UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
-------------------------
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: 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)
(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 May 15, 2000, 8,050,202 common shares were outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
- -----------------------------------------------------------------------------------------------------------------
ASSETS March 31, 2000 December 31, 1999
-------------- -----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,072,176 $ 489,521
Accounts receivable 688,565 650,279
Prepaid expenses and other current assets 156,728 202,064
-------------------------------------------
Total current assets 2,917,469 1,341,864
PROPERTY AND EQUIPMENT, net 1,184,322 1,291,351
Debt issuance costs (net of accumulated amortization of $86,500 and 771,000 382,500
Intangible assets (net of accumulated amortization of $48,434 and 574,290 584,669
Other assets 225,150 244,011
-------------------------------------------
TOTAL ASSETS $ 5,672,231 $ 3,844,395
===========================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 226,786 $ 496,533
Accrued salaries and wages 337,856 190,232
Line of credit 2,500,000 -
Accrued expenses 33,566 22,767
Deferred revenue 316,224 218,200
-------------------------------------------
Total current liabilities 3,414,432 927,732
-------------------------------------------
LINE OF CREDIT - 500,000
STOCKHOLDERS' EQUITY:
Common stock - $.01 par value: shares authorized:
20,000,000; issued and outstanding: March 31,
2000 - 8,040,202; December 31, 1999 - 8,040,202 80,402 80,402
Preferred Stock - $.01 par value: shares authorized: 5,000,000
Series C, 9% cumulative, convertible
issued and outstanding March 31, 2000 - 100,000 1,000 -
Additional paid-in capital 23,443,578 21,968,536
Accumulated other comprehensive income 1,805 1,805
Accumulated Deficit (21,268,986) (19,634,080)
-------------------------------------------
Total stockholders' equity 2,257,799 2,416,663
-------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,672,231 $ 3,844,395
===========================================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
- -----------------------------------------------------------------------------------------------
Three Months Ended
March 31,
2000 1999
---- ----
<S> <C> <C>
REVENUES
Operations Fees $ 588,181 $ 833,812
Development Fees - -
Licensing Fees 12,399 -
-------------------------------------------
Total revenues 600,580 833,812
-------------------------------------------
COSTS AND EXPENSES
Cost of sales 1,278,175 1,449,926
Sales and marketing 310,473 570,322
General and administrative 466,459 455,283
Research and development 85,552 118,419
-------------------------------------------
Total costs and expenses 2,140,659 2,593,950
-------------------------------------------
OPERATING LOSS (1,540,079) (1,760,138)
OTHER INCOME (EXPENSE) (94,827) 46,411
-------------------------------------------
NET LOSS $ (1,634,906) $ (1,713,727)
===========================================
NET LOSS PER SHARE - BASIC
AND DILUTED $ (0.20) $ (0.21)
===========================================
WEIGHTED AVERAGE COMMON
AND POTENTIAL COMMON SHARES 8,040,202 8,023,423
===========================================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------------
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,634,906) $ (1,713,727)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 223,911 115,952
Compensation expense related to issuance of stock warrants 1,042 2,915
(Increase) decrease in accounts receivable, net (38,286) 436,553
(Increase) decrease in prepaid expenses and other current assets 45,336 (12,841)
Decrease in other assets 18,861 34,294
Decrease in accounts payable (269,747) (10,090)
Increase in accrued salaries and wages 147,624 128,330
Increase in accrued expenses 10,799 31,037
Increase in deferred revenue 98,024 20,057
-------------------------------------------
Net cash used in operating activities (1,397,342) (967,520)
INVESTING ACTIVITY:
Property and equipment additions (20,003) (306,953)
Purchases of available-for-sale securities - (10,847)
Purchase of HealthDesk Intellectual Property, net - (608,166)
-------------------------------------------
Net cash used in investing activities (20,003) (925,966)
FINANCING ACTIVITIES:
Proceeds from issuance of common and preferred stock, net 1,000,000 1,801
Line of credit borrowings 2,000,000 -
-------------------------------------------
Net cash provided by financing activities 3,000,000 1,801
-------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,582,655 (1,891,685)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 489,521 6,316,955
-------------------------------------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 2,072,176 $ 4,425,270
===========================================
Supplemental disclosures of cash flow information
Cash paid and received for income taxes, net $ - $ 20,600
===========================================
Supplemental disclosures of non-cash information
Fair value of stock purchase warrants issued in conjunction with
guarentees by certain board members of borrowings on the line
of credit $ 475,000 $ -
===========================================
See notes to consolidated financial statements.
