<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
-------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------------- ------------------
Commission File 0-28016
Number Biopsys Medical, Inc.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 33-0578012
------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3 Morgan, Irvine CA 92618
---------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
714-460-7800
---------------------------------------------------------------------------
(Registrant's telephone number, including area code)
---------------------------------------------------------------------------
(Former name, former address and fiscal year, if changed since last report)
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.
Yes X No
------ ------
As of April 25, 1997, 9,888,567 shares of Common Stock were issued and
outstanding.
<PAGE>
BIOPSYS MEDICAL, INC.
FORM 10-Q For the Three and Nine Months Ended March 31, 1997
INDEX
PAGE
----
Facing Sheet 1
Index 2
Part I. Financial Information
Item 1. a) Balance sheets at March 31, 1997 and June 30, 1996 3
b) Statements of operations for the three month and
nine month periods ended March 31, 1997 and 1996 4
c) Statements of cash flows for the nine month periods
ended March 31, 1997 and 1996 5
d) Note to financial statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Part II. Other Information 11
Signature 12
Index to Exhibits 13
2
<PAGE>
PART 1: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BIOPSYS MEDICAL, INC.
BALANCE SHEETS
ASSETS
March 31, June 30,
1997 1996
------------ -------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 6,538,000 $ 12,122,000
Short-term investments 15,222,000 9,405,000
Accounts receivable, net 2,392,000 985,000
Inventories 2,602,000 1,581,000
Prepaid expenses and other current assets 662,000 141,000
------------ -------------
Total current assets 27,416,000 24,234,000
LONG-TERM INVESTMENTS 13,457,000 15,860,000
PROPERTY AND EQUIPMENT, net 1,390,000 776,000
OTHER ASSETS 26,000 44,000
------------ -------------
$ 42,289,000 $ 40,914,000
------------ -------------
------------ -------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 969,000 $ 1,270,000
Accrued expenses 1,064,000 561,000
------------ -------------
Total current liabilities 2,033,000 1,831,000
COMMITMENTS - -
STOCKHOLDERS' EQUITY
Common Stock, $.001 par value; 50,000,000
shares authorized; 9,884,900 shares
issued and outstanding 10,000 10,000
Additional paid-in capital 45,363,000 45,092,000
Accumulated deficit (6,008,000) (6,615,000)
Deferred stock option compensation 891,000 596,000
------------ -------------
Net stockholders' equity 40,256,000 39,083,000
------------ -------------
$ 42,289,000 $ 40,914,000
------------ -------------
------------ -------------
See accompanying notes to financial statements.
3
<PAGE>
BIOPSYS MEDICAL, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31, Nine Months Ended March 31,
---------------------------- ---------------------------
1997 1996 1997 1996
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net Sales $ 4,342,000 $ 1,042,000 $ 10,045,000 $ 1,805,000
Cost of Sales 1,726,000 581,000 4,236,000 1,051,000
------------ ------------ ------------- ------------
Gross Profit 2,616,000 461,000 5,809,000 754,000
Operating Expenses:
Research and development 591,000 516,000 1,650,000 1,027,000
Selling, general and administrative 1,903,000 1,021,000 4,984,000 2,439,000
------------ ------------ ------------- ------------
Total operating expenses 2,494,000 1,537,000 6,634,000 3,466,000
------------ ------------ ------------- ------------
Income (loss) from operations 122,000 (1,076,000) (825,000) (2,712,000)
Interest income 479,000 45,000 1,432,000 180,000
Interest expense - - - (13,000)
------------ ------------ ------------- ------------
Net income (loss) $ 601,000 $ (1,031,000) $ 607,000 $ (2,545,000)
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
Net income (loss) per share $ 0.05 $ (0.13) $ 0.06 $ (0.33)
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
Weighted average shares outstanding 11,217,000 7,641,000 11,031,000 7,619,000
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
BIOPSYS MEDICAL, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended March 31,
------------------------------
1997 1996
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 607,000 $ (2,545,000)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 202,000 70,000
Deferred Compensation 295,000 444,000
Changes in assets and liabilities:
Accounts receivable (1,407,000) (639,000)
Prepaid expenses and other current assets (521,000) (50,000)
Inventories (1,021,000) (680,000)
Other assets - (137,000)
Accounts payable and accrued expenses 202,000 617,000
------------ ------------
Net cash used in operating activities (1,643,000) (2,920,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (798,000) (417,000)
Short-term investment maturities 642,000 477,000
