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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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 000-21909
PIRANHA INTERACTIVE PUBLISHING, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 86-0779928
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1839 West Drake, Suite B, Tempe, Arizona 85283
(Address of principal executive offices)
602-491-0500
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
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. [X] Yes [ ] No
As of March 11, 1998, the number of outstanding shares of the Registrant's
Common Stock was 3,200,000.
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<PAGE>
INDEX
Page
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheet as of March 31, 1998 ............................ 3
Statements of Operations for the three month
periods ended March 31, 1998 and 1997 ......................... 4
Statements of Cash Flows for the three month periods
ended March 31, 1998 and 1997 ................................ 5
Notes to Financial Statements.................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................... 8
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds .....................12
Item 6. Exhibits and Reports on Form 8-K...............................12
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PIRANHA INTERACTIVE PUBLISHING, INC.
BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
ASSETS
Current assets:
Cash and cash equivalents $ 1,983,149
Accounts receivable, net of allowance for returns
of $37,097 and doubtful accounts of $5,000 187,299
Inventories 246,949
Prepaid royalties 380,310
Other prepaid expenses 79,897
-----------
Total current assets 2,877,604
Property and equipment, net 105,425
Other assets 4,347
-----------
Total assets $ 2,987,376
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 207,948
Payroll related accruals 30,621
Other accrued liabilities 20,015
-----------
Total current liabilities 258,584
Notes payable - officers 41,213
Other liabilities 7,518
-----------
Total liabilities 307,315
Stockholders' equity:
Preferred stock, $.001 par value; 5,000,000 shares
authorized; no shares issued and outstanding Common
stock, $.001 par value; 20,000,000 shares authorized;
3,200,000 shares issued and outstanding 3,200
Additional paid-in capital 5,901,339
Accumulated deficit (3,224,478)
-----------
Total stockholders' equity 2,680,061
-----------
Total liabilities and stockholders' equity $ 2,987,376
===========
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
PIRANHA INTERACTIVE PUBLISHING, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
Three Months Ended
March 31,
----------------------------
1998 1997
---- ----
Net sales $ 204,520 $ 57,708
Cost of goods sold 104,479 28,096
---------- ---------
Gross profit 100,041 29,612
Selling, general and
administrative expenses 765,112 334,069
---------- ---------
Loss from operations (665,071) (304,457)
Other income (expense):
Interest income 31,413 --
Interest expense (1,006) (111,846)
---------- ---------
30,407 (111,846)
Net loss $ (634,664) $(416,303)
========== =========
Net loss per common share $ (0.32) $ (1.11)
========== =========
Shares used in computing
net loss per common share 1,975,000 375,000
========== =========
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
PIRANHA INTERACTIVE PUBLISHING, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1997
(UNAUDITED)
Three Months Ended
March 31,
------------------------
1998 1997
---- ----
Cash flows from operating activities:
Net loss $ (634,664) $(416,303)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 8,311 5,532
Amortization 53 69,328
Interest on notes payable - officers 1,006 911
Reserve for obsolescence (14,703) 2,023
Net changes in current assets and liabilities:
Accounts receivable (150,399) (11,952)
Inventory (92,238) (32,967)
Prepaid expenses (99,587) (32,388)
Accounts payable 48,906 222,628
Accrued liabilities (1,985) 56,927
Other liabilities (950) (652)
---------- ---------
Net cash used in operating activities (936,250) (136,913)
---------- ---------
Cash flow used in investing activities:
Purchase of property and equipment (14,353) (10,748)
---------- ---------
Net cash used in investing activities (14,353) (10,748)
---------- ---------
Cash flows from financing activities:
Payments related to initial public offering -- (83,705)
---------- ---------
Net cash used in financing activities -- (83,705)
---------- ---------
Net decrease in cash and cash equivalents (950,603) (231,366)
Cash and cash equivalents, beginning of period 2,933,752 246,732
---------- ---------
Cash and cash equivalents, end of period $1,983,149 $ 15,366
========== =========
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
PIRANHA INTERACTIVE PUBLISHING, INC.
NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
Interim Financial Information
The unaudited interim financial statements of Piranha Interactive Publishing,
Inc., a Nevada Corporation (the "Company"), include all adjustments, consisting
of only normal recurring adjustments which, in the opinion of management, are
necessary for their fair presentation. The results of operations for the interim
periods are not necessarily indicative of the operating results for the full
year. These financial statements have been prepared in accordance with the
instructions to Form 10-QSB and do not contain certain information required by
generally accepted accounting principles. These statements should be read in
conjunction with the financial statements and notes thereto for the year ended
December 31, 1997 included in the Company's Form 10-KSB on file with the
Securities and Exchange Commission.
LOSS PER SHARE DISCLOSURES
Basic loss per share is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted loss per share is computed giving effect to all dilutive
potential common shares that were outstanding during the period. Dilutive
potential common shares consist of the incremental common shares issuable upon
exercise of stock options, warrants and the unit purchase option.
A reconciliation of the numerator and denominator of basic loss per share is
provided as follows:
1998 1997
---- ----
Numerator - Basic and Diluted loss per share:
Net loss $ (634,664) $ (416,303)
=========== ===========
Denominator - Basic and Diluted loss per share:
Weighted average common shares outstanding 3,200,000 1,600,000
Less shares of common stock in escrow (1,225,000) (1,225,000)
----------- -----------
1,975,000 375,000
----------- -----------
Basic and Diluted loss per share $ (0.32) $ (1.11)
=========== ===========
Outstanding warrants, unit purchase options, and stock options totaling
2,712,800 in 1998 and 766,000 in 1997 are not included in the computations of
diluted loss per share as their effect would be antidilutive. As the conditions
for release of the escrow shares have not been met nor will they be met upon the
mere passage of time, the escrow shares have been considered contingently
issuable and, accordingly, have been excluded from the weighted average number
of common shares outstanding used for the calculation of the basic and dilutive
net loss per share.
6
<PAGE>
MANAGEMENT'S PLANS
On September 23, 1997, the Company was successful in completing its initial
public offering of 1,600,000 units, each consisting of one share of common stock
and one Class A warrant, at a price to the public of $5.00 per unit; however,
the Company continues to experience difficulty in generating sufficient cash
flows from its operations. As a result of its working capital deficiency prior
to the offering, the Company's net sales for 1997 were materially hampered by
its inability to acquire, launch and market new products. Management expects
cash flows to improve and to continue operations through sales, marketing and
distribution of eight software titles it has licensed since the public offering,
one title licensed prior to the public offering but not yet released, and other
titles it is currently pursuing.