</TABLE>
<PAGE>
PATIENT INFOSYSTEMS, INC.
Notes to Consolidated Financial Statements
1. The consolidated financial statements for the three month periods ended
March 31, 2000 and March 31, 1999 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 consolidated financial
statements should be read in conjunction with the consolidated 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, 1999.
The results of operations for the three months ended March 31,2000 are not
necessarily indicative of the results for the entire year ending December
31, 2000.
2. Intangible assets represent the intellectual property (i.e.: tradenames,
trademarks, licenses and brandnames) acquired from HealthDesk Corporation,
which are being amortized over 15 years using the straight-line method.
3. In March 2000, the Company completed a private placement of 100,000 shares
of newly issued Series C 9% Cumulative Convertible Preferred Stock, raising
$1,000,000 in total proceeds. These shares can be converted into Common
Stock at a rate of 8 shares of Common Stock to 1 share of Preferred Stock.
Each Series C share has voting rights equivalent to 8 shares of Common
Stock. The proceeds resulting from this issuance will be used to support
the Company's operation.
Also in March 2000, the Company secured an additional $1,000,000 line of
credit under substantially the same terms as its existing $1,500,000 line.
Because these lines of credit are due and payable on March 31, 2001,
amounts borrowed at March 31, 2000 and December 31, 1999 are reported as
current and long term liabilities, respectively. Additional warrants for
the purchase of 250,000 common shares, which had a fair market value of
$475,000, were issued to the guarantors of this additional line of credit.
<PAGE>
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 month periods ended March 31, 2000 and March 31,
1999 and its financial condition at March 31, 2000. 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 consolidated 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 includes
forecasts by the Company's management about future performance and results.
Because they are forward-looking, these forecasts involve uncertainties. These
uncertainties include the Company's working capital short falls, 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 including the Company's
Annual Report on Form 10-K for the year ended December 31, 1999.
Results of Operations
Revenues
Revenues consist of revenues from operations, development and licensing
fees. Revenues decreased from $833,812 during the three months ended March 31,
1999 to $600,580 during the three months ended March 31, 2000, or 28%.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
Revenues 2000 1999
- -------- ---- ----
<S> <C> <C>
Operations Fees
Disease Management and Compliance $ 175,757 $ 148,778
Surveys 130,409 454,107
Demand Management 232,762 198,713
Other 49,253 32,215
------------------------------
Total Operations Fees 588,181 833,812
Development Fees - -
Licensing Fees 12,399 -
------------------------------
Total Revenues $ 600,580 $ 833,812
------------------------------
</TABLE>
Operations revenues are generated as the Company provides services to its
customers. Operations revenues decreased from $833,812 during the three months
ended March 31, 1999 to $588,181 during the three months ended March 31, 2000.
Operations revenues continue to be the primary source of revenue for the
Company. The decrease in operations revenues reflected reduced revenues from the
conduct of surveys that resulted from the elimination of a Medicare product by
one of the Company's primary customers. Demand Management revenues increased 17%
due to marginal increases in the membership of existing clients and the addition
of McClelland Air Force Base as a new customer.
The Company has identified possible new customers, but there can be no
assurance that such prospects will contribute revenue in the near term, if at
all.
Development revenue represents the amounts that the Company charges its
customers for the development of its customized programs. There were no
development revenues in the three months ended March 31, 2000 or 1999. The
Company has entered into new development agreements but anticipates that revenue
from program development will remain immaterial in the future.