Short-term investment purchases - (1,516,000)
Long-term investment purchases (4,056,000) -
------------ ------------
Net cash used in investing activities (4,212,000) (1,456,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance common stock 271,000 8,000
Net proceeds from issuance of Series C
preferred stock - 6,495,000
------------ ------------
Net cash provided by financing activities 271,000 6,503,000
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (5,584,000) 2,127,000
CASH AND CASH EQUIVALENTS, beginning of period 12,122,000 13,000
------------ ------------
CASH AND CASH EQUIVALENTS, end of period $ 6,538,000 $ 2,140,000
------------ ------------
------------ ------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes $ - $ 800
------------ ------------
------------ ------------
Cash paid for interest $ - $ -
------------ ------------
------------ ------------
</TABLE>
NON-CASH TRANSACTION:
During the nine months ended March 31, 1997 the Company re-classified
$6,423,000 of long-term investments to short-term investments as the
original maturity dates of the investments became within twelve months
of the balance sheet date.
See accompanying notes to financial statements.
5
<PAGE>
BIOPSYS MEDICAL, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying balance sheet as of March 31, 1997 and the statements
of operations and cash flows for the three months and nine months ended March
31, 1997 and 1996 have been prepared by Biopsys Medical, Inc.( the
"Company"), without audit. In the opinion of management, all adjustments
necessary to present fairly the financial position, results of operations,
and cash flows at March 31, 1997, and for all periods presented, have been
made.
Although the Company believes that the disclosures in these financial
statements are adequate to make the information presented not misleading,
certain information and footnote disclosures required by Generally Accepted
Accounting Principles for complete financial statements have been omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). This financial data should be reviewed in conjunction
with the audited financial statements and notes thereto included in the
Company's Form 10-K for the year ended June 30, 1996. The results of
operations for the three months and nine months ended March 31, 1997 may not
necessarily be indicative of the operating results for the full 1997 fiscal
year.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the unaudited
Financial Statements and related Note thereto included in Part I - Item 1 of
this Form 10-Q and with the Financial Statements and related Notes thereto
included in its June 30, 1996 Annual Report on Form 10-K. This Report on
Form 10-Q contains certain 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. Actual events or results may differ materially from
those projected in the forward-looking statements as a result of the factors
described herein and in the documents incorporated herein by reference. Such
forward-looking statements include, but are not limited to, statements
concerning the Company's operating and capital requirements.
OVERVIEW
Since its inception in July 1993, the Company has been engaged in the
design, development, clinical testing and, more recently, the manufacture and
sale of the Mammotome Biopsy System. The Company received clearance of its
510(k) premarket notification for the Mammotome Biopsy System from the FDA in
April 1995, began limited sales to selected customers in May 1995 and
commercially introduced the Mammotome Biopsy System in August 1995. For the
three and nine months ended March 31, 1997, net sales totaled $4,342,000
and $10,045,000, respectively. As of March 31, 1997, the Mammotome Biopsy
System had been used in approximately 58,000 breast biopsy procedures at
approximately 516 sites primarily in the United States.
The Company has a limited history of operations and experienced
significant operating losses from inception through December 31, 1996. As of
March 31, 1997 the Company had an accumulated deficit of approximately $6.0
million. Results of operations may fluctuate significantly from quarter to
quarter and will depend upon numerous factors, including the extent to which
the Company's products continue to gain market acceptance, actions relating
to regulatory and reimbursement matters, progress of clinical trials,
introduction of alternative means for less-invasive breast biopsy by
competitors of the Company, pricing of competitive products and the cost and
effect of promotional discounts and marketing programs. There can be no
assurance that the Company will continue to successfully commercialize the
Mammotome Biopsy System or achieve significant revenues or profitability.
Furthermore, although the Company achieved profitability in the quarter ended
March 31, 1997, there can be no assurance that such levels of revenues and
profitability will be sustained on a quarterly or annual basis, or at all.
