<PAGE> 1
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 QUARTERLY PERIOD ENDED APRIL 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period From XXX to XXX
MODERN RECORDS, INC.
(Name of Small Business Issuer in its charter)
CALIFORNIA 95-3404374
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
468 North Camden Drive
Third Floor
Beverly Hills, California 90210
(Address of principal executive office, including zip code)
(310) 285-5370
(Issuer's telephone number, including area code)
Indicate by check mark whether the issuer (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. Yes ( X ) No ( )
The number of shares outstanding of the issuer's Common Stock, no par
value, as of June 11, 1999 was 23,497,414.
<PAGE> 2
MODERN RECORDS, INC. QUARTERLY REPORT ON FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION Page
<S> <C>
Item 1. Financial Statements
Balance Sheets as of April 30, 1999 and October 31, 1998 3
Statements of Operations
for the three and six months ended April 30, 1999 and 1998 4
Statements of Cash Flows
for the six months ended April 30, 1999 and 1998 5
Statements of Stockholders' Equity (Deficiency)
for the six months ended April 30, 1999 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 2. Change in Securities and Use of Proceeds 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 10
</TABLE>
2
<PAGE> 3
PART I.
ITEM 1. FINANCIAL INFORMATION
MODERN RECORDS, INC.
BALANCE SHEETS
(EXPRESSED IN U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
April 30, October 31,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 198,597 $ 1,656
Receivables -- 156,140
----------- -----------
TOTAL CURRENT ASSETS 198,597 157,796
DEFERRED RECORD MASTER COST, NET 193,484 184,892
PREPAID ARTISTS ROYALTIES 726,000 --
PROPERTY AND EQUIPMENT, NET 36,884 --
OTHER ASSET 6,589 655
----------- -----------
$ 1,161,554 $ 343,343
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES
Bank overdraft $ -- $ 3,544
Accounts payable and accrued expenses 403,214 299,245
Note payable -- 19,705
Deferred revenue 23,599 --
Recoupable advance -- 50,000
Accrued officer's compensation 397,917 283,333
Due to related parties 51,562 6,823
----------- -----------
TOTAL CURRENT LIABILITIES 876,292 662,650
LONG-TERM DEBT - RELATED PARTIES 27,819 26,570
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIENCY)
Preferred stock; authorized - 20,000,000 shares, none issued -- --
Common stock, no par value; authorized - 40,000,000 shares;
issued and outstanding - 23,497,414 shares (1999) and
23,297,696 shares (1998) 3,592,737 2,499,370
Accumulated deficit (3,335,294) (2,845,247)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 257,443 (345,877)
----------- -----------
$ 1,161,554 $ 343,343
=========== ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
MODERN RECORDS, INC.
STATEMENTS OF OPERATIONS
(EXPRESSED IN U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended April 30, Six Months Ended April 30,
------------ ------------ ------------ ------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUE $ 55,215 $ 107,512 $ 199,775 $ 177,594
COST OF REVENUE -- 30,869 -- 59,315
------------ ------------ ------------ ------------
GROSS PROFIT 55,215 76,643 199,775 118,279
EXPENSES
Officer's salaries 62,500 50,000 125,000 100,000
Other marketing, general and administrative expenses 351,117 133,643 564,822 193,776
------------ ------------ ------------ ------------
413,617 183,643 689,822 293,776
------------ ------------ ------------ ------------
NET LOSS $ (358,402) $ (107,000) $ (490,047) $ (175,497)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 20,497,414 15,166,859 20,397,555 13,412,315
============ ============ ============ ============
BASIC AND DILUTED LOSS PER SHARE $ (0.02) $ (0.01) $ (0.02) $ (0.01)
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
MODERN RECORDS, INC.
STATEMENTS OF CASH FLOWS
(EXPRESSED IN U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended April 30,
-----------------------------
1999 1998
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (490,047) $ (175,497)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 2,000
Amortization of deferred record master cost -- 25,000
(Increase) decrease in:
Receivables 156,140 --
Deposits (5,934) --
Increase (decrease) in:
Accounts payable and accrued expenses 103,969 (141,504)
Accrued interest on note payable 4,000 --
Accrued officer's compensation 114,584 100,000
Recoupable advance (50,000) --
Deferred revenue 23,599 (120,117)
----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (141,689) (312,118)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Deferred record master cost (8,592)
Prepaid artists royalties (726,000) --
Purchase of property and equipment (38,884) --
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (773,476) --
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft (3,544)
Advances from related parties, net 22,283 (232,560)
Common stock sold -- 594,679
Options exercised into common stock 104,755
Special warrants sold 988,612 --
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,112,106 362,119
----------- -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 196,941 50,001
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,656 15,417
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD 198,597 65,418
=========== ===========
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
MODERN RECORDS, INC.