License revenues recognized from the Case Management Support Systems for
the three months ended March 31, 2000 were $12,399. The Company has not entered
into any new licensing agreements for its Case Management Support System and the
revenue for the current period reflects ongoing revenue from the existing
agreements.
Costs and Expenses
Cost of sales include salaries and related benefits, services provided by
third parties, and other expenses associated with the implementation and
delivery of the Company's standard and customized population, demand, and
disease management programs. Cost of sales for the three months ended March 31,
2000 consisting of costs associated with the operation of the Company's programs
was $1,278,175 as compared to $1,449,926 for the three month period ended March
31, 1999. The decrease in these costs primarily reflects a response to the
decreased level of population and disease management operational activities. The
Company's gross margin continues to be negative. The Company anticipates that
revenue must increase before it will recognize economies of scale. No assurance
can be given that revenues will increase or that, if they do, they will exceed
expenses.
Sales and marketing expenses consist primarily of salaries, related
benefits, travel costs, sales materials and other marketing related expenses.
Sales and marketing expenses for the three months ended March 31, 2000 were
$310,473 as compared to $570,322 for the three month period ended March 31,
1999. Spending in this area has decreased due to the resignation or termination
of several members of the sales staff. The Company anticipates expansion of the
Company's sales and marketing staff and expects it will continue to invest in
the sales and marketing process, and that such expenses related to sales and
marketing may 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 March 31, 2000 were $466,459, as compared to $455,283 for the three
month period ended March 31, 1999. These expenditures have been incurred to
maintain the corporate infrastructure necessary to support anticipated program
operations. The increase in these costs during the period reflected a single
severance payment of $58,763 to Donald A. Carlberg who resigned as Chief
Executive Officer effective March 30, 2000. Without this charge, general and
administrative costs would have decreased $47,587 to $407,696 as compared to the
same period of 1999. The Company expects that general and administrative
expenses will remain relatively constant in future periods.
Research and development expenses consist primarily of salaries and related
benefits and administrative costs associated with the development of certain
components of the Company's integrated information capture and delivery system,
as well as development of the Company's standardized disease management programs
and the Company's Internet based technology products. Research and development
expenses for the three months ended March 31, 2000 were $85,552, as compared to
$118,419 for the three months ended March 31, 1999.
Other (expense) income was ($94,827) and $46,411 at March 31, 2000 and 1999
respectively. The net decrease in these amounts is principally due to
amortization of debt issuance costs and interest expense on the line of credit
borrowings, both of which began on January 1, 2000.
The Company had a net loss of $1,634,906 for the three months ended March
31, 2000, as compared to a net loss of $1,713,727 for the three months ended
March 31, 1999. This represents a net loss per share of $.20 for the first
quarter of 2000, as compared to a net loss of $.21 per share in the first
quarter of 1999.
Liquidity and Capital Resources
At March 31, 2000 the Company had a working capital deficit of $496,963 as
compared to working capital of $414,132 at December 31, 1999. Through March 31,
2000 these amounts reflect the effects of the Company's continuing losses as
well as the borrowings against its $2,500,000 line of credit, $500,000 of which
was considered to be a long term liability at December 31, 1999. Since its
inception, the Company has primarily funded its operations, working capital
needs and capital expenditures from the sale of equity securities. The Company
completed an initial public offering of its common stock on January 8, 1997, at
which time, it generated net proceeds to the Company of $16,314,048.
In March 2000, the Company completed a private placement of 100,000 shares
of newly issued Series C 9% Cumulative Convertible Preferred Stock, raising
$1,000,000 in total proceeds. These shares can be converted into Common Stock at
a rate of 8 shares of Common Stock to 1 share of Preferred Stock. Each Series C
share has voting rights equal to the number of shares of Common Stock into which
it can be converted. The proceeds resulting from this issuance will be used to
support the Company's operations.
