<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 April 3, 1998
|_| Transition report under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _________ to
___________
Commission File Number: 000-21415
WHITE PINE SOFTWARE, INC.
(Name of Small Business Issuer as Specified in Its Charter)
Delaware 04-3151064
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
542 Amherst Street, Nashua, New Hampshire 03063
(Address of Principal Executive Offices)
(603) 886-9050
(Issuer's Telephone Number, Including Area Code)
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 the Registrant's common stock as of May 10,
1998 was 9,325,758.
Transitional Small Business Disclosure Format (check one):
Yes |_| No |X|
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements (Unaudited):
Condensed Consolidated Balance Sheets as of April 3, 1998 and
December 31, 1997................................................... 3
Condensed Consolidated Statements of Income and Comprehensive
Income for the three months ended April 3, 1998 and April 4, 1997... 4
Condensed Consolidated Statements of Cash Flows for the three
months ended April 3, 1998 and April 4, 1997........................ 5
Notes to Condensed Consolidated Financial Statements................ 6
Item 2. Management's Discussion and Analysis or Plan of Operation......... 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................. 11
Item 6. Exhibits and Reports on Form 8-K.................................. 12
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
White Pine Software, Inc. and Subsidiary
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
April 3, December 31,
1998 1997
----------- -----------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 13,069 $ 14,704
Accounts receivable, net 1,828 2,403
Inventories 84 98
Prepaid expenses and other current assets 1,180 1,378
----------- -----------
Total current assets 16,161 18,583
Property and equipment, net 1,532 1,514
Third party licenses, net 603 669
Goodwill, net 616 676
Other long-term assets 188 168
----------- -----------
Total assets $ 19,100 $ 21,610
=========== ===========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued expenses $ 1,921 $ 2,550
Deferred revenue 281 246
Current portion of long-term debt 54 55
----------- -----------
Total current liabilities 2,256 2,851
Long-term debt, net of current portion 29 33
Total stockholders' equity 16,815 18,726
----------- -----------
Total liabilities and stockholders' equity $ 19,100 $ 21,610
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
3
<PAGE>
White Pine Software, Inc. and Subsidiary
Condensed Consolidated Statements of Income and Comprehensive Income
(in thousands, except per share and share data)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
April 3, 1998 April 4, 1997
(Unaudited) (Unaudited)
-----------------------------
<S> <C> <C>
Revenue:
Software license fees $ 1,794 $ 2,263
Services and other 211 337
----------- -----------
Total revenue 2,005 2,600
Cost of revenue 412 559
----------- -----------
Gross profit 1,593 2,041
Operating expenses:
Sales and marketing 1,823 2,003
Research and development 1,284 1,661
General and administrative 571 951
----------- -----------
Total operating expenses 3,678 4,615
----------- -----------
Loss from operations (2,085) (2,574)
Other income, net 180 226
----------- -----------
Loss before provision for income taxes (1,905) (2,348)
Other comprehensive income -- 7
----------- -----------
Comprehensive income (1,905) (2,341)
Provision for income taxes 5 --
----------- -----------
Net loss $ (1,910) $ (2,341)
=========== ===========
Net loss per share: Basic $ (0.21) $ (0.26)
=========== ===========
Diluted $ (0.21) $ (0.26)
=========== ===========
Weighted average number of common and common
equivalent shares outstanding 9,306,710 9,057,740
=========== ===========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
4
<PAGE>
White Pine Software, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
--------------------
April 3, April 4,
1998 1997
-------- --------
<S> <C> <C>
Operating activities
Net loss $ (1,910) $ (2,342)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 131 103
Amortization of goodwill and third party licenses 125 168
Provision for bad debts 7 24
Changes in operating assets and liabilities:
Accounts receivable 560 686
Inventories 14 30
Prepaid expenses 234 (152)
Other assets (58) (2)
Accounts payable and accrued expenses (615) (235)
Deferred revenue 38 (211)
-------- --------
Net cash used in operating activities (1,474) (1,931)
Investing activities
Purchase of property and equipment, net (153) (227)
Purchase of third party licenses, net -- (158)
-------- --------
Net cash used in investing activities (153) (385)
Financing activities
Principal payments on long-term debt
(3) (105)
Proceeds from common stock issued at $5.83 par value common
stock, redeemable as $.01 par value common stock 4 --
Proceeds from common stock issued upon exercise of stock options -- 51
-------- --------
Net cash provided by financing activities
1 (54)
Currency translation effect on cash and cash equivalents
(9) (13)
-------- --------
Net decrease in cash and cash equivalents (1,635) (2,383)
Cash and cash equivalents at beginning of period 14,704 23,298
-------- --------
Cash and cash equivalents at end of period $ 13,069 $ 20,915
======== ========
</TABLE>
See Notes to Condensed Consolidated Financial Statements
5
<PAGE>
WHITE PINE SOFTWARE, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
April 3, 1998
1. Accounting Policies
Description of Business
The Company develops, markets and supports multiplatform desktop
multimedia software that facilitates worldwide video and audio communication and
data collaboration across the Internet, intranets and other networks that use
the Internet Protocol ("IP"). The Company's desktop videoconferencing software
products, CU-SeeMe and MeetingPoint, create a client-server solution that allows
users to participate in real-time, multipoint videoconferences over the Internet
and intranets. In November 1997, the Company began commercial shipments of
MeetingPoint, the first multimedia conferencing server software to implement the
ITU H.323 standard for conferencing over packet networks. MeetingPoint enables
any standards-based client to participate in full multipoint group conferences.
