<PAGE>
United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 10-QSB
(MARK ONE)
[x] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 For the Quarterly Period ended September 30, 1998
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-28920
Access Solutions International, Inc.
------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 05-0426298
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
650 Ten Rod Road
North Kingstown, RI 02852
-------------------------
(Address of principal executive offices)
(401) 295-2691
--------------
(Issuer's telephone number)
Check 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 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
The number of shares of the issuer's Common Stock, $.0l par value,
outstanding as of November 10, 1998 was 3,963,940.
<PAGE>
ACCESS SOLUTIONS INTERNATIONAL, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL FORMATION PAGE
<S> <C> <C>
Item 1. Financial Statements
Balance sheet--September 30, 1998 (unaudited)
and June 30, 1998 3
(unaudited) Statements of operations --Three
months ended September 30, 1998 and 1996 5
(unaudited) Statements of cash flows -- Three
months ended September 30, 1998 and 1996 6
Notes to unaudited financial statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
2
<PAGE>
ACCESS SOLUTIONS INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ACCESS SOLUTIONS INTERNATIONAL, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1998 1998
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $82,728 $238,459
Trade accounts receivable, net of allowance for
doubtful accounts of $13,167. 106,349 341,926
Inventories 108,537 112,855
Prepaid expenses and other current assets 67,347 96,088
--------------- --------------
TOTAL CURRENT ASSETS 364,961 789,328
Property and equipment, net 238,732 281,240
OTHER ASSETS:
Deposits and other assets 64,672 51,308
Service Contract Inventory -- 1,980
--------------- ---------------
Total other assets 64,672 53,288
--------------- ---------------
TOTAL ASSETS $668,365 $1,123,856
--------------- ---------------
--------------- ---------------
</TABLE>
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
3
<PAGE>
ACCESS SOLUTIONS INTERNATIONAL, INC.
BALANCE SHEET (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1998 1998
(UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Current installments of capital lease obligations -- 6,716
Accounts payable $870,510 $922,077
Accrued salaries and wages 50,515 74,053
Accrued expenses 245,750 174,701
Deferred revenue-prepaid service contracts 319,560 476,153
------------ ------------
TOTAL CURRENT LIABILITIES 1,486,335 1,653,700
CONVERTIBLE NOTES PAYABLE 650,000 650,000
TOTAL LIABILITIES 2,136,335 2,303,700
------------ ------------
STOCKHOLDERS' DEFICIT:
Common Stock, $.01 par value, 13,000,000
shares authorized, 3,965,199 shares issued 39,652 39,652
Additional paid-in capital 17,637,694 17,637,694
Accumulated deficit (19,127,256) (18,839,134)
------------ ------------
TOTAL (1,449,910) (1,161,788)
Treasury stock, at cost (1,259 shares) (18,056) (18,056)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIT (1,467,966) (1,179,844)
------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $668,365 $1,123,856
------------ ------------
------------ ------------
</TABLE>
Note: The balance sheet at June 30, 1998 has been derived from the audited
financial statements at that date, however does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
4
<PAGE>
ACCESS SOLUTIONS INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDING
SEPTEMBER 30,
1998 1997
<S> <C> <C>
NET SALES:
Products $25,381 $193,413
Services 189,197 131,643
------- -------
TOTAL NET SALES 214,578 325,056
------- -------
COST OF SALES:
Products 13,681 138,449
Services 62,390 71,213
TOTAL COST OF SALES 76,071 209,662
------ -------
GROSS PROFIT 138,507 115,394
------- -------
OPERATING EXPENSES:
Selling expense 46,952 191,361
General and administrative expense 166,086 274,022
Research and development expense 45,116 376,231
------- -------
TOTAL OPERATING EXPENSES 258,154 841,614
------- -------
LOSS FROM OPERATIONS (119,647) (726,220)
-------- ---------
OTHER (INCOME) AND EXPENSES:
Interest income (2,179) (25,795)
Interest expense 31,673 747
Loss on PaperClip merger termination 138,981 --
-------- ---------
TOTAL OTHER (INCOME) AND EXPENSES 168,475 25,048
-------- ---------
NET LOSS ($288,122) ($701,172)
-------- ---------
LOSS PER COMMON SHARE ($.07) ($.18)
-------- ---------
-------- ---------
Weighted average number of
common shares 3,963,940 3,963,940
</TABLE>
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
5
