<PAGE>
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 1997
COMMISSION FILE NUMBER 0-27830
-----------
LYCOS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3277338
(State or other jurisdiction (IRS Employer
of incorporation Identification No.)
or organization)
500 OLD CONNECTICUT PATH, FRAMINGHAM, MASSACHUSETTS 01701-4576
(Address of principal executive offices, including Zip Code)
(508)-424-0400
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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.
[X] Yes [ ] No
The number of shares outstanding of the registrant's Common Stock as of
March 14, 1997 was 13,792,896.
================================================================================
<PAGE>
LYCOS, INC.
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheets (unaudited)
January 31, 1997 and July 31, 1996................................3
Consolidated Statements of Operations (unaudited)
Three and six months ended January 31, 1997 and 1996..............4
Consolidated Statements of Cash Flows (unaudited)
Six months ended January 31, 1997 and 1996........................5
Notes to Consolidated Financial Statements (unaudited)...............7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................9
PART II. OTHER INFORMATION
Item 1 Legal Proceedings...................................................12
Item 2 Changes in Securities...............................................12
Item 3 Defaults Upon Senior Securities.....................................12
Item 4 Submission of Matters to a Vote of Securities Holders...............12
Item 5 Other Information...................................................12
Item 6 Exhibits and Reports on Form 8-K....................................12
SIGNATURE...........................................................13
2
<PAGE>
LYCOS, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JANUARY 31, JULY 31,
1997 1996
------------------- ------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 38,466,905 $ 44,142,187
Accounts receivable, less allowance for doubtful accounts of $329,000 at
January 31, 1997 and $200,000 at July 31, 1996 3,005,269 3,293,925
License fees receivable 4,766,476 1,032,405
Prepaid expenses 1,425,332 981,711
------------------- ------------------
Total currrent assets 47,663,982 49,450,228
------------------- ------------------
Property and equipment, less accumulated depreciation 1,816,187 1,405,768
Long-term license fees receivable 2,786,935 951,816
License agreement, net 1,318,555 1,513,466
Goodwill, net 162,351 171,682
Other assets 5,954 167,615
------------------- ------------------
Total assets $ 53,753,964 $ 53,660,575
=================== ==================
LIABILITIES AND STOCKHOLDERS'EQUITY
Current liabilities:
Accounts payable $ 553,862 $ 2,741,879
Accrued expenses 4,640,563 1,746,418
Deferred revenues 5,282,983 3,148,422
Billings in excess of revenues 1,178,171 1,402,432
Due to related parties 209,278 437,267
------------------- -------------------
Total current liabilities 11,864,857 9,476,418
------------------- -------------------
Long-term deferred revenue 2,400,000 -
Deferred taxes 66,667 78,000
Stockholders' equity:
Common stock, $.01 par value 137,929 137,929
Additional paid-in capital 49,537,608 49,537,608
Deferred compensation (288,821) (376,161)
Accumulated deficit (9,964,276) (5,193,219)
------------------- -------------------
Total stockholders' equity 39,422,440 44,106,157
------------------- -------------------
Commitments
Total liabilities and stockholders' equity $ 53,753,964 $ 53,660,575
=================== ===================
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
LYCOS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, JANUARY 31,
1997 1996 1997 1996
------------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Revenues:
Advertising $ 4,010,467 $ 749,006 $ 7,112,594 $ 939,047
License and product 993,741 77,416 1,554,600 102,416
------------------- -------------------- -------------------- -------------------
Total revenues 5,004,208 826,422 8,667,194 1,041,463
Cost of revenues 2,339,681 483,136 4,427,865 667,082
------------------- -------------------- -------------------- -------------------
Gross profit 2,664,527 343,286 4,239,329 374,381
Operating expenses:
Research and development 976,353 257,573 1,943,541 288,064
In process research and development - 452,000 - 452,000
Sales and marketing 3,504,290 308,425 6,872,501 439,943
General and administrative 736,556 344,806 1,317,278 497,786
------------------- -------------------- -------------------- -------------------
Total operating expenses 5,217,199 1,362,804 10,133,320 1,677,793
------------------- -------------------- -------------------- -------------------
Operating loss (2,552,672) (1,019,518) (5,893,991) (1,303,412)
Interest income, net 540,608 5,565 1,122,934 9,946
------------------- -------------------- -------------------- -------------------
Net loss $ (2,012,064) $ (1,013,953) $ (4,771,057) $ ( 1,293,466)
=================== ==================== ==================== ===================
Net loss per share $ (0.15) $ (0.09) $ (0.35) $ (0.12)
=================== ==================== ==================== ===================
Shares used in computing net loss
per share 13,792,896 11,012,764 13,792,896 11,012,764
=================== ==================== ==================== ===================
