<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[Mark One]
/X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the Quarterly period ended December 28, 1997 or
/ / Transition report under Section 13 or 15(d) of the Exchange Act for the
Transition period from ________ to _________
Commission File Number 0-18707
SPECIALTY RETAIL GROUP, INC.
(Exact Name of Small Business Issuer as specified in its charter)
Florida 59-2824411
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
477 Madison Avenue, 14th Floor, New York, New York 10022
(Address of principal offices)
(212) 872-9684
(Issuer's telephone number)
Check whether the issuer (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 issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No
On March 2, 1998, there were 9,084,238 shares of the issuer's Common Stock
outstanding excluding 213,333 contingently issuable shares held by an escrow
agent.
The Index to Exhibits Appears on Page 14
Page 1 of 17
<PAGE>
SPECIALTY RETAIL GROUP, INC.
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Condensed Consolidated Financial
Statements as of December 28, 1997....................................3
Condensed Consolidated Balance
Sheet at December 28, 1997 (Unaudited).............................3
Condensed Consolidated Statements of
Operations for the thirteen-week and twenty-six-week
periods ended December 28, 1997 and
December 29, 1996 (Unaudited)......................................4
Condensed Consolidated Statements
of Cash Flows for the thirteen-week
periods ended December 28, 1997
and December 29, 1996 (Unaudited)..................................5
Notes to the Condensed Consolidated
Financial Statements as of
December 28, 1997 (Unaudited)......................................6
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations..............................................10
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings....................................................12
Item 6 - Exhibits and Reports on Form 8-K.....................................12
Signature.....................................................................13
Page 2 of 17
<PAGE>
Specialty Retail Group, Inc.
Condensed Consolidated Balance Sheet
Condensed
from Audited
Dec. 28, Financial
1997 Statements
ASSETS (unaudited) June 29, 1997
----------- -------------
Current Assets:
Cash $29,416 $32,156
Other current assets 42,059 17,909
-------- --------
Total current assets 71,475 50,065
Property and equipment, net 2,892 3,253
-------- -------
TOTAL ASSETS $74,367 $53,318
======= =======
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued
expenses $348,362 $317,164
Lease guarantee settlement payable 25,000 25,000
Corporate taxes payable 4,620 5,370
Due to unconsolidated subsidiary 10,000 10,000
Demand loans -- stockholders 336,913 157,468
-------- ---------
Total current liabilities 724,895 515,002
Legal settlement 80,000 80,000
-------- ---------
Total liabilities $804,895 $595,002
-------- ---------
Commitments and contingencies (Note 5)
Stockholders' deficit:
Series A-1 Preferred Stock; 10,000,000 shares
authorized; $.001 par value; issued and
outstanding, 2,394,130 shares 2,394 2,394
Common Stock; 100,000,000 shares authorized;
$.001 par value; 9,324,738 shares issued
(December 28, 1997) 9,325 9,325
Additional paid-in capital 11,573,570 11,573,570
Accumulated deficit (12,140,153) (11,951,309)
Treasury Stock - 240,500 shares, at cost (175,664) (175,664)
------------ ------------
Total stockholders' deficit (730,528) (541,684)
------------ -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $74,367 $53,318
=========== ==========
See accompanying notes to consolidated financial statements
Page 3 of 17
<PAGE>
Specialty Retail Group, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
13 Weeks Ended 26 Weeks Ended
-------------- --------------
December 28, 1997 December 29, 1996 December 28, 1997 December 29, 1996
<S> <C> <C> <C> <C>
Results of Discontinued
Operations:
Net sales $ -- $1,068,749 -- $2,316,042
Cost of sales -- 805,878 -- 1,625,385
-------- ---------- -------- ---------
Gross profit -- 262,871 -- 690,657
Operating costs:
Selling expenses -- 590,681 -- 1,369,967
General and administrative 95,177 435,116 179,433 890,012
expenses ------ --------- ------- -------
Loss from operations (95,177) (762,926) (179,433) (1,569,322)
