U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
-----
Commission file number 001-12671
The Hartcourt Companies, Inc.
(Exact name of small business issuer as specified in its character)
Utah 87-0400541
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
19104 S. Norwalk Boulevard, Artesia California 90701
(Address of principal executive offices)
(562) 403-1126
(Issuer's telephone number)
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 __.
As of September 30, 1997, The Hartcourt Companies, Inc.
had 12,106,024 shares of Common
Stock outstanding.
Transitional Small Business Disclosure Format (check one):
Yes __ No X
<PAGE>
TABLE OF CONTENTS
THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
Report on Form 10-QSB
For quarter ended
September 30, 1997
Page
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - September 30, 1997 and
December 31, 1996
(audited)..............................................3
Consolidated Statement of Operations - Quarter ended September
30, 1997 and 1996 and the nine months
Ended September 30, 1997 and 1996
.......................................4
Consolidated Statement of Shareholders' Equity - Nine
Months ended September 30, 1997
..........................................5
Consolidated Statements of Cash Flows - Nine months ended
September 30, 1997 and 1996
..............................................6
Notes to the Consolidated Financial Statements
...................................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
.......................................................10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...
.............................................................11
Item 2. Charges in Securities...
.........................................................11
Item 3. Defaults upon Senior Securities..
................................................11
Item 4. Submission of Matters to Vote of Security Hoders.
................................11
Item 5. Other Information
................................................................11
Item 6. Exhibits and Reports on Form 8-K
................................................11
Signatures..
.....................................................................12
<PAGE>
<TABLE>
<CAPTION>
THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
1997 1996
ASSETS (Unaudited)
CURRENT ASSETS
<S> <C> <C>
Cash $ 144,790 $ 822
Accounts receivable, net of allowance for doubtful accounts
of $6,571 and $19,034 in 1997 and 1996, respectively -- 19,034
Trade dollar receivables 38,651 72,054
Inventory, net 128,591 311,424
Interest receivable 14,760 3,877
Note receivable, current portion 193,103 133,764
Prepaid expenses 328,736 --
Prepaid consulting fees 900,000 900,000
Due from related party 74,985 32,356
TOTAL CURRENT ASSETS $ 1,823,616 $ 1,473,331
PROPERTY AND EQUIPMENT, net $ 31,992 $ 44,809
INVESTMENTS 17,906,520 17,906,520
NOTE RECEIVABLE 1,346,278 1,190,795
OTHER ASSETS 51,951 7,550
$ 21,160,357 $ 20,623,005
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 96,708 $ 148,569
Trade dollar payables 135,902 --
Accrued expenses 4,960 133,747
Notes payable, current portion 51,586 56,396
Bank overdrafts -- 5,691
Subscription deposits 125,034 45,000
TOTAL CURRENT LIABILITIES $ 414,190 $ 389,403
NOTES PAYABLE, net of current portion 576,615 524,369
TOTAL LIABILITIES $ 990,805 $ 913,772
SHAREHOLDERS' EQUITY
Original preferred stock - $0.01 par value
1,000 shares authorized, issued and outstanding 10 10
Common Stock - $0.001 par value; 50 million (10 million in
1995) Shares authorized; 12,106,024 shares outstanding
at September 30, 1997 and 10,560,352 at
December 31, 1996 12,106 10,560
Stock subscriptions receivable (276,000) --
Treasury stock, at cost (24,364 shares) (279,928) (279,928)
Additional paid-in capital 24,095,558 23,204,260
Retained deficit (3,382,194) (3,225,669)
TOTAL SHAREHOLDERS EQUITY 20,169,552 19,709,233
$ 21,160,357 $ 20,623,005
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
REVENUES
<S> <C> <C> <C> <C>
Product sales $ 45,206 $ 119,103 $ 316,706 $ 212,772
COST OF SALES 18,402 113,949 213,727 556,683
Gross Profit 26,804 5,154 102,979 (343,911)
OPERATING EXPENSES
General and administrative 127,115 27,712 271,405 248,272
