<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- --- OF 1934
For the period ended MARCH 31, 2000
OR
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- --- OF 1934
Commission File No.: 0-27878
MCGLEN INTERNET GROUP, INC.
(Name of small business issuer in its charter)
Delaware 13-3779546
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
3002 Dow Avenue Suite 114 Tustin, California 92780
(Address of principal executive offices)(Zip code)
Issuer's telephone number: (714) 838-1240
(formally known as Adrenalin Interactive, Inc.; 5301 Beethoven Street, Los
Angeles, CA 90066; former fiscal year end for Adrenalin Interactive, Inc. was
June 30)
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
--- ---
The number of shares outstanding of each of the issuer's classes of publicly
traded common equity, as of May 12, 2000 was 31,850,004, shares of Common Stock.
<PAGE>
MCGLEN INTERNET GROUP, INC.
Index to Form 10-QSB
PART I - FINANCIAL INFORMATION................................................3
ITEM 1 FINANCIAL STATEMENTS..............................................3
CONSOLIDATED BALANCE SHEETS.......................................4
CONSOLIDATED STATEMENTS OF OPERATIONS.............................5
CONSOLIDATED STATEMENT OF CASH FLOWS..............................6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS........................7
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.........................................7
Business Factors...........................................................10
Part II - OTHER INFORMATION...................................................11
Item 2. Changes in Securities and Use of Proceeds.........................11
Item 6. Exhibits and Reports on Form 8-K..................................11
SIGNATURE..................................................................11
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
3
<PAGE>
<TABLE>
MCGLEN INTERNET GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<CAPTION>
(unaudited)
ASSETS MARCH 31, DECEMBER 31,
2000 1999
-------------- --------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 32,492 $ 961,666
Accounts receivable, net of allowance for doubtful accounts and
estimated returns of $70,000 at March 31, 2000 and December 31, 1999 622,857 558,356
Inventories 586,096 436,017
Prepaid expenses and other current assets 15,732 52,776
Deposits 477,805 386,074
-------------- --------------
Total current assets 1,734,982 2,394,889
-------------- --------------
Equipment, net 507,207 519,576
Intangible assets 316,081 337,584
Other assets 58,643 52,314
-------------- --------------
$ 2,616,913 $ 3,304,363
============== ==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 1,773,632 $ 1,933,122
Accrued expenses 475,213 379,768
Line of credit 71,500
Capital lease obligations - current portion 101,189 96,989
Convertible notes payable 309,000 200,000
Net current liabilities of discontinued operations 993,941 1,342,620
-------------- --------------
Total current liabilities 3,724,475 3,952,499
-------------- --------------
Capital lease obligations 212,994 216,172
-------------- --------------
Total liabilities 3,937,469 4,168,671
-------------- --------------
Stockholders' deficit
Preferred stock, $0.01 par value; 5,000,000 shares authorized,
none issued or outstanding - -
Common stock, $0.03 par value; authorized 50,000,000 shares,
31,837,681 at March 31, 2000 and 31,733,893 at December 31, 1999, 955,131 952,017
shares issued and outstanding
Additional paid in capital 1,982,958 2,204,143
Deferred compensation (200,549) (575,971)
Accumulated deficit (4,058,096) (3,444,497)
-------------- --------------
Total Stockholders' Deficit (1,320,556) (864,308)
-------------- --------------
$ 2,616,913 $ 3,304,363
============== ==============
See notes to the consolidated financial statements
</TABLE>
4
<PAGE>
<TABLE>
MCGLEN INTERNET GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31,
2000 1999
-------------- --------------
<S> <C> <C>
NET SALES $ 10,909,046 $ 3,571,894
COST OF SALES 9,657,679 3,177,078
-------------- --------------
GROSS PROFIT 1,251,367 394,816
-------------- --------------
OPERATING EXPENSES
Selling, general and administrative (including $157,351
amortization of deferred compensation in 2000) 1,860,118 430,407
Interest expense 4,848 417
-------------- --------------
Total operating expenses 1,864,966 430,824
-------------- --------------
LOSS BEFORE INCOME TAXES (613,599) (36,008)
-------------- --------------
PROVISION FOR INCOME TAXES - -
-------------- --------------
NET LOSS $ (613,599) $ (36,008)
============== ==============
BASIC AND DILUTED NET LOSS PER SHARE $ (0.02) $ -
============== ==============
WEIGHTED AVERAGE SHARES OF COMMON STOCK OUTSTANDING:
BASIC AND DILUTED 31,837,681 20,200,000
============== ==============
See notes to the consolidated financial statements
</TABLE>
5
<PAGE>
<TABLE>
MCGLEN INTERNET GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<CAPTION>
FOR THE PERIODS ENDED MARCH 31,
------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (613,599) $ (36,008)
-------------- --------------
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 91,741 -