In December 1999, the Company established a credit facility for $1,500,000
guaranteed by two of the Company's Board members. In March 2000, the facility
was increased by $1,000,000 under substantially the same terms, also guaranteed
by the same Board members. Because this line of credit is due and payable on
March 31, 2001, amounts borrowed at March 31, 2000 and December 31, 1999 are
reported as current and long term liabilities, respectively. Additional warrants
for the purchase of 250,000 common shares, which had a fair market value of
$475,000, were issued to the guarantors of this additional line of credit.
The Company has expended substantial amounts to expand its operational
capabilities and strengthen its infrastructure, which at the same time has
increased its administrative and technical costs. In addition, the Company's
cash has been steadily depleted as a result of operating losses. To the extent
that the Company anticipates that its losses will continue or increase, the
Company's available capital will continue to decline. Accordingly, the Company
has been required to seek additional capital to maintain its operations. The
Company is continuing its efforts to raise additional capital privately through
the sale of convertible preferred stock in a private placement to accredited
investors through the efforts of its officers and directors. No assurance can be
given that the Company will successfully raise the necessary funds. In addition,
the Company anticipates that as its losses continue, it will likely need to
raise additional funds during 2000. However, no assurance can be given that the
Company will be able to obtain additional financing on favorable terms, if at
all. In addition, any additional financing, which includes the issuance of
additional securities of the Company, may be dilutive to the Company's existing
stockholders. If the Company is unable to identify additional capital, it will
be required to curtail or cease operations.
Nasdaq Continued Listing Requirements
In order for the Company's Common Stock to continue to be quoted on the
Nasdaq National Market, it must have net tangible assets of at least $4 million.
As of March 31, 2000, the Company's net tangible assets were less than $4
million. Accordingly, the Company expects that its Common Stock may be delisted
from the Nasdaq National Market. Nevertheless, the Company intends to try to
satisfy the continuing listing criteria to be listed on the Nasdaq Small Cap
Market so thet if its shares are delisted from the Nasdaq National Market, that
its Common Stock may be listed for trading on the Nasdaq Small Cap Market. No
assurance can be given that the liquidity of the Common Stock will not be
adversely affected if it is traded on the Nasdaq Small Cap Market ("Nasdaq"). In
order to satisfy continued listed criteria on the Nasdaq Small Cap Market, a
company must have, among other things, net tangible assets of at least $2
million and maintain a stock price in excess of $1 per share. Whether or not the
Company can be deemed to satisfy the listing requirements of the Nasdaq Small
Cap Market as of March 31, 2000, to the extent that the Company continues to
incur losses and is unable to raise additional equity, it will not be able to
maintain compliance with the continued listing requirements of the Nasdaq Small
Cap Market.
No assurance can be given that the Company's Common Stock will continue to
be listed on Nasdaq. If the failure to meet the maintenance criteria results in
the Company's Common Stock no longer being eligible for quotation on Nasdaq,
trading, if any, of the Common Stock would thereafter be conducted in the
non-Nasdaq over-the-counter market. As a result of such delisting, an investor
may find it more difficult to dispose of or to obtain accurate quotations as to
the market value of the Company's Common Stock. In addition, if the Common Stock
was to become delisted from Nasdaq and the trading price of the Common Stock was
less than $5.00 per share, trading in the Common Stock would be subject to the
requirements of certain rules promulgated under the Securities Exchange Act of
1934, as amended ("the "Exchange Act"), which require additional disclosure by
broker-dealers in conjunction with any trades involving a stock defined as a
penny stock (generally, any non-Nasdaq equity security that has a market price
of less than $5.00 per share, subject to certain exceptions). Such rules require
the delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith, and impose
various sales practice requirements on dealer-brokers who sell penny stocks to
persons other than established customers and accredited investors (generally
institutions). For these types of transactions, the dealer-broker must make a
special suitability determination for the purchaser and must receive the
purchaser's written consent to the transaction prior to sale. The additional
burdens imposed on broker-dealers by such requirements may discourage them from
effecting transactions in the Common Stock, which could severely limit the
liquidity of the Common Stock and the ability to sell the Common Stock in the
secondary market.
