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: September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from .......................to.....................
Commission file number: 0-22319
PATIENT INFOSYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 16-1476509
------------------------------ -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
46 Prince Street, Rochester, NY 14607
-------------------------------------
(Address of principal executive offices)
(Zip Code)
(716) 242-7200
--------------
(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 last 90 days. Yes __X___ No _____
As of September 30,1997, 7,969,972 shares of common stock were outstanding.
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements.
PATIENT INFOSYSTEMS, INC.
CONDENSED BALANCE SHEETS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, 1997 December 31, 1996
------------------ -----------------
<S> <C> <C>
ASSETS
Unaudited) (Audited)
CURRENT ASSETS:
Cash and cash equivalents ............................................................ $ 2,300,679 $ 15,666,609
Marketable securities ................................................................ 11,700,371 --
Accounts receivable .................................................................. 804,310 386,215
Accrued interest receivable .......................................................... 139,479 --
Prepaid expenses and other current assets ............................................ 100,263 170,526
------------ ------------
Total current assets ........................................................... 15,045,102 16,223,350
PROPERTY AND EQUIPMENT, net ............................................................ 996,989 862,037
OTHER ASSETS ........................................................................... 250,000 --
------------ ------------
TOTAL ASSETS ........................................................................... $ 16,292,091 $ 17,085,387
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ..................................................................... $ 169,287 $ 196,674
Accrued salaries and wages ........................................................... 208,042 127,029
Accrued expenses ..................................................................... 101,182 211,457
Accrued initial public offering costs ................................................ -- 446,568
Deferred revenue ..................................................................... 633,252 582,783
Accrued loss on development contracts ................................................ 41,165 67,139
------------ ------------
Total current liabilities ...................................................... 1,152,928 1,631,650
------------ ------------
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value: shares authorized:
20,000,000; issued and outstanding:
September 30, 1997- 7,995,062; December 31,
1996 - 7,653,202 .............................................................. 80,085 76,532
Additional paid-in capital ........................................................... 21,547,739 19,300,293
Unrealized gain on investments available for sale .................................... 13,419 --
Retained earnings .................................................................... (6,502,080) (3,923,088)
------------ ------------
Total stockholders' equity ..................................................... 15,139,163 15,453,737
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................................. $ 16,292,091 $ 17,085,387
============ ============
</TABLE>
See notes to condensed financial statements.
<PAGE>
PATIENT INFOSYSTEMS, INC.
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES ........................................... $ 433,059 $ 178,729 $ 1,526,866 $ 644,146
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Cost of sales .................................... 398,696 153,812 1,284,838 601,124
Sales and marketing .............................. 492,318 226,789 1,295,979 616,545
General and administrative ....................... 754,555 396,613 1,739,490 1,298,801
Research and development ......................... 93,230 133,882 430,399 160,619
----------- ----------- ----------- -----------
Total costs and expenses ................... 1,738,799 911,096 4,750,706 2,677,089
----------- ----------- ----------- -----------
OPERATING LOSS ..................................... (1,305,740) (732,367) (3,223,840) (2,032,943)
INTEREST INCOME .................................... 208,178 32,664 644,848 53,333
----------- ----------- ----------- -----------
NET LOSS ........................................... $(1,097,562) $ (699,703) $(2,578,992) $(1,979,610)
=========== =========== =========== ===========
NET LOSS PER COMMON AND
COMMON SHARE
EQUIVALENTS ...................................... $ (.14) $ (.11) $ (.32) $ (.32)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON
AND COMMON SHARE
EQUIVALENTS ...................................... 7,995,062 6,423,553 7,969,972 6,215,220
========= ========= ========= =========
</TABLE>
See notes to condensed financial statements.
<PAGE>
[PATIENT INFOSYSTEMS, INC.