Amortization of deferred compensation 157,351 -
Changes in operating assets and liabilities:
Accounts receivable (64,501) (160,566)
Inventories (150,079) (66,416)
Prepaid expenses and other current assets 37,044 (1,812)
Deposits (91,731) (60,611)
Other assets (4,471) -
Accounts payable (159,489) 101,357
Accrued expenses 95,445 (35,244)
Net current liabilities of discontinued operations (348,679) -
-------------- --------------
Total adjustments (437,368) (223,292)
-------------- --------------
Net cash used in operating activities (1,050,967) (259,300)
-------------- --------------
Cash flows from investing activities:
Purchases of equipment (38,998) (10,296)
Other assets, notes receivable - related parties (1,858) -
-------------- --------------
Net cash used in investing activities (40,856) (10,296)
-------------- --------------
Cash flows from financing activities:
Borrowings under convertible notes payable 109,000 -
Borrowings under line of credit, net 71,500 -
Distributions to stockholders' (8,000)
Payments on capital lease obligations (17,851) -
-------------- --------------
Net cash provided by (used in) financing activities 162,649 (8,000)
-------------- --------------
Net decrease in cash and cash equivalents (929,174) (277,596)
Beginning of period 961,666 436,692
-------------- --------------
End of period $ 32,492 $ 159,096
============== ==============
See notes to the consolidated financial statements
</TABLE>
6
<PAGE>
MCGLEN INTERNET GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated interim financial statements include the accounts of Mcglen
Internet Group, Inc. (a Delaware corporation) and its wholly owned subsidiaries
(the "Company") and have been prepared, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (SEC). 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 such regulations. These financial statements should be read
in conjunction with the audited financial statements and the notes thereto
included in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1999.
In the opinion of management, the accompanying financial statements contain all
adjustments necessary to present fairly the financial position of the Company at
March 31, 2000 and the results of operations and cash flows for the three months
ended March 31, 2000 and 1999. The results of operations for the interim periods
are not necessarily indicative of the results of operations for the full year.
2. OVERVIEW AND RECENT DEVELOPMENTS
Mcglen Internet Group (Mcglen or the Company), formerly Adrenalin Interactive,
Inc. (Adrenalin), was acquired by Mcglen Micro, Inc. in December 1999 through a
transaction in which the stockholders of Mcglen Micro, Inc. acquired control of
the Company through a reverse acquisition. As a result of the acquisition, each
share of Mcglen Micro, Inc. was converted into 0.9889611 shares of the Company,
with 25,485,527 shares being issued. In addition, under the terms of the
acquisition agreement between the Company, Mcglen Micro, Inc., and a consulting
firm, who arranged the acquisition, the consulting firm received 2,010,932
shares of common stock upon completion of the acquisition. The value of these
shares has been accounted for as a cost of the recapitalization. The equity
section of the balance sheet and earnings per share information have been
retroactively restated to reflect the exchange ratio established in the
acquisition agreement and the issuance of shares to the consulting firm.
In connection with the acquisition, the Board of Directors of the Company
adopted a formal plan to discontinue the operations of Western Technologies,
Inc. (Western), the operating subsidiary of Adrenalin that developed video
games. As such, the accounting treatment for the reverse acquisition is that of
a recapitalization. The net liabilities of Western have been reclassified as
discontinued operations on the balance sheets for all periods presented.
In March 1999, the Company acquired all of the assets and assumed the
liabilities of AMT Components, Inc., (AMT) dba AccessMicro.com, in exchange for
4,500,000 shares of stock (pre recapitalization). The purchase price of the AMT
acquisition was allocated to the acquired assets based on the estimated fair
values at the date of acquisition. This resulted in an excess of purchase price
over net assets acquired of approximately $400,000 which has been allocated to
goodwill and customer lists acquired and is being amortized on a straight-line
basis over 3 to 7 years. The operating results for AMT have been included in the
consolidated financial statements from the date of acquisition.
Mcglen Internet Group, Inc. is an Internet operating company focused on creating
multiple on-line business divisions targeting specific business-to-business and
business-to-consumer markets. The Company offers over 150,000 computer hardware,
software, and peripheral products servicing individuals, small offices/home
offices, and the corporate market through its three web sites; Mcglen.com,
AccessMicro.com, and Techsumer.com.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the Company's unaudited
condensed consolidated financial statements and the notes thereto included
elsewhere herein.
