U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 27, 1999
-------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) EXCHANGE ACT
For the transition period from to
------------ ------------
Commission file number 0-17975
-------
Redheads, Inc.
--------------
(Exact name of business issuer as specified in its charter)
Delaware 95-4169432
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
Fifty South Buckhout Street, Irvington, New York 10533
------------------------------------------------------
(Address of principal executive offices)
(914) 591-4444
--------------
(Issuer's telephone number)
-------------------------------------------
(Former name, former address and formal fiscal year,
if changed since last report)
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 registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
APPLICATION ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
2,457,759 as of December 27, 1998.
----------------------------------
Redheads, Inc, and Subsidiaries
INDEX
PART I FINANCIAL INFORMATION
Page No.
Item 1. Financial Statements
Consolidated Balance Sheet as of September 27, 1998
(unaudited) and September 28, 1998 (Unaudited) 3
Consolidated Statement of Operations for the thirteen
weeks ending September 27, 1998 (unaudited) and
September 28, 1997 (unaudited) 4
Consolidated Statement of Operations for the thirty-nine
weeks ending September 27, 1998 (unaudited) and
twenty-one weeks ending May 30, 1997 and eighteen weeks
ending September 28, 1997 (unaudited) 5
Consolidated Statement of Cash Flows as of
September 27, 1998 (unaudited) 6
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8-11
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. Subsequent Events 12
Item 7 Exhibits and Reports on Form 8-K 12
Signature Page 13
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Redheads, Inc, and Subsidiaries
Consolidated Balance Sheet
<TABLE>
<CAPTION>
June 27 December 27
1999 1998
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash 0 0
Accounts Receivable - Credit Cards 47,056 26,036
Inventories 94,247 84,812
Other Current Assets 106,635 60,682
------------------------
TOTAL CURRENT ASSETS 247,939 171,531
Fixed Assets 1,220,290 1,349,017
Other Assets 344,398 365,674
Long Term Note Receivable 0 0
------------------------
TOTAL LONG TERM ASSETS 1,564,688 1,714,691
TOTAL ASSETS 1,812,627 1,886,222
========================
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Cash Overdraft 0 210,955
Trade accounts 1,071,246 674,556
Deferred Liabilities 19,579 32,766
Sales and payroll taxes payable 1,200,023 562,803
Postpetition senior securred notes 0 0
Loans Payable - Taxes 443,237 443,237
Reserves 101,539 101,539
Accrued Expenses 98,436 103,921
------------------------
TOTAL CURRENT LIABILITIES 2,934,061 2,129,776
Notes Payable 1,163,896 793,641
------------------------
TOTAL LIABILITIES 4,097,958 2,923,417
STOCKHOLDERS' EQUITY (DEFICIT)
8% Cumulative Exchangeable $.001 par value;
authorized - 1,017,000 shares; 125,000 125,000
issued and outstanding - 16,666
shares as of June 27, 1999
and December 27, 1998
12% Preferred stock - $.001 par value;
authorized - 5,000,000 shares; 335,815 335,815
issued and outstanding - 44,775
shares as of June 27, 1999
issued and outstanding - 44,775
shares as of December 27, 1998
Common stock - $.001 par value;
authorized - 23,024,000 shares; 2,458 2,458
issued and outstanding - 2,457,759
shares as of June 27, 1999
issued and outstanding - 2,457,759
shares as of December 27, 1998
Additional paid-in capital 3,263,426 3,263,426
Accumulated deficit (4,763,894) (715,837)
Accumulated deficit Current (1,248,136) (4,048,058)
------------------------
(2,285,331) (1,037,195)
------------------------
TOTAL STOCKHOLDERS' EQUITY
Plus: subscriptions receivable 0 0
Total Stockholders Equity (2,285,331) (1,037,195)
------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY 1,812,627 1,886,222
========================
</TABLE>
Redheads, Inc, and Subsidiaries
Consolidated Statement of Operations
<TABLE>
<CAPTION>
13 Weeks Ending 13 Weeks Ending
June 27, 1999 June 28, 1998
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
SALES 2,037,536 100.00% 2,415,365 100.00%
COST OF SALES 550,802 27.03% 692,125 28.66%
--------- ---------
