<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For The Quarterly Period Ended June 30, 1999
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 number: 000-20865
e-Net, Inc.
(Exact name of registrant as specified in its charter)
Delaware 52-1929282
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12800 Middlebrook Road, Suite 400, Germantown, MD 20874
(Address of principal executive offices) (Zip Code)
(301) 601-8700
(Registrant's telephone number, including area code)
Not applicable (Former name, former address and former fiscal year, if changed
since last report.)
Check whether the issuer (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 periods 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 of the Registrant's common stock, $.01 par value per
share, outstanding as of August 6, 1999 was 8,333,124.
Transitional small business disclosure format (check one):
Yes ____ No X
The exhibit index appears in sequentially numbered page: N/A
-1-
<PAGE>
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
<S> <C>
Item 1. Consolidated Financial Statements (Unaudited)
Accountants' Review Report . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Balance Sheets as of June 30 and March 31, 1999 . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations for the three months ended June 30, 1999 and 1998. . . . 5
Consolidated Statements of Cash Flows for the three months ended June 30, 1999 and 1998. . . . 6
Consolidated Statements of Stockholders' Equity as of June 30, 1999. . . . . . . . . . . . . . 7
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 2. Management's Discussion and Analysis
Or Plan of Operations . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
-2-
<PAGE>
Board of Directors
e-Net, Inc.
We have reviewed the accompanying consolidated balance sheet of e-Net, Inc. (a
Delaware Corporation) as of June 30, 1999, and the related consolidated
statements of operations, stockholders' equity and cash flows for the
three-month period then ended. These financial statements are the responsibility
of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the accompanying financial statements for them to be in conformity
with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet as of March 31, 1999, and the related statements of
operations, stockholders' equity and cash flows for the year then ended (not
presented herein), and in our report dated June 10, 1999, we expressed an
unqualified opinion on those financial statements. In our opinion, the
information set forth in the accompanying condensed balance sheet as of March
31, 1999 is fairly stated, in all material respects, in relation to the balance
sheet from which it has been derived.
Grant Thornton LLP
Vienna, Virginia
August 6, 1999
-3-
<PAGE>
E-NET, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30, 1999 MARCH 31, 1999
--------------------- ----------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 2,005,297 $ 1,760,627
Short-term investments, at market 2,775,211 4,618,587
Accounts receivable 191,271 749,903
Inventory - 583,634
Prepaid expenses 117,783 120,873
------------------ ------------------
TOTAL CURRENT ASSETS 5,089,562 7,833,624
DEPOSITS AND OTHER ASSETS 44,322 44,322
PROPERTY, AND EQUIPMENT, NET 576,323 500,627
SOFTWARE DEVELOPMENT COSTS, NET - 488,570
------------------ ------------------
$ 5,710,207 $ 8,867,143
------------------ ------------------
------------------ ------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable--trade 139,947 279,266
Accrued liabilities 1,034,948 669,652
------------------ ------------------
TOTAL CURRENT LIABILITIES 1,174,895 948,918
LONG TERM DEBT - -
---------------- ----------------
TOTAL LIABILITIES 1,174,895 948,918
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 50,000,000 shares
authorized, 8,333,124 and 8,291,955 shares outstanding
at June 30 and March 31, 1999, respectively 83,331 82,919
Stock subscriptions and notes receivable - (23)
Additional paid-in capital 28,657,982 28,479,060
Retained deficit (24,206,001) (20,643,731)
------------------ ------------------
TOTAL STOCKHOLDERS' EQUITY 4,535,312 7,918,225
------------------ ------------------
$ 5,710,207 $ 8,867,143
------------------ ------------------
------------------ ------------------
</TABLE>
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
E-NET, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
1999 1998
------------------------ -----------------
<S> <C> <C>
SALES
Products $ 1,843 $ 303,895
Services 155,861 129,375
------------------ ------------------
Total sales 157,704 433,270
COST OF PRODUCT SOLD AND SERVICE PROVIDED
Products 584 190,323
Services 97,739 43,248
------------------ ------------------
Total cost of product sold and service provided 98,323 233,571
GROSS PROFIT 59,381 199,699
OPERATING EXPENSES
Selling, general and administrative 1,531,711 1,532,884
Restructuring Costs 1,710,000 -
Research and development 390,574 554,737
------------------ ------------------
LOSS FROM OPERATIONS (3,572,904) (1,887,922)
INTEREST AND FINANCING CHARGES
Interest and financing expense - -
Other expenses (47,225) (68,789)
Interest income 57,859 77,533
------------------ ------------------
LOSS BEFORE INCOME TAXES (3,562,270) (1,879,178)
INCOME TAX PROVISION - -
------------------ -----------------
NET LOSS $ (3,562,270) $ (1,879,178)
------------------ ------------------
------------------ ------------------
LOSS PER SHARE $ (.43) $ (.28)
------------------ ------------------
------------------ ------------------
WEIGHTED AVERAGE SHARES OUTSTANDING 8,269,640 6,795,362
</TABLE>
The accompanying notes are an integral part of these statements.