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ..................................................................... $(2,578,992 $(1,979,610)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization ............................................ 218,690 129,087
Amortization of premiums and discounts on available-for-sale
marketable securities .............................................. (171,501) --
Compensation expense related to issuance of stock warrants ............... 6,299 13,208
(Increase) in accounts receivable ........................................ (418,095) (33,441)
(Increase) in accrued interest receivable ................................ (124,777) --
Decrease (increase) in prepaid expenses and other current assets ......... 55,561 (174,117)
(Decrease) in accounts payable ........................................... (147,355) (143,212)
Increase in accrued salaries and wages ................................... 81,014 68,827
Increase in accrued expenses ............................................. 9,692 102,276
Increase in deferred revenue ............................................. 50,469 113,871
(Decrease) increase in accrued loss on development contracts ............. (25,974) 47,911
----------- -----------
Net cash used in operating activities .............................. (3,044,969) (1,855,200)
----------- -----------
INVESTING ACTIVITY:
Property and equipment additions ............................................. (353,641) (304,004)
Purchases of available-for-sale marketable securities ........................ (16,060,452) --
Maturities of available-for-sale marketable securities ....................... 4,545,000 --
Increase in other assets ..................................................... (250,000) --
----------- -----------
Net cash used in investing activities ................................ (12,119,093) (304,004)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from issuance of common and preferred stock, net .................... 2,244,700 2,999,752
(Decrease) in accrued initial public offering costs .......................... (446,568) --
----------- -----------
Net cash provided by financing activities .......................... 1,798,132 2,999,752
----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS .......................... (13,365,930) 840,548
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD .......................................................... 15,666,609 1,182,080
----------- -----------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD ................................................................ $ 2,300,679 $ 2,022,628
=========== ===========
</TABLE>
See notes to condensed financial statements.
<PAGE>
PATIENT INFOSYSTEMS, INC.
Notes to Condensed Financial Statements
1. The condensed financial statements for the three and nine month periods
ended September 30, 1997 and 1996 are unaudited and reflect all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion
of management, necessary for a fair presentation of the financial position
and operating results for the interim periods. The condensed financial
statements should be read in conjunction with the financial statements and
notes thereto, together with management's discussion and analysis of
financial condition and results of operations contained in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996. The
results of operations for the nine months ended September 30, 1997 are not
necessarily indicative of the results for the entire fiscal year ending
December 31, 1997.
2. In March 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share." This new standard requires dual presentation of basic and diluted
earnings per share (EPS) on the face of the earnings statement and requires
a reconciliation of the numerators and denominators of basic and diluted
EPS calculations. This statement will be effective for the Company's 1997
fiscal year. The Company has not performed the calculation for the pro
forma financial statement effect of the application of this standard,
however management believes the results would not materially differ from
earnings per share as shown.
In June 1997, FASB issued SFAS No. 130, "Reporting Comprehensive Income"
and SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information." SFAS No. 130 establishes standards for reporting and
disclosure of comprehensive income and its components in financial
statement format. Comprehensive income is defined as the change in equity
of a business enterprise during a period from transactions and other events
and circumstances from nonowner sources. Items considered comprehensive
income include foreign currency items, minimum pension liability
adjustments and unrealized gains and losses on certain investments in debt
and equity securities. SFAS No. 130 is effective for financial statements
for fiscal years beginning after December 15, 1997.
SFAS No. 131 establishes standards for the reporting information about
operating segments by public entities in annual financial statements and
requires that those entities report selected information about operating
segments in interim financial reports issued for shareholders. This
Statement supercedes SFAS No. 14, "Financial Reporting for Segments of a
Business Enterprise" and amends SFAS No. 94, "Consolidation of
All-Majority-Owned Subsidiaries." SFAS No. 131 requires that public
entities report financial and descriptive information about its reportable
business segments. This statement is effective for financial statements for
periods beginning after December 15, 1997. Management has not fully
analyzed the impact of SFAS No. 131, and believes that the Company
currently operates in one business segment.
3. During the nine month period ended September 30, 1997, the Company
purchased marketable investment securities which are considered available
for sale and are recorded at fair value, based on quoted market prices. The
net unrealized holding gain or loss on marketable investment securities is
included as a separate component of stockholders' equity. A decline in the
fair value of any marketable investment security below cost, that is deemed
other than temporary, is charged to earnings resulting in a new cost basis
for the security. Costs of investments sold are determined on the basis of
specific identification.
The cost or amortized cost and estimated market values of investments
were as follows at September 30, 1997:
Cost or Gross Estimated
Amortized Unrealized Market
Cost Gains Value
---- ----- -----
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $11,686,952 $13,419 $11,700,371
=========== ======= ===========
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
Management's discussion and analysis provides a review of the Company's
operating results for the three and nine month periods ended September 30, 1997
and 1996, and its financial condition at September 30, 1997. The focus of this
review is on the underlying business reasons for significant changes and trends
affecting the revenues, net earnings and financial condition of the Company.