<PAGE>
ACCESS SOLUTIONS INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($288,122) ($701,172)
Adjustments to reconcile net loss to net cash used by
operating activities:
Depreciation and amortization 52,411 37,040
Provision for doubtful accounts (21,946) (11,547)
Changes in operating assets and liabilities:
(Increase)/ decrease in:
Trade accounts receivable 257,523 49,197
Inventories 6,299 (12,980)
Prepaid expenses and other current assets 28,741 1,164
Deposits and other assets (23,915) (979)
(Increase)/ decrease in:
Accounts payable (51,568) 215,390
Accrued expenses and salaries and wages 47,509 (61,213)
Deferred revenue (156,593) (94,645)
--------- --------
NET CASH (USED FOR) OPERATING ACTIVITIES (149,661) (578,766)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment 646 (31,980)
Loans and advances to PaperClip (138,981) (652,639)
Loans and advances written off relating to PaperClip
merger termination 138,981 --
Deferred merger costs -- (20,670)
--------- ---------
NET CASH PROVIDED BY (USED FOR)
INVESTING ACTIVITIES 646 (706,268)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of capital lease obligations (6,716) (6,080)
CASH USED FOR FINANCING ACTIVITIES (6,716) (6,080)
---------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (155,731) (1,291,114)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 238,459 1,889,446
---------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $82,728 $598,332
---------- --------
---------- --------
</TABLE>
SEE NOTES TO UNAUDITED FINANCIAL STATEMENTS.
6
<PAGE>
ACCESS SOLUTIONS INTERNATIONAL, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article
10-01 of Regulation S-B. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for annual financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. Operating results for the three
months ended September 30, 1998 are not necessarily indicative of the results
that may be expected for the year ended June 30, 1999. For further
information, refer to the financial statements and footnotes thereto included
in the Access Solutions International, Inc. ("ASI") annual report on Form
10-KSB for the year ended June 30, 1999.
2. PAPERCLIP MERGER AND MANAGEMENT AGREEMENTS
On April 15, 1997, ASI and PaperClip Software, Inc., Inc. ("PaperClip")
entered into an Asset Purchase Agreement for ASI to acquire substantially all
the assets and liabilities of PaperClip (the "Agreement"). On September 12,
1997, the agreement was amended (the "Amended Agreement") to change the
acquisition to a merger. As a result of this amendment, a newly-formed
subsidiary of ASI will merge into PaperClip with PaperClip surviving as a
subsidiary of ASI (the "Merger"). Consummation of this transaction is subject
to various conditions, including approval by the PaperClip stockholders.
Under the terms of the Amended Agreement, the PaperClip stockholders will be
entitled to receive an aggregate of approximately 1.5 million shares of ASI's
Common Stock plus an equivalent number of ASI Class B Warrants. Each Class B
Warrant will entitle the holder to purchase one share of ASI Common Stock at
an exercise price of $6.00 per share. In connection with the Merger, the
holders of PaperClip's outstanding 12% Convertible Notes due December 1999
will exchange such notes for an aggregate of approximately 400,000 shares of
non-voting redeemable preferred stock of PaperClip. After 18 months, the
holders of the preferred stock will have the option to require the surviving
corporation or ASI to purchase such shares for cash or ASI common stock and
Class B Warrants. After 30 months, ASI will have the right to redeem the
Preferred Stock for cash or ASI Common Stock and Class B Warrants.
On April 14, 1998, ASI and PaperClip Software, Inc.(OTC EBB:PCLP) agreed to
extend the date for the consummation of PaperClip's previously announced
merger with and into a newly formed wholly-owned subsidiary of Access
Solutions. Pursuant to the terms of the merger agreement, completion of the
merger transaction was subject to certain conditions, including a financing
contingency. Because the financing contingency was not satisfied, the merger
transaction was not consummated, and the merger agreement was amended to
allow more time for the financing condition to be satisfied. The agreement
called for an extension to August 24, 1998. On August 24, 1998, the merger
agreement was terminated. In connection with the termination of the merger
agreement, the Company wrote off all merger costs incurred through June 1998.
Costs relating to the discontinued merger incurred after June 30, 1998 were
expensed in the quarter ended September 30, 1998.
