<PAGE>
- --------------------------------------------------------------------------------
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 March 31, 1998
Transition Report Pursuant to Section 13 or 15(d) of the
--- Securities Exchange Act of 1994
Commission File Number. 0-21819
HealthDesk Corporation
(Exact name of Company as specified in charter)
<TABLE>
<CAPTION>
<S> <C>
California 94-3165144
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
2560 Ninth Street, Suite 220, Berkeley, California 94710
(Address of principal executive offices) (Zip Code)
</TABLE>
(510) 883-2160
(Company's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 May 13, 1998, there were 5,792,845 shares of the Company's Common
Stock outstanding, 250 shares of the Company's Preferred Stock and 2,125,000
Redeemable Warrants outstanding.
Transitional Small Business Disclosure Format Yes No X
---
- --------------------------------------------------------------------------------
<PAGE>
INDEX
Part I Page
Item 1 Financial Statements ........................................ 3
Item 2 Management's Discussion and Analysis or Plan Operation....... 3
Part II
Item 2 Changes in Securities........................................ 6
Item 6 Exhibits and Reports on Form 8-K............................. 6
2
<PAGE>
Part I
Item 1. Financial Statements.
The following Financial Statements are filed with this report as pages F-1
through F-6 following the signature page:
Index to Interim Financial Statements
Condensed Balance Sheets
Condensed Statements of Operations
Condensed Statements of Cash Flows
Notes to Condensed Financial Statements
Item 2. Management's Discussion and Analysis or Plan Operation.
The Company's operating performance each quarter is subject to various
risks and uncertainties as discussed in the Company's Form 10-KSB for the year
ended December 31, 1997. The following discussion should be read in conjunction
with the section entitled "Factors Affecting the Company's Business, Operating
Results and Financial Condition" in the Form 10-KSB.
The information set forth in "Management's Discussion and Analysis of
Financial Condition and Results of Operations" below includes "forward-looking
statements" within the meaning of Section 21E of the Securities and Exchange Act
of 1934, as amended (the "Exchange Act"), and is subject to the safe harbor
created by the section. Readers are cautioned not to place undue reliance on
these forward-looking statements as they speak only as of the date hereof.
Overview
The Company was organized in August 1992 and is still in the development
stage. Since inception, the Company has been engaged primarily in product
development activities. The Company's initial product was introduced in early
1993 and the Company has not yet proven to be commercially viable.
The Company has not yet generated any meaningful revenues, and will not
generate any meaningful revenues until after the Company successfully completes
market testing and subsequent commercialization of CareTeam Connect and
HealthDesk OnLine for Diabetes and the commercialization of HealthDesk OnLine
and then attract and retain a significant number of subscribers. For the period
August 28, 1992 (inception) to March 31, 1998, the Company incurred a cumulative
net loss of approximately $10,910,000. Since March 31, 1998, the Company has
continued to incur increasing and significant losses and anticipates that it
will continue to incur significant losses until, at the earliest, the Company
generates sufficient revenues to offset the substantial up-front expenditures
and operating costs associated with developing and commercializing its proposed
products.
The statements regarding the Company's future cash requirements are forward
looking statements that are subject to risks and uncertainties which could
result in the Company's inability to meet its funding requirements for the time
period indicated.
Software development costs (consisting primarily of salaries and related
expenses) incurred prior to establishing technological feasibility are expensed
in accordance with Financial Accounting Standards Board (FASB) Statement No. 86.
In accordance with FASB 86, the Company will capitalize software development
costs at such time as the technological feasibility of the product has been
established.
In June 1997, Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" and Statement of Financial Accounting Standards
No 131 "Disclosures About Segments of An Enterprise and Related Information"
were issued and are effective for the year ending December 31, 1998. The Company
believes the adoption of these pronouncements will not have a material effect on
its financial statements.
3
<PAGE>
In October 1997, the Accounting Standards Executive Committee issued
Statement of Position 97-2 (SOP 97-2), Software Revenue Recognition, which
delineates the accounting for software product and maintenance revenue. SOP 97-2
supersedes the Accounting Standards Executive Committee Statement of Position
91-1, Software Revenue Recognition, and is effective for transactions entered
into in fiscal years beginning after December 15, 1997. The Company anticipates
that SOP 97-2 will not have a material impact on its financial statements.