This review should be read in conjunction with the accompanying condensed
financial statements.
In an effort to give investors a well-rounded view of the Company's
current condition and future opportunities, this Quarterly Report on Form 10-Q
may include forecasts by the Company's management about future performance and
results. Because they are forward-looking, these forecasts involve
uncertainties. These uncertainties include risks of market acceptance of or
preference for the Company's systems and services, competitive forces, the
impact of, and changes in, government regulations, general economic factors in
the healthcare industry and other factors discussed in the Company's filings
with the Securities and Exchange Commission.
Results of Operations
Revenues
The Company generated revenue of $433,059 during the three months ended
September 30, 1997, a 142% increase over revenue of $178,729 for the three
months ended September 30, 1996. For the nine months ended September 30, 1997,
revenue was $1,526,866, a 137% increase over revenue of $644,146 during the nine
months ended September 30, 1996. The following is a summary of revenue by
category:
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
Revenues
- --------
Program Development $ 158,267 160,000 $ 761,372 $611,393
Licensing 70,834 17,500 354,167 23,056
Operations 203,958 1,229 411,327 9,697
------- ------- --------- -------
$ 433,059 $178,729 $1,526,866 $644,146
========== ========= ========== ========
Program development revenue represents the fees that the Company
charges its customers for the development of its customized programs. Program
development revenue declined from the third quarter of 1996 to the third quarter
of 1997 as the Company reduced its development fees charged to certain
customers, and entered into arrangements providing for development fees that are
based upon a program outcome to be measured at a later date. The increase in
program development revenue from the nine months ended September 30, 1996 to the
nine months ended September 1997, reflects the increase from 1996 to 1997,
primarily during the first quarter of 1997, in the number of different programs
which produced program development revenue. The program development revenue for
the nine months ended September 30, 1997 also reflects the recognition of
deferred development revenue of $80,021 related to a weight management program
which was under development pursuant to a Services Agreement with a customer.
The customer has been denied regulatory approval for the use of their
pharmaceutical product for the indication which was the focus of the program,
and, therefore, because the Company believes that no further development of this
program will occur and the Company has no obligation to repay any amounts to
this customer pursuant to this Services Agreement, the remaining deferred
development revenue was recognized.
Licensing revenue represents amounts that the Company charges its
customers for the right to enroll patients in or the right to market to other
entities certain of its programs, primarily the Company's standardized asthma
and diabetes programs, and the right to have access to data collected from
patients enrolled in such programs. The Company did not initiate any licensing
activity until the second quarter of 1996, therefore licensing revenues for the
three and nine month periods ended September 30, 1997 were significantly higher
than those generated during the corresponding periods in 1996.
Operations revenues are generated as the Company provides services to
its customers. These revenues increased significantly for the three and nine
month periods ended September 30, 1997 as compared to the corresponding periods
in 1996, due to initiation of patient enrollments in the Company's disease state
management programs during the fourth quarter of 1996 and the Company's
initiation of its physician education programs during the second quarter of
1997.
The Company has begun to provide other services to customers in the
healthcare industry during 1997 which involve new applications of its
information capture and delivery system. These services include patient surveys,
health risk assessments, nursing support lines and marketing support functions.
As the Company expands its operations, it intends to continue to emphasize
operations revenue to the exclusion of development revenues
Interest income was $208,178 for the three months ended September 30,
1997, as compared to $32,664 for the three month period ended September 30,
1996. For the nine months ended September 30, 1997 interest income was $644,848,
as compared to $53,333 for the nine months ended September 30, 1996. The
increase in interest income reflects the deposit of additional funds available
to the Company for investment as a result of the closing of its initial public
offering on December 19, 1996.
Costs and Expenses
Cost of sales includes salaries and related benefits, services provided
by third parties, and other expenses associated with the development of the
Company's customized disease state management programs, as well as the operation
of each of its disease state management programs. In addition, cost of sales
includes accrued losses on program development in accordance with the Company's
policy of recognizing such losses, if any, in full as identified. Cost of sales
was $398,696 for the three months ended September 30, 1997, as compared to
$153,812 during the three months ended September 30, 1996. For the nine months
ended September 30, 1997, cost of sales was $1,284,838, as compared to $601,124
for the nine months ended September 30, 1996. The increase in these costs from
1996 to 1997 reflects an increased level of program development and operational
activities.