Further building upon the core CU-SeeMe and MeetingPoint technologies, the
Company developed ClassPoint, an integrated vertical solution for distance
learning and distance training, which began shipping commercially in April 1998.
The Company also offers desktop X Windows and terminal emulation software. The
Company's customers include businesses, educational institutions, government
organizations and individual consumers. The Company markets and sells its
products in the United States, Canada, Europe, and the Pacific Rim through
distributors, a combination of strategic partners and OEMs, and its direct sales
organization, as well as over the Internet. The Company was incorporated in
April 1992.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly owned foreign subsidiary, White Pine Software, Europe. All
significant intercompany accounts and transactions have been eliminated in
consolidation.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash on hand and investments in high
grade commercial paper having maturities of three months or less when purchased.
Commercial paper qualifying as cash equivalents totaled $12,078,000 and
$13,440,000 at April 3, 1998 and December 31, 1997, respectively. These
investments have been categorized as held to maturity under the provisions of
Statement of Financial Accounting Standards No. 115, Accounting for Certain
Investments in Debt and Equity Securities. Accordingly, the balances are stated
at amortized cost, which approximates fair value, because of the short maturity
of these instruments.
Revenue Recognition
The Company's revenue is derived from software license fees and fees for
services related to its software products, primarily software maintenance fees.
The Company recognizes revenue in accordance with the provisions of AICPA
Statement of Position No. 97-2, Software Revenue Recognition.
Software license revenue is recognized upon receipt of a firm customer
order and shipment of the software, net of allowances for estimated future
returns, provided that no significant obligations remain on the part of the
Company and collection of the related receivable is deemed probable. Revenue
under certain license agreements is recognized upon execution of a signed
contract and fulfillment of the contractual obligations, provided that no
significant obligations remain on the part of the Company and collection is
deemed probable.
6
<PAGE>
Software maintenance fees, which are generally payable in advance and are
non-refundable, are recognized ratably over the period of the maintenance
contract, typically twelve months. Revenue from training and consulting services
is recognized as services are provided.
Software license fees, consulting fees, and training fees that have been
prepaid or invoiced but that do not yet qualify for recognition as revenue under
the Company's policy, and prepaid maintenance fees not yet recognized as
revenue, are reflected as deferred revenue.
Loss per Share
In 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128"). SFAS
128 replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very similar to the
previously reported fully diluted earnings per share. Pursuant to the previous
requirements of the Securities and Exchange Commission (the "SEC"), common
shares and common share equivalents issued by the Company during the
twelve-month period prior to the initial public offering of the Company's common
stock had been included in the calculations as if they were outstanding for all
periods prior to the offering in August 1996 whether or not they were
anti-dilutive. In February 1998, the SEC issued Staff Accounting Bulletin 98
which, among other things, conformed prior SEC requirements to SFAS 128 and
eliminated inclusion of such shares in the computation of earnings per share.
All earnings per share amounts for all periods have been presented, and where
appropriate, restated to conform to SFAS 128 and SEC requirements.
Basic net loss per common share is computed using the weighted average
number of shares of common stock outstanding during the period. Diluted net loss
is computed using the weighted average number of shares of common stock and
dilutive common equivalent shares outstanding during the period. Common
equivalent shares consist of the incremental common shares issuable upon the
exercise of stock options and warrants using the treasury stock method.