In the absence of an active trading market, purchasers of the Common Stock
may experience difficulty in selling their shares. The trading price of the
Common Stock is expected to be subject to significant fluctuations in response
to variations in quarterly operating results, changes in analysts' earnings
estimates and other factors. In addition, the stock market is subject to price
and volume fluctuations that affect the market prices for companies and that are
often unrelated to operating performance.
Inflation
Inflation did not have a significant impact on the Company's costs during
the three periods ended March 31, 2000 and March 31, 1999. The Company continues
to monitor the impact of inflation in order to minimize its effects through
pricing strategies, productivity improvements and cost reductions.
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>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to changes in interest rates primarily in its cash
transactions. The interest paid on the Company's outstanding line of credit is
based upon the prime rate. The Company has the option of reducing its interest
expenses by rolling the outstanding line of credit balance into notes that carry
a rate equal to LIBOR plus 1.75%.
In relation to the operations of Patient Infosystems Canada, fluctuations
of foreign currency can impact the Company's net operating results. However,
management believes that due to the relative size of its operations in Canada,
such impact would be considered immaterial to the consolidated financial
statements. The Company currently has no significant investments in foreign
currency instruments.
The balances the Company has in cash or cash equivalents are generally
available without legal restrictions to fund ordinary business operations. The
Company regularly invests excess operating cash in certificates of deposit and
U.S. government bonds and other bonds that are subject to changes in short-term
interest rates. Accordingly, the Company believes that the market risk arising
from its holding of these financial instruments is minimal. The Company did not
make any purchases of available-for-sale securities in the three months ended
March 31, 1999 and 2000.
<PAGE>
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Series C Preferred Stock
On March 31, 2000, the Company received $1,000,000 in proceeds from a
private sale of 100,000 shares of Series C Convertible Preferred Stock. The
Series C Convertible Preferred carries a 9% cumulative dividend provision and
can be converted into Common Stock at a rate of 8 shares of Common to 1 share of
Preferred. Each share of Series C Convertible Preferred Stock has voting rights
equal to the number of shares of Common Stock into which it can be converted.
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
- --------
(a) (11) Statements of Computation of Per Share Earnings
(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended March 31, 2000
<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: May 15, 2000
PATIENT INFOSYSTEMS, INC.
(Registrant)
Date May 15, 2000 /s/ Roger L. Chaufournier
------------ -------------------------
Roger L. Chaufournier
Director, President and
Chief Executive Officer
Date May 15, 2000 /s/ Kent A. Tapper
------------ -------------------------
Kent A. Tapper
Principle Accounting Officer
Exhibit 11. Statement of Computation of Per Share Earnings
<TABLE>
<CAPTION>
PATIENT INFOSYSTEMS, INC.
Three Months Ended
March 31,
2000 1999
---- ----
<S> <C> <C>
Net Loss $ (1,637,906) $ (1,713,727)
--------------- ---------------
Weighted average common and
potential common shares 8,040,202 8,023,423
--------------- ---------------
Net Loss per share - Basic and Diluted $ (0.20) $ (0.21)
=============== ===============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,072,176
<SECURITIES> 0
<RECEIVABLES> 688,565
<ALLOWANCES> 50,000
<INVENTORY> 0
<CURRENT-ASSETS> 2,917,469
<PP&E> 2,631,015
<DEPRECIATION> 1,446,693
<TOTAL-ASSETS> 5,672,231
<CURRENT-LIABILITIES> 3,414,432
<BONDS> 0
0
1,000
<COMMON> 80,402
<OTHER-SE> 2,174,592
<TOTAL-LIABILITY-AND-EQUITY> 5,672,231
<SALES> 600,580
<TOTAL-REVENUES> 600,580
<CGS> 1,278,175
<TOTAL-COSTS> 2,140,659
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 21,954
<INCOME-PRETAX> (1,634,906)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,634,906)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,634,906)
<EPS-BASIC> (.20)
<EPS-DILUTED> (.20)
</TABLE>