Sales and marketing expenses for the three months ended September 30,
1997 were $492,318, as compared to $226,789 for the three month period ended
September 30, 1996. For the nine months ended September 30, 1997 sales and
marketing expenses were $1,295,979, as compared to $616,545 for the same period
in 1996. These costs consist primarily of salaries, related benefits, travel
costs, sales materials and other marketing related expenses. Spending in this
area has increased due to significant expansion of the Company's sales and
marketing staff. It is anticipated that the Company will continue to make
significant investments in the sales and marketing process, and that such
expenses will increase in future periods.
General and administrative expenses include the costs of corporate
operations, finance and accounting, human resources and other general operating
expenses of the Company. General and administrative expenses for the three
months ended September 30, 1997 were $754,555, as compared to $396,613 for the
three month period ended September 30, 1996. For the nine months ended September
30, 1997 general and administrative expenses were $1,739,490 as compared to
$1,298,801 for the nine months ended September 30, 1996. These expenditures have
been incurred in order to maintain the corporate infrastructure necessary to
support anticipated program development and operations. The increase in these
costs was caused by an increase in the Company's level of business activity, and
the addition of required administrative personnel. The Company expects that
general and administrative expenses will continue to increase in future periods.
Research and development expenses consist primarily of salaries and
related benefits and administrative costs allocated to the Company's research
and development personnel for development of certain components of its
integrated information capture and delivery system and the conduct of a clinical
trial of the Company's asthma program and development of the Company's
standardized disease state management programs. Research and development
expenses for the three months ended September 30, 1997 were $93,230, and were
$133,883 for the three months ended September 30, 1996. For the nine months
ended September 30, 1997 research and development costs were $430,398, as
compared to $160,619 for the same period in 1996. The increase in these costs
reflects the development activities related to the Company's standardized
disease state management programs for patients suffering from asthma and
diabetes and the costs associated with the clinical trial of its asthma program.
The Company anticipates that research and development expenses will continue at
the current level, or increase slightly in future periods, as the Company
continues to expand the number of programs that it develops and makes available
to its customers on a standardized basis.
Liquidity and Capital Resources
At September 30, 1997 the Company had working capital of $13,892,175,
as compared to working capital of $14,591,700 at December 31, 1996. Since its
inception, the Company has primarily funded its operations, working capital
needs and capital expenditures from the sale of equity securities. The Company's
initial capitalization of $500,000 was completed in February 1995. The Company
received $1,800,000 from the sale of equity securities in a private placement
during the third quarter of 1995, and $3,000,000 from the sale of additional
equity securities in a private placement during the second quarter of 1996. On
December 19, 1996 the Company completed an initial public offering of its common
stock which generated net proceeds to the Company of $14,082,048. The
underwriters of the Company's initial public offering exercised their
over-allotment option on January 8, 1997, resulting in additional net proceeds
to the Company of $2,232,000. The Company's net loss of $2,578,991 for the first
nine months of 1997 was funded by the receipt of the proceeds of the sale of
additional securities upon the closing of the over-allotment option, however it
is anticipated that the Company's continuing losses will result in further
reductions of working capital.
Certain of the Company's development contracts require that payments be
made by the customer at the time of contract execution and at the achievement of
certain milestones in the development process. These payments are normally
received in advance of the Company's recognition of the associated revenue. The
timing of customer payments for program operation services varies by contract,
but has often occurred prior to the associated services being provided. The
Company recognizes deferred revenue for amounts billed for these services in
advance of the rendering of the services. The advance payments have been a
source of liquidity for the Company. The Company anticipates that although such
billing practices are likely to continue in this manner in the foreseeable
future they will become less frequent as the Company absorbs more costs related
to program development.
The Company has been substantially dependent upon the public and
private sale of securities to fund its research and development activities and
working capital requirements. In order to implement programs using the Company's
integrated information capture and delivery system, the Company will be required
to devote substantial additional assets to the development of technology, the
construction of physical facilities and the acquisition of telephone and
computer equipment. The Company will also be required to retain the services of
employees in advance of obtaining contracts to provide services.
Inflation
Inflation did not have a significant impact on the Company's costs
during either the first nine months of 1997 or the first nine months of 1996.
The Company continues to monitor the impact of inflation in order to minimize
its effects through pricing strategies, productivity improvements and cost
reductions.