Other income (expense):
Interest income (expense), net (5,584) 64 (9,429) 850
Miscellaneous income -- 18,894 18 22,450
Gain on sale of equity
investment (Note 4) -- -- -- 44,406
Loss on fixed assets due to
store closings -- (314,594) -- (314,594)
Writedown of goodwill -- (136,882) -- (136,882)
--------- ------------ ---------- ------------
Net loss $(100,761) ($1,195,444) ($188,844) ($1,953,092)
========== ============ ========== ============
Per share amounts:
Net income (loss): ($.01) ($.13) ($.02) ($.22)
====== ====== ====== ======
Weighted average number of
common shares outstanding 9,324,738 9,084,238 9,324,738 8,900,542
========= ========== ========= =========
</TABLE>
See accompanying notes to consolidated financial statements
Page 4 of 17
<PAGE>
Specialty Retail Group, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
26 Weeks Ended
--------------
December 28, 1997 December 29, 1996
----------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss ($188,844) ($1,953,092)
---------- ------------
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 361 70,845
Gain on sale of equity investment -- (44,406)
Loss on fixed assets -- 314,594
Writedown of goodwill -- 136,882
Decrease in inventory -- 899,050
Increase in other current assets (24,150) (47,885)
Increase in other assets -- 2,287
Increase in accounts payable
and accrued liabilities 39,893 282,231
------ -------
Total adjustments 16,104 1,613,598
------ ---------
Net cash used in operating activities (172,740) (339,494)
Cash flows from investing activities:
Expenditures for property and equipment -- (5,180)
----------
Net cash used in investing activities -- (5,180)
-------- ----------
(Cash flows from financing activities:
Loans from stockholders 170,000 225,000
Net cash provided by financing activities 170,000 225,000
------- ----------
Net decrease in actual cash equivalents (2,740) (119,674)
Cash and cash equivalents, beginning of period 32,156 387,006
------- ----------
Cash and cash equivalents, end of period $29,416 $267,332
======= ==========
</TABLE>
Supplemental Schedule of Noncash Investing and Financing Activities:
On August 26, 1996, the Company issued 650,000 shares of its Common
Stock valued at $570,000 as part of a legal settlement. This item appeared as
"Legal settlement -- equity to be issued," in the Company's June 30, 1996
Consolidated Balance Sheet. Please refer to Note 5 in the accompanying notes for
a further discussion of this matter.
In 1996, the Company transferred its interest in an equity investment
as repayment of a $224,150 loan from a beneficial owner of the Company's
Preferred Stock.
See accompanying notes to consolidated financial statements
Page 5 of 17
<PAGE>
Specialty Retail Group, Inc.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
December 28, 1997
1. Basis of Presentation
The accompanying unaudited consolidated financial statements
of Specialty Retail Group, Inc. and subsidiaries (collectively, the "Company")
have been prepared in accordance with generally accepted accounting principles
for interim financial information and the instructions to Form 10-QSB.
With respect to the unaudited consolidated financial
statements for the twenty-six weeks ended December 28, 1997 and December 29,
1996, respectively, it is the Company's opinion that all necessary adjustments
(consisting of normal and recurring adjustments) have been included to present a
fair statement of results for the interim periods.
As discussed in Note 2, effective in the period ended March
30, 1997 the Company sold or discontinued all business operations and its
subsidiary, Building Blocks, Inc., filed a petition for relief under Chapter 11
of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern
District of New York. The only current operations are the general and
administrative costs related to the bankruptcy and maintaining a business
office. In accordance with generally accepted accounting principles, the Company
deconsolidated its Building Blocks, Inc. subsidiary as of the bankruptcy filing.
These statements should be read in conjunction with the
Company's financial statements included in the Company's Annual Report on Form
10-KSB for the fiscal year ended June 29, 1997. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations promulgated by the Securities and Exchange
Commission.