7
<PAGE>
Results Of Operations
The following table sets forth, for the periods indicated, the percentage of net
sales represented by certain items reflected in the Company's consolidated
statements of operations. There can be no assurance that the trends in sales
growth or operating results will continue in the future. The discussion of the
"Results of Operations" includes Mcglen Micro, Inc. in both periods and AMT
Components, Inc. in the period ended March 31, 2000; Mcglen Micro, Inc. acquired
AMT Components, Inc. as of March 31, 1999.
PERCENTAGE OF NET SALES
------------------------------
PERIOD ENDED MARCH 31,
2000 1999
-------------- --------------
Net sales 100.00% 100.00%
Cost of sales 88.53 88.95
-------------- --------------
Gross profit 11.47 11.05
-------------- --------------
Operating expenses 15.66 12.06
Deferred compensation expenses 1.44 -
-------------- --------------
Loss before income taxes (5.63) (1.01)
-------------- --------------
Provision for income taxes 0.00 0.00
-------------- --------------
Net loss (5.63%) (1.01%)
============== ==============
Net sales increased by $7.3 million, or 205%, to $10.9 million for the three
months ended March 31, 2000, compared to $3.6 million for the three months ended
March 31, 1999. The increase in net sales was a result of the acquisition of AMT
Components, Inc. by Mcglen in March 1999, as well as the Company achieving
overall sales and customer growth through its other two websites, Mcglen.com and
Techsumer.com. This growth was achieved through increased product offerings, an
increase in the Company's linking programs with targeted Mcglen sites,
personalized direct marketing programs designed to generate repeat sales from
existing customers, and strategic alliances with Internet content providers and
portal sites. Proforma net sales, including AMT for both periods in 2000 and
1999, increased by $5.5 million or 100%, (see Notes to the condensed
consolidated financial statements included herein).
Gross profit increased by $857,000 or 329% to $1.3 million for the three months
ended March 31, 2000, compared to $395,000 for the three months ended March 31,
1999. The increase in gross profit was due to increased sales in 2000 as a
result of the Company's marketing efforts, which were described in the preceding
paragraph, and the acquisition of AMT Components, Inc. in March 1999. Gross
profit, as a percentage of net sales increased to 11.5 % for the quarter ended
March 31, 2000 from 11.0% for the same period in 1999. The increase in gross
profit margin was the result of lower cost product sourcing and decreased margin
pressure in the overall marketplace. The Company's gross margin increased by
167% from the fourth quarter of 1999, to 11.5%, from 4.3% for the three months
ended December 31, 1999.
On a forward-looking basis, future gross profit margins may decline from recent
levels. The statement concerning future gross profit is a forward looking
statement that involves certain risks and uncertainties which could result in a
fluctuation of gross margins below those achieved for the three months ended
March 31, 2000. Although the Company believes it provides a high level of value
and added services, pricing and gross profit could be negatively impacted by the
activities of larger Internet resellers.
8
<PAGE>
Operating expenses increased by $1.4 million or 333%, to $1.9 million for the
three months ended March 31, 2000, from $431,000 for same period in the prior
year. The increase in operating expenses was attributable to an increase in
personnel costs associated with the increased sales volume, and an increase in
advertising costs resulting from increased spending on the Company's websites.
Advertising increased by approximately $159,000, or 116%, on a proforma basis
with AMT, as Mcglen increased spending to promote its brand name awareness and
acquire customers. Mcglen conducted almost all of its advertising on the
Internet, primarily through price comparison and product placements on websites.
Additionally, Mcglen increased the size of its facilities and invested in
capital infrastructure to support the growth in sales. As a result, depreciation
and amortization increased by approximately $90,000 due to the infrastructure
development during 1999 and the period ended March 31, 2000. On a proforma
basis, payroll and related costs increased by approximately $417,000, or 164% in
the first quarter of 2000 compared to the first quarter of 1999, as Mcglen hired
senior and mid-level management to support the Company's growth. Deferred
compensation charges of approximately $157,000, or 0.9% of sales, was recorded
during the three months ended March 31, 2000 resulting from options granted to
key management and consultants; no such charges occurred during the period ended
March 31, 1999. Finally, as a result of the Company's growth, credit card
processing and phone charges increased by approximately $116,000 and $60,000,
respectively, or 90% and 132%, respectively, for the three months ended March
31, 2000 compared to the same period in 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital need has been the funding of operations and
working capital requirements created by its rapid growth. Historically, the
Company's primary sources of financing have been private placements of stock and
borrowings from its stockholders, private investors, and financial institutions.
