U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 for the quarterly period ended February 28, 1999
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934 for the transition period from . . . . to . . . .
Commission file number 0-26578
LANDMARK INTERNATIONAL, INC.
Exact name of small business issuer as specified in its charter)
Nevada 33-0662114
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1720 East Garry, Suite 201, Santa Ana, California 92705
(Address of principal executive offices) (Zip Code)
(949) 475-4500
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all the reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past twelve 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 ... No .X.
The number of shares of common stock outstanding as of February 28, 1999 is
25,386,666.
Transitional Small Business Disclosure Format (check one): Yes ... No .X.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
LANDMARK COMMUNICATIONS INC.
Balance Sheet (Unaudited)
For the periods ended as indicated
Aug. 31 Feb 28
ASSETS 1998 1999
Cash 3,772 4,676
Accounts Receivable 98,352 30,000
Employee Advances 0 6
Due from Officers 0 0
Deferred tax assets 1,900 1,900
Total Current Assets 104,024 36,582
Equipment 147,058 147,058
Accumulated Depreciation (3,897) (9,741)
Total Equipment less
Accumulated depreciation 143,161 137,317
Total Assets 247,185 173,899
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable 81,189 72,133
Accrued payroll taxes 8,089 19,205
Accrued income taxes 2,000 2,000
Capitalized lease obligations due
within one year 39,182 39,182
Loans from officers 0 0
Total current liabilities 130,460 132,519
Capitalized Lease LT 79,778 65,862
Stockholders' equity
Paid in capital 88,942 128,942
Retained Earnings (40,776) (51,995)
Current Years Earnings (11,219) (101,429)
Total Stockholders Equity 36,947 (24,483)
Total Stockholders Equity and
Liabilities 247,185 173,899
LANDMARK COMMUNICATIONS INC.
Statement of Operations (Unaudited)
For the periods ended as indicated
Three Months Six Months
End Feb 28, Ended Feb. 28,
1998 1999 1998 1999
Sales 41,880 197,508 138,330 238,388
Cost of Sales 0 67,136 0 70,310
Gross Profit 41,880 130,371 138,330 168,079
Selling Expense 31,887 84,138 53,754 156,726
General and administrative
Expenses 4779,200 81,434 113,253 106,897
Gain or (loss) from
Operations (69,207)(35,200) (28,677)(95,545)
Interest, net 0 3,867 0 5,885
Gain or (loss) before
Provision for income
Taxes (69,207)(39,067) (28,677)(101,429)
Provision for income taxes 0 0 0 0
Net gain or (loss) (69,207)(39,067) (28,677)(101,429)
LANDMARK COMMUNICATIONS INC.
Statement of Cash Flows (Unaudited)
For the periods ended as indicated
Six Months
Cash flows from operating activities: Ended Feb 28,
1998 1999
Net gain or (loss) (28,677) (101,429)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 0 5,844
Deferred Income Taxes 0 0
Changes in assets and liabilities
Accounts Receivable (690) 68,352
Employee Advances (2,713) (6)
Due to/from officers 1,000 0
Accounts Payable (5,705) (9,056)
Accrued payroll related
Liabilities 2,938 11,115
Accrued income taxes 0 0
(33,846) (25,179)
Cash flows from investing activities
Purchase of capital equipment 2,523 0
Cash flows from financing activities
Repayment of capitalized lease
Obligations 0 (13,916)
Proceeds from common stock 40,200 40,000
40,200 26,084
Net increase (decrease) in cash 3,830 905
Cash at beginning of periods 5,410 3,772
Cash at end of periods 9,240 4,676
LANDMARK COMMUNICATIONS INC.
Notes to Financial Statements (Unaudited)
For the Six Months Ended February 28, 1999
1. Basis of Presentation and Summary of significant accounting policies
The unaudited interim condensed financial statements and related notes have
been prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations. In the opinion of management, all
adjustments, consisting of normal recurring adjustments necessary for a fair
presentation of the financial position, and the results of operations and
cash flows for the interim periods presented have been made. Due to
seasonality of the Company's operations and unsettled transactions, the
results of operations and cash flows for the interim periods presented may
not be indicative of total results for the full year.