Results of Operations
Revenue decreased from $200,485 for the three months ended March 31, 1997
to $12,910 for the three months ended March 31, 1998. This decrease was
primarily attributable to a decrease in development fee revenue associated with
the development of HealthDesk OnLine for diabetes. During 1997, the Company had
focused its efforts on the initial development of HealthDesk OnLine and reduced
its marketing and sales efforts relating to its original Desktop HealthDesk
product.
Product development costs decreased by 47.9% from $697,217 for the three
months ended March 31, 1997 to $363,212 for the three months ended March 31,
1998. The decrease in expenditures was principally related to the hiring of
full-time programming staff versus the usage of higher cost contractors. During
the first quarter 1997, the Company had ten (10) contractors in product
development as compared to no contractors during the same period in 1998. To
date, all product development costs have been expensed as incurred. The Company
believes that significant investments in product development will be incurred to
enhance the functionality of HealthDesk OnLine and increase the product line
with new disease and life-stage modules. In the month of March 1998, the Company
re-negotiated an existing content license agreement and recognized a reduced
royalty cost of approximately $95,000 in the first quarter of 1998.
Sales and marketing costs decreased by 31.6% from $438,718 for the three
months ended March 31, 1997 to $299,867 for the three months ended March 31,
1998. This decrease resulted primarily from the reduction of headcount from ten
(10) full-time sales and marketing employees during the first quarter of 1997 to
six (6) during the same period in 1998 and a reduction in the allocations of
general and administrative resources to sales and marketing activities. These
reductions were offset by the increased expenses incurred in connection with
leveraging the distribution channel established as a result of the Company's
marketing agreement with HBO & Company.
General and administrative costs decreased by 23.7% from $143,917 for the
three months ended March 31, 1997 to $109,787 for the three months ended March
31, 1998. This decrease was primarily attributable to reversal of accrued
professional fees.
Other income (expense), net (including interest expense, interest income
and amortization of discount and issuance costs) changed from a net expense of
($122,075) for the three months ended March 31, 1997 to income of $15,849 for
the three months ended March 31, 1998. This change was primarily attributable to
the fact that during the quarter ended March 31, 1997, the Company recorded
remaining amortization of the non-recurring bridge discount and deferred debt
issuance costs of $145,023.
As a result of the foregoing, the Company incurred a net loss of $744,307
for the three months ended March 31, 1998, as compared to a net loss of
$1,201,642 for the comparable period.
Liquidity and Capital Resources
On February 25, 1998, the Company completed an $800,000 private placement.
The placement consisted of the sale of 400,000 shares of Common Stock, at a
price of $2.00 per share to two of the Company's existing shareholders.
At March 31, 1998, the Company had cash and cash equivalents of $1,431,465,
as compared to $1,405,430 at December 31, 1997.
4
<PAGE>
As of March 31, 1998, two existing shareholders agreed to purchase 250
shares of the Company's preferred stock for proceeds of $500,000. On May 13,
1998, the Company received the $500,000 proceeds. These shares are convertible,
at any time, at the option of the holders into a number of shares of the
Company's Common Stock equal to the proceeds of $500,000 divided by the lesser
of 50% of the average closing prices for the preceding three days or $1.00,
whichever is less. These shares are subject to mandatory conversion after five
years from the date of their issuance.
On April 13, 1998, the Company announced that it was repricing its
outstanding publicly traded warrants to reduce the exercise price from $5.00 per
share to $2.50 per share. In connection with such reduction, the Company was
also seeking to reduce the call price for the warrants from $7.50 to $3.75. The
Company intends to seek warrant holder approval of these changes over the next
month.
In the first quarter of 1997, $1,104,147 of cash was used in operating
activities, principally as a result of the $1,201,642 loss in the first quarter
of 1997 as offset by $145,023 in amortization of non cash discount, and $650,602
decrease in accounts payable and accrued liabilities. In the first quarter of
1998, $756,254 of cash was used in operating activities, principally as a result
of the $744,307 loss in the first quarter of 1998. Working capital at March 31,
1998 was $1,605,914, as compared to $999,092 at December 31, 1997.
The Company expects to incur significant expenses in connection with its
operations, including expenses associated with marketing and sales personnel and
the research and development of product lines. The Company believes that it has
working capital which together with a $300,000 funding commitment from existing
shareholders is sufficient to meet its projected cash requirements through the
end of 1998. Of the $1 million funding commitment dated February 20, 1998,
$200,000 and $500,000 were received in February and May 1998, respectively. The
Company is actively seeking additional equity financing. There can be no
assurance, that the Company will be able to obtain public or private third-party
sources of financing or, if obtained, that favorable terms for such financing
would be obtained. In addition, given the trading history of the Company's
Common Stock and Warrants since the initial public offering, there can be no
assurance that the Company will be able to raise additional cash through public
or private offerings of its common stock. There also can be no assurance that
the Company's funding requirements will not increase significantly as a result
of unforeseen circumstances or that the Company's cash used for operating
activities will not increase.