-5-
<PAGE>
E-NET, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
<TABLE>
<CAPTION>
1999 1998
-------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (3,562,270) $ (1,879,178)
Adjustments to reconcile net loss to net cash from
operating activities
Depreciation and amortization 164,033 109,556
Stock-based compensation 13,822 13,388
Non-Cash Restructuring Costs 1,710,000 -
Changes in operating assets and liabilities
Decrease (Increase) in accounts receivable 241,720 (315,362)
Decrease (Increase) in inventory 8,556 (74,292)
Decrease (Increase) in prepaid expenses, deposits and other assets 3,090 (16,255)
Decrease (Increase) in accounts payable
and accrued liabilities (191,055) 18,192
------------------- ------------------
NET CASH USED IN OPERATING ACTIVITIES (1,612,104) (2,143,951)
------------------ -------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (152,137) (150,774)
Capitalized software development costs - (30,000)
Sale of (Investment in) short term securities 1,843,376 (2,917,837)
------------------ -------------------
NET CASH PROVIDE BY (USED IN) INVESTING ACTIVITIES 1,691,239 (3,098,611)
------------------ -------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from of common stock exercise
in 1999 and private placement
of common stock and exercise of common stock warrants in 1998 165,100 14,088,210
Issuance of common stock 412 24,709
Payments of common stock subscriptions
receivable 23 23
------------------ -------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 165,535 14,112,942
------------------ ------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 244,670 8,870,380
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,760,627 855,743
------------------ ------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,005,297 $ 9,726,123
------------------ -------------------
------------------ -------------------
SUPPLEMENTAL DISCLOSURES:
Income Taxes Paid $ - $ -
------------------ -------------------
------------------ -------------------
Interest Paid $ - $ -
------------------ -------------------
------------------ -------------------
</TABLE>
The accompanying notes are an integral part of these statements.
-6-
<PAGE>
E-NET, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK STOCK
------------ SUBSCRIPTIONS ADDITIONAL TOTAL
NO. OF AND NOTES PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT RECEIVABLE CAPITAL DEFICIT EQUITY
------------- ---------- ------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, APRIL 1, 1999 8,291,955 $82,919 $ (23) $ 28,479,060 $ (20,643,731) $ 7,918,225
Issuance of common stock
associated with:
stock option exercises 41,169 412 - 165,100 - 165,512
Stock-based compensation - - - 13,822 - 13,822
Payment of stock subscriptions - - 23 - - 23
Net loss - - - - (3,562,270) (3,562,270)
------------- ---------- ------------- -------------- -------------- ----------------
BALANCE, JUNE 30, 1999 8,333,124 $83,331 $ - $ 28,657,982 $ (24,206,001) $ 4,535,312
------------- ---------- ------------- -------------- -------------- ----------------
------------- ---------- ------------- -------------- -------------- ----------------
</TABLE>
The accompanying notes are an integral part of these statements.
-7-
<PAGE>
E-NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include
the accounts of e-Net, Inc. and its wholly owned subsidiary, ZeroPlus.com, Inc.,
(collectively, the "Company"), which was incorporated in June 1999. Such
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and pursuant to the regulations of
the Securities and Exchange Commission; accordingly, they do not include all of
the information and notes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
considered necessary for a fair presentation (consisting of normal recurring
accruals) have been included. The consolidated results of operations for the
quarter ended June 30, 1999 are not necessarily indicative of the results for
the fiscal year ending March 31, 2000. The accompanying unaudited financial
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-KSB for the fiscal
year ended March 31, 1999.