The Mammotome procedure requires the use of an imaging modality during
the procedure. Currently, the primary imaging modality with which the
Mammotome Biopsy System is compatible is a prone stereotactic x-ray imaging
table. Two companies, Fischer and Lorad, have sold substantially all of the
approximately 1,200 prone stereotactic imaging tables installed in the United
States. The Company has established non-exclusive marketing arrangements
with Fischer and Lorad under which Fischer and Lorad can purchase Mammotome
drive units from the Company at a discount from list price and include
Mammotome drive units with stereotactic imaging tables for sale to customers.
However, Mammotome probes and other disposable products related to the
Mammotome Biopsy System are purchased by the customer directly from the
Company, not from Fischer or Lorad. There can be no assurance that Fischer
and Lorad will purchase or promote the Mammotome drive unit or that they will
continue their marketing arrangements with the Company. Lorad also has an
arrangement with United States Surgical Corporation ("USSC"), a competitor of
the Company, under which Lorad manufactures stereotactic tables for USSC on a
private label basis. In addition, Fischer and Lorad may have additional
arrangements to market other competing biopsy systems. There can be no
assurance that these or other imaging equipment manufacturers will not
redesign the stereotactic tables so that they would not be compatible with
the Mammotome Biopsy System. The failure or loss of such marketing
arrangements could have a material adverse affect on the Company's business,
financial condition and results of operations.
7
<PAGE>
The Company has limited experience in manufacturing the Mammotome Biopsy
System. If the Company is unable to manufacture an adequate number of drive
units or probes on a cost-effective and timely basis, it would have a
material adverse effect on the Company's ability to realize significant
product revenues for at least the next several quarters. The Company
currently contracts with third parties to manufacture certain components of
the Mammotome Biopsy System. Final assembly, sterilization and packaging of
the Mammotome Biopsy System is currently performed by the Company in-house
and by contract manufacturers. There can be no assurance that reliable,
high-volume manufacturing can be established or maintained at commercially
reasonable costs on a timely basis, or at all. Delays associated with, or the
inability to establish, such additional capacity could have a material
adverse affect on the Company's business, financial condition and results of
operations. Medical device companies frequently experience difficulties in
obtaining required quantities of components necessary to manufacture their
products. For example, the industry has experienced shortages of the type of
stainless steel used in the Mammotome probes, and there can be no assurance
that such shortages will not occur in the future. If the Company or any of
its contract manufacturers encounter future manufacturing difficulties,
including problems involving production yields, quality control and
assurance, shortages of components or shortages of qualified personnel, it
could have a material adverse effect on the Company's business, financial
condition and results of operations. In addition, prior to international
commercialization, the Company will be required to attain and maintain
compliance with GMP requirements and ISO 9001 standards. Failure to either
attain or maintain compliance with the applicable regulatory requirements of
various regulatory agencies would have a material adverse effect on the
Company's business, financial condition and results of operations.
Biopsys has during the past several months engaged in discussions and
correspondence with the FDA's 510(k) Reviewing Division regarding the
Mammotome system and the FDA's concerns that devices cleared under 510(k)
premarket notifications for diagnostic tissue sampling were being used for
excision of tissue. The Company's discussions with the Reviewing Division
resulted in defining the procedural steps necessary to fulfill the agency's
requests and desire to establish consistent indications and promotional
materials for all breast biopsy devices. As a result, on February 3 and 4,
1997, Biopsys advised the FDA that it would comply with the requests and file
a stand alone 510(k) application for the Mammotome specifically directed
towards breast biopsy for diagnostic purposes. However, on February 5, 1997,
the Company received a warning letter concerning the labeling and promotion
of the Mammotome system from a different FDA division than the division
involved in previous discussions.
On February 24, 1997 the Company announced that it had received
confirmation from the FDA that all issues set-out in the February 5, 1997
warning letter concerning the labeling and promotion of the Mammotome Biopsy
System had been satisfactorily resolved. On April 2, 1997 the Company
announced that it had received 510(k) premarket notification clearance from
the FDA for the Mammotome Biopsy System specifically for breast biopsy for
diagnostic purposes.