The Company's capital requirements relating to the development and
commercialization of HealthDesk OnLine have been and will continue to be
significant. Other than as described in this 10-QSB, the Company has no material
commitments for capital expenditures. For the period August 28, 1992 (inception)
to March 31, 1998, the Company had capital expenditures of $1,108,865 relating
primarily to purchases of servers, PCs and telecommunications equipment.
5
<PAGE>
Part II
Item 2 Changes in Securities
(c) Recent Sales of Unregistered Securities
On February 19, 24 and 25, 1998 the Company sold an aggregate of 400,000
shares of Common Stock at a purchase price of $2.00 to two existing shareholders
of the Company. On May 13, 1998, the Company received the proceeds of a $500,000
private placement of convertible preferred stock with two existing shareholders
of the Company. The preferred stock conversion price is based on the market
price of the common stock at the lesser of $1.00 or 50% of the three-day average
closing price prior to conversion. The foregoing transactions were not
registered under the Securities Act of 1933, as amended (the "1933 Act") in
reliance upon the exemptions provided by Section 4 (2) of the 1933 Act and/or
Regulation D promulgated thereunder as a transaction by an issuer not involving
a public offering.
Item 6. Exhibits and Reports on Form 8-K.
a) Exhibits:
11.1 Statement Regarding computation of loss per share
27 Financial Data Schedule
b) Reports on Form 8-K
On February 19, 1998, the Company filed a current report on Form 8-K
relating to the completion of sale of 400,000 shares of Common Stock to two
existing shareholders for an aggregate gross proceeds of $800,000 recorded on a
pro-forma basis, on the January 31, 1998 Balance Sheets.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto authorized.
HealthDesk Corporation
By: /s/ Timothy S. Yamauchi Date: May 15, 1998
-----------------------
Timothy S. Yamauchi
Chief Financial Officer
(principal financial and accounting officer)
6
<PAGE>
Exhibit Index
Description
-----------
11.1 Statement Regarding computation of loss per share
27 Financial Data Schedule
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Condensed Balance Sheets as of December 31, 1997 and March 31, 1998 (unaudited)........................ F-2
Condensed Statements of Operations for the three months ended March 31, 1997 and 1998, and
period from inception to March 31, 1998 (unaudited).................................................. F-3
Condensed Statements of Cash Flows for the three months ended March 31, 1997 and 1998 and
period from inception to March 31, 1998 (unaudited).................................................. F-4
Notes to Condensed Financial Statements................................................................. F-5
</TABLE>
F-1
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
CONDENSED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
December 31, March 31,
ASSETS 1997 1998
---- ----
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents.............................. $ 1,405,430 $ 1,431,465
Stock Subscriptions Receivable (See Note 6)............ ---- 500,000
Prepaid expenses and other............................. 78,724 119,383
Deferred offering and debt issuance costs............. ---- 10,618
------------------ ------------------
Total current assets................................ 1,484,154 2,061,466
------------------ ------------------
Property and equipment, net.............................. 472,561 417,948
Other assets............................................. 15,850 19,334
------------------ ------------------
Total assets........................................ $ 1,972,565 $ 2,498,748
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:
Accounts payable.................................... $ 133,992 $ 153,330
Accrued liabilities................................. 351,070 302,222
------------------ ------------------
Total liabilities................................. 485,062 455,552
------------------ ------------------
Shareholders' equity:
Convertible Preferred Stock (See Note 6)............ ---- 500,000
Common stock........................................ 11,457,505 12,257,505
Common Stock Warrants............................... 195,687 195,687
Deficit accumulated during the development stage.... (10,165,689) (10,909,996)
------------------- -------------------
Total shareholders' equity......................... 1,487,503 2,043,196
------------------ ------------------
Total liabilities and shareholders' equity...... $ 1,972,565 $ 2,498,748
================== ==================
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
August 28, 1992
(Inception) to
Three Months Ended March 31, March 31,
1997 1998 1998
---- ---- ----
<S> <C> <C> <C>
Revenue:
Software development and licensing............ $ 200,485 $ 12,910 $ 1,136,255
Other......................................... -- -- 12,714
------------ ------------ --------------
Total revenue............................... 200,485 12,910 1,148,969
------------ ------------ --------------
Costs and expenses:
Product development........................... 697,217 363,212 5,321,347
Sales and marketing........................... 438,718 299,867 3,648,468
General and administrative.................... 143,917 109,787 2,101,349
------------ ------------ --------------
Total costs and expenses................... 1,279,852 772,866 11,071,164