Cash used by operations was approximately $1 million for the three months ended
March 31, 2000. Cash was used to fund the Company's loss from operations and to
fuel the Company's growth in sales, establish brand name awareness of its
websites, for payment of expenses related to the reverse merger completed in
December 1999, and for building of the Company's infrastructure to support
Mcglen's operations.
The Company incurred a loss from operations during the last fifteen months and
had a working capital deficit and shareholders' deficit at March 31, 2000. The
Company raised $109,000 in subordinated debt financing and is attempting to
raise additional capital to meet future working capital requirements, but may
not be able to do so. Should the Company not be able to raise additional
capital, it may have to severely curtail operations.
During the three months ended March 31, 2000, the Company's capital expenditures
were approximately $39,000 as compared to $10,000 in 1999, primarily for
computer software and hardware, and distribution equipment. An additional
$19,000 in computer hardware was acquired through a capital lease.
The Company has two credit facilities of up to $1.5 million with financial
institutions. The credit facilities function in lieu of a vendor trade payable
for inventory purchases and are included in accounts payable. The facilities are
cancelable upon 30 days or less advance notice and do not bear interest if paid
within 30 days of the date the inventory is purchased. The credit facilities are
secured by substantially all of the Company's assets and are personally
guaranteed by the Company's majority shareholders. One of the credit facilities
required the Company to maintain a minimum level of subordinated debt plus
tangible net worth. At March 31, 2000, the Company was not in compliance with
this covenant and the finance company can initiate a default notice on the
facility at any time. Management is attempting to re-negotiate the covenants at
May 15, 2000.
Since computer retailers typically have low product gross margins, Mcglen's
ability to regain profitability is dependent upon its ability to increase net
sales. To the extent that Mcglen's marketing efforts do not result in
significantly higher net sales, Mcglen will be materially adversely affected.
There can be no assurance that sufficient revenues will be generated from the
sale of its products to enable Mcglen to regain profitability on a quarterly or
annual basis. In view of the rapidly evolving nature of Mcglen's business and
its limited operating history, Mcglen believes that period-to-period comparisons
of its operating results, including gross profit and operating expenses as
percentage of net sales, are not necessarily meaningful and should not be relied
upon as an indication of future performance.
9
<PAGE>
Mcglen believes that the key factor affecting its long-term financial success is
its ability to attract and retain customers in a cost effective manner.
Currently, Mcglen seeks to expand its customer base and encourage repeat buying
through internal and other sales and marketing programs. Such programs include:
(i) brand development, (ii) online and off-line marketing and promotional
campaigns, (iii) linking programs with targeted Mcglen sites, (iv) personalized
direct marketing programs designed to generate repeat sales from existing
customers, (v) strategic alliances with Internet content providers and portal
sites, and (vi) the development of a one-stop online marketplace.
Mcglen expects to experience significant fluctuations in its future operating
results due to a variety of factors, many of which are outside its control.
Factors that may affect its operating results include the frequency of new
product releases, success of strategic alliances, mix of product sales and
seasonality of sales typically experienced by retailers. Sales in the computer
retail industry are significantly affected by the release of new products.
Infrequent or delayed new product releases can negatively impact the overall
growth in retail sales. Gross profit margins for hardware, software and
peripheral products vary widely, with computer hardware generally having the
lowest gross profit margins. While Mcglen has some ability to affect its product
mix through effective up-selling of high margin products, its sales mix will
vary from period to period and Mcglen's gross margins will fluctuate
accordingly.
The Company incurred a net loss from operations for the three months ended March
31, 2000 and had a working capital deficit and shareholders' deficit at March
31, 2000. For the year ended December 31, 1999, the Company's independent
certified public accountants included a modification to their opinion, which
indicated there is substantial doubt about the Company's ability to continue as
a going concern. The Company will require additional equity and/or debt capital
in order to meet future working capital needs and to accomplish its combined
short-term and long-term business objectives. The Company has identified several
corporate finance consultants who have signed agreements to assist the Company
in raising additional capital. In April 2000, the Company signed agreements,
which provide the Company with a $1.5 million bridge loan and a $24 million
private placement of common stock. The $24 million private placement will be
funded through twelve (12) monthly draws of $2 million each on an equity line of
credit, commencing one month after the effective date of a SB-2 registration
statement which the Company is required to file for the private placement. The
Company expects to file the registration statement in May 2000. The private
Placement will be at a price equal to 87% of the volume weighted average price
for the Company's common stock for 22 days prior to the draw down. The private
placement agreement contains certain conditions whereby the investor's
obligation to fund the draw down is reduced if the Company's stock price drops
below a threshold price, as defined. Accordingly, the Company cannot make any
assurances that it will be able to complete any draw down's under this line. In
addition, our ability to complete any such future equity and/or debt financing
will depend upon the Company's then financial condition, results of operations
and future business prospects as well as market conditions at the time such
additional equity and/or debt financing is consummated. Many of the factors that
will influence the Company's ability to conduct any such future financing will
be outside of its control. For these reasons, it cannot make any assurances that
it will successfully complete the equity financing discussed above. Should the
Company be unable to raise additional capital, it may have to severely curtail
operations.