8
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Net sales for the three months ended March 31, 1997 were $4,342,000
compared to $1,042,000 during the three months ended March 31, 1996. The
Company commenced commercial shipments of its Mammotome Biopsy System in August
1995. Net sales for the three months ended March 31, 1997 reflect sales of 100
Mammotome drive units and approximately 18,000 disposable probes compared to 69
Mammotome drive units and approximately 4,600 disposable probes in the three
months ended March 31, 1996.
During the three months ended March 31, 1997, cost of sales totaled
$1,726,000, or 39.8% of net sales compared to $581,000 or 55.8% of net sales
in the prior year. The decrease in cost of sales as a percentage of net
sales and resulting higher gross profit is primarily related to a higher
sales mix of disposable probes which carry a higher gross profit.
Research and development expenses increased 15% to $591,000 during the
three months ended March 31, 1997 from $516,000 during the three months ended
March 31, 1996. This increase was primarily due to research and development
expenses associated with the continued development of software and
ultrasound related products.
Selling, general and administrative expenses increased 86% to $1,903,000
during the three months ended March 31, 1997 from $1,021,000 during the three
months ended March 31, 1996. This increase was primarily due to the hiring
of sales personnel, increased marketing activities and increases in
administrative personnel and related costs to support increased commercial
sales of the Mammotome Biopsy System.
Interest income increased to $479,000 during the three months ended
March 31, 1997 from $45,000 during the three months ended March 31, 1996.
The increase was due to higher cash balances and short-term and long-term
investments associated with completion of the Company's initial public
offering in May 1996.
NINE MONTHS ENDED MARCH 31, 1997 AND 1996
Net sales for the nine months ended March 31, 1997 were $10,045,000
compared to $1,805,000 during the nine months ended March 31, 1996. Net
sales for the nine months ended March 31, 1997 reflect sales of 296 Mammotome
drive units and approximately 44,000 disposable probes compared to 121
Mammotome drive units and approximately 8,100 disposable probes in the nine
months ended March 31, 1996.
During the nine months ended March 31, 1997, cost of sales totaled
$4,236,000, or 42% of net sales compared to $1,051,000, or 58% of net sales
in the prior year. The decrease in cost of sales as a percentage of net sales
and resulting higher gross profit is primarily related to a higher sales mix
of disposable probes which carry a higher gross profit.
Research and development expenses increased 61% to $1,650,000 during the
nine months ended March 31, 1997 from $1,027,000 during the nine months ended
March 31, 1996. This increase was primarily due to research and development
expenses associated with the continued development of the 11-gauge probe, the
MicroMark Clip, software and ultrasound related products.
Selling, general and administrative expenses increased 104% to
$4,984,000 during the nine months ended March 31, 1997 from $2,439,000 during
the nine months ended March 31, 1996. This increase was primarily due to the
hiring of sales personnel, increased marketing activities and increases in
administrative personnel and related costs to support commercial sales of the
Mammotome Biopsy System.
9
<PAGE>
Interest income increased to $1,432,000 during the nine months ended
March 31, 1997 from $167,000, net during the nine months ended March 31,
1996. The increase was due to higher cash balances and short-term and
long-term investments associated with completion of the Company's initial
public offering in May 1996.
LIQUIDITY AND CAPITAL RESOURCES
In May 1996, the Company completed an initial public offering of
2,587,500 shares of common stock (including the underwriters overallotment of
337,500 shares) at $15.00 per share. Net proceeds to the Company were
approximately $35.3 million. From inception through April 1996, the Company
financed its operations primarily through the private placement of equity
securities totaling $9.7 million. These equity securities were converted to
common stock in conjunction with the initial public offering. As of March 31,
1997, cash, cash equivalents, short-term and long-term investments totaled
$35.2 million. The Company's cash used in operating activities decreased to
$1.6 million for the nine months ended March 31, 1997 from $2.9 million for
the nine months ended March 31, 1996 primarily resulting from changing a net
loss of $2,545,000 to net income of $607,000 partially offset by increases in
accounts receivable and inventories related to increased sales of the
Mammotome Biopsy System.
