offer, purchase and sale of Company common stock, in
violation of Section 17(a) of the Securities Act of 1933 and Section 10(b) of
the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 thereunder.
9
<PAGE>
ARETE INDUSTRIES, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
6. Commitments and contingencies (continued)
Additionally, the staff's proposed action would be based on facts developed
in their investigation that, between January 1988 to the present, the Company
failed to file, or filed on an untimely basis, required periodic reports with
the Commission, in violation of Section 15(d) of the Exchange Act and Rules
15d-1 and 15d-13 thereunder. The proposed action would further allege the two
former officer's of the Company aided and abetted the Company's violation of
Section 15(d) of the Exchange Act and Rules 15d-1 and 15d-13 thereunder. The
Company's legal counsel has indicated that at this state of the
investigation, it is impracticable to render an opinion about whether the
likelihood of an unfavorable outcome is either "probable" or "remote". A
contingency exists with respect to this matter, the ultimate resolution of
which cannot presently be determined.
10
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Overview
- --------
Management reports that effective March 31, 2000, the entire financial structure
of the Company, relative to the coop coupon advertising business, has changed.
The Company has completely discontinued the coop advertising business which has
historically averaged total revenues in the $1 to $1.5 Million range and
traditionally incurred annual cash losses of approximately $300,000 or more. The
Company is now in the business of cultivating new start-up or development stage
businesses by providing managed fixed cost services, marketing and fulfillment
services and executive management services, and by offering entrepeneurs
liquidity as a publicly traded entity.
Since the change in control to current management which occurred on April 30,
1998, the Company has been in a turnaround and restructuring mode. With the
discontinuance of its print and direct mail operations and of the franchised
cooperative coupon direct mail advertising business, the Company resolved to put
its resources behind launching the outdoor adventure equipment business, Arete
Outdoors, which management believes has a much greater potential for revenues
and profits. As such, the Company became essentially a development stage
company.
Current management signed on to develop and implement a strategic plan to
restore the Company to financial viability. The first phase of that plan has
come to fruition with the elimination of unprofitable, cash and resource
draining business operations. This task was accomplished without jeapordizing
the economic viability of parent entity, Arete Industries, Inc. The second phase
of adding executive financial, corporate, legal and operational management
expertise was accomplished in the first quarter of 2000. The third phase, which
management is focused on now is to develop operational capabilities to cultivate
new business ideas, and generate immediate revenue with Arete Outdoors.
During the first quarter of fiscal 2000, the Company aggressively launched
start-up operations for Arete Outdoors, by initiating the patenting and product
development process for a number of its product concepts. Patents were filed for
the snowshoe and the alpine scooter. The product development cycle is nearly
complete for the snowshoe which is scheduled to go into production during the
second quarter and will be released in the third quarter of 2000. The alpine
scooter is scheduled to be released for sale in late third quarter or early
fourth quarter of 2000. Patenting and initial design work has been initiated for
two other winter season products, the suspension ski and the power pole. Arete
Outdoors also initiated development of its e-commerce website through Digital
Spinner, Inc. which will be an outdoor adventure and lifestyle community website
built on a complex database engine which will be fully scalable.
During the first quarter of 2000, with a view of acquiring e-commerce marketing,
fulfillment and data-base driven direct marketing infrastructure, the Company
moved to expanded office space and initiated discussions with several early
stage companies at various levels of maturity which offer significant synergy
with the goals and direction of the Company. The Company believes that these
discussions will develop into relationships which will be profitable to the
Company.
Management is currently focused on establishing sales and developing profitable
operations and then recapitalizing the business when it has a demonstrable cash
flow model to show to potential investors. Management believes that it cannot
currently attract capital from professionally managed funds on terms which will
be favorable to its current shareholders. Management therefore intends to raise
capital internally, through small private offerings and through project
financing. Management believes that they can take advantage of the publicly held
nature of the Company's stock to pursue capital raising transactions and
strategic acquisitions as outlined above. Other than outstanding stock options,
there are currently no acquisition or capital funding transactions pending and
no assurances that such opportunities will become available in the near future,
nor that Management will be able to keep present operations viable.
The current financial statements provide consolidated financial statements
reflecting its wholly owned subsidiary corporation, Global Direct Marketing
Services, Inc. The financials treat its partly owned subsidiary Agression
Sports, Inc. (d/b/a Arete Outdoors) on a non-consolidated basis, as an
investment.
<PAGE>
Financial Condition
- -------------------
The Company had a working capital deficit as of March 31, 2000, of $ 370,677.