2. Going Concern
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern, and they do not
include adjustments relating to the recoverability of recorded asset amounts and
classification of recorded assets and liabilities.
On January 31, 1997, the Company's Building Blocks, Inc.
("Building Blocks") subsidiary filed a petition for relief under Chapter 11 of
the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District
of New York (Case No. 97-B-40684 (BRL)). The petition sought protection from
creditors while Building Blocks liquidated its
Page 6 of 17
<PAGE>
inventory and fixtures. Effective January 28, 1997 the outstanding capital stock
of the Company's Building Blocks Franchise Corp. subsidiary, which owns the
"Building Blocks" trademarks, was sold by the Company's Building Blocks
Holdings, Inc. subsidiary.
The Company, which has no other business operations, has been
attempting to attract an operating business with which to effectuate a business
combination. The Company had approximately $74,000 of assets and had current
liabilities of approximately $725,000 at December 28, 1997. It is now expected
that the Company will pay approximately $83,000 to or on behalf of Building
Blocks and will be released from all claims of Building Blocks and its creditors
upon completion of Building Blocks' bankruptcy proceedings. The Company has been
receiving cash advances in the form of demand loans from three beneficial owners
of its Capital Stock in order to meet its operating expenses and has been
obtaining forbearances from its principal creditors. At December 28, 1997, such
advances and interest accrued thereon (which are included in the current
liabilities described above) aggregated $336,193. The Company anticipates that
the three beneficial owners will advance the $83,000 contemplated in the Plan,
but there are no assurances as to the time or extent that the stockholder
advances and/or forbearance will continue. Further, there is no assurance that
any business combination can ever be effectuated. Any such combination may
depend upon the final outcome of Building Blocks' Chapter 11 proceeding and upon
the Company's ability to reach settlements of its outstanding obligations. See
Note 3.
The foregoing raise substantial doubt about the Company's
ability to continue as a going concern and the report of the Company's auditor
with respect to the Company's financial statements for its fiscal year ended
June 29, 1997 contained qualifying language to that effect.
3. Chapter 11 Petition of Debtor
In a Chapter 11 case, substantially all liabilities of the
Debtor, Building Blocks, as of the date of the Filing are subject to resolution
under a plan of reorganization to be voted upon by the Debtor's creditors and
stockholders and confirmed by the Bankruptcy Court. Financial schedules filed by
the Debtor as of the date of the Filing show liabilities exceed assets by
approximately $800,000. Differences between amounts shown by the Debtor and
claims filed by creditors will be investigated and resolved. The amount and
settlement terms for such disputed liabilities are subject to allowance by the
Bankruptcy Court. Ultimately the adjustment of all liabilities of the Debtor
remains subject to a Bankruptcy Court approved plan of reorganization or
liquidation and, accordingly, are not presently determinable.
On August 8, 1997, Building Blocks submitted to the Bankruptcy
Court a Chapter 11 Plan which, if approved, would have resulted in a discharge
of Building Blocks from all claims of its creditors, including the Company; a
discharge of the Company from all claims of Building Blocks and Building Blocks'
creditors in exchange for the Company satisfying Building Blocks' obligations
under a store lease which the Company and the
Page 7 of 17
<PAGE>
landlord have agreed to settle for $30,000 (the "Store Lease"), and the merger
of Building Blocks with and into the Company. The Official Committee of
Unsecured Creditors in the Chapter 11 proceeding (the "Committee") filed
objections to certain aspects of Building Blocks' Reorganization Plan on
September 18, 1997. Building Blocks, with the approval of the Committee and the
Company, submitted a revised Plan to the Bankruptcy Court on February 18, 1998,
and the Bankruptcy Court approved the mailing of the revised Plan to Building
Blocks' creditors. The revised Plan contemplates that the Company will pay to
Building Blocks the sum of $58,000 to enable Building Blocks to settle creditor
claims, and will provide $25,000 of the $30,000 required under the settlement of
the Store Lease. The revised Plan contemplates Building Blocks paying the
additional $5,000 out of Building Blocks' Chapter 11 assets. In addition,
Building Blocks will be dissolved and not merged into the Company. As a result,
the Company will not have any right to use the portion of its historic
consolidated net operating loss carryforwards ("NOLs") attributable to Building
Blocks' operations. The Company has not performed a precise calculation of the
Company's share of the consolidated NOLs, but believes that, at June 29, 1997,
the Company's share of the consolidated NOLs was less than one-half of the
approximate total of $13,475,000.