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
SIX MONTHS ENDED APRIL 30, 1999
(EXPRESSED IN U.S. DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
Preferred Stock Common Stock
-------------------------- -------------------------- Accumulated
Shares Amount Shares Amount Deficit Total
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 31, 1998 -- $ -- 23,297,696 $ 2,499,370 $(2,845,247) $ (345,877)
Special warrants (969,100 shares
of common stock and 969,100 --
warrants issuable upon exercise
plus 44,350 special warrants
to finders) 988,612 988,612
Options exercised 199,718 104,755 104,755
Net loss (490,047) (490,047)
----------- ----------- ----------- ----------- ----------- -----------
Balance, April 30, 1999 -- $ -- 23,497,414 $ 3,592,737 $(3,335,294) $ 257,443
=========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
6
<PAGE> 7
MODERN RECORDS, INC.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED APRIL 30, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION
The interim financial statements presented have been prepared by Modern
Records, Inc. (the "Company") without audit and, in the opinion of the
management, reflect all adjustments of a normal recurring nature
necessary for a fair statement of (a) the results of operations for the
three and six months ended April 30, 1999 and 1998, (b) the financial
position at April 30, 1999 and (c) the cash flows for the six months
ended April 30, 1999 and 1998. Interim results are not necessarily
indicative of results for a full year.
The balance sheet presented as of October 31, 1998 has been derived from
the financial statements that have been audited by the Company's
independent public accountants. The financial statements and notes are
condensed as permitted by Form 10-QSB and do not contain certain
information included in the annual financial statements and notes of the
Company. The financial statements and notes included herein should be
read in conjunction with the financial statements and notes included in
the Company's Annual Report on Form 10-KSB.
2. STOCKHOLDERS' EQUITY
Private Placement - On January 28, 1999, the Company arranged a private
placement of 969,100 special warrants at a price of $1.52Cdn. per
special warrant for gross proceeds of approximately $1,473,032Cdn. Each
special warrant will permit the holder, without additional payment, to
acquire one common share and one non-transferable share purchase warrant
on or before the earlier of the day which is four months from the
closing date, if the Company becomes eligible to rely on the British
Columbia Securities Commission's Blanket Order and Ruling #98/7 to issue
the underlying securities subject to a four month hold period in British
Columbia, or 330 days from the closing date. If the Company becomes
eligible to rely on BOR #98/7, the special warrants will be deemed to be
exercised on the day which is four months from the closing. Each share
purchase warrant will be exercisable into one additional common share of
the Company for a period of two years, at a price of $2.25Cdn per share.
The special warrants will not be registered in the United States and
will be subject to applicable restrictions on transfer under United
States Securities laws. A finder's fee, consisting of 44,350 special
warrants, is payable in connection with this private placement.
Completion of this private placement is subject to regulatory approval
and the Company finalizing an agreement for recording an album with the
Jacksons. The Company has finalized the agreement with the Jacksons and
has received regulatory approval.
Stock Options - On December 17, 1998, the Company, granted incentive
stock options to purchase common shares to Johan Grandin (125,000
options), Kendrik Packer (125,000 options) and Wayne Smith (75,000
options) The options are exercisable for a period of 5 years, commencing
on December 17, 1998 at $2.30Cdn. per share. Mr. Grandin is a director
of the Company. Mr. Smith is a consultant to the Company. Mr. Packer
was a director of the Company at the grant date.
On February 5, 1999, one of the directors exercised his options to
purchase 199,718 shares at a total purchase price of $155,780Cdn.
3. OFFICER'S COMPENSATION
Effective November 1, 1998, the compensation of Stephen Randall Jackson,
the Company's President and Chief Executive Officer was increased to
$250,000 per year.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OVERVIEW
The Company produces, licenses, acquires, markets and distributes high
quality recorded music for a variety of musical formats.
In May of 1997, Mr. Randy Jackson acquired a controlling interest in the
Company with the intent of repositioning the Company as a forward thinking,
dynamic independent label in the recording industry.