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
ASI's sales consist of sales of products and services. Products sold by ASI
consist of COLD systems, software and hardgoods including replacement disk
drives, subassemblies and miscellaneous peripherals. ASI also sells document
management software in accordance with a distribution agreement with
PaperClip Software, Inc. signed June 1, 1997 (see note 2 to the unaudited
financial statements). Services rendered by ASI include post-installation
maintenance and support. ASI recognizes revenue from customers upon
installation of COLD systems and, in the case of COLD systems installed for
evaluation, upon acceptance by such customers of the products. ASI sells
extended service contracts on the majority of the products it sells. Such
contracts are one year in duration with payments received either annually in
advance of the commencement of the contract or quarterly in advance. ASI
recognizes revenue from service contracts on a straight line basis over the
term of the contract. The unearned portion of the service revenue is
reflected as deferred revenue. As of September 30, 1998, ASI had deferred
revenue in the amount of $319,560.
ASI's operating results have in the past and may in the future fluctuate
significantly depending upon a variety of factors which vary substantially
over time, including industry conditions; the timing of orders from
customers; the timing of new product introductions by ASI and competitors;
customer acceleration, cancellation or delay of shipments; the length of
sales cycles; the level and timing of selling, general and administrative and
research and development expenses; specific feature needs of customers; and
production delays. Substantial portions of ASI's quarterly revenues are
derived from the sale of a relatively small number of COLD systems which
range in price from approximately $150,000 to $900,000. As a result, the
timing of recognition of revenue from a single product order has in the past
and may in the future have a significant impact on ASI's net sales and
operating results for particular financial periods. This volatility is
counter balanced by the increase in sales of annual service contracts which
generally accompanies an increase in systems sales.
ASI's primary operating expenses include selling expenses, general and
administrative expenses and research and development expenses. General and
administrative expenses consist primarily of employee compensation and
certain internal office and support expenses. Research and development
expenses include compensation paid to internal research and development staff
members and expenses incurred in connection with the retention of independent
research and development consultants. ASI utilizes its own employees for
research and development functions except in certain circumstances involving
product enhancements. In those circumstances, ASI regularly retains
independent experts to consult and design new software modules which are
subsequently evaluated and tested by ASI's internal research and development
staff. Upon successful testing of such product enhancements, ASI's internal
staff integrates the new products with ASI's existing COLD systems and
products.
ASI's total expenditures for research and development for Fiscal 1998 and
Fiscal 1997 were $921,537 and $1,651,322 respectively. Due to the completion
of all customer, commitments to the GIGAPAGE product by the end of the second
quarter of Fiscal 1998, it is anticipated that development costs for Fiscal
1999 will be substantially reduced from prior levels.
8
<PAGE>
ASI has historically incurred net losses and anticipates that further
net losses will be incurred prior to the time, if ever, that ASI achieves
profitability. However, ASI has taken certain steps intended to limit
incurring future net losses. Such steps include: (i) the reduction of
personnel from 14 to 4 full-time and two part-time employees during Fiscal
year ending 1998 and the first quarter of Fiscal 1999 which is expected to
reduce overhead by approximately $50,000 per quarter (ii) reduction of ASI's
operating facilities by 60% which is expected to save approximately $40,000
per year and (iii) joint development and marketing agreements which are
expected to increase sources of revenues at minimum cost. While no assurance
can be given that such steps will be sufficient to limit losses, which may be
incurred in the future, ASI believes that such steps, when fully implemented,
may enable ASI to realize improved operating results. Of the 10 employees
terminated or reclassified, one was field support, two were product
development personnel, four were administrative staff, two were sales and one
was production. Of the above, one employee each from administrative staff and
product development were reclassified from full-time to part-time employees.
Many of the product development personnel were employed in enhancing ASI's
GIGAPAGE product, which has now been substantially completed. ASI does not
believe that these steps, particularly the reduction in the workforce, have
to date or will in the future materially adversely impact ASI's revenues and
earnings.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto of Access Solutions International,
Inc. contained elsewhere herein.