It is expected that, if it is acceptable to Building Blocks'
creditors, the revised Plan will be confirmed by the Bankruptcy Court in late
March or early April, 1998. It remains possible that the Company will settle
additional creditor claims and/or make a payment to Building Blocks and/or issue
shares of its common stock to creditors of Building Blocks or make other
concessions in connection with the definitive Plan. Ultimately, the adjustment
of all claims and liabilities of a debtor is subject to a Bankruptcy Court
approved Plan and, accordingly, is not presently determinable.
4. Equity Investments
Effective December 14, 1995, the Company acquired 25% of the
Common Stock of CM Franchise Corp., a franchiser of specialty carpet retailers
operating under the registered trademark of "Carpet Master" for a total
consideration of $224,150. In addition, as part of the transaction, the Company
obtained an option to acquire an additional 12.5% of CM Franchise Corp.'s common
stock. The Company accounted for this transaction using the equity method.
In July 1996, the Company received a loan of $224,150 to cover
a working capital shortfall. Under the agreement, the Company had the right to
either repay the advance without interest or to transfer to the lender all of
the Company's rights and interests in the common stock of CM Franchise Corp. and
warrants to purchase additional shares of such common stock it acquired in
December 1995. The Company transferred the rights and interests to the lender on
September 29, 1996. As a result, the Company recorded a $44,406 gain on this
transaction in the accompanying Condensed Consolidated Statements of Operations
for the 26 weeks ended December 29, 1996.
Page 8 of 17
<PAGE>
5. Commitments and Contingencies
Legal Settlement-Issuance of Common Stock
The Company was a party defendant in a lawsuit with a former
officer, director and shareholder of the Company's predecessor corporation who
alleged, among other things, breach of contract, fraud, defamation, interference
with stock transfer rights, breach of fiduciary duties by certain former
officers of the Company, conspiracy to defraud, and interference with respect to
the inspection of corporate records. The Plaintiff claimed he was entitled to a
termination payment of $1,400,000 pursuant to an employment agreement with the
Company.
In August 1996, the Company settled this litigation without
admitting liability, by issuing an aggregate of 650,000 shares of the Company's
common stock valued at $570,000 to the plaintiff and his designee. The Company
also agreed to guarantee up to $160,000 for any shortfall from $650,000 realized
upon the sale by the holders of all of the 650,000 shares. The Company may
satisfy the guarantee by a cash payment or the issuance to the holders of up to
213,333 shares of its common stock currently held by an escrow agent.
Other Legal Proceedings-Leases
Building Blocks is a defendant in a number of legal
proceedings instituted by landlords of various former Building Blocks store
locations. These cases have been stayed by the bankruptcy proceeding and it is
expected that the underlying claims will be extinguished upon the completion of
the bankruptcy proceeding.
Of the aforementioned cases, the Company is a limited
guarantor in Fashion Mall Partners, L.L.P. v. Building Blocks, Inc., City Court
- - Westchester, New York, commenced September 26, 1996. This suit seeks $180,000
for rent arrearages under a lease to Building Blocks which was guaranteed by the
Company, which guaranteed up to $180,000 of rent payments under this lease. The
landlord subsequently filed a Proof of Claim with the Bankruptcy Court in the
amount of approximately $480,000. The landlord has agreed to settle the
guarantee and the underlying claim for $30,000. The revised Chapter 11 Plan
contemplates that the Company will fund $25,000 of this amount, which is
reflected in the accompanying balance sheet, and Building Blocks will pay the
remaining $5,000.