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
LYCOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31,
1997 1996
--------------------- ----------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (4,771,057) $ (1,293,466)
Adjustments to reconcile net loss to net cash used in operating
activities:
Amortization of deferred compensation 87,340 78,900
Depreciation and amortization 563,181 153,779
Provision for bad debts 180,000 40,000
In process research and development expense - 452,000
Changes in operating assets and liabilities:
Accounts receivable 108,656 (704,140)
License fees receivable (5,569,190) (1,203,034)
Prepaid expenses (443,621) (75,544)
Other assets 161,661 -
Accounts payable (2,188,017) 240,602
Accrued expenses 2,894,145 260,807
Deferred revenues 4,534,561 1,126,447
Billings in excess of revenues (224,261) 284,034
Due to related parties (227,989) 354,085
Deferred taxes (11,333) -
--------------------- ----------------------
Net cash used in operating activities (4,905,924) (285,530)
INVESTING ACTIVITIES
Purchase of property and equipment (769,358) (607,980)
Payments under License Agreement - (471,421)
Cash acquired through acquisition of Point Communications - 17,137
--------------------- ----------------------
Net cash used in investing activities (769,358) (1,062,264)
FINANCING ACTIVITIES
Proceeds from capital contribution - 1,000,000
--------------------- ----------------------
Net cash provided by financing activities - 1,000,000
--------------------- ----------------------
Decrease in cash and cash equivalents (5,675,282) (347,794)
Cash and cash equivalents at beginning of period 44,142,187 446,447
--------------------- ----------------------
Cash and cash equivalents at end of period $ 38,466,905 $ 98,653
===================== ======================
</TABLE>
5
<PAGE>
LYCOS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS-(CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JANUARY 31,
1997 1996
-------------------- -------------------
<S> <C> <C>
Schedule of non-cash financing and investing activities:
Issuance of common stock for License Agreement -- $ 300,000
Recognition of deferred tax liability related to License Agreement -- 50,000
Assets and liabilities recognized upon acquisition of Point Communications:
Accounts receivable -- 33,975
Property and equipment -- 47,496
Goodwill -- 186,633
Accounts payable -- 97,734
Deferred revenues -- 23,137
Accrued expenses -- 4,370
Due to related parties -- 70,000
</TABLE>
See accompanying notes to consolidated financial statements
6
<PAGE>
LYCOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. THE COMPANY AND BASIS OF PRESENTATION
Lycos, Inc. ("the Company") provides among the most widely used online
navigational guides to the Internet's World Wide Web. The Company was
formed in June 1995 by CMG@Ventures, L.P., a wholly-owned subsidiary of CMG
Information Services. The Company operates in one industry segment, selling
advertising on its Web sites and licensing its technology and products to
customers in various industries worldwide. The Company's fiscal year end is
July 31.
The accompanying unaudited consolidated financial statements include the
accounts of the Company and Point Communications Corporation, its wholly-
owned subsidiary, and have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions for Form 10-Q and Article 10 of Regulation S-X. In the
opinion of management, these financial statements contain all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of the results of these interim periods. Certain information
and related footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have
been condensed or omitted, although the Company believes the disclosures in
these financial statements are adequate to make the information presented
not misleading. These financial statements should be read in conjunction
with the Company's audited financial statements for the year ended July 31,
1996, included in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The results of operations for the
interim periods shown are not necessarily indicative of the results for any
future interim period or for the entire fiscal year.
2. CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with original
or remaining maturities of three months or less to be cash equivalents, and
those with maturities of greater than three months but less than twelve
months to be short-term investments. At January 31, 1997, the Company had
no investments with maturities greater than three months.
3. COMMITMENTS
In April 1996, the Company entered into a one year "Premier Provider"
agreement ("the Agreement") with Netscape Communications Corporation
("Netscape") pursuant to which the Company was designated one of five
"Premier Providers" of search and navigation services accessible from the
"Net Search" button on the Netscape browser. Under the terms of the
Agreement, the Company is obligated to make installment payments totaling
$5 million over the term of the Agreement. At January 31, 1997, the Company
had no remaining financial obligation under the terms of the Agreement. The
cost of the Agreement is recognized ratably over its term and therefore,
$1,250,000 relating to the Agreement is included in "Cost of revenues" in
the accompanying Consolidated Statements of Operations for the three months
ended January 31, 1997.