Depreciation and amortization 5,647 1,138 10,792 --
TOTAL OPERATING EXPENSES 132,762 28,850 282,197 248,272
LOSS FROM OPERATIONS (105,958) (23,696) (179,218) (592,183)
OTHER INCOME (EXPENSES)
Minority interest
Interest expense 4,095 (154) (22,305) (122,516)
Interest income 6,410 925 21,885 7,039
Loss on sale of subsidiary -- (1,135,482) -- (1,135,482)
Other income -- 572,863 25,556 367,828
TOTAL OTHER INCOME (EXPENSES) 10,505 (561,848) 25,136 (883,131)
NET LOSS BEFORE INCOME TAXES (95,453) (585,544) (154,082) (1,475,314)
Income taxes 1,402 1,247 2,443 1,029
NET LOSS $ (96,885) $ (586,791) $ (156,525) $ (1,476,343)
NET LOSS PER COMMON SHARE $ (0.008) $ (0.186) $ (0.013) $ (0.467)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING 11,654,153 3,159,383 11,654,153 3,159,383
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(Unaudited)
Additional
Common Stock Preferred Stock Paid-in Treasury Stock Retained
Shares Amount Shares Amount Capital Shares Amount Deficit Total
Balance,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 31, 1996 10,560,352 $ 10,560 1,000 $ 10 $23,204,260 27,364 $(279,928) $(3,225,669) $19,703,233
Shares issued for
settlement of payables2,672 3 5,341 5,344
Shares issued for
consulting agreement 100,000 10 149,900 150,000
Shares issued to
present and former
employees and Board
of Directors 289,000 289 144,211 144,500
Sale of shares under
Regulation S 1,000,000 1,000 499,000 500,000
Net loss (101,549) (101,549)
Balance,
March 31, 1997 11,952,024 $ 11,952 1,000 $ 10 $24,002,712 27,364 $(279,928) $(3,327,218) $20,407,528
Sale of shares under
Regulation S 138,000 138 68,862 69,000
Shares issued in
settlement of
payables 16,000 16 23,984 24,000
Net income 41,879 41,879
Balance,
June 30, 1997 12,106,024 $ 12,106 1,000 $ 10 $24,095,558 27,364 $(279,928) $(3,285,339) $20,542,407
Net loss (96,855) (96,855)
Balance,
September 30, 1997 12,106,024 $ 12,106 1,000 $ 10 $24,095,558 27,364 $(279,928) $(3,382,194) $20,445,552
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
September 30,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (156,525) $ (1,476,343)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock issued for services 294,500 --
Minority interest in loss of joint venture -- 86,639
Write-off of bad debts (19,034) (116,490)
Accrued interest income (10,883) --
Depreciation and amortization 10,792 269,263
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable 71,471 111,590
Note receivable (214,822) (153,559)
Inventory 182,833 47,852
Prepaid expenses (328,736) 72,051
Other assets (12,045) 268,770
Increase (decrease) in:
Accounts payable and accrued expenses (15,402) 235,539
Due from related party (74,985) (103,841)
NET CASH USED IN OPERATING ACTIVITIES (272,836) (758,529)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment -- (214,761)
Sale of equipment 2,025 --
NET CASH USED IN INVESTING ACTIVITIES 2,025 (214,761)
CASH FLOWS FROM FINANCING ACTIVITIES
Bank overdraft (5,691) --
Borrowing from notes 47,436 --
Other loans -- 350,640
Stock subscriptions receivable (276,000) --
Issuance of common stock subscribed 80,034 --
Sale of common stock 569,000 488,033
NET CASH PROVIDED BY FINANCING ACTIVITIES 414,779 838,673
NET INCREASE (DECREASE) IN CASH 143,968 (134,617)
CASH, BEGINNING OF PERIOD 822 142,047
CASH, END OF PERIOD $ 144,790 $ 7,430
</TABLE>
<PAGE>
THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1. Organization and Nature of Operations:
Harcourt Investments (USA), Inc. (Harcourt Investments) was
incorporated on April 23, 1993. Principal business activities are the design,
manufacture and sale of writing instruments. During its first two years of
operations, Harcourt Investments used foreign contract manufacturers to produce
various types of pens and markers which were then imported for sale in the U.S.
market. In August 1994, Harcourt Investments acquired a 60% interest in the
Xinhui Harchy Modern Pens, Ltd. Joint Venture (Xinhui JV) owned by a Hong Kong
corporation for common stock valued at $2,149,200. The Xinhui JV is located in
the Guangdong Province of China. Pursuant to an amendment to the joint venture
agreement governing the Xinhui JV entered into in October 1995, the Company's
interest was reduced to a 52% interest in the Xinhui JV.