6. Writedown of Goodwill and Loss on Property and Equipment
Due to the Chapter 11 filing by Building Blocks and the sale
of all of the outstanding capital stock of BBFC on January 28, 1997, the Company
has determined that the Goodwill has no future value and has recorded a writeoff
of $136,882 during the 13- week period ended December 29, 1996. Additionally,
the Company recorded a Loss on
Page 9 of 17
<PAGE>
Property and Equipment during the same period of $314,595 due to the closing of
certain stores.
Page 10 of 17
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Set forth below is a discussion of (1) the Company's lack of
liquidity and capital resources; and (2) the items set forth under "Other income
(expenses)" in the Consolidated Statements of Operations included in the
Company's financial statements. These discussions should be read in conjunction
with the financial statements and notes thereto.
The reported results of discontinued operations are not
indicative of future results of operations or financial position of the Company.
The financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information applicable to a
going concern, which principles, except as otherwise disclosed, assume that
assets will be realized and liabilities will be discharged in the normal course
of business. The financial statements do not include adjustments relating to the
recoverability of recorded asset amounts and classification of recorded assets
and liabilities which may result from the Company's lack of capital resources or
ongoing operations as described below.
Liquidity and Capital Resources
Certain of the matters discussed under this caption that are
forward-looking statements involve risks and uncertainties, as described herein,
and others which may arise from changes in general economic conditions,
unanticipated changes in the Company's circumstances, and other factors.
The principal operating subsidiary of the Company prior to
February 1997 was Building Blocks, Inc., which the Company acquired on April 13,
1993 and which operated a chain of specialty retail toy stores. Building Blocks
Franchise Corp. ("BBFC") was organized subsequent to June 30, 1996, as a
second-tier subsidiary, and was engaged in marketing and selling franchises for
Building Blocks stores.
Effective January 28, 1997, the outstanding capital stock of
BBFC was sold. The net proceeds from the sale ($43,224) were paid over to
Building Blocks pursuant to an agreement requiring the parent of BBFC to obtain
a general release from Building Blocks to BBFC. On January 31, 1997, Building
Blocks filed a petition for relief under Chapter 11. The petition sought
protection from creditors while Building Blocks attempted to dispose of its
retail stores either through sales of the stores and assignment of their leases
or by the liquidation of inventory and fixtures.
On August 8, 1997, Building Blocks submitted a Chapter 11 Plan
of Reorganization to the Bankruptcy Court which, if approved, would have
resulted in a discharge of Building Blocks from all claims of its creditors,
including the Company; a discharge of the Company from all claims of Building
Blocks and Building Blocks' creditors
Page 11 of 17
<PAGE>
in exchange for the Company satisfying Building Blocks' obligations (and the
Company's limited guarantee thereof) under a store lease (which the landlord has
agreed to settle for $30,000); and the merger of Building Blocks with and into
the Company. The Official Committee of Unsecured Creditors (the "Committee") in
the Chapter 11 proceeding filed objections to certain aspects of Building
Blocks' Reorganization Plan on September 18, 1997. Building Blocks, with the
approval of the Committee and the Company, submitted a revised Plan to the
Bankruptcy Court on February 18, 1998 and, pursuant to the Bankruptcy Court's
authorization, sent the revised Plan to the creditors of Building Blocks on or
about February 26, 1998. It is expected that, if it is approved by the
creditors, the Plan may be confirmed by late March or early April, 1998.
The Company had approximately $74,000 of assets and had
current liabilities of approximately $725,000 at December 28, 1997. It is now
expected that the Company will pay approximately $83,000 to or on behalf of
Building Blocks and will be released from all claims of Building Blocks and its
creditors upon completion of Building Blocks' bankruptcy proceedings and will be
released from its guarantee of the store lease. The Company may also be
required, at some future date, to satisfy a non-current liability carried on its
books in the amount of $80,000 by the issuance of 213,333 shares of its common
stock to certain parties pursuant to the settlement agreement described in Note
5 to the financial statements included herewith. (See Note 5 of the Condensed
Consolidated Financial Statements.)