------------ ------------ --------------
Loss from operations....................... (1,079,367) (759,956) (9,922,195)
Interest expense............................ (14,900) -- (127,232)
Interest income............................. 37,848 15,849 188,003
Amortization of discount and issuance costs
associated with bridge financing.......... (145,023) -- (1,029,250)
Other expenses.............................. -- -- (14,322)
------------ ------------ ---------------
Loss before income taxes................... (1,201,442) (744,107) (10,904,996)
Provision for income taxes....................... (200) (200) (5,000)
------------- ------------- ---------------
Net loss................................... $ (1,201,642) $ (744,307) $ (10,909,996)
============= ============= ===============
Basic net loss per share......................... $ (0.26) $ (0.13)
============= =============
Diluted net loss per share....................... $ (0.26) $ (0.13)
============= =============
Weighted average number of shares of common stock,
basic and diluted............................. 4,659,663 5,564,512
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
August 28, 1992
Three Months Ended March 31, (inception) to
1997 1998 March 31,1998
---- ---- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss....................................... $ (1,201,642) $ (744,307) $ (10,909,996)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization................ 63,357 72,322 635,838
Amortization of non cash discount............ 145,023 ---- 1,029,250
Other........................................ ---- ---- 28,800
Changes in assets and liabilities:
(Increase) decrease in prepaid expenses and
deferred costs............................ 539,300 (51,277) (107,156)
(Increase) decrease in other assets........ 417 (3,484) (19,334)
Increase (decrease) in accounts payable.... (423,273) 19,338 153,330
Increase (decrease) in accrued liabilities. (227,329) (48,846) 305,656
------------------- ------------------- ------------------
Net cash used in operating activities..... (1,104,147) (756,254) (8,883,612)
------------------- ------------------- -------------------
Cash flows from investing activities:
Additions to property and equipment............ (74,188) (17,711) (1,108,865)
------------------- ------------------- -------------------
Net cash used in investing activities...... (74,188) (17,711) (1,108,865)
------------------- ------------------- -------------------
Cash flows from financing activities:
Payments of short-term notes payable........... (2,000,000) ---- (2,000,000)
Proceeds of short-term notes payable, net
accrued offering costs........................ ---- ---- 970,750
Repayment of convertible notes payable......... ---- ---- (500,000)
Proceeds from issuance of convertible notes
payable....................................... ---- ---- 1,800,000
Proceeds from issuance of common stock and
warrants, net of offering costs............... 7,018,788 800,000 8,858,965
Net proceeds from issuance of preferred stock.. ---- ---- 2,183,036
Proceeds from shareholders' loans.............. ---- ---- 118,164
Repayment of loans from shareholders........... ---- ---- (118,164)
Proceeds from the exercise of stock options..... 4,816 ---- 111,191
------------------ ------------------ ------------------
Net cash provided by financing activities... 5,023,604 800,000 11,423,942
------------------ ------------------ ------------------
Net increase (decrease) in cash and cash
equivalents................................. 3,845,269 26,035 1,431,465
Cash and cash equivalents at beginning of period.. 198,277 1,405,430 ----
------------------ ------------------ ------------------
Cash and cash equivalents at end of period........ $ 4,043,546 $ 1,431,465 $ 1,431,465
================== ================== ==================
</TABLE>
The accompany notes are an integral part of these financial statements.
F-4
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
The interim financial data is unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting of all normal
recurring adjustments necessary for a fair statement of results for the interim
periods. The financial statements included herein have been prepared by the
Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principals have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures included herein
are adequate to make the information presented not misleading. Operating results
for the three months ended March 31, 1998 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1998.
The organization and the business of the Company, accounting policies
followed by the Company and other information are contained in the notes to the
Company's consolidated financial statements filed as part of the Company's
annual report for the fiscal year ended December 31, 1997 on Form 10-KSB. This
quarterly report should be read in conjunction with such annual report.
1. Organization and Basis of Presentation:
HealthDesk Corporation (the Company), a development stage company, is
engaged in designing, developing and marketing HealthDesk(R) OnLine, a
healthcare management and information system which enables consumers to take a
more active role in their personal and family health. HealthDesk OnLine features
easy-to-use Windows-based software designed to develop personal medical records
and health management programs and access educational, health related
information from the Company's private website and over the Internet.