THREE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1997
NET SALES
Net sales for the three months ended September 30, 1998 was $214,578 compared
with $325,056 for the three months ended September 30, 1997, a decrease of
$110,478 or 34%. Product sales were $25,381 for the first quarter of Fiscal
1998 compared with $193,413 for the first quarter of Fiscal 1997, a decrease
of $168,032 or 87%. The decrease was due to product sales of PaperClip
Software, Inc. in the first quarter of FY 1998 that did not reoccur in the
first quarter of FY 1999. ASI and PaperClip entered into a one-year
distribution agreement on June 1, 1997 pursuant to which ASI acted as a
distributor for PaperClip's products in the United States to dealers and
resellers. The agreement expired on July 31, 1998 and was not renewed.
Service revenues were $189,197 for the first quarter of Fiscal 1998 compared
with $131,643 for the first quarter of Fiscal 1997, an increase of $57,554 or
44%. The increase was primarily due to an increase in the Company's
maintenance customer base.
COST OF SALES
Cost of sales includes component costs, firmware license costs, labor,
travel and certain overhead costs. Costs of sales in the aggregate decreased
64% to $76,071 for the three months ended September 30, 1998 from $209,662
for the three months ended September 30, 1997. Cost of sales decreased due to
lower sales in Fiscal 1998.
The cost of product sales decreased 90% to $13,680 for the three months ended
9
<PAGE>
September 30, 1998 from $138,449 for the three months ended September 30,
1997. The cost of services decreased by 12% to $62,390 for the three months
ended September 30, 1998 from $71,213 for the three months ended
September 30, 1997. The improved result was primarily due to lower sales for
products and reduced personnel expenses for service sales.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist of administrative and certain
internal office and support expenses. General and administrative expenses
decreased 38% or $105,092 to $168,930 for the three months ended
September 30, 1998 from the three months ended September 30,1997. This
decrease was due to lower personnel costs and reduced professional fees.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses decreased by 88% or $331,115 to $45,116 for
the three months ended September 30, 1998 from $376,231 for the three
months ended September 30, 1997. The decrease in research and development
was primarily due to reduced personnel resulting from the completion of the
Company's development projects in Fiscal 1998.
SELLING EXPENSES
Selling expenses decreased by $144,409 or 75% to $46,952 for the three months
ended September 30, 1998 from $191,361 for the three months ended
September 30, 1997. The decreases were primarily the result of lower
commissions due to lower product sales and reduced personnel costs.
OTHER INCOME AND EXPENSES
Other income and expenses consisted of interest expense, interest income and
other expense. Interest expense increased by $30,926 to $31,673 for the three
months ended September 30, 1998 from $747 for the three months ended
September 30, 1997. This increase represents accrued interest on a $650,000
loan made to the Company at an annual interest rate of 19% by a stockholder
and former director. Subsequent to September 30, 1998, this stockholder sold
all of his Company common stock. Interest income decreased by $23,616 to
$2,179 for the three months ended September 30, 1998 from $25,795 for the
three months ended September 30, 1997, as a result of reduced cash balances.
Other expenses for the three months ended September 30, 1998 was $140,394 as
a result of expense incurred from the discontinued merger of PaperClip
Software, Inc., which was terminated on August 24, 1998.
NET LOSS
As a result of the foregoing, ASI's net loss decreased to $288,122 ($.07
per share on 3,963,940 weighted average shares outstanding) for the
three months ended September 30, 1998 from a net loss of $701,172 ($.18 per
share on 3,963,940 weighted average shares outstanding) during the three
months ended September 30, 1997.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
ASI had a working capital deficit of $1,121,374 as of September 30, 1998
compared to a working capital surplus of $476,978 at September 30, 1997. The
decrease in working capital was primarily attributable to the use of cash
from loans to PaperClip Software, Inc., which were written off at June 30,
1998 and September 30, 1998 and to completion of software enhancements
previously promised to customers.
Total cash used for operating activities during the three-month period ended
September 30, 1998 and 1997 was $149,661 and $578,766, respectively. ASI's
net losses for these periods were $288,122 and $$701,172, respectively. The
major uses of capital for operating activities during the three-month period
ended September 30, 1998 included funding such net losses, decreases in
deferred revenue and in accounts payable. The major source of capital from
operating activities was an increase in accrued expenses.