The Company's principal source of liquidity at March 31, 1997 consisted
of cash, cash equivalents, short-term and long-term investments of $35.2
million. The Company has adopted investment guidelines which restrict the
types and quality of investments the Company is authorized to enter into. At
March 31, 1997, the Company had invested approximately $1.1 million in money
market funds, approximately $21.5 million in commercial paper and short term
corporate bonds, and approximately $12.6 million in U.S. government treasury
notes or long term corporate bonds. At March 31, 1997, the Company had no
long term debt. The Company has never had and currently does not have
commitments for credit facilities, such as revolving credit agreements or
lines of credit, that could provide additional working capital.
The Company believes that the current cash balances and short-term and
long-term investments will be sufficient to meet the Company's operating and
capital requirements through fiscal 1997. The Company's future liquidity and
capital requirements will depend on numerous factors, including the extent to
which the Company's Mammotome Biopsy System gains market acceptance, the
timing of regulatory actions regarding the Company's potential future
products, the costs and timing of expansion of sales, marketing and
manufacturing activities, obtaining and enforcing patents important to the
Company's business, results of clinical trials and competition. There can be
no assurance that the Company will not be required to raise additional
capital, or that such capital will be available on acceptable terms, or at
all.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS IN 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
PAGE
----
(a)
11.1 Computation of net income (loss) per share 14
27 Financial Data Schedule 15
(b) Reports on Form 8-K
None
11
<PAGE>
SIGNATURES
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.
BIOPSYS MEDICAL, INC.
By: /s/
--------------------------------------
Steven J. Naber
Vice President of Finance and
Chief Financial Officer
(Duly Authorized and Principal
Financial and Accounting Officer)
Date: April 25, 1997
12
<PAGE>
BIOPSYS MEDICAL, INC.
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------ ----------- -------------
<S> <C> <C>
11.1 Statement Re: Computation of Net Income (Loss) Per Share 14
27 Financial data schedule 15
</TABLE>
13
<PAGE>
EXHIBIT 11.1
BIOPSYS MEDICAL, INC.
STATEMENT RE: COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------------- ----------------------------
1997 1996 1997 1996
---------- ----------- ---------- -------------
<S> <C> <C> <C> <C>
Net income (loss) $ 601,000 $(1,031,000) $ 607,000 $ (2,545,000)
---------- ----------- ---------- -------------
---------- ----------- ---------- -------------
Shares used in computing net income (loss)
per share:
Weighted average common shares outstanding
during the period 9,856,000 1,833,218 9,794,000 1,811,218
Equivalent shares representing shares
issuable upon conversion of preferred
stock and preferred warrants:
Series A - 833,333 - 833,333
Series B - 1,333,333 - 1,333,333
Series C - 3,051,590 - 3,051,590
Series C warrants - 32,624 - 32,624
Equivalent shares representing shares
issuable upon conversion of common
stock options 1,361,000 556,902 1,237,000 556,902
---------- ----------- ---------- -------------
Total shares used in computing historical
net income (loss) per share 11,217,000 7,641,000 11,031,000 7,619,000
---------- ----------- ---------- -------------
---------- ----------- ---------- -------------
Net income (loss) per share $ 0.05 $ (0.13) $ 0.06 $ (0.33)
---------- ----------- ---------- -------------
---------- ----------- ---------- -------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED BALANCE SHEET AND STATEMENT OF OPERATIONS CONTAINED IN THE BIOPSYS
MEDICAL, INC. FORM 10Q FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 6,538,000
<SECURITIES> 15,222,000
<RECEIVABLES> 2,538,000
<ALLOWANCES> (146,000)
<INVENTORY> 2,602,000
<CURRENT-ASSETS> 27,416,000
<PP&E> 1,692,000
<DEPRECIATION> (302,000)
<TOTAL-ASSETS> 42,289,000
<CURRENT-LIABILITIES> 2,033,000
<BONDS> 0
0
0
<COMMON> 10,000
<OTHER-SE> 40,246,000
<TOTAL-LIABILITY-AND-EQUITY> 42,289,000
<SALES> 10,045,000
<TOTAL-REVENUES> 10,045,000
<CGS> 4,236,000
<TOTAL-COSTS> 4,236,000
<OTHER-EXPENSES> 6,635,000
<LOSS-PROVISION> 80,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 607,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 607,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 607,000
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