If Mcglen is successful in securing additional capital, the Company anticipates
expenditures of up to $2.5 million for improvements in software, hardware, and
other infrastructure investments.
As part of its growth strategy, the Company may, in the future, acquire other
companies or websites, in the same or complementary lines of business. Any such
acquisition and the ensuing integration of the operations of the acquired
company with those of Mcglen would place additional demands on Mcglen's
management and operating and financial resources. Additionally, the Company is
engaged in an ongoing evaluation of potential new websites, which may be created
internally. Any such development and the ensuing integration of the operations
of the new website with those of Mcglen would place additional demands on
Mcglen's management and operating and financial resources.
BUSINESS FACTORS
10
<PAGE>
Except for historical information, all of the statements, expectations and
assumptions contained in the foregoing are forward-looking statements. The
realization of any or all of these expectations is subject to a number of risks
and uncertainties and it is possible that the assumptions made by management may
not materialize. In addition, there can be no assurances that momentum in the
Company's sales will be sustained, that the first quarter trends for sales will
continue in future periods, or that the Company's Internet sales will continue
to grow. In addition to the factors set forth above, other important factors
that could cause actual results to differ materially from our expectations
include competition from companies either currently in the market or entering
the market; competition from other Internet, catalog and retail store resellers
and price pressures related thereto; uncertainties surrounding the supply of and
demand for computer and computer related products; reliance on the Company's
vendors; and risks due to shifts in market demand and/or price erosion of owned
inventory. This list of risk factors is not intended to be exhaustive. Reference
should also be made to the risk factors set forth from time to time in the
Company's SEC reports, including but not limited to those set forth in the
section entitled "Certain Factors Affecting Future Results" in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1999.
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
The Company entered into a purchase agreement to sell 293,255 shares of common
stock to Escaldade Investors, LLC ("Escaldade") in July 1999, which allowed for
repricing rights if Mcglen's stock price dropped below certain prices as defined
in the agreement. Escaldade exercised its repricing rights relating to
two-thirds of the shares it obtained in the financing in January 2000 and
received 103,775 shares of the Company's common stock. Escaldade exercised its
repricing rights relating to the final one-third of the shares it obtained in
the financing in April 2000 and received an additional 39,352 shares of the
Company's common stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
a. Exhibits. The exhibit index attached hereto is incorporated herein
by reference.
b. Reports on Form 8-K
1. On February 1, 2000, we filed a Current Report on Form 8-K
announcing the change of control of the Company, acquisition and
disposition of assets, change in certified accountants, the closing of
an offering of Common Stock for $750,000 with Escaldade, the closing of
an private placement of common stock for $1.5 million with Redstone
Securities, Inc., the resignation of former directors, Jay Smith,
Edward Mackay, Robert Wilson, and a change in our fiscal year end to
December 31.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Mcglen Internet Group, Inc.
Date: May 15, 2000 By /s/ Grant Trexler
-----------------------
Grant Trexler
Chief Financial Officer
(Duly Authorized Officer of the Registrant
and Principal Financial Officer)
11
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 32,492
<SECURITIES> 0
<RECEIVABLES> 622,857
<ALLOWANCES> 70,000
<INVENTORY> 586,096
<CURRENT-ASSETS> 1,734,982
<PP&E> 507,207
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,616,913
<CURRENT-LIABILITIES> 3,724,475
<BONDS> 0
0
0
<COMMON> 955,131
<OTHER-SE> 1,782,409
<TOTAL-LIABILITY-AND-EQUITY> 2,616,913
<SALES> 10,909,046
<TOTAL-REVENUES> 10,909,046
<CGS> 9,657,678
<TOTAL-COSTS> 9,657,678
<OTHER-EXPENSES> 1,860,118
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,847
<INCOME-PRETAX> (613,599)
<INCOME-TAX> 0
<INCOME-CONTINUING> (613,599)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (613,599)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