The accompanying condensed financial statements and related notes should
be read in conjunction with the Company's audited financial statements
included in its Annual Report on Form 10-KSB for the year ended August 31,
1998. The results of operations for the six months ended February 28, 1999
are
not necessarily indicative of the results to be expected for the full
calendar year.
2.Nature of Business and Summary of Significant Accounting Policies
Nature of Business: Landmark International, Inc. (the "Company") is a Nevada
Corporation engaged in providing communication services to individuals and
businesses.
Equipment: Equipment is carried at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the depreciable
assets, which range from three to seven years.
Equipment under capitalized lease obligations are carried at estimated fair
market value determined at the inception of the lease. Amortization is
computed using the straight-line method over the original term of the lease
or the estimated useful lives of the assets, whichever is shorter.
Reporting Comprehensive Income: In June 1997, Statement of Financial
Accounting Standards ("SFAS") No. 130, " Reporting Comprehensive Income" was
issued, which established standards for reporting and display of
comprehensive income and its components as separate amounts in the financial
statements. Comprehensive income includes all changes in equity during a
period of an enterprise that results from recognized transactions and other
economic events other than transactions with owners. This statement requires
all items that are to be recognized under accounting standards as components
of comprehensive income be reported in a financial statement that is
displayed with the same prominence as other financial statements. This
statement affects only financial statement presentation. As of May 31, 1998,
the Company does not carry any items required to be disclosed as other
comprehensive income in accordance with the statement.
Revenue Recognition: Fees for services are recognized at month-end as
services are completed and income earned.
Advertising: The Company expenses the cost of advertising as selling
expenses as incurred. Advertising expenses was approximately $898 for the
six month period ending February 28, 1999.
Income Taxes: Income taxes are accounted for and reported using an asset and
liability approach. Deferred income tax assets and liabilities are computed
annually for differences between the financial statement and tax basis of
assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to effect taxable income.
Valuation allowances are established when necessary to reduce deferred tax
assets to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period plus or minus the change during the year
in deferred tax assets and liabilities.
Net loss per common share: Net loss per share is computed by dividing net
loss by the weighted average number of common shares outstanding during the
period. The weighted average number of common stock shares outstanding was
22,986,666 for the six month period ending February 28, 1999. Stock options
outstanding are not considered to be common stock equivalents, as the affect
on net loss per common share would be anti-dilutive.
Net loss per fully diluted common share: Net loss per fully diluted share is
computed by dividing net loss by the weighted average number of common shares
plus options outstanding during the period. The weighted average number of
fully diluted common stock shares outstanding was 25,653,333 for the six
month period ending February 28, 1999.
Concentration Risk: The Company grants credit to customers in the Southern
portion of the State of California. The Company's ability to collect broker
fees and to fund borrower's transactions are affected both by economic
fluctuations in the geographic areas served by the Company.
Risks and Uncertainties: The process of preparing financial statements in
conformity with generally accepted accounting principles requires the use of
estimates and assumptions regarding certain types of assets, liabilities,
revenues and expenses. Management of the Company has made certain estimates
and assumptions regarding the collectibility of accounts receivable. Such
estimates and assumptions primarily relate to unsettled transactions and
events as of the date of the financial statements. Accordingly, upon
settlement, actual results may differ from estimated amounts.
Recently Issued Accounting Pronouncements:
Accounting for Derivative Instruments and Hedging Activities: In June 1998,
SFAS No. 133, " Accounting for Derivative Instruments and Hedging Activities"
was issued. The Statement requires that all derivatives be carried on the
balance sheet at fair value and changes in the fair value of derivatives be
recognized in income when they occur, unless the derivatives qualify as
hedges in accordance with the standard. If a derivative qualifies as a
hedge, a company can elect to use hedge accounting. The type of accounting
to be applied varies depending on the nature of the exposure that is being
hedged, and the standard defines three hedge risks: change in fair value,
change in cash flows and change in foreign currency.