In November 1994, Stardust, Inc. Production-Recording-Promotion
(Stardust) acquired 100% of the outstanding shares of Harcourt Investments for
8,280,000 shares of its common stock in a transaction accounted for as a
recapitalization of Harcourt Investments with Harcourt Investments as the
acquirer (reverse acquisition). Therefore, the historic cost of assets and
liabilities were carried forward to the consolidated entity. In 1996, a reverse
stock split changed the number of shares issued and outstanding to 2,735,952.
The consolidated financial statements were restated to reflect this capital
stock transaction. Stardust's name was changed to "Hartcourt Companies, Inc."
Hartcourt Pen Factory, Inc. (Hartcourt Pen) was incorporated in October
1993. Principal business activities are the sale of writing instruments. In
December 1994, Harcourt Investments acquired 100% of the outstanding shares of
the common stock of Hartcourt Pen for 52,500 shares of its common stock and
1,000 shares of its original preferred stock in a transaction accounted for
similar to a pooling of interests. In 1995, stock dividends and a reverse stock
split changed the number of shares issued to 38,625 to acquire Hartcourt Pen.
The consolidated financial statements were restated to reflect these capital
stock transactions.
Note 2. 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. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. These financial
statements should be read in conjunction with the financial statements and
related notes included in the Company's 1996 Form 10-KSB.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (which include only normal recurring
adjustments) necessary to present fairly the balance sheet of The Hartcourt
Companies and Subsidiaries as of September 30, 1997 and the results of their
operations and their cash flows for the nine months ended September 30, 1997 and
1996, respectively. The financial statements are consolidated to include the
accounts of The Hartcourt Companies and its subsidiary Hartcourt Pen (together
"the Company").
Certain 1996 amounts have been reclassified to conform to current
period presentation. These reclassifications have no effect on previously
reported net income.
The accounting policies followed by the Company are set forth in Note 1
to the Company's financial statements as stated in its report on Form 10-KSB for
the fiscal year ended December 31, 1996.
<PAGE>
THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 3. Material Events:
Sale of Harcourt Investments, Inc.
In September 1996 the Company sold its wholly-owned subsidiary,
Harcourt Investments (USA), Inc. (Harcourt Investments) to CKES, Inc. located in
Sunnyvale, California. Harcourt Investments owned a 52% interest in Xinhui
Harchy Modern Pens, Ltd., a joint venture in the Peoples Republic of China. All
of the outstanding shares of Harcourt Investments were sold for a $3 million
dollar note receivable which is payable in 60 equal monthly installments of
$50,000 each, beginning October 1, 1998. Interest accrues at 6% per annum and is
payable in full at the end of the loan period. The note receivable is secured by
a security agreement. This agreement allows the Company to have a security
interest in all assets of CKES, Inc.
Investment in Peony Gardens
In August 1996 the Company purchased an apartment complex located near
Beijing, China for $22 million from NuOasis International, Inc. The purchase
price included the issuance of 4 million shares of common stock, valued at $10
million, and a promissory note to NuOasis for $12 million. The note was due and
payable on August 17, 1997, or if construction is not complete, then the note is
extended to the date that the certificate of occupancy is received. Under the
deposit method of accounting in accordance with Financial Accounting Standards
No. 66, the promissory note of $12 million is currently being deferred until the
complete consummation of the Peony Gardens sale. Also, the value of the 4
million shares of common stock is recorded as a deposit.
Investment in Alaskan Gold Claims
In September 1996 the Company purchased several gold mining claims
encompassing 320 acres of land in the state of Alaska for $6 million. The
purchase was made by issuing 1,298,700 shares of the Company's common stock.
Under the deposit method of accounting in accordance with Financial Accounting
Standards No. 66, the value of the 1,298,700 shares of common stock is recorded
as a deposit.
Agreement to Acquire Pego Systems, Inc.