Item 2. Management's Discussion and Analysis or Plan of Operation
THIS FORM 10-QSB CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING
OF SECTION 27A OF THE SECURITIES ACT OF 1933 AND SECTION 21E OF THE SECURITIES
EXCHANGE ACT OF 1934. ANY STATEMENTS CONTAINED HEREIN THAT ARE NOT STATEMENTS OF
HISTORICAL FACT MAY BE DEEMED TO BE FORWARD-LOOKING STATEMENTS. WITHOUT LIMITING
THE FOREGOING, THE WORDS "BELIEVES," "ANTICIPATES," "PLANS," "EXPECTS" AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THE
FORWARD-LOOKING STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND
OTHER FACTORS THAT MAY CAUSE THE ACTUAL RESULTS, PERFORMANCE AND ACHIEVEMENTS OF
WHITE PINE SOFTWARE, INC. TO DIFFER MATERIALLY FROM THOSE INDICATED BY THE
FORWARD-LOOKING STATEMENTS. CERTAIN OF THESE FACTORS ARE DESCRIBED UNDER "ITEM
1A. Risk Factors" IN THE COMPANY'S FORM 10-KSB, FILED WITH THE COMMISSION
DECEMBER 31, 1997, A COPY OF WHICH IS INCLUDED AS AN EXHIBIT TO THIS FORM 10-QSB
AND IS INCORPORATED HEREIN BY REFERENCE.
Overview
The Company develops, markets and supports multi-platform desktop
multimedia software that facilitates worldwide video and audio communication and
data collaboration across the Internet, intranets and other networks using IP.
The Company's desktop videoconferencing software products, CU-SeeMe and
MeetingPoint, create a client-server solution that allows users to participate
in real-time, multipoint videoconferences over the Internet and intranets. In
November 1997, the Company began commercial shipments of MeetingPoint, the first
multimedia conferencing server software to implement the ITU H.323 standard for
conferencing over packet networks. MeetingPoint enables any standards-based
client to participate in full multipoint group conferences. Further building
upon the core CU-SeeMe and MeetingPoint technologies, the Company developed
ClassPoint, an integrated vertical
7
<PAGE>
solution for distance learning and distance training, which began shipping
commercially in April 1998. The Company also offers desktop X Windows and
terminal emulation software.
In June 1995, as a part of its continuing plan to focus on software
connectivity products, the Company entered into the License Agreement with the
Cornell Research Foundation, Inc. (the "Cornell Foundation"), which granted to
the Company the exclusive worldwide right to develop, modify, market, distribute
and sublicense commercial versions of Freeware CU-SeeMe and its related
software-only multipoint conferencing server. The Company commenced shipments of
the initial commercial versions of CU-SeeMe and the White Pine Reflector (the
predecessor of MeetingPoint) in March 1996 and May 1996, respectively. The
Company anticipates that its revenue growth, if any, will depend on increased
sales of MeetingPoint and other multimedia server solutions, such as ClassPoint.
Accordingly, the Company intends to continue to devote a substantial portion of
its research and development and sales and marketing resources to technologies
related to group conferencing.
On May 22, 1997, the Company renegotiated the terms of its License
Agreement with the Cornell Foundation. The principal changes to the agreement
were a $1,000,000 prepayment of royalties by the Company to the Cornell
Foundation and a decrease in the revenue-based royalties. The renegotiated terms
were retroactive to January 1, 1997. The Company is still subject to minimum
royalty payments.
Effective January 1, 1997, the Company changed its interim fiscal
reporting periods from calendar quarters to quarters consisting of thirteen
weeks.
The Company's revenue is derived from software license fees and fees for
services related to its software products, primarily software maintenance fees.
During fiscal 1997, the Company recognized revenue in accordance with the
American Institute of Certified Public Accountants Statement of Position No.
91-1, "Software Revenue Recognition." For fiscal year 1998, the Company is
recognizing revenue in accordance with AICPA Statement of Position 97-2,
"Software Revenue Recognition." Software license revenue is recognized upon
execution of a contract or purchase order and shipment of the software, net of
allowances for estimated future returns, provided that no significant
obligations on the part of the Company remain outstanding and collection of the
related receivable is deemed probable by management. An allowance for product
returns is recorded by the Company at the time of sale and is measured
periodically to adjust to changing circumstances, including changes in retail
sales. Software maintenance fees, which are generally payable in advance and are
non-refundable, are recognized ratably over the period of the maintenance
contract, typically twelve months. Revenue from training and consulting services
is recognized as services are provided. Software license fees, consulting fees
and training fees that have been prepaid or invoiced but that do not yet qualify
for recognition as revenue under the Company's policy, and prepaid maintenance
fees not yet recognized as revenue, are reflected as deferred revenue.
Results of Operations. The following table sets forth line items from the
Company's statement of operations as percentages of total revenue for the three
months ended April 3, 1998 and April 4, 1997.