A fair-value hedge represents the hedge of an exposure to changes in the fair
value of an asset, liability or an unrecognized firm commitment. Changes in
fair value hedges are recognized in earnings, as well as the gain or loss on
the hedged item attributable to the hedged risk. Certain criteria must be
met in order for a hedging relationship to qualify as a fair-value hedge.
A cash-flow hedge is a hedge of an exposure to variability in cash flows that
is attributable to a particular risk. That exposure may be associated with
an existing recognized asset or liability or a forecasted transaction. The
effective portion of a hedging instrument's gain or loss is initially
reported as a component of other comprehensive income and is reclassified as
a component of earnings in the same period or periods during which the hedge
forecasted transaction affects earnings. As in fair value hedges, certain
criteria must be met in order for a hedging relationship to qualify as a
cash-flow hedge.
A foreign-currency hedge can be a fair-value hedge or a cash-flow hedge of
the foreign currency exposure, therefore it follows the same principles as
those that apply to the accounting for non-foreign hedges with some
particularities defined in the statement.
This statement is effective for the year beginning after September 1, 1999
and cannot be applied retroactively. Management believes that the adoption
of this statement will not have a material effect on the Company's financial
position or results of operations.
Accounting for the Cost of Computer Software Developed for Internal Use: In
March 1998, the American Institute of Certified Public Accountants issued
Statement of Position 98-1, " Accounting for the Cost of Computer Software
Developed for Internal Use" ("SOP 98-1"), which will become effective for
financial statements for the year beginning September 1, 1999, with early
adoption encouraged. SOP 98-1 requires the capitalization of eligible costs
of specified activities related to computer software developed or obtained
for internal use. Management does not believe the impact of adoption will
have a material effect on the Company's financial position or results of
operations.
2. Business Combination:
Effective June 1, 1999, the Company acquired Mobilenetics Corporation
("Mobilenetics"), a supplier of communications equipment. The Company issued
10,000,000 shares of its common stock exchange for all of the outstanding
shares of Mobilenetics. When completed, the acquisition will be accounted
for as a purchase. The excess purchase price, if any, over the estimated
fair value of the assets of Mobilenetics will be amortized using the
straight-line method over five years.
The following unaudited pro forma summary presents the consolidated financial
position and results of operations of the Company as if the business
combination occurred on September 1, 1998:
As of February 28, 1999:
Tangible current assets $ 118,157
Total assets 218,511
Current liabilities 341,850
Total liabilities 364,856
Total stockholders' equity (146,344)
For the six month period ending February 28, 1999:
Net sales 583,536
Net (loss) (455,905)
(Loss) per share (.0198)
The above amounts are based upon certain assumptions and estimates which the
Company believes are reasonable. The pro forma financial position and
results of operations do not purport to be indicative of the results which
would gave been obtained had the business combination occurred as of
September 1, 1998 or which may be obtained in the future.
3. Capitalized Lease Obligations:
The Company leases equipment under non-cancelable lease agreements.
Equipment under lease agreements aggregated at February 28, 1999 $129,929,
less accumulated amortization at February 28, 1999 of $9,741.
Aggregate future minimum lease payments and the present value of minimum
lease payments are as follows:
Years ending August 31,
1999 $ 53,381
2000 53,381
2001 35,588
Total minimum lease payments 142,350
Less amount representing interest 23,390
Present value of minimum lease payments 118,960
Less amounts due within one year 39,182
Long-term capitalized lease obligations $ 79,778
4. Income Taxes:
The components of the provision (benefit) for income taxes are as follows for
the six month period ended February 28, 1999:
Federal:
Current $ 1,500
Deferred - net operating loss carryover (1,600)
(100)
State of California:
Current 500
Deferred - net operating loss carryover (300)
200
Provision for income taxes $ 100
Reconciliation of income taxes computed at the federal statutory rate to the
provision for income taxes is as follows for the six month period ended
February 28, 1999:
Tax at statutory rates $ (1,600)
Differences resulting from state tax,
net of federal benefit, and
non-deductible and other items 1,700
Effective $ 100
5. Common Stock:
In December 1998, the Board of Directors authorized the issuance of 4,000,000
shares of common stock to the Chairman of the Company for services rendered.