The primary source of revenue to the Company has been the production and
release of recorded music. The Company has been closely associated with the work
of recording artist Stevie Nicks, who was one of the Company's founders.
Although Ms. Nicks is no longer under contract with the Company, her works
continue to provide the dominant source of revenue; her three CD box set
"Enchanted" Album recently achieved Gold status with sales in excess of 167,000
albums.
In March, the Company announced the signing of The Jacksons on the Modern
label. Work has begun on the project and it is expected that the album will be
released in early 2000. The Jacksons' recording contract (the "Jacksons'
Agreement") requires the Company to make certain advances to The Jacksons upon
commencement of recording and completion of The Jacksons' album, which advances
are recoupable against The Jacksons' share of royalties. Randy Jackson,
Chairman, Chief Executive Officer and President of the Company and Jackie
Jackson, a director of the Company are members of The Jacksons.
RESULTS OF OPERATIONS
SIX MONTHS ENDED APRIL 30, 1999 COMPARED TO SIX MONTHS ENDED APRIL 30, 1998
Gross revenues increased $22,181 or 13% to $199,775 for the six months
ended April 30, 1999 compared to the same period in 1998. This increase reflects
the revenue sharing from the Atlantic agreement with Stevie Nicks which required
the Company along with Atlantic to retire several outstanding non-recurring
financial obligations associated with the project. The Company expects revenue
flow from the Atlantic Agreement to commence again in the forthcoming period.
Cost of revenues decreased $59,315 or 100% to $0 for the six months ended
April 30, 1999 compared to the same period in 1998. This decrease is due to no
production activity during this period.
Gross profit increased $81,496 or 68% to $199,775 for the six months ended
April 30, 1999 reflecting lower than expected flow through from the Stevie
Nicks' catalog as a result of the non-recurring debt retirement associated with
the Atlantic agreement.
Selling, marketing and general administrative expenses increased in 1999
over the corresponding second quarter of 1998 by $396,046 to $689,822 reflecting
the costs associated with the signing of The Jacksons, ongoing work with new
artist Abel Mason whose first album is expected be released in the fall of 1999,
legal and accounting services required to gain new financing for Modern and a
developing infrastructure including payroll, rent, and communications.
The net loss from continuing operations for the six months ended April 30,
1999 totaled $490,048 compared to $175,497 for the same period the prior year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's current revenue stream is derived in large part from sales of
Stevie Nicks' albums. In fiscal 1998, the Company realized $241,462 Gross Profit
from sales of Stevie Nicks' albums. The Company's current management, headed by
Mr. R. Jackson who acquired a 47% equity interest in the Company in 1997,
intends to pursue a growth strategy that is centered on signing additional
artists to the Modern label, advancing funds for production of new albums,
marketing albums released on the Modern label and retaining a team of talented
executives with experience in the entertainment industry. Revenues from the
Company's existing product are insufficient to fund this strategy since the
strategy will require significant expenditures before additional revenues are
generated.
8
<PAGE> 9
In the last two fiscal years, the Company has financed its growth strategy
primarily from sales of the Company's Common Stock to a limited number of
investors, including officers and directors of the Company. In fiscal 1998, the
Company raised approximately C$1.7 million from placements of its Common Stock
to a limited number of investors and from the exercise of stock options by
officers and directors of the Company. More recently, in March 1999, the Company
completed a private placement of special warrants in which it received net
proceeds of C$1.47 million. The proceeds from this placement have been applied
to fund production of The Jacksons forthcoming album.
The Company is currently engaged in discussions with a number of lenders with
respect to the possibility of obtaining long term debt financing in the future.
The Company is also exploring alternative sources of financing.
The Company's implementation of its growth strategy is dependent on the
Company's ability to obtain additional debt, equity and other financing,
particularly during the period before the Company releases (and begins to derive
revenues from) albums with its existing artists such as The Jacksons and Abel
Mason. There can be no assurance that such financing will be available to the
Company on favorable terms, if at all.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company has been advised that in May 1999 a federal bankruptcy court
judge requested that a federal district court issue a body attachment for the
appearance of Mr. R. Jackson, Chairman and CEO of the Company, in a bankruptcy
court proceeding in which a default judgment in the amount of $1.3 million had
been entered against Mr. R. Jackson and others in 1996. The Company is not a
party to the bankruptcy proceedings, and Mr. R. Jackson's involvement is as a
defendant to the default judgment obtained by the bankruptcy plaintiff. The
request for the body attachment by the bankruptcy court arose as a result of the
bankruptcy plaintiff's attempt to execute on the default judgment by enforcing a
prior bankruptcy court order requiring Mr. R. Jackson to turn over assets
belonging to him, including shares of the Company's Common Stock owned by him.