Recent Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per
Share," which will be effective during the fourth quarter of 1997. SFAS No. 128
will require the Company in its fourth quarter and in its annual report to
restate all previously reported earnings per share information to conform with
the new pronouncement's requirements. See Note 2 of the Notes to Financial
Statements.
FASB recently issued SFAS No. 130 on "Reporting Comprehensive Income"
and SFAS No. 131 on "Disclosures about Segments of an Enterprise and Related
Information." The "Reporting Comprehensive Income" standard is effective for
fiscal years beginning after December 15, 1997. SFAS No. 130 changes the
reporting of certain items currently reported in the common stock equity section
of the balance sheet and is not expected to have a material effect on the
Company's financial statements. The "Disclosures about Segments of an Enterprise
and Related Information" standard is also effective for fiscal years beginning
after December 15, 1997. This standard requires that public companies report
certain information about operating segments in their financial statements. It
also establishes related disclosures about products and services, geographic
areas, and major customers. The Company is currently evaluating what impact this
standard will have on its disclosures. See Note 2 of the Notes to Financial
Statements.
Forward Looking Statements
When used in this and in future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases and in oral
statements made with the approval of an authorized executive officer of the
Company, the words or phrases "will likely result," "expects," "plans," "will
continue," "is anticipated," "estimated," "project," or "outlook" or similar
expressions (including confirmations by an authorized executive officer of the
Company of any such expressions made by a third party with respect to the
Company) are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, each of which speak only as of the date made. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. These uncertainties include risks of market acceptance
of or preference for the Company's systems and services, competitive forces, the
impact of, and changes in, government regulations, general economic factors in
the healthcare industry and other factors discussed in the Company's filings
with the Securities and Exchange Commission. The Company has no obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect anticipated or unanticipated events or
circumstances occurring after the date of such statements.
<PAGE>
PART II - OTHER INFORMATION
Item 5. Other Information
The Company appointed Mr. Leonard Serafino to Senior Vice President and
Chief Operating Officer effective July 14, 1997.
The Company's Sr. Vice President, Chief Financial Officer, Secretary and
Treasurer, Mr. Gregory D. Brown, resigned from those offices effective August
15, 1997.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1997.
Exhibits:
(11) Statements of Computation of Per Share Earnings
See Page 11 of this Quarterly Report on Form 10-Q.
(27) Financial Data Schedule
Filed electronically
Exhibit 11. Statement of Computation of Per Share Earnings
PATIENT INFOSYSTEMS, INC.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Loss $(1,097,562) $ (699,703) $(2,578,992) $(1,979,610)
=========== ========== =========== ===========
Weighted average Common Stock outstanding 7,995,062 3,607,202 7,969,972 3,607,202
Weighted average Series A Convertible Preferred
Stock outstanding - 1,296,000 - 1,296,000
Staff Accounting Bulletin Common Stock equivalents:
Series B Convertible Preferred Stock
issued May and June of 1996, calculated using the
treasury stock method - 750,000 - 541,668
Dilutive effect of stock options granted in
the preceding twelve months, calculated
using the treasury stock method - 770,350 - 770,350
--------- --------- --------- ---------
Number of shares to be used in calculation 7,995,062 6,423,553 7,969,972 6,215,220
========= ========= ========= =========
Loss per common share $ (0.14) $ (0.11) $ (0.32) $ (0.32)
========== ========== ========== ==========
</TABLE>
<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.
Dated: November 14, 1997
PATIENT INFOSYSTEMS, INC.
(Registrant)
/s/ Donald A. Carlberg
Donald A. Carlberg
President and Chief Executive Officer
/s/ Lynda J. Bates
Lynda J. Bates, CPA
Controller
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,300,679
<SECURITIES> 11,700,371
<RECEIVABLES> 804,310
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 15,045,102
<PP&E> 1,428,151
<DEPRECIATION> 431,162
<TOTAL-ASSETS> 16,292,091
<CURRENT-LIABILITIES> 1,152,928
<BONDS> 0
0
0
<COMMON> 80,085
<OTHER-SE> 15,059,078
<TOTAL-LIABILITY-AND-EQUITY> 16,292,091
<SALES> 1,526,866
<TOTAL-REVENUES> 1,526,866
<CGS> 1,284,838
<TOTAL-COSTS> 4,750,706
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,578,992)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,578,992)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,578,992)
<EPS-PRIMARY> (0.32)
<EPS-DILUTED> (0.32)
</TABLE>