7
<PAGE>
LYCOS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(CONTINUED)
(UNAUDITED)
3. COMMITMENTS (CONTINUED)
The Company leases its facilities and certain other equipment under
operating agreements expiring through 2001. Future noncancelable minimum
payments as of January 31, 1997 under these leases for each fiscal year end
are as follows:
<TABLE>
<S> <C>
1997 $ 951,507
1998 1,874,643
1999 1,641,703
2000 623,480
2001 179,875
Thereafter 49,379
------------------
$ 5,320,587
==================
</TABLE>
The Company is subject to legal proceedings and claims which arise in the
ordinary course of business. In the opinion of management, the ultimate
liability with respect to these actions will not materially affect the
financial position of the Company.
4. NET LOSS PER SHARE
Net loss per share is computed using the weighted average number of shares
of common stock and dilutive common stock equivalent shares outstanding
during the period. Pursuant to the Securities and Exchange Commission Staff
Accounting Bulletins, for periods prior to the Company's initial public
offering such computations include those common and common equivalent shares
issued within 12 months of the filing date as if they were outstanding for
all periods presented using the treasury stock method. Common equivalent
shares consist of shares issuable upon the exercise of stock options. Fully
diluted net loss per share approximates primary net loss per share.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The matters discussed in this report contain forward-looking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include, but are not limited to, those discussed in this
section and elsewhere in this Report, and the risks discussed in the "Factors
Affecting the Company's Business, Operating Results and Financial Condition"
section included in the Company's 1996 Annual Report on Form 10-K filed with the
Securities and Exchange Commission.
RESULTS OF OPERATIONS
REVENUES Total revenues for the three and six months ended January 31, 1997
were $5.0 million and $8.7 million versus $826,000 and $1.0 million for the
three and six months ended January 31, 1996, representing an increase of 506%
and 732%, respectively. As of January 31, 1997, the Company had deferred
revenues of $7.7 million attributable to license agreements for which there are
significant obligations of the Company remaining, and billings in excess of
revenues of $1.2 million, attributable to billings in excess of revenues on
advertising contracts.
ADVERTISING REVENUES Advertising revenues were $4.0 million and $7.1 million
for the three and six months ended January 31, 1997, representing 80% and 82% of
total revenues as compared to advertising revenues of $749,000 and $939,000 for
the three and six months ended January 31, 1996, which represented 91% and 90%
of total revenues, respectively. Ten customers accounted for 35% of advertising
revenues in the quarter ended January 31, 1997 as compared with ten customers
which accounted for 69% of advertising revenues in the quarter ended January 31,
1996.
The Company's advertising revenues are derived principally from the sale of
advertising on its Internet web sites. Advertising contracts vary in duration
from several days to five years. Advertising contracts are principally sold as
either: (1) a "general rotation" contract under which a customer is guaranteed a
minimum number of impressions; (2) a "key word" contract in which a customer
purchases the right to specified words and the customer's advertisement is shown
as those words are "searched"; or (3) a combination of general rotation and key
word contracts.
LICENSE AND PRODUCT REVENUES License and product revenues were $994,000 and
$1.6 million for the three and six months ended January 31, 1997, representing
20% and 18% of total revenues as compared to $77,000 and $102,000 for the three
and six months ended January 31, 1996, representing 9% and 10% of total
revenues, respectively. This increase is attributable primarily to the addition
of new licensees, including, among others, GTE, Blockbuster, AT&T, Bertelsmann's
Telemedia GmbH, Compuserve, Simon & Schuster, and Swedish Post.
The Company licenses its products and technology generally in exchange for a
license fee, maintenance fees for product updates and, where applicable, a share
of the advertising revenues, subscription fees or product sales received by
licensees. The Company's license agreements generally have terms of one to three
years.
COST OF REVENUES Cost of revenues were $2.3 million and $4.4 million for the
three and six months ended January 31, 1997, representing 47% and 51% of total
revenues, as compared to $483,000 and $667,000 in the three and six months ended
January 31, 1996, which represented 58% and 64% of total revenues, respectively.
Cost of revenues consist primarily of expenses associated with the ongoing
enhancement, maintenance and support of the Company's products and services,
including compensation, consulting fees, equipment, networking and other related
indirect costs. Cost of revenues also includes amortization costs associated
with the Company's License Agreement with Carnegie Mellon University, as well as
costs associated with the Company's "Premier Provider" agreement, as further
described below.