The federal district court judge executed an order indicating that the body
attachment would be issued on May 26, 1999. However, on June 4, 1999, the
federal district court judge revoked the order and issued a stay of proceedings
in the case pending de novo review of the request for the body attachment and
the default judgment. A hearing has been scheduled for July 1999 with respect to
the matter, and Mr. R. Jackson has advised the Company that he intends to
vigorously contest the default judgment issued against him.
ITEM 2. CHANGE IN SECURITIES AND USE OF PROCEEDS.
UNREGISTERED SECURITIES
In February 1999, Mr. R. Jackson exercised options to acquire 199,718
shares of Common Stock at C$.78 per share, for total proceeds of C$155,780,
which proceeds were used for general working capital purposes. The Company
believes that the issuance of the shares upon exercise of Mr. Jackson's options
were exempt from the registration requirements of the Securities Act under
Section 4(2) of the Securities Act because the exercise of the options did not
involve a public offering. Mr. R. Jackson is an accredited investor.
In March 1999, the Company consummated a private placement of 969,100
special warrants (each special warrant entitles the holder to acquire at no
additional cost one share of Common Stock and one non-transferable share
purchase warrant to purchase one share of common stock at an exercise price of
C$2.25), for net proceeds to the Company of C$1,473,032 (the "March 1999 Private
Placement"). The Company issued an aggregate of 44,350 special warrants to SAS
Corporate Ltd., International Consultancy Partnership, Yorkton Securities and
Jordac Investment Ltd. as a finder's fee. The placement was conditioned on the
execution of the Jacksons Agreement and governmental approval, each of which
conditions have been satisfied, and the proceeds from the placement will be
applied to finance production of the Jacksons Agreement. Affiliates of Mr. Stig
Hans Johan Grandin, a director of the Company, and Mr. Kendrick E. Packer,
formerly a director of the Company, purchased 23,000 special warrants and 90,000
special warrants, respectively, in the March 1999 Private Placement. The Company
believes that the sales of the special warrants were exempt from the
registration requirements of the Securities Act under Section 4(2) of the
Securities Act because the transaction did not involve a public offering and
fell within the safe harbor afforded by Regulation D under the Securities Act.
There were less than 10 offerees of the special warrants and each offeree was an
accredited investor.
ITEM 5. OTHER INFORMATION.
On June 11, 1999 the Company announced that it was proceeding with a
private placement of 600,000 units at a price of C$.60 per unit with each unit
comprised of one share of Common Stock and one non-transferable share purchase
warrant.
9
<PAGE> 10
Upon issuance each share purchase warrant will entitle the holder to
purchase an additional share of Common Stock for two years at C$.60 for the
first year, and at C$.75 for the second year. The transaction is subject to
applicable regulatory approval. The units will not be registered under the
Securities and Exchange Act of 1933 and will be issued pursuant to an applicable
exemption from the Securities Act registration requirements.
In addition, in June 1999, the Company announced that it had retained
Henley "Jr." Regisford as Vice-President of Artist & Repertoire (A&R) and
Stanley Winslow as a consultant with respect to Sales and Promotions. Mr.