Cash provided by/used for investing activities for the three-month period
ended September 30, 1998 and 1997 was $646 and $706,268, respectively. The
cash used by investing activities in Fiscal 1998 was incurred primarily due
to advances pursuant to the agreements with PaperClip Software, Inc. See
note 2.
Cash used for financing activities was $6,716 for the three-month period
ended September 30, 1998 and $6,080 for the three-month period ended
September 30, 1997. The use of cash for financing activities during both
three-month periods was for repayment of ASI's capital lease obligations.
ASI has suffered recurring losses from operations and has negative cash flows
from operating activities. The recurring losses and negative cash flows from
operating activities raise substantial doubt about ASI's ability to continue
as a going concern. As a result, ASI's independent accountants in their
report dated July 20, 1999 on the audited financial statements for the year
ended June 30, 1998 included an explanatory paragraph that described factors
raising substantial doubt about ASI's ability to continue as a going concern.
The financial statements do not include any adjustments relating to the
recoverability of asset and classifications of liabilities or any other
adjustments that might be necessary should ASI be unable to continue as a
going concern.
As of September 30, 1998, ASI had long term debt totaling approximately
$700,000 including interest. ASI believes that the proceeds from this loan,
together with funds generated from operations, will be sufficient to meet
ASI's working capital requirements through September, 1999. There can be no
assurance that additional funds can be obtained on acceptable terms, if at
all. If additional financing is not available, ASI's business will be
materially adversely affected.
ASI believes that its current corporate infrastructure can support
significant increases in sales without proportionate increases in costs.
However, there can be no assurances that sales will increase or that any cost
advantage will result.
SEASONALITY AND INFLATION
To date, seasonality and inflation have not had a material effect on ASI's
operations.
11
<PAGE>
FORWARD LOOKING STATEMENTS
Statements contained in this Form 10-QSB that are not historical facts are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. In addition, words such as
"believes", "anticipates", "expects" and similar expressions are intended to
identify forward looking statements. ASI cautions that a number of important
factors could cause actual results for Fiscal 1999 and beyond to differ
materially from those expressed in any forward-looking statements made by or
on behalf of ASI. Such statements contain a number of risks and
uncertainties, including, but not limited to, the availability of necessary
financing before September, 1999, future capital needs, uncertainty of
additional funding, variable operating results, lengthy sales cycles,
dependence on ASI's COLD system product, rapid technological change and
product development, reliance on single or limited sources of supply, intense
competition, recent turnover in management, ASI's ability to manage growth,
dependence on significant customers, dependence on key personnel, and ASI's
ability to protect its intellectual property. ASI cannot assure that it will
be able to anticipate or respond timely to changes which could adversely
affect its operating results in one or more fiscal quarters. Results of
operations in any past period should not be considered indicative of results
to be expected in future periods. Fluctuations in operating results may
result in fluctuations in the price of ASI's securities.
12
<PAGE>
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBITS
(b) REPORTS ON FORM 8-K
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the issuer caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<CAPTION>
Access Solutions International, Inc.
<S> <C>
Date: August 5, 1999 ROBERT H. STONE
----------------
President and CEO
Date: August 5, 1999 DENIS L. MARCHAND
-----------------
VP of Finance and Administration,
Chief Accounting Officer (Principal
Accounting Officer)
</TABLE>
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000875385
<NAME> ACCESS SOLUTIONS INTERNATIONAL, INC.
<MULTIPLIER> 1
<CURRENCY> US$
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 82,728
<SECURITIES> 0
<RECEIVABLES> 119,516
<ALLOWANCES> 13,167
<INVENTORY> 108,537
<CURRENT-ASSETS> 364,961
<PP&E> 1,273,101
<DEPRECIATION> 1,034,369
<TOTAL-ASSETS> 668,365
<CURRENT-LIABILITIES> 2,136,335
<BONDS> 0
0
0
<COMMON> 39,652
<OTHER-SE> 17,637,694
<TOTAL-LIABILITY-AND-EQUITY> 668,365
<SALES> 214,578
<TOTAL-REVENUES> 214,578
<CGS> 76,071
<TOTAL-COSTS> 258,154
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,673
<INCOME-PRETAX> (288,122)
<INCOME-TAX> 0
<INCOME-CONTINUING> (288,122)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (288,122)
<EPS-BASIC> (.07)
<EPS-DILUTED> (.07)
</TABLE>