8
<PAGE>
<TABLE>
<CAPTION>
Three months ended
April 3, April 4,
1998 1997
----------------------------
<S> <C> <C>
Revenue:
Software license fees 89.5% 87.0%
Services and other 10.5 13.0
----------------------------
Total revenue 100.0 100.0
Cost of revenue 20.6 21.5
----------------------------
Gross profit 79.4 78.5
Operating expenses:
Sales and marketing 90.9 77.0
Research and development 64.0 63.9
General and administrative 28.5 36.6
----------------------------
Total operating expenses 183.4 177.5
Loss from operations (104.0) (99.0)
Interest income and other, net 9.0 9.0
Provision for income taxes 0.3 --
----------------------------
Net loss (95.3)% (90.0)%
======= ======
</TABLE>
Revenue. Total revenue decreased by 23% to $2,005,000 in the quarter ended April
3, 1998 from $2,600,000 in the quarter ended April 4, 1997. The decrease in
revenue was attributed to lower videoconferencing revenues and the continued
decline of the Company's connectivity revenue streams. These shortfalls occurred
primarily in the international sectors.Revenue from sales outside the United
States comprised 29% and 30% of total revenue for the quarters ended April 3,
1998 and April 4, 1997, respectively.
Cost of Revenue. Cost of revenue consists principally of royalties and
associated amortization of paid license fees relating to third-party software
included in the Company's products, and costs of product media, manuals,
packaging materials, product localization for international markets, duplication
and shipping.
Cost of revenue as a percentage of total revenue decreased to 21% for the
quarter ended April 3, 1998 from 22% for the quarter ended April 4, 1997. The
percentage decrease resulted primarily from reduced royalty payments under the
revised License Agreement with the Cornell Foundation, offset in part by the
fixed portion of cost of sales which represented a larger percentage of revenue
in the most recent quarter.
Sales and Marketing. Sales and marketing expense consists primarily of costs
associated with sales and marketing personnel, sales commissions, trade shows,
advertising and promotional materials. Sales and marketing expense decreased by
9% to $1,823,000 in the quarter ended April 3, 1998 as compared to the
respective period in the prior year. This decrease was attributable to lower
advertising expense in the quarter ended April 3, 1998. Sales and marketing
expense for the quarter decreased by 11% from the prior quarter primarily as a
result of reduced advertising and trade show activity in the quarter ending
April 3, 1998. Sales and marketing expense increased as a percentage
9
<PAGE>
of total revenue to 91% in the quarter ended April 3, 1998 from 69% in the
quarter ended April 4, 1997. This increase was due to the shortfall in revenue
in the most recent quarter ended April 3, 1998.
Research and Development. Research and development expense consists primarily of
costs of personnel and equipment. Research and development expense decreased by
23% to $1,284,000 in the quarter ended April 3, 1998 from $1,661,000 in the
quarter ended April 4, 1997. The decrease was principally attributable to
reduced headcount and consulting fees in comparison with the same period in the
prior year. Research and development expense for the quarter increased by 9%
from the prior quarter. This increase was substantially due to increased
headcount over the quarter ended December 31, 1997. Total research and
development expense represented 64% and 40% of total revenue for the quarters
ended April 3, 1998 and April 4, 1997, respectively.
General and Administrative. General and administrative expense consists of
administrative, financial and general management activities, including legal,
accounting and other professional fees. General and administrative expense
decreased by 40% over the same quarter prior year to $571,000 in the three
months ended April 4, 1997. The decrease was due primarily to reduced salary
expense and legal and audit fees in the quarter ended April 3, 1998. General and
administrative expense decreased as a percentage of total revenue to 28% in the
quarter ended April 3, 1998 from 37% in the same quarter in the prior year.
Provision for Income Taxes. The Company's provision for income taxes consists of
federal alternative minimum taxes and state and foreign income taxes. The
Company expects that its effective tax rate for the foreseeable future will be
lower than the combined federal and state statutory rate primarily as a result
of the realization of net operating loss carryforwards.
10
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is a defendant in six lawsuits pending in New York federal and
state courts (the "RSI Suits") in which the plaintiffs claim to suffer from
carpal tunnel syndrome, or "repetitive stress injuries," as a result of having
used computer keyboards (the "Keyboards") that are alleged to have been
defectively designed. The Keyboards were supplied, and possibly designed and
manufactured, by Ontel Corporation. The assets of Ontel Corporation were
purchased in 1982 by Visual Technology, Inc. ("Visual"), a predecessor of Visual
T.I., Inc. ("VTI"), which in turn is a predecessor of the Company. See "Item 1.