GROSS PROFIT 1,486,734 72.97% 1,723,240 71.34%
--------- ---------
OPERATING EXPENSES
Labor costs 833,474 40.91% 792,020 32.79%
Occupancy costs 276,600 13.58% 336,277 13.92%
Other Operating Expense 574,020 28.17% 543,365 22.50%
Depreciation 140,486 6.89% 153,940 6.37%
0.00% 0.00%
--------- ---------
TOTAL OPERATING EXPENSES 1,824,579 89.55% 1,825,602 75.58%
--------- ---------
LOSS FROM RESTAURANT OPERATIONS (337,845) -16.58% (102,362) -4.24%
--------- ---------
General and administrative expenses 276,792 13.58% 299,819 12.41%
--------- ---------
LOSS FROM OPERATIONS (614,637) -30.17% (402,181) -16.65%
--------- ---------
OTHER INCOME (EXPENSE)
Interest expense (31,317) -1.54% (12,250) -0.51%
Other income (expense) net (65,526) -3.22% 2,137 0.09%
--------- ---------
TOTAL OTHER INCOME (EXPENSE) (96,843) -4.75% (10,113) -0.42%
REORGANIZATION EXPENSE
Professional fees 0 0.00% (100,500) -4.16%
Gain loss on disposal of assets 0 0.00% 0 0.00%
Forgiveness of Debt 0 0.00% 176,586 7.31%
--------- ---------
TOTAL REORGANIZATION EXPENSE 0 0.00% 76,086 3.15%
--------- ---------
NET LOSS (711,480) -34.92% (336,208) -13.92%
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 2,457,759 2,235,743
INCOME (LOSS) PER COMMON SHARE (0.29) (0.15)
</TABLE>
Redheads, Inc, and Subsidiaries
Consolidated Statement of Operations
<TABLE>
<CAPTION>
YTD YTD
June 27, 1999 June 28, 1998
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
SALES 3,924,282 100.00% 4,805,017 100.00%
COST OF SALES 1,065,755 27.16% 1,422,291 29.60%
--------- ---------
GROSS PROFIT 2,858,527 72.84% 3,382,726 70.40%
--------- ---------
OPERATING EXPENSES
Labor costs 1,637,905 41.74% 1,521,171 31.66%
Occupancy costs 539,518 13.75% 644,028 13.40%
Other Operating Expense 1,051,908 26.81% 1,139,618 23.72%
Depreciation 280,971 7.16% 322,310 6.71%
--------- ---------
TOTAL OPERATING EXPENSES 3,510,303 89.45% 3,627,127 75.49%
--------- ---------
LOSS FROM RESTAURANT OPERATIONS (651,776) -16.61% (244,401) -5.09%
--------- ---------
General and administrative expenses 506,762 12.91% 408,238 8.50%
--------- ---------
LOSS FROM OPERATIONS (1,158,538) -29.52% (652,640) -13.58%
--------- ---------
OTHER EXPENSE
Interest expense (56,575) -1.44% (19,070) -0.40%
Other expense net (33,023) -0.84% (80,557) -1.68%
--------- ---------
TOTAL OTHER EXPENSE (89,598) -2.28% (99,627) -2.07%
--------- ---------
REORGANIZATION EXPENSE
Professional fees 0 0.00% (197,616) -4.11%
Gain loss on disposal of assets 0 0.00% (405) -0.01%
Forgivness of Debt 0 0.00% 0 0.00%
--------- ---------
TOTAL REORGANIZATION EXPENSE 0 0.00% (198,022) -4.12%
--------- ---------
LOSS BEFORE EXTRAORDINARY ITEM (1,248,136) -31.81% (950,288) -19.78%
EXTRAORDINARY ITEM
Forgiveness of Debt 0 0.00% 0 0.00%
NET LOSS (1,248,136) -25.98% (950,288) -19.78%
========= =========
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 2,457,759 2,386,439
========= =========
INCOME (LOSS) PER COMMON SHARE (0.51) (0.40)
========= =========
</TABLE>
Redheads, Inc, and Subsidiaries
Consolidated Statement of Cash Flows
<TABLE>
<CAPTION>
Mar 28 99 Jun 28 99
<S> <C>
CASH FLOW FROM OPERATING ACTIVITY
Net Income (Loss) (711,480)
Depreciation Amortization 280,971
Decrease (Increase) In Inventory (12,327)
Decrease (Increase) In Other Current Assets
And Accts. Rec. 36,056
Decrease (Increase) In Other Assets 42,899
Loss on conversion of asset 0
Restructuring Expense 0
Forgiveness Of Debt 0
Increase (Decrease) In Trade Accounts And Notes Payable
And Accrued Expenses (75,951)
Increase (Decrease) In Loans Payable 0
Increase (Decrease) In Sales And Payroll Taxes Payable 412,831
-------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (27,001)
-------
CASH FLOW FROM INVESTING ACTIVITY
(Increase) Decrease In C.I.P. And Fixed Assets (214,677)
Increase (Decrease) In Cash Due To/From Affiliated Co'S 0
-------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (214,677)
-------
CASH FLOW FROM FINANCING ACTIVITY
Increase (Decrease) In Long Term Debt 297,988
Increase (Decrease) In Cash Overdraft (56,310)
Change To Paid In Capital 0
Change To Preferred Cumulative Preferred 0
Change To Preferred Stock Subscribed 0
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 241,678
-------
Increase (Decrease) In Cash 0