On April 8, 1997 the Company entered into a preliminary stock purchase
agreement with Michael V. Caruana, officer and owner of Pego Systems, Inc. On
October 6, 1997 the Company completed the purchase of 100% of the outstanding
shares of Pego Systems, Inc. Details of this transaction were reported on Form
8-K and submitted to the SEC on or about October 18, 1997.
Agreement to Acquire Electronic Components and Systems, Inc. and Pruzin
Technologies, Inc.
On July 24, 1997 the Company entered into a preliminary stock purchase
agreement with James Pruzin, officer and owner of Electronic Components and
Systems, Inc. and Pruzin Technologies, Inc. (collectively ECS). The Company
completed the purchase of 100% of the outstanding shares of ECS on October 29,
1997. Details of this transaction will be reported on Form 8-K submited to the
SEC on or about November 12, 1997.
Escrow Opened to Acquire Shopping Center
In July 1997 the Company opened escrow to purchase a multi-tenant
shopping center in Perris, California. Estimated purchase price is approximately
$6,750,000. The purchase is subject to financing of $3,750,000 from Nations
Bank.
<PAGE>
THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 3. Mateiral Events (continued):
Purchase of Marketable Securities
On July 28, 1997 the Company purchased $6 million worth of free-trading
marketable securities from Capital Commerce Ltd., an Isle of Man corporation.
The Company issued $4 million of Series A 9% Convertible Preferred Stock and $2
million of Series B 9% Convertible Preferred Stock in exchange for the free
trading securities. The securities will be sold and funds will be used in the
acquisition of Pego Systems, Inc. and Electronic Components and Systems, Inc.,
as well as future acquisitions.
Note 4. Supplemental Disclosure of Non-cash Financing Activities:
On January 29, 1997 the Company issued 2,672 shares valued at $2.00 per
share ($5,344) for services rendered in 1996.
On February 12, 1997 the Company issued 100,000 shares valued at $1.50
per share ($150,000) in connection with an investment banking services
agreement.
On March 31, 1997 the Company issued 289,000 shares valued at $0.50 per
share ($144,500) to present and former employees and directors as bonuses.
On May 7, 1997 the Company issued 16,000 shares valued at $1.50 per
share ($24,000) for business operations.
Income (loss) per common share is based on the weighted average number
of common shares outstanding during the period. No material dilution of earnings
per share would result for the periods if it were assumed that all outstanding
warrants were exercised.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
The Company sold its interest in the XinHui Joint Venture during 1996
and, therefore, comparability of assets, income and expenses between the first
three quarters of 1997 and the first three quarters of 1996 is not meaningful.
Liquidity and capital resources.
The Company continued its plan to divest itself of unprofitable
operations and seek new opportunities. In July 1997 the Company entered into an
agreement to issue $6 million of new Series A ($4 million) and B ($2 million) 9%
Convertible Preferred Stock in exchange for $6 million of free trading
marketable securities held by Capital Commerce, Ltd., an Isle of Man
Corporation. Interest on the preferred stock is payable monthly for a term of
ten years. The Company has the right to call the preferred stock at any time
during the ten years. Capital Commerce has the option to convert the preferred
stock into the Company's Common Stock on a dollar for dollar basis. The free
trading securities will be used, in part, to acquire Pego Systems, Inc. and
Electronic Components & Systems, Inc. (see below). In connection with this
agreement the Company agreed to pay a $600,000 commission to Mercantile
Investment Trust Ltd. payable in restricted Common Stock of the Company totaling
685,715 shares.
At September 30, 1997 the Company had received $125,000 from the sale of a
portion of the marketable securities, however, the preferred stock had not been
issued. The $125,000 received was recorded as a subscription deposit.
<PAGE>
THE HARTCOURT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations (contd.)
During the third quarter the Company received $135,000 in connection
with a $500,000 common stock subscription agreement entered into in the last
quarter of 1996. At September 30, 1997 there is $276,000 remaining receivable on
the subscription agreement. The one million shares of common stock sold by the
Company in connection with the subscription agreement were issued in March 1997,
however, they are not released until the Company receives the money.
The Company finalized negotiations in October 1997 on the following
acquisitions which won't be recorded until the fourth quarter:
1. On October 6, 1997 the Company completed the purchase of all of the
outstanding stock of Pego Systems, Inc. (Pego) for a total purchase
price of $2,450,000. The purchase price included $500,000 in cash, $1.5
million in Series C Convertible Preferred Stock and 450,000 shares of
restricted common stock priced at $1 per share. Pego manufactures
industrial processing equipment, especially for air and gas handling.