NOTE B--RESTRUCTURING COSTS
During the quarter ended June 30, 1999 the Company recorded a charge of
approximately $1.7 million related primarily to a restructuring program that
is expected to be fully implemented by December 31, 1999. The charge includes
a provision for reductions in the carrying value of various Company assets
and the accrual of expenses related to the Company's network gateway
equipment activities. The other accrued expenses related to restructuring
costs at June 30, 1999 was approximately $340,000 and was associated with
estimated equipment and support costs. The restructuring effort, a refinement
of the Company's previously announced "niche" strategy, refocuses the
Company's operating model, based on a comprehensive strategy of making voice
and telephony functions easily available at common entry points to digital
data networks. The Company intends to use its core technology competency in
advancement of its voice-over-digital data networks business by exploiting
markets that it believes pose fewer competitive risks.
NOTE C--INVENTORY
Inventory is stated at the lower of cost or market value. As indicated
in Note B above, the carrying value of inventory has been eliminated as a part
of the restructuring program.
NOTE D--SOFTWARE DEVELOPMENT COSTS
The Company has capitalized certain software development costs incurred
after establishing technological feasibility. Software costs will be amortized
over the estimated useful life of the software once the product is available for
general release to customers. As indicated in Note B above, the capitalized
software carrying value has been eliminated as a part of the restructuring
program.
NOTE E--LINE OF CREDIT FACILITY
On June 25, 1999, the Company signed a one (1) year promissory note for
a $1,000,000 line of credit facility that is secured by investments, receivables
and fixed assets of the Company.
NOTE F--NON-QUALIFIED STOCK OPTION PLAN
At June 30, 1999, the Company had two stock-based compensation plans.
As permitted under generally accepted accounting principles, grants under those
plans are accounted for following APB Opinion No. 25 and related
interpretations. Accordingly, only the compensation cost associated with grants
to non-employees or non-directors of the Company have been recognized in the
amount of $13,822. All options granted to employees are non-compensatory.
NOTE G--INCOME TAXES
The Company has generated net operating losses since its inception. At
June 30, 1999, the Company recorded a valuation allowance in an amount equal to
the deferred tax asset due to the uncertainty of generating future taxable
income.
NOTE H--CONCENTRATION
Approximately 78% of the Company's accounts receivable balance at June
30, 1999 were from one customer, and approximately 94% of the Company's sales
for the quarter ended June 30, 1999, were from two customers.
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
This information should be read in conjunction with the Management's
Discussion and Analysis of Financial Condition and Results of Operations and the
consolidated financial statements and notes contained in the our Annual Report
on Form 10-KSB for the fiscal year ended March 31, 1999.
RESULTS OF OPERATIONS
NET SALES
Net sales for the first quarter ended June 30, 1999 were approximately
$158,000, a decrease of 64% over the approximately $433,000 recorded for the
corresponding quarter of 1998. The revenue decrease was due to a shift in focus
from sales of our Telecom 2000 customer premises-based gateway - medium systems
products to planning for our restructuring efforts described below. Product
sales were only approximately $2,000 in the first quarter ended June 30, 1999
compared to $304,000 recorded for the corresponding quarter of 1998. The
services sales for the quarter ended June 30, 1999 were primarily from two
customers. The product sales for the quarter ended June 30, 1998 were primarily
from four customers.
GROSS PROFIT
Gross profits for the first quarter ended June 30, 1999 were
approximately $59,000 or 38% of sales, compared to approximately $200,000 or 46%
of sales for the corresponding quarter of 1998. The amount of gross profit
decrease was due to reduced product sales resulting from a shift in focus from
sales of our Telecom 2000 customer premises-based gateway - medium systems
products to planning for our restructuring efforts described below.
OPERATING EXPENSES
Selling, general & administrative expenses for the first quarter
ended June 30, 1999 were approximately $1,532,000, nearly the same as the
approximately $1,533,000 recorded for the corresponding quarter of 1998.
These expenses reflected spending for personnel, advertising and substantial
marketing expenditures made in connection with promotion of our Telecom 2000
technology products. During the quarter ended June 30, 1998 selling, general
& administrative expenses included significant costs associated with
advertising and tradeshows that we did not incur in the corresponding quarter
in 1999. However, we incurred nearly equal amount for personnel, travel, and
other management efforts in connection with our shift in focus from sales of
our Telecom 2000 customer premises-based gateway - medium systems products to
planning for our restructuring efforts described below.