Cash Beginning 0
-------
Cash Ending 0
=======
</TABLE>
REDHEADS, INC, AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIT)
<TABLE>
<CAPTION>
TOTAL PIC
Stockholder Preferred Preferred Preferred Preferred Common Paid-in Preferred Retained
Equity Stock Stock/LEV Stock/MRI Stock Stock Capital Stock subs. Earnings
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 28, 1997 3,029,026 125,000 315,815 2,401,813 2,386 499,849 400,000 (715,836)
STOCK FOR DEBT SETTLEMENT 176,587 68 176,519
STOCK FOR DEBT SETTLEMENT 5,250 4 5,246
EQUITY PLACEMENT FEES 0
RECORD PREFERRED STOCK TO
TELEFERSCOT 0 20,000 180,000 (200,000)
NET INCOME JAN. TO Dec 1998 (4,048,058) (4,048,058)
Converted to debt (200,000) (200,000)
0
0
------------------------------------------------------------------------------------------------
BALANCE AT DECEMBER 27, 1998 (1,037,195) 125,000 0 335,815 2,581,813 2,458 681,614 0 (4,763,894)
===============================================================================================
0
0
NET INCOME JAN. TO MARCH 1999 (536,656) (536,656)
0
0
------------------------------------------------------------------------------------------------
BALANCE AT MARCH 28, 1999 (1,573,850) 125,000 0 335,815 2,581,813 2,458 681,614 0 (5,300,550)
===============================================================================================
0
0
NET INCOME MARCH TO JUNE 1999 (711,480) (711,480)
0
0
------------------------------------------------------------------------------------------------
BALANCE AT JUNE 27, 1999 (2,285,331) 125,000 0 335,815 2,581,813 2,458 681,614 0 (6,012,030)
===============================================================================================
</TABLE>
Redheads, Inc, and Subsidiaries
Notes to Consolidated Financial Statements
(unaudited)
1. Statement of Information Furnished
The accompanying unaudited consolidated 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 recurring
accruals) necessary to present fairly the financial position as of June 27,
1999 and June 28, 1998, the results of operations for the thirteen and
twenty-six weeks ended June 27, 1999, thirteen and twenty-six weeks ending
June 28, 1998, and the cash flows for the twenty-six weeks ended June 27,
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 Annual Consolidated Financial Statements
included in the Company's Form 10-KSB for the year ended December 27, 1998.
Certain information and footnote disclosures normally included in the
financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
the accompanying consolidated financial statements be read in conjunction
with financial statements and notes thereto incorporated by reference in the
Company's Form 10-KSB for the year ended December 27, 1998.
Interim results of operations are not necessarily indicative of the
results to be expected for a full year.
2. Income Taxes
The company files a consolidated federal income tax return and certain
combined state and city returns. There are no significant temporary
differences for the thirteen weeks ended March 28, 1999. The Company's
federal state and city tax returns have not yet been filed for the fifty two
week period ending December 27, 1998. As of December 27, 1998 the Company
had approximately $15,300,000 of net operating loss carry forwards expiring
through 2011, available to face future federal income taxes.
As of December 27, 1998 the Company had approximately $15,300,000 of
net operating loss carry forwards expiring through 2011, available to face
future federal income taxes.
As a result of the change in control of the company is subject to
limitations on the future utilization of its federal net operating loss
carry forwards. These limitations, described in Section 382 of the Internal
Revenue Code, limit the amount of future taxable income which may be offset
by pre-change net operating loss and capital loss carry forwards. This
limitation is calculated by reference to the value the Company immediately
before the change date, multiplied by a discount factor, known as the "long
term tax-exempt rate"
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
(B) Results of Operations
Results of Operations -The thirteen weeks ended June 27, 1999 as
compared with the thirteen weeks ended June 28, 1998.