Pego has been profitable throughout its 27 year history and management
expects it to remain that way. Mr. Mike Caruana, Pego's owner, will
continue as President of Pego in addition to other top management, all
of whom have signed three year employment contracts with the Company.
2. The Company also completed the acquisition of Electronic Components
and Systems, Inc. and Pruzin
Technologies, Inc. (collectively referred to as ECS) on October 29,
1997. Both are Arizona corporations
with headquarters in Nogales, Arizona. ECS is a contract manufacturer
for the high-tech industry
specializing in electromechanical assembly of printed circuit boards,
cable and wire, and other related
electronic components. ECS employs a total workforce of approximately
1,000 people in three factories
located in Arizona and Mexico. In addition ECS has a warehouse
distribution center in Nogales Arizona.
Existing customers include: Intel, General Instruments, and Motorola.
The total purchase price of $11.4
million is payable $250,000 cash, $3,169,000 Series D Preferred Stock,
2.5 million shares of the
Company's restricted common stock valued at $3.09 per share and a
promissory note for $250,000. In
addition, the Company agreed to infuse an additional $2 million into
ECS for working capital purposes.
ECS will operate as a subsidiary of the Company under existing
management.
3. In July 1997 the Company opened escrow for the purchase of a
multi-tenant shopping center in Perris, California for a total purchase
price of $6,750,000. The purchase is contingent on the Company
obtaining financing of $3,750,000 for the project.
Results of Operations
The Company's statement of consolidated income for nine months ended
September 30, 1997 reflects the sale, in the second quarter, of the cosmetic
inventory for $200,000 which produced a gross profit of $38,750 and the sale of
the California Awards business for $33,000 which recognized non operating income
of $15,000. The sale of California Awards included inventory, store fixtures and
equipment. Additional non operating income of $10,880 was recognized during the
second quarter from the renegotiation of outstanding accounts payable and the
resultant cancellation of debt. Interest expense for the second quarter
increased due to finance charges relating to trade dollar payables as well as
interest on the $50,000 of short term debt.
During the third quarter, sales of $45,206 were from the Company's
Hartcourt Pen Factory primarily from mail order sales. Hartcourt Pen's gross
profit on these sales of $26,804 reflected an approximate gross margin of 59%.
The Company is continuing its efforts to find a buyer for the remaining pen
inventory.
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There have been no changes since the Company's last report in Item 3,
"Legal Proceedings" of Form 10- KSB for the fiscal year ended December 31, 1996.
Item 2. CHANGES IN SECURITIES
Not applicable.
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
Exhibits - None.
Reports on Form 8-K - None during the quarter.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
THE HARTCOURT COMPANIES, INC.
Date: November 15, 1997 By:_______________________________
Dr. Alan V. Phan
President
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE STATEMENTS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1997 AND
AS OF SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000949427
<NAME> THE HARTCOURT COMPANIES, INC.
<MULTIPLIER> 1
<CURRENCY> US dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jun-01-1996
<PERIOD-END> Sep-30-1997
<EXCHANGE-RATE> 1
<CASH> 144,790
<SECURITIES> 17,906,520
<RECEIVABLES> 321,499
<ALLOWANCES> 6,571
<INVENTORY> 128,591
<CURRENT-ASSETS> 1,823,616
<PP&E> 31,992
<DEPRECIATION> 0
<TOTAL-ASSETS> 21,160,357
<CURRENT-LIABILITIES> 414,190
<BONDS> 0
0
10
<COMMON> 12,106
<OTHER-SE> 20,157,436
<TOTAL-LIABILITY-AND-EQUITY> 21,160,357
<SALES> 316,706
<TOTAL-REVENUES> 316,706
<CGS> 213,727
<TOTAL-COSTS> 282,197
<OTHER-EXPENSES> 25,136
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,305
<INCOME-PRETAX> (154,082)
<INCOME-TAX> 2,443
<INCOME-CONTINUING> (156,525)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (156,525)
<EPS-PRIMARY> (.013)
<EPS-DILUTED> (.013)
</TABLE>