Restructuring costs the first quarter ended June 30, 1999 were
approximately $1,710,000. The costs were related primarily to a refinement of
our previously announced "niche" stratety that we expect to implement by
December 31, 1999. The charge includes a provision for reductions in the
carrying value of various Company assets and the accrual of expenses related
to our network gateway equipment activities. We are in the process of further
refining our operating model, in the direction contemplated by our previously
announced "niche" strategy, toward a comprehensive strategy of making one
primarily in voice and telephony functions mostly available at common entry
points to digital data networks. We intend to use our core technology
competency in voice-over-digital data networks by exploiting markets that we
believe pose fewer competitive risks.
The formation of a wholly owned subsidiary, ZeroPlus.com, Inc., in June
1999, to offer a free software-only voice-over-internet product, is the first
example of our effort. Market access points upon which we intend to refocus
include Telecom 2000 desktop - small systems and selected versions of our
customer-premises-based gateway - medium systems. Through these access points,
we believe that we can provide our customers with quick and easy access to the
advantages of voice-over-digital data network technology, building on our
strengths, specifically, the ability to provide voice-over-digital data network
telephony that operates similarly to the traditional telephone network. We
believe that this initiative will position us to take advantage of partnerships
with Internet service providers, Internet portals, and data network carriers to
leverage off their larger customer distribution capabilities. As we continue to
implement this refined program, we indefinitely delayed our Telecom 2000 carrier
class gateway - large systems project, and we expect to shift our focus in
Telecom 2000 customer premises-based gateways - medium systems to market niches
consistent with our refined strategy.
Research & development expenses for the first quarter ended June 30,
1999 were approximately $391,000, an decrease over the approximately $555,000
recorded for the corresponding quarter of 1998. The decrease in the research and
development expenditures for the 1999 quarter reflected lower overall workforce
costs and reduced third party supplier costs for new integrated printed circuit
boards and the related software.
-9-
<PAGE>
OTHER INCOME (EXPENSE)
Other income (expense) for the first quarter ended June 30, 1999, were
approximately $11,000, an increase over the approximately $9,000 recorded for
the corresponding quarter of 1998. The decrease in other expenses in 1999 is due
primarily to expenses associated with the registration of certain of the
Company's publicly traded securities in 1998 and other related items, while the
interest income also decreased over 1998 due to the use of investments to fund
working capital requirements.
-10-
<PAGE>
OTHER
IMPACT OF INFLATION
The Company does not believe that inflation has had a material adverse
effect on sales or income during the past several years. Increases in supplies
or other operating costs may adversely affect the Company's operations; however,
the Company believes it may increase prices of its products and systems to
offset increases in costs of goods sold or other operating costs.
SEASONALITY
Based our experience to date, the we believe that our future operating
results may be subject to quarterly variations based on a variety of factors,
but seasonal changes in the weather should have little or no effect.
LIQUIDITY AND CAPITAL RESOURCES
In the quarter ended June 30, 1999, we used approximately $(2,091,000)
in cash flows from operating activities, excluding changes in assets and
liabilities, during the first quarter ended June 30, 1999, compared to
approximately $(1,756,000) for the corresponding quarter of 1998. The increase
in cash flows used in operating activities excluding changes in assets and
liabilities was mainly due to the restructuring costs discussed above. The total
net cash used by operating activities was approximately $(1,612,000) for the
first quarter ended June 30, 1999, compared to approximately $(2,144,000) for
the corresponding quarter of 1998.
Cash provided by investing activities totalled approximately $1,691,000
for the first quarter ended June 30, 1999 as compared to approximately
$3,099,000 used in investing activities for the corresponding quarter of 1998.
The main component of that investing activity was the sale of short-term
securities of approximately $1,843,000, as well as continued expenditures for
equipment of approximately $152,000. The majority of the expenditures related to
continued development of our Telecom 2000 product line.