Also in December 1998, the Chairman of the Company was granted an additional
4,000,000 shares of common stock of the Company exercisable in whole or in
part at the bid price at the date of exercise and expire five year from the
date of issue. The Company has reserved 4,000,000 shares of its common stock
for issuance under this stock option.
In December 1998, the Board of Directors also authorized the issuance of an
aggregate of 900,000 shares of the Company's common stock to three
individuals and a law firm in exchange for services rendered and to be
rendered.
Item 2. Management's Discussion and Analysis or Plan of Operation
Forward Looking Statements
This discussion may contain statements that could be deemed forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act
of 1934 and the Private Securities Litigation Reform Act, which statements
are inherently subject to risks and uncertainties. Forward-looking statements
are statements that include projections, predictions, expectations or beliefs
about future events or results or otherwise are not statements of historical
fact.
Such statements are often characterized by the use of qualifying words (and
their derivatives) such as "expect," "believe," "estimate," "plan,"
"project," "anticipate," or other statements concerning opinions or judgment
of the Company and its management about future events. Factors that could
influence the accuracy of such forward-looking statements include, but are
not limited to, the financial success or changing strategies of the Company's
customers, actions of government regulators, the level of market interest
rate and general economic conditions. All forward-looking statements included
herein are based on information available to the Company on the date hereof,
and the Company assumes no obligation to update any such forward-looking
statements. It is important to note that the Company's actual results could
differ materially from those in such forward-looking statements due to the
factors cited above. As a result of these factors, there can be no assurance
the Company will not experience material fluctuations in future operating
results on a quarterly or annual basis, which would materially and adversely
affect the Company's business, financial condition and results of operations.
Results of Operations
The Company's operating results have fluctuated in the past, primarily as a
result of sales promotions being offered by GTE which LMKI is no longer
reselling, and may in the future fluctuate significantly, depending upon a
variety of factors, including the timely deployment and expansion of new
network architectures, the incurrence of related capital costs, variability
and length of the sales cycle associated with the Company's product and
service offerings, the receipt of new value-added network services and
consumer services subscriptions and the introduction of new services by the
Company and its competitors. Effective January 31, 1999 LMKI stop reselling
GTE services and started selling DSL services. Additional factors that may
contribute to variability of operating results include: the pricing and mix
of services offered by the Company; customer retention rate; market
acceptance of new and enhanced versions of the Company's services; changes in
pricing policies by the Company's competitors; the Company's ability to
obtain sufficient supplies of sole- or limited-source components; user demand
for network and Internet access services; balancing of network usage over a
24-hour period; the ability to manage potential growth and expansion; the
ability to identify, acquire and integrate successfully suitable acquisition
candidates; and charges related to acquisitions. In response to competitive
pressures, the Company may take certain pricing or marketing actions that
could have a material adverse affect on the Company's business. As a result,
variations in the timing and amounts of revenues could have a material
adverse affect on the Company's quarterly operating results. Due to the
foregoing factors, the Company believes that period-to-period comparisons of
its operating results are not necessarily meaningful and that such
comparisons cannot be relied upon as indicators of future performance. In the
event that the Company's operating results in any future period fall below
the expectations of securities analysts and investors, the trading price of
the Company's common stock would likely decline.
Revenue. Revenue totaled approximately $197,508 for the three
month period ended February 28, 1999, a 383% increase over revenue of
$40,880 for the three month period ended February 28, 1998.
This increase reflects growth in revenue from an aggressive GTE sales
promotion during December 1998 and January 1999. As of January 31, 1999
Landmark stopped reselling GTE services and started selling DSL services. As
demand for DSL continues to grow dramatically, we believe it is possible to
increase our revenue at an accelerated rate through an aggressive marketing
strategy.