This compares to a working capital deficit of $ 455,148 in fiscal year ended
March 31, 1999. Losses were again partially funded with issuance of common stock
and the exercise of stock options. During the 3-month period ended March 31,
2000 an aggregate of 9,200,000 shares of common stock were issued for aggregate
consideration of $ 64,652 and 6,000,000 shares of Common Stock were issued for
the exercise of incentive options for $66,000 in cash. (See - Notes to Financial
Statements - Note 4)
Results of Operations
- ---------------------
The Company's financial performance has been adversely affected by the
termination of its co-op coupon business.
The Company generated operating revenues of approximately $8,035 with cost of
goods sold of $7,515 (or 93% of sales) during the quarter ended March 31, 2000.
This is compared to operating revenues of $257,484 and cost of goods sold of
approximately $226,151 (or 88% of sales) during the quarter ended March 31,
2000. Salary expenses of approximately $30,028 (or 374% of sales) were incurred
during the quarter ended March 31, 2000, compared to $64,805 (or 25% of sales)
in the quarter ended March 31, 1999. The decrease in compensation was due to the
elimination of the management, employees and consultants necessary to perform
the turnaround of the direct mail business. The Company had a net loss of
$78,714 (or 980% of sales) during the quarter ended March 31, 2000.
Liquidity and Capital Resources
- -------------------------------
Arete Outdoors will need significant additional capital in the coming months as
additional products come on stream and prior to the generation of sufficient
revenue to cover these costs.
The Company had liabilities in excess of assets at March 31, 2000 of $130,587.
This is compared to liabilities in excess of assets at March 31, 1999 of
$412,492. The reduction in the liabilities in excess of assets was due to a
change in the investment in and advances to Aggression Sports from $40,560 in
the period ending March 31, 1999 to $237,665 in the period ending March 31,
2000.
The Company has made progress toward becoming an attractive investment for new
equity investors, but the Company has a long way to go to qualify for
conventional bank or venture capital financing.R> Additional equity capital is
necessary to finance working capital for the Company's new business cultivation
initiatives and to build merchant banking and operational infrastructure
capabilities. Management is resolved to continue to bootstrap the Company as
long as it is able to generate positive cash flow to finance growth and retire
debt. Due to the current financial condition of the Company and the volatility
in the market for the Company's common stock, no assurance can be made that the
Company will be successful in raising any substantial amount of capital through
the sale of equity securities, or with additional bank debt on favorable terms
in the near future. Never the less, due to such conditions, the Company may be
required to issue further common stock to pay executives, consultants and other
employees which may have a continuing dilutive effect on other shareholders of
the Company. Failure of the Company to acquire additional capital in the form of
either debt or equity capital will most likely impair the ability of the Company
to meet its obligations in the near or medium term.
At March 31, 2000, the Company had no material commitments for capital
expenditures.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
During the period ended March 31, 2000, there were no material legal proceedings
initiated by or against the Company or any of its officers, directors or
subsidiaries.
Item 2. Changes in Securities
(a) Changes in Instruments Defining Rights of Security Holders. Previously
reported.
(b) Not Applicable
(c) Item 701 Reg. SB. - During the period covered by the report, 400,000
shares of no par value common stock were sold by officers of the Company to
an individual on February 29, 2000 for an aggregate of $31,500. There were
no commissions or fees paid in connection with the placement and Management
relied on the exemption from registration provided by Section 4(2) of the
Securities Act of 1933 and Rule 504 promulgated thereunder.
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
The following exhibits are attached:
Exhibit No. Description
27 Financial Data Schedule
Other than one report covering a change in accountants on Item 4 of Form 8-K
with related exhibits on March 16, 2000 there were no Reports on Form 8-K filed
during the period covered by this report
<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.
ARETE INDUSTRIES, INC.
Date: May 15, 2000 By: /s/ Thomas Y. Gorman, CFO
------------ -------------------------------
Thomas Y. Gorman
Principal Financial and Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 88,202
<SECURITIES> 0
<RECEIVABLES> 445
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 88,647
<PP&E> 2,349
<DEPRECIATION> (349)
<TOTAL-ASSETS> 328,292
<CURRENT-LIABILITIES> 458,879
<BONDS> 0
0
0
<COMMON> 7,805,377
<OTHER-SE> (7,935,964)
<TOTAL-LIABILITY-AND-EQUITY> 328,292
<SALES> 8,035
<TOTAL-REVENUES> 8,035
<CGS> 7,515
<TOTAL-COSTS> 7,515
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,757
<INCOME-PRETAX> (8,194)
<INCOME-TAX> 0
<INCOME-CONTINUING> (8,194)
<DISCONTINUED> (70,520)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (78,714)
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