Total revenues decreased $377,829 or 16.0% to $2,037,536 for the
thirteen weeks ended June 27, 1999, from $2,415,365 for the thirteen weeks
ended June 28, 1998. The decrease was attributable to the closure of the
Levittown location.
Food and beverage expense decreased $141,323 or 20% to $550,802 for
the thirteen weeks ended June 27, 1999 from $692,125 for the thirteen weeks
ended June 28, 1998. The decrease was attributable to the closure of the
Levittown location.
Restaurant labor and related expenses increased $41,454 or 5% to
$833,474 for the thirteen weeks ended June 27, 1999, from $792,020 for the
thirteen weeks ended June 28, 1998. The increase is attributable to the
increase associated with the hiring of corporate chefs to upgrade the menu
offerings.
Restaurant occupancy expenses decreased $59,677 or 18% to $276,600 for
the thirteen weeks ended June 27, 1999, from $336,277 for the thirteen weeks
ended June 28, 1998. The decrease is attributable to the closure of the
Levittown location.
Other operating expenses increased $30,655 to $574,020 for the
thirteen weeks ended June 27, 1999, from $543,365 for the thirteen weeks
ended June 28, 1998. This was attributable to the increase associated with
marketing and advertising which began in the second quarter of 1999. Other
operating expenses consist mainly of fixed costs such as utilities,
advertising, insurance, repair & maintenance and other variable costs such
as supplies and promotional items.
Depreciation and Amortization decreased $13,454 or 9% to $140,486 for
the thirteen weeks ended June 27, 1999, from $153,940 for the year ended
June 28, 1998. The decrease is attributable to the closure of the
Levittown location.
General and administrative expenses decreased $23,027 to $276,792 for
the thirteen weeks ended June 27, 1999, from $299,819 for the thirteen weeks
ended June 28, 1998. The decrease is attributable to the reduction of
administrative staff. General and administrative expenses consist of, among
other things, executive salaries, other administrative compensation,
corporate office rent and corporate overhead expenses.
The Company's net loss from operations increased $212,456 or 53% to
$614,637 for the thirteen weeks ended June 27, 1999, from $402,181 for the
thirteen weeks ended June 28, 1998. Net operating loss as a percentage of
revenues increased 13 percentage points to 30% from 17%, in the respective
periods. The increase in the loss can be attributable to a number of
factors namely increased marketing expenditures, labor and administrative
expenses.
Results of Operations -The twenty-six weeks ended
June 27, 1999 as compared with the twenty-six weeks
ended June 28 1998.
Total revenues decreased $880,734 or 18% to $3,924,282 for the twenty-
six weeks ended June 27, 1999, from $4,805,017 for the twenty-six weeks
ended June 28, 1998. The decrease was attributable to the closure of the
Levittown location.
Food and beverage expense decreased $356,536 or 25% to $1,065,755 for
the twenty-six weeks ended June 27, 1999 from $1,422,291 for the twenty-six
weeks ended June 28, 1998. The decrease was attributable to the closure of
the Levittown location.
Restaurant labor and related expenses increased $116,734 or 8% to
$1,637,905 for the twenty-six weeks ended June 27, 1999, from $1,521,171 for
the twenty-six weeks ended June 28, 1998. The increase is attributable to
the increase associated with the hiring of corporate chefs to upgrade the
menu offerings.
Restaurant occupancy expenses decreased $104,509 or 16% to $539,518
for the twenty-six weeks ended June 27, 1999, from $644,028 for the twenty-
six weeks ended June 28, 1998. This was attributable to the closure of the
Levittown location.
Other operating expenses decreased $87,710 or 8.0% to $1,051,908 for
the twenty-six weeks ended June 27, 1999, from $1,139,618 for the twenty-six
weeks ended June 28, 1998. This was attributable to the increase associated
with marketing and advertising which began in the second quarter of 1999.
Other operating expenses consist mainly of fixed costs such as utilities,
advertising, insurance, repair & maintenance and other variable costs such
as supplies and promotional items.
Depreciation decreased $41,339 or 12.8% to $280,971 for the twenty-six
weeks ended June 27, 1999, from $322,310 for the year ended June 28, 1998.
The decrease is attributable to the closure of the Levittown location.
General and administrative expenses increased $98,523 or 24% to
$506,762 for the twenty-six weeks ended June 27, 1999, from $408,238 for the
twenty-six weeks ended June 28, 1998. The increase is attributable to the
hiring of a team of marketing professionals. General and administrative
expenses consist of, among other things, executive salaries, other
administrative compensation, corporate office rent and corporate overhead
expenses.