Cost of Revenue. Cost of revenue consists primarily of personnel
costs to maintain and operate the Company's network, access charges from
local exchange carriers, backbone and Internet access costs, depreciation of
network equipment and amortization of related assets. Cost of revenue
increased for the three month period ended February 28, 1999 was
approximately $67,138, an increase of cost of revenue of $0 for the three
month period ended February 28, 1997. This increase is attributable to the
shift from reselling GTE services to exclusively DSL and T-1 services. In
addition, the increase in cost of revenue to the overall growth in the size
of the network and costs associated with operations. The Company expects its
cost of revenue to continue to increase in dollar amount, while declining as
a percentage of revenue as the Company expands its customer base.
Sales Expense. Sales expense consists primarily of personnel
expenses, including salary and commissions, and costs of for customer support
functions.
Marketing and sales expense was approximately $84,138 for the three month
period ended February 28, 1999 and $31,887 for the three month period ended
February 28, 1998. The $52,251 increase in 1999 reflects an expansion of the
sales organizations necessary to support the Company's shift from reselling
GTE services to DSL and T-1 services. This increase also reflects a growth in
subscriber acquisition costs, related to both increased direct marketing
efforts as well as commissions paid sales staff. Sales expense as a
percentage of revenue decreased to 43% for the three month period ended
February 28, 1999 from 76% in the year earlier period as a result of the
Company's product shift. The Company expects sales expenditures to continue
to increase in dollar amount, but to decline as a percentage of revenue.
General and Administrative Expense. General and administrative
expense consists primarily of personnel expense, rent and professional fees.
General and administrative expense was approximately $81,434 for the three
month period ended February 28, 1999 and $79,200 for the three month period
ended February 28, 1998. This higher level of expense reflects an increase in
personnel and professional fees necessary to manage the financial, legal and
administrative aspects of the business. General and administrative expense as
a percentage of revenue declined to 41% for the three month period ended
February 28, 1999 from 189% in the year earlier period as a result of the
Company's increased revenue. The Company expects general and administrative
expense to increase in dollar amount, reflecting its growth in operations,
but to decline as a percentage of revenue.
Net Income Attributable to Common Stockholders. The Company's net
loss attributable to common stockholders was approximately $39,067 for the
three month period ended February 28, 1999 as compared to net loss
approximately $69,207 for the three month period ended February 28, 1998.
The Company expects to focus in the near term on building and increasing its
revenue base, which will require it to significantly increase its expenses
for personnel, marketing, network infrastructure and the development of new
services, and may adversely impact short term operating results. As a result,
the Company believes that it will incur losses in the near term and we cannot
assure you that the Company will be profitable in the future.
Financial Condition
To date, the Company has satisfied its cash requirements primarily through
the debt financings and capitalized lease financings. The Company's principal
uses of cash are to fund working capital requirements and capital
expenditures, to service its capital lease and debt financing obligations,
and to finance and fund acquisitions. Net cash used by operations for the six
month periods ended February 28, 1999 and 1998 was approximately $25,179 and
$33,846, respectively. Cash used for operating activities in the period
ending February 28, 1999 was primarily affected by the net loss from
operations as the company was expanding its market share and improving its
infrastructure. The net cash used from operations decreased for the period
ending February 28, 1998 was the result of the net loss from operations.
Net cash used in investing activities for the three month periods ended
February 28, 1999 and 1998 was approximately $0 and $2,523, respectively.
Net cash used in investing activities for the three month period ended
February 28, 1998 consisted of $2,523 used for purchases of capital equipment
to support the Company's expanded network infrastructure.
The net cash increase for the three month period ended February 28, 1999 was
$905 as compared to a net cash increase for the three month period ended
February 28, 1998 of $3,380.
At February 28, 1999, the Company had cash and cash equivalents of
approximately $4,676, and negative working capital of $95,937. The Company
anticipates that it will require additional financing on a continuing basis.
The Company will be required to raise such additional funds through public or
private financing, strategic relationships or other arrangements. We cannot
assure you that such additional funding, if needed, will be available on
terms attractive to the Company, or at all.