9
<PAGE>
In April 1996, the Company entered into a one year "Premier Provider"
agreement ("the Agreement") with Netscape Communications Corporation
("Netscape") pursuant to which the Company was designated one of five "Premier
Providers" of search and navigation services accessible from the "Net Search"
button on the Netscape browser. Under the terms of the Agreement, the Company is
obligated to make installment payments totaling $5 million over the term of the
Agreement. The Company recognizes the cost of this agreement ratably over the
term of the agreement. For the three months ended January 31, 1997, cost of
revenues includes $1,250,000 attributable to the Agreement. While the Company is
considering the possibility of renewing the Agreement when it expires in April
1997 there can be no assurance the contract will be renewed on commercially
reasonable terms, if at all.
OPERATING EXPENSES
RESEARCH AND DEVELOPMENT Research and development expenses were $976,000 and
$1.9 million for the three and six months ended January 31, 1997, representing
20% and 22% of total revenues, versus $710,000 and $740,000 for the three and
six months ended January 31, 1996, or 86% and 71% of total revenues,
respectively. Research and development expenses consist primarily of equipment
depreciation, personnel costs and editorial costs. The overall increase in
research and development spending was primarily due to increased staffing
required to continue to develop and enhance the Company's product lines. The
Company expects to continue to commit substantial resources to research and
development in the future.
SALES AND MARKETING Sales and marketing expenses were $3.5 million
and $6.9 million for the three and six months ended January 31, 1997,
representing 70% and 79% of total revenues, versus $308,000 and $440,000 for the
three and six months ended January 31, 1996, representing 37% and 42% of total
revenues, respectively. The spending increases were due to the addition of sales
and marketing personnel and expenses associated with the Company's expanded
advertising, marketing and public relations campaigns. The Company expects to
continue to build its sales force and promote its brand resulting in continued
increases in sales and marketing expenses in future periods.
GENERAL AND ADMINISTRATIVE General and administrative expenses were
approximately $737,000 and $1.3 million for the three and six months ended
January 31, 1997, representing 15% and 15% of total revenues versus $345,000 and
$498,000 for the three and six months ended January 31, 1996, representing 42%
and 48% of total revenues, respectively. The increases in spending were
primarily due to the expansion of the Company's corporate infrastructure,
including the addition of finance and administrative personnel and increased
costs for professional services.
INTEREST INCOME, NET Interest income, net, was approximately $541,000
and $1.1 million for the three and six months ended January 31, 1997 versus
$6,000 and $10,000 for the three and six months ended January 31, 1996,
respectively. The increase is due primarily to the investment of proceeds
received upon the closing of the Company's initial public offering in April
1996.
OTHER FACTORS WHICH MAY AFFECT FUTURE OPERATIONS There are a number
of business factors which singularly or combined may affect the Company's future
operating results. These factors include the limited operating history of the
Company, dependence on major customers, dependence on advertising revenues,
dependence on third party relationships, dependence on the Internet, rapid
technological change, competition and variability of quarterly results, which
have been outlined in the Company's 1996 Annual Report on Form 10-K, filed with
the Securities and Exchange Commission.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 1997, the Company had cash and cash equivalents of $38.5
million. The Company regularly invests excess funds in short-term money market
funds, government securities, and commercial paper. At January 31, 1997, the
Company also has available a bank revolving credit facility providing for
borrowings up to $1.0 million which matures on June 1, 1997. As of January 31,
1997, there were no borrowings outstanding under this credit facility.
The Company used cash from operations of $2.7 million in the three months
ended January 31, 1997, due primarily to the net loss, as well as the decrease
in accounts payable, primarily attributable to the payment under the Netscape
Agreement. The Company's primary investing activity in the three month period
has been, and further expenditures are anticipated to be, for the purchase of
computer and office equipment to support the Company's growth.
From time to time the Company expects to evaluate the acquisition of products,
businesses and technologies that complement the Company's business. Currently,
however, the Company does not have any understandings, commitments or agreements
with respect to any such material acquisitions.