Regisford has worked in A&R positions since 1992, and since 1996 was
Vice-President of A&R for A&M Records. Mr. Regisford has been A&R director for
such artists as the Pointer Sisters, Salt N' Pepa, Vanessa Williams and Barry
White. Mr. Winslow has worked for MCA Records, Columbia Records and Elektra
Entertainment, and has promoted albums for such artists as Prince, George
Michael, Diana Ross, Mariah Carey, Donna Summer, New Kids on the Block and Patti
Labelle.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
<TABLE>
<S> <C>
3.1 Articles of Incorporation of the Company, as amended.*
3.2 By-laws of the Company, as amended.
3.3 Certificate of Amendment of Articles of Incorporation.
10.1 Agreement between Company and Atlantic Recording Corporation
dated July 1, 1979, as amended September 10, 1979, April 30,
1983, May 1, 1983, August 1, 1983, March 27, 1987, December 20,
1988, June 29, 1989 and April 22, 1990.*
10.2 Recording agreement between the Company and Stephanie Nicks dated
December 4, 1978, as amended December 11, 1978, April 26, 1979,
May 31, 1979, June 27, 1979 and April 26, 1988.*
10.3 Distribution Agreement between the Company and EMI Records
Limited dated April 15, 1985, as amended by undated amendment and
April 6, 1989.*
10.4 Recording agreement between the Company and Mark Lennon et al.,
dba "Venice", dated June 29, 1989.*
10.5 Recording agreement between the Company and Thomas J. Henrickson
et al., dba "Big Trouble", dated November 22, 1989.*
10.6 Recording agreement between the Company and Rick Vito dated April
22, 1990.*
10.7 Share Purchase Option Agreement with Paul E. Fishkin, dated
November 2, 1990.*
10.8 Share Purchase Option Agreement with John G. Proust and Jeffrey
C. Ingber, dated January 2, 1991.
10.9 Pooling Agreement dated June 26, 1990 among Paul E. Fishkin,
Stephanie Nicks, Pacific Corporate Services Limited and the
Company.*
10.10 Pooling Agreement dated June 26, 1990 among certain
non-affiliated shareholders, the Company and Pacific Corporate
Services Limited.*
10.11 Pooling Agreement dated June 26, 1990 among J. Proust and
Associates, Inc., Pacific Corporate Services Limited and the
Company.*
10.12 Pooling Agreement dated July 5, 1990 among Howard Rosen, Pacific
Corporate Services Limited and the Company.*
10.13 Pooling Agreement dated November 2, 1990 among Douglas Bleeck,
Pacific Corporate Services Limited and the Company.*
10.14 Management Agreement dated June 26, 1989 between the Company and
J. Proust and Associates, Inc.*
10.15 Escrow Agreement dated June 26, 1990 among the Company, Paul E.
Fishkin, Stephanie Nicks and Pacific Corporate Services Limited.*
10.16 Option to purchase 265,000 shares of Common Stock of the Company
issued to Randy Jackson, dated July 10, 1998.**
10.17 Option to purchase 200,000 shares of Common Stock of the Company
issued to Jackie Jackson, dated July 10, 1998.**
10.18 Option to purchase 400,000 shares of Common Stock of the Company
issued to Lawrence W. Gallo, dated July 10, 1998.**
10.19 Option to purchase 125,000 shares of Common Stock of the Company
issued to Johan Grandin, dated December 17, 1998.**
10.20 Option to purchase 125,000 shares of Common Stock of the Company
issued to Kendrik Packer, dated December 17, 1998.**
10.21 Loan Agreement dated March 16, 1998 between the Company, Randy
Jackson and Kendrik Packer.**
10.22 Employment Agreement dated May 15, 1997 between the Company and
Randy Jackson.**
10.23 Recording agreement dated March 1, 1999 between the Company and
The Jacksons.**
</TABLE>
* Incorporated herein by reference to exhibits of the same number in the
Company's S-1 Registration Statement dated September 9, 1991 (33-40804).
** Incorporated herein by reference to exhibits of the same number in the
Company's Report on Form 10-KSB for the fiscal year ended October 31,
1998.
(b) Reports on Form 8-K
None
ITEMS 3 and 4 are not applicable and have been omitted.
10
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Modern
Records, Inc. has duly caused this report to be signed by the undersigned
thereunto duly authorized.
Modern Records, Inc.
-----------------------------------
Date: June 14, 1999 /s/ Stephen Randall Jackson
----------------------------------
Stephen Randall Jackson
Chairman of the Board, President
and Chief Executive Officer
S-1
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED APRIL 30, 1999 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-START> NOV-01-1998
<PERIOD-END> APR-30-1999
<CASH> 198,597
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 198,597
<PP&E> 36,884
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,161,554
<CURRENT-LIABILITIES> 876,292
<BONDS> 0
0
0
<COMMON> 3,592,737
<OTHER-SE> (3,335,294)
<TOTAL-LIABILITY-AND-EQUITY> 1,161,554
<SALES> 0
<TOTAL-REVENUES> 199,775
<CGS> 0
<TOTAL-COSTS> 689,822
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (490,047)
<INCOME-TAX> 0
<INCOME-CONTINUING> (490,047)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (490,047)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