Year 2000 Compliance
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. As a result, date-
sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in system failures or miscalculations
causing disruptions of normal business activities. The Company has reviewed
its products and services, as well as its internal management information
systems in order to identify and modify those products, services and systems
that are not year 2000 compliant.
Based on the Company's assessment to date, the Company has determined that
its internally developed software, including all of its operational,
financial and management information systems software is year 2000 compliant.
The Company's operational, financial and management information systems
software which have not been internally developed have been certified as year
2000 compliant by the third party vendors who have supplied the software.
The equipment and software that runs the Company's data centers are supplied
by Microsoft, Cisco Systems, and Intel Corporation. The Company has
implemented software patches supplied by Microsoft so that the Microsoft
software in these data centers no longer contains any material year 2000
deficiencies. The Company implemented similar patches for the software
supplied by Cisco Systems at the end of 1998. The company is building a new
communications network, and, as such, the company does not have a technology
infrastructure comprised of legacy software and systems. In building its
communications network, the company has adopted a strategy to select
technology vendors and suppliers that provide products that are represented
by such vendors and suppliers to be Year 2000 Ready. In negotiating its
vendor and supplier contracts, the company secures Year 2000 representations
and warranties that address the Year 2000 Readiness of the applicable
product(s). To date, the company has exclusively used equipment from Cisco
Systems within our network backbone, and Customer Premises Equipment (CPE)
from both Cisco Systems and Flowpoint / Cabletron. Both companies have
provided the company with sufficient Year 2000 readiness information and test
results for the equipment that we have purchased from these vendors. The
company has tested and validated the Year 2000 Readiness of the company
Network and select external systems, products, and facilities that are
essential components in the company's delivery of the Services by engaging in
a product delivery system tests. These system tests have been performed in a
controlled, defined laboratory environment utilizing procedures to replicate
the end-to-end delivery of Services. The Company does not separately track
internal costs incurred to assess and remedy deficiencies related to the year
2000 problem, however, such costs are principally the payroll costs for its
information systems group. The Company does not have and is not developing a
contingency plan in the event its systems fail as a result of year 2000
related problems.
However, despite testing by the Company and its vendors, the Company's
products, services and systems may contain undetected errors or defects
associated with year 2000 date functions. In the event any material errors or
defects are not detected and fixed or third parties cannot timely provide the
Company with products, services or systems that meet the year 2000
requirements, the Company's operating results could be materially adversely
affected. Known or unknown errors or defects that affect the operation of the
Company's products, services or systems could result in delay or loss of
revenue, interruption of network services, cancellation of customer
contracts, diversion of development resources, damage to the Company's
reputation, and litigation costs. There can be no assurance that these or
other factors relating to year 2000 compliance issues will not have a
material adverse effect on the Company's business, operating results or
financial condition.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
William Kettle President was issued 4,000,000 shares of restricted stock in
and options to purchase an additional 4,000,000 shares lieu of compensation.
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Table:
None
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter.
[Signatures]
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
LANDMARK INTERNATIONAL, INC.
(Registrant)
Date: 9/15/99
By:/s/_______________________________
William J. Kettle
Chairman and Chief Executive Officer
Date: 9/15/99
By:/s/_______________________________
John W. Diehl, Jr.
Chief Financial Officer and Treasurer
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This schedule contains summary financial information extracted from the
February 28, 1999 consolidated financial statements] and is qualified in its
entirety by reference to such financial statements and the notes thereto.
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<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> FEB-28-1999
<CASH> 4,676
<SECURITIES> 0
<RECEIVABLES> 30,000
<ALLOWANCES> 0
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<CURRENT-ASSETS> 36,582
<PP&E> 147,058
<DEPRECIATION> 9,741
<TOTAL-ASSETS> 173,899
<CURRENT-LIABILITIES> 132,519
<BONDS> 0
0
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<COMMON> 128,942
<OTHER-SE> (153,424)
<TOTAL-LIABILITY-AND-EQUITY> 173,899
<SALES> 197,508
<TOTAL-REVENUES> 197,508
<CGS> 67,136
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<OTHER-EXPENSES> 165,572
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