2. Recently Issued Accounting Pronouncements:
In June 1997, Statement of Financial Accounting Standards No. 130
"Reporting Comprehensive Income" and Statement of Financial Accounting Standards
No 131 "Disclosures About Segments of An Enterprise and Related Information"
were issued and are effective for the year ending December 31, 1998. The Company
believes the adoption of these pronouncements will not have a material effect on
its financial statements.
In October 1997, the Accounting Standards Executive Committee issued
Statement of Position 97-2 (SOP 97-2), Software Revenue Recognition, which
delineates the accounting for software product and maintenance revenue. SOP 97-2
supersedes the Accounting Standards Executive Committee Statement of Position
91-1, Software Revenue Recognition, and is effective for transactions entered
into in fiscal years beginning after December 15, 1997. The Company anticipates
that SOP 97-2 will not have a material impact on its financial statements.
3. Concentrations of Credit Risk:
The Company places its temporary cash investments with one financial
institution. The Company performs ongoing credit evaluations of its customers
and generally does not require collateral. One customer accounted for
approximately 97% of revenues in three months ended March 31, 1998.
4. Legal Proceedings:
The Company is subject to a complaint filed by a former employee with the
California Department of Fair Employment & Housing. The claim alleges wrongful
termination as a result of alleged denial of reasonable accommodation for a
wrist and neck injury. The Company intends to defend this matter vigorously.
There can be no assurance, however, that such matters will be resolved in a
manner favorable to the Company.
F-5
<PAGE>
HealthDesk Corporation
(a Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
5. Net Loss Per Share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share, which
establishes standards for computing and presenting earnings (loss) per share.
Under the new standard, Basic earnings per share is computed based on the
weighted average number of common shares outstanding and excludes any potential
dilution; Diluted earnings per share reflects potential dilution from the
exercise or conversion of securities into common stock. SFAS No. 128 is
effective for financial statements issued for periods ending after December 15,
1997. The financial statements presented have been prepared in accordance with
SFAS No. 128 and loss per share data for the prior period presented has been
restated to conform with current year presentation. Options to purchase 730,738
and 699,827 shares of common stock with exercise prices ranging from $1.04 to
$5.00 and $1.04 to $5.00, respectively, were outstanding as of March 31, 1997
and 1998 and were excluded from the loss per share calculation for the quarters
then ended as they have the effect of decreasing loss per share.
6. Convertible Preferred Stock
As of March 31, 1998, two existing shareholders agreed to purchase 250
shares of the Company's preferred stock for proceeds of $500,000. On May 13,
1998, the Company received the $500,000 proceeds. These shares are convertible,
at any time, at the option of the holders into a number of shares of the
Company's Common Stock equal to the proceeds of $500,000 divided by the lesser
of 50% of the average closing prices for the preceding three days or $1.00,
whichever is less. These shares are subject to mandatory conversion after five
years from the date of their issuance.
7. Repricing of Warrants
On April 13, 1998, the Company announced that it was repricing its
outstanding publicly traded warrants to reduce the exercise price from $5.00 per
share to $2.50 per share. In connection with such reduction, the Company was
also seeking to reduce the call price for the warrants from $7.50 to $3.75. The
Company intends to seek warrant holder approval of these changes over the next
month.
F-6
<PAGE>
EXHIBIT 11.1
HealthDesk Corporation
Computation of Loss per Share
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1998
---- ----
<S> <C> <C>
Weighted average number of common shares outstanding used for both
Basic and Diluted calculations..................................... 4,659,663 5,564,512
------------------- -------------------
Net Loss........................................................... $ (1,201,642) $ (744,307)
==================== ====================
Basic loss per share............................................... $ (0.26) $ (0.13)
==================== ====================
Diluted loss per share............................................. $ (0.26) $ (0.13)
==================== ====================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CIK> 0001023767
<NAME> HEALTHDESK CORPORATION
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,431,465
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,061,466
<PP&E> 965,684
<DEPRECIATION> 547,736
<TOTAL-ASSETS> 2,498,748
<CURRENT-LIABILITIES> 455,552
<BONDS> 0
0
500,000
<COMMON> 12,257,505
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,498,748
<SALES> 12,910
<TOTAL-REVENUES> 12,910
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 772,866
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (744,107)
<INCOME-TAX> 200
<INCOME-CONTINUING> (744,307)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (744,307)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