It is not expected that the Company will receive any cash or
other benefit (including any right to utilize Building Blocks' net operating
loss carryforwards) from Building Blocks upon completion of Building Blocks'
bankruptcy proceedings. The Company has been receiving cash advances in the form
of demand loans from three beneficial owners of its Capital Stock in order to
meet its operating expenses and has been obtaining forbearances from its
principal creditors. At December 28, 1997, such advances and interest accrued
thereon (which are included in the current liabilities described above)
aggregated $336,193. The Company anticipates that the three beneficial owners
will advance the $83,000 contemplated in the Plan, but there are no assurances
as to the time or extent that the stockholder advances and/or forbearance will
continue.
The Company has been attempting to attract an operating
business with which to effectuate a business combination. There is no assurance
that any business combination can ever be effectuated, and any such combination
may depend, among other things, upon the outcome of Building Blocks' Chapter 11
proceeding and upon the Company's ability to reach settlements of its
outstanding obligations.
Other Income (Expense)
During the quarter ended September 29, 1996, the Company
recorded a $44,406 gain on the sale of its equity investment in CM Franchise
Corp. Such gain results from the Company's transferring its rights and interests
in the investee's common stock, with a recorded value of $179,744, in
satisfaction of a $224,150 debt.
Page 12 of 17
<PAGE>
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Building Blocks is a defendant in a number of legal
proceedings instituted by landlords of various former Building Blocks store
locations. These cases have been stayed by the bankruptcy proceeding and it is
expected that the underlying claims will be extinguished upon the completion of
the bankruptcy proceeding.
Of the aforementioned cases, the Company is a limited
guarantor in Fashion Mall Partners, L.L.P. v. Building Blocks, Inc., City Court
- - Westchester, New York, commenced September 26, 1996. This suit seeks $180,000
for rent arrearages under a lease to Building Blocks which was guaranteed by the
Company, which guaranteed up to $180,000 of rent payments under this lease. The
landlord subsequently filed a Proof of Claim with the Bankruptcy Court in the
amount of approximately $480,000. The Company has negotiated an agreement for
settlement of this claim and the suit for a payment of $30,000, of which it is
expected that $25,000 will be paid by the Company and $5,000 will be paid by
Building Blocks.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27. Financial Data Schedule
(b) No reports on Form 8-K were required to be filed during the fiscal
quarter ended December 28, 1997.
Page 13 of 17
<PAGE>
SIGNATURE
In accordance with the requirements of the Securities Exchange
Act of 1934, the Company has caused this Report to be signed on its behalf by
the undersigned, thereto duly authorized.
SPECIALTY RETAIL GROUP, INC.
Date: March 3, 1998 By:/s/ STEVEN E. GLASS
-----------------------------
Steven E. Glass, Secretary
Page 14 of 17
<PAGE>
INDEX TO EXHIBITS
Number Exhibit Page
- ------ ------- ----
27 Financial Data Schedule 16
Page 15 of 17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEET AND CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM 10-QSB FOR THE QUARTER
ENDED DECEMBER 28, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-28-1998
<PERIOD-START> JUN-28-1997
<PERIOD-END> DEC-28-1997
<CASH> 29,416
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 42,059
<PP&E> 2,892
<DEPRECIATION> 361
<TOTAL-ASSETS> 74,367
<CURRENT-LIABILITIES> 724,895
<BONDS> 0
0
2,394
<COMMON> 9,325
<OTHER-SE> (742,247)
<TOTAL-LIABILITY-AND-EQUITY> 74,367
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,429
<INCOME-PRETAX> (188,844)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> (188,844)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (188,844)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