Cash provided by financing activities totalled approximately $166,000
compared to approximately $14,113,000 for the corresponding quarter of 1998. We
successfully completed a private placement in April 1998 that yielded net
proceeds of approximately $5,100,000, and exercises of our common stock warrants
prior to their redemption in June 1998 yielded net proceeds of approximately
$9,000,000. We have access to a $1,000,000 credit line secured by investments,
fixed assets and receivables, but did not borrow against that line of credit
during the first quarter ended June 30, 1999.
We expect to continue to make significant investments in the future to
support our overall growth. Currently, we anticipate that ongoing operations in
the near term will be financed primarily from net proceeds of the private
placement, warrant exercise, the line of credit facility, and from internally
generated funds. We presently have a line of credit, investments, and cash and
cash equivalents on hand and believe that these will be sufficient to meet
near-term cash requirements. We expect that these cash requirements will
decrease somewhat as a result of our restructuring efforts, primarily as a
result of decreases in development costs. However, to the extent we experience
greater than expected growth, our operating and product development activities
may require more cash than we have available. Consequently, such growth may
require us to obtain additional sources of financing. In any event, we can make
no assurance that we will not require more working capital than we currently
have at our disposal.
FUTURE OPERATING RESULTS
The preceding paragraphs and the following discussion include
forward-looking statements regarding our future financial position and results
of operations. Actual financial position and results of operations may differ
materially from these statements. All such statements are qualified by the
cautionary statements set forth in Part I, Item 1 of our most recent Annual
Report on Form 10-KSB, as amended, under "Forward Looking and Cautionary
Statements," as well as the following statements.
We have invested significant amounts in the research and development
and the initial product rollout marketing and selling for the Telecom 2000
product line. Even after our restructuring is completed, the emphasis,
attention, and dedication of our limited resources to the Telecom 2000 product
line will, in our view, continue to cause losses. However, we believe that the
value and sales potential of our refocused Telecom 2000 product line outweighs
the risk of continued operating losses.
We believe that our revenues will grow as we begin to finalize
contracts and deliver new Telecom 2000 products that make voice and telephony
functions easily available at common entry points to digital data networks,
which we will target under our
-11-
<PAGE>
refined strategy. However, our refined strategy is new and still under
development. While we believe it offers us the possibility of increased revenue
growth sooner than did our previous equipment-based strategy, we can make no
assurance of this result.
We do not expect revenue growth to occur ratably in the near term.
Revenue growth, if any, in fiscal 2000 will depend to a large extent on the
timing and success of the finalization and rollout of our refined strategy.
Because of these and other uncertainties affecting our future operating
results, past performance should not be considered to be a reliable indicator of
future performance. The use of historical trends to anticipate results or trends
in future periods may be inappropriate. In addition, our participation in a
highly dynamic industry may result in significant volatility in the price of our
common stock.
-12-
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibit Description
None.
(b) Since the end of its most recent fiscal year on March 31, 1999, e-Net,
Inc. has filed the following reports on Form 8-K:
Date of Report Item Reported
None.
-13-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
e-Net, Inc.
(Registrant)
DATE: August 16, 1999 /s/ Donald J. Shoff
----------------------------------
Donald J. Shoff
Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS YEAR
<FISCAL-YEAR-END> MAR-31-2000 MAR-31-1999
<PERIOD-START> APR-01-1999 APR-01-1998
<PERIOD-END> JUN-30-1999 MAR-31-1999
<CASH> 2,005 1,761
<SECURITIES> 2,775 4,619
<RECEIVABLES> 248 1,305
<ALLOWANCES> 57 555
<INVENTORY> 0 584
<CURRENT-ASSETS> 5,090 7,834
<PP&E> 1,158 1,006
<DEPRECIATION> 582 505
<TOTAL-ASSETS> 5,710 8,867
<CURRENT-LIABILITIES> 1,175 949
<BONDS> 0 0
0 0
0 0
<COMMON> 83 82
<OTHER-SE> 4,452 7,835
<TOTAL-LIABILITY-AND-EQUITY> 5,710 8,867
<SALES> 2 1,127
<TOTAL-REVENUES> 156 1,673
<CGS> 1 1,417
<TOTAL-COSTS> 98 1,600
<OTHER-EXPENSES> 3,632 9,551
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 (9,270)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (3,562) 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (3,562) (9,270)
<EPS-BASIC> (.43) (1.17)
<EPS-DILUTED> 0 0
</TABLE>