The Company's net loss from operations increased $505,898 or 78% to
$1,158,538 for the twenty-six weeks ended June 27, 1999, from $652,640 for
the twenty-six weeks ended June 28, 1998. Net operating loss as a
percentage of revenues increased 16 percentage points to 30% from 14%, in
the respective periods. The increase in the loss can be attributable to a
number of factors namely increased marketing expenditures, labor and
administrative expenses.
(C) Liquidity And Capital Resources
Operating Activities. During the quarter end June 27, 1999 operations
resulted in a loss of $711,480. The change in cash was $0. The company
continued to operate utilizing current payables and debt financing in the
form of 12% senior secured notes as financing.
As of June 27, 1999, the Company had negative working capital of
$2,686,077, as compared to negative working capital of $1,958,245 as of
December 27, 1998.
The Company does not have trade accounts receivable, since sales are
for cash or by credit card receipts, which are usually paid within one week.
The Company does not maintain substantial inventories due to the relatively
brief shelf life and frequent turnover of food products and liquor. The
restaurants receive deliveries of food not less frequently than every other
day and deliveries of liquor several times each week
The Company's current leases require, and future leases may require,
the Company to pay taxes, maintenance, insurance, repairs and utility costs
which are also subject to inflation, and in addition, some leases contain,
and future leases may contain, escalations of annual rentals based upon
limited increases in specific cost-of-living indices, none of which are
controllable by the Company.
The Company anticipates that it may continue to incur losses in the
near term as it continues to integrate operating margin improvement programs
into its existing restaurants. However, the Company believes, although
there can be no assurance, that these programs will achieve profitability
and/or anticipated financing occur thereby and enhancing the Company's
profitability and working capital position.
Financing Activities. It is management's belief that profitability
will be achieved by opening or acquiring additional restaurants to provide
an expanding revenue base to absorb fixed corporate overhead charges. The
Company anticipates that revenues will exceed the increased expenditures
associated with the construction and acquisition of additional restaurants.
The poor performance of any one restaurant could have a materially
adverse effect upon the financial condition of the Company. However, the
Company believes, although there can be no assurance, that the adverse
effect of the results of any one restaurant will diminish as the number of
restaurants operated by the Company increases. While the Company believes
that management efficiencies and marketing strategies will limit declines in
existing store revenues, there can be no assurance that future declines in
existing restaurant revenues will not occur and adversely affect the
Company.
The Company anticipates that it will require substantial additional
debt or equity capital to fund the Company's expansion plans, which
contemplate the opening of at least one new Redheads Bistro/Bar restaurant
each quarter. The inability of the Company to obtain such additional
financing will result in the curtailment by the Company of its expansion
activities and further restructuring or downsizing of the Company's
operations.
Part II OTHER INFORMATION
Item 1. Legal Proceedings.
General
Other than as discussed in this Item 3, there are no other legal
proceedings to which the Company is a party that are material to the
Company's business.
Submission of Matters to a Vote of Security Holders
Item 2. Changes in Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information
None
Item 6. Subsequent Events
During November 1998 the Kings Plaza Brooklyn, New York Red Robin was
successfully converted to a Redheads Bistro/Bar.
Item 7. Exhibits and Reports on Form 8-K
(A) Exhibits Filed
None
(B) The Company filed the following currents reports of Form 8-K and
8-K/A during the quarter ended June 27, 1999:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Redheads, Inc,
Date: March 21, 2000 By: s/ Charles O. Olson, Jr.
-------------- ------------------------
Charles O. Olson, Jr.
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-26-1999
<PERIOD-END> JUN-27-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 47,056
<ALLOWANCES> 0
<INVENTORY> 94,247
<CURRENT-ASSETS> 247,939
<PP&E> 3,855,646
<DEPRECIATION> (2,635,356)
<TOTAL-ASSETS> 1,812,627
<CURRENT-LIABILITIES> 2,934,061
<BONDS> 0
0
460,815
<COMMON> 2,458
<OTHER-SE> 3,263,426
<TOTAL-LIABILITY-AND-EQUITY> 1,812,267
<SALES> 2,037,536
<TOTAL-REVENUES> 2,037,536
<CGS> 550,802
<TOTAL-COSTS> 550,802
<OTHER-EXPENSES> 2,166,897
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,317
<INCOME-PRETAX> (711,480)
<INCOME-TAX> (711,480)
<INCOME-CONTINUING> (711,480)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (711,480)
<EPS-BASIC> (.29)
<EPS-DILUTED> (.29)
</TABLE>