The Company believes that its existing cash and cash equivalents, together
with borrowings available under the Company's credit facility, will be
sufficient to meet the Company's cash requirements for at least the next twelve
months. Thereafter, the Company may need to raise additional funds. The Company
may need to raise additional funds sooner in order to fund more rapid expansion,
to develop new or enhanced products and services, to respond to competitive
pressures or to acquire complementary businesses or technologies. If additional
funds are raised through the issuance of equity securities, the percentage
ownership of the stockholders of the Company will be reduced, stockholders may
experience additional dilution, and such equity securities may have rights,
preferences or privileges senior to those of the Company's Common Stock. There
can be no assurance that additional financing will be available when needed on
terms favorable to the Company or at all. If adequate funds are not available or
are not available on acceptable terms, the Company may be unable to develop or
enhance products and services, take advantage of future opportunities or respond
to competitive pressures, which could have a material adverse effect on the
Company's business, results of operations or financial condition.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not currently involved in any legal proceedings that
it believes could have, either individually or in the aggregate, a
material adverse effect on its business or financial condition.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Securities Holders
(a) At the Annual Meeting of Stockholders held on December 18, 1996,
the Company's nominee for a director to serve until the 1999
Annual Meeting of Stockholders was elected, and the stockholders
approved the selection of KPMG Peat Marwick LLP as the
independent certified public accountants of the Company for the
fiscal year 1997.
With respect to the election of the director, the voting was as
follows:
Nominee For Withheld
--------- ----- ----------
Robert J. Davis 13,375,332 21,490
With respect to the approval of the selection of KPMG Peat
Marwick LLP, the voting was as follows:
For Against Abstain
----- --------- ---------
13,384,582 7,260 4,980
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11: Statement of Computation of Net Loss Per Share
included herein on page 14.
(b) No reports on Form 8-K were filed during the three-month period
ended January 31, 1997.
12
<PAGE>
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.
LYCOS, INC.
Date: March 14, 1997 By:
-----------------------------
Edward M. Philip
Chief Operating Officer and
Chief Financial Officer
(Principal Financial and
Accounting Officer,
Authorized Officer)
13
<PAGE>
EXHIBIT 11
LYCOS, INC.
COMPUTATION OF NET LOSS PER SHARE (1)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JANUARY 31, JANUARY 31,
1997 1996 1997 1996
----------------- -------------------- -------------------- -------------------
<S> <C> <C> <C> <C>
Common stock, beginning of period 13,792,896 10,526,316 13,792,896 10,000,000
Weighted average common shares issued
during the period 91,533
Shares relating to SAB No. 83(2) 553,174 987,957
Treasury stock buyback (2) (66,726) (66,726)
----------------- -------------------- -------------------- -------------------
13,792,896 11,012,764 13,792,896 11,012,764
================= ==================== ==================== ===================
Net loss $ (2,012,064) $ (1,013,953) $ (4,771,057) $ (1,293,466)
Primary net loss per share $ (0.15) $ (0.09) $ (0.35) $ (0.12)
================= ==================== ==================== ===================
</TABLE>
(1) Fully diluted net loss per share has not been separately presented,
as the amounts would not be materially different from
primary net loss per share.
(2) In accordance with Securities and Exchange Commission Staff Accounting
Bulletin No. 83 ("SAB No. 83"), issuances of Common Stock equivalents
(common stock and stock options) during the twelve months immediately
preceeding the initial filing of the registration statement relating to
the Company's initial public offering have been included in the
calculation of weighted average shares, using the treasury stock method
and the initial public offering price, as if these shares were outstanding
for all periods prior to the initial public offering.
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> JUL-31-1997 JUL-31-1996
<PERIOD-START> AUG-01-1996 AUG-01-1995
<PERIOD-END> JAN-31-1997 JAN-31-1996
<CASH> 38,466,905 44,142,187
<SECURITIES> 0 0
<RECEIVABLES> 3,334,269 3,493,925
<ALLOWANCES> 329,000 200,000
<INVENTORY> 0 0
<CURRENT-ASSETS> 47,663,982 49,450,228
<PP&E> 2,480,464 1,711,105
<DEPRECIATION> 664,277 305,337
<TOTAL-ASSETS> 53,753,964 53,660,575
<CURRENT-LIABILITIES> 11,864,857 9,476,418
<BONDS> 0 0
0 0
0 0
<COMMON> 137,929 137,929
<OTHER-SE> 39,422,440 43,968,228
<TOTAL-LIABILITY-AND-EQUITY> 53,753,964 53,660,575
<SALES> 8,667,194 1,041,463
<TOTAL-REVENUES> 8,667,194 1,041,463
<CGS> 4,427,865 667,082
<TOTAL-COSTS> 14,561,185 2,344,875
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (4,771,057) (1,293,466)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (4,771,057) (1,293,466)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (4,771,057) (1,293,466)
<EPS-PRIMARY> (.35) (.12)
<EPS-DILUTED> (.35) (.12)
</TABLE>