Description of Business Overview." The RSI Suits, which seek money damages, were
brought from February 1992 to June 1996 by employees of New York Telephone,
which purchased the Keyboards from Lockheed Electronics Corporation. One or more
of Visual, Ontel Corporation, Lockheed Electronic Corporation and Key Tronics
Corporation, a subcontractor for certain of the Keyboards, are named as
co-defendants in certain of the RSI Suits. New York Telephone employees are also
proceeding with 29 suits that name as defendants only Visual and/or Ontel
Corporation. The Company could be named as a defendant in these cases. None of
the RSI Suits has reached trial and additional information detrimental to the
Company could be developed in the course of discovery.
In May 1993, VTI's product liability coverage terminated. Certain of the
RSI Suits appear to be based on claims that allegedly arose after May 1993, and
therefore may be uninsured. The insurers for VTI, the Company and others (the
"Insurers") are defending the RSI Suits under a reservation of rights. To date,
the Company's proportionate share of the defense costs of the RSI Suits has not
been material. There can be no assurance, however, that the Company will not
incur material legal expenses defending the RSI Suits. The Company has a reserve
of approximately $291,000 in connection with the RSI Suits, based upon the
Company's belief that (i) certain of the RSI Suits are covered by product
liability insurance, (ii) the Company is contractually indemnified by Lockheed
Electronics Corporation and/or Key Tronics Corporation against all or a portion
of the damages to which the Company may be subject and (iii) the Company has
defenses to substantially all of the claims under the RSI Suits. Although the
Company believes that its reserve for the RSI Suits is adequate, there can be no
assurance that the Company's liabilities under the RSI Suits will not
substantially exceed that reserve.
New York Telephone and others may continue to use certain of the Keyboards
and, accordingly, there can be no assurance that additional product liability
claims will not be asserted against the Company in the future.
From time to time, the Company has received and may receive in the future
notice of claims of infringement of other parties' proprietary rights. Although
the Company believes that its products and technology do not infringe the
proprietary rights of others, there can be no assurance that additional third
parties will not assert infringement and other claims against the Company or
that any infringement claims will not be successful.
From time to time, the Company may be exposed to litigation arising out of
its products, services and operations. As of the date of filing this Form
10-QSB, the Company is not engaged in any legal proceedings of a material
nature, other than the RSI Suits.
11
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit Description
11.1 Statement re computation of per share earnings
27.1 Financial Data Schedule for fiscal quarter ended April 3,
1998
99.1 Disclosure set forth under "Item 1A. Risk Factors" in the
Registrant's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1997 (incorporated by reference
from pages 15 to 25 of such Annual Report).
(b) Reports on Form 8-K
None.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, as of May 15, 1998.
WHITE PINE SOFTWARE, INC.
By: /s/ KILLKO A. CABALLERO
-----------------------------
Killko A. Caballero
President
By: /s/ CHRISTINE J. COX
-----------------------------
Christine J. Cox
Vice President - Finance and
Principal Financial and
Accounting Officer
13
<PAGE>
Exhibit 11.1
<TABLE>
<CAPTION>
Three Months Ended
April 3, 1998 April 4, 1997
------------- -------------
<S> <C> <C>
Weighted average shares outstanding 9,306,710 9,057,740
Effect of common and common equivalent shares
issued by the Company during the twelve month
period immediately preceding the Company's
registration for initial public offering on
August 2, 1996 -- --
----------- -----------
Total shares 9,306,710 9,057,740
----------- -----------
Net loss $(1,910,238) $(2,341,691)
Net loss per share Basic $ (0.21) $ (0.26)
Diluted $ (0.21) $ (0.26)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0001006591
<NAME> WHITE PINE SOFTWARE, INC.
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> APR-03-1998
<EXCHANGE-RATE> 1
<CASH> 13,068,409
<SECURITIES> 0
<RECEIVABLES> 1,957,733
<ALLOWANCES> 129,431
<INVENTORY> 83,809
<CURRENT-ASSETS> 1,180,222
<PP&E> 3,978,341
<DEPRECIATION> 2,446,602
<TOTAL-ASSETS> 19,100,206
<CURRENT-LIABILITIES> 2,255,727
<BONDS> 0
0
0
<COMMON> 93,090
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 19,100,206
<SALES> 0
<TOTAL-REVENUES> 2,005,479
<CGS> 0
<TOTAL-COSTS> 412,812
<OTHER-EXPENSES> 3,677,786
<LOSS-PROVISION> 6,648
<INTEREST-EXPENSE> 654
<INCOME-PRETAX> (1,904,932)
<INCOME-TAX> 5,306
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,910,238)
<EPS-PRIMARY> (0.21)
<EPS-DILUTED> (0.21)
</TABLE>