RECENT ACCOUNTING PRONOUNCEMENTS
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income" in the quarter
ended March 31, 1998. SFAS No. 130 requires the Company to report in its
financial statements, in addition to its net income (loss), comprehensive income
(loss), which includes all changes in equity during the period from non-owner
sources including, as applicable, foreign currency items, minimum pension
liability adjustments and unrealized gains and losses on certain investments in
debt and equity securities. During the quarter ended March 31, 1998, such items
were not significant, and the Company's comprehensive loss approximated its net
loss.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE STATEMENTS CONTAINED IN THIS REPORT THAT ARE NOT PURELY HISTORICAL ARE
"FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT OF 1933 AND SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, INCLUDING
STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS, HOPES, BELIEFS, INTENTIONS OR
STRATEGIES REGARDING THE FUTURE GENERALLY, THE COMPANY'S GROWTH STRATEGY, FUTURE
SALES AND ANTICIPATED TRENDS IN THE COMPANY'S BUSINESS. ALL FORWARD LOOKING
STATEMENTS INCLUDED IN THIS DOCUMENT ARE BASED ON INFORMATION KNOWN TO THE
COMPANY ON THE DATE HEREOF, AND THE COMPANY ASSUMES NO OBLIGATION TO UPDATE ANY
SUCH FORWARD LOOKING STATEMENT. IT IS IMPORTANT TO NOTE THAT ACTUAL RESULTS
COULD DIFFER MATERIALLY FROM THOSE IN SUCH FORWARD-LOOKING STATEMENTS AS A
RESULT OF A NUMBER OF FACTORS, INCLUDING, BUT NOT LIMITED TO, THE COMPANY'S
EARLY STAGE OF DEVELOPMENT, INTENSE COMPETITION IN VARIOUS ASPECTS OF ITS
BUSINESS, THE SEASONAL NATURE OF ITS BUSINESS, ITS DEPENDENCE ON THIRD PARTY
AUTHORS AND KEY PERSONNEL, THE RISING COST OF ACQUIRING A TITLE WHICH CAN
SUCCESSFULLY COMPETE IN AN INCREASINGLY COMPETITIVE RECREATIONAL SOFTWARE MARKET
AND THE RISKS ASSOCIATED WITH BRINGING ITS SOFTWARE TITLES TO MARKET, INCLUDING
BUT NOT LIMITED TO, THE DIFFICULTY OF ACCURATELY FORECASTING FUTURE CONSUMER
PREFERENCES, FINDING REASONABLY PRICED AVAILABLE TITLES TO MEET THE FORECAST
PREFERENCES AND PUBLISHING THOSE TITLES IN A TIMELY MANNER IN ORDER TO TAKE
ADVANTAGE OF THE ANTICIPATED MARKET. ADDITIONAL FACTORS WHICH COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE IN THE COMPANY'S FORWARD LOOKING
STATEMENTS ARE DESCRIBED IN THE COMPANY'S DOCUMENTS FILED FROM TIME TO TIME WITH
THE U.S. SECURITIES AND EXCHANGE COMMISSION. IN LIGHT OF THESE AND OTHER RISKS
AND UNCERTAINTIES, THERE CAN BE NO ASSURANCE THAT THE FORWARD LOOKING
INFORMATION CONTAINED IN THIS DOCUMENT WILL IN FACT TRANSPIRE OR PROVE TO BE
ACCURATE. READERS SHOULD REVIEW THE INFORMATION SET FORTH HEREIN IN THE CONTEXT
OF THE OTHER INFORMATION, INCLUDING, BUT NOT LIMITED TO, INFORMATION IDENTIFIED
AS "RISK FACTORS" AND THE COMPANY'S FINANCIAL INFORMATION MADE PUBLICLY
AVAILABLE BY THE COMPANY IN THE COMPANY'S REGISTRATION STATEMENT ON FORM SB-2,
AS WELL AS THE INFORMATION CONTAINED IN THE COMPANY'S REPORTS ON FORM 10-QSB,
8-KSB, 10-KSB, AND OTHER REPORTS PUBLICLY FILED FROM TIME TO TIME BY THE COMPANY
WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION.
OVERVIEW
The Company publishes interactive multimedia software products for the home
personal computer ("PC") market with an emphasis on "edutainment" titles, which
combine entertainment and educational content, as well as games and other titles
which it determines to have market potential. The Company was founded in
November 1994 and has published titles in several categories, including
entertainment, early childhood education, reference and personal productivity.
The Company's management team has worked closely together for the past four to
seven years and all have prior software publishing experience. During its first
year of operations, the Company's primary focus was devoted to developing
infrastructure and obtaining titles for publication. The Company's first four
titles were published in the fall of 1995. Thereafter, the Company published
only one title in 1996 as a result of its working capital deficiency during
1996, which continued through the closing date of its initial public offering on
September 23, 1997. This deficiency prevented the Company from acquiring,
launching and marketing new products in time to realize significant sales in
1997 as well as the first quarter of 1998. Consequently, the Company believes
that the comparisons below in "Results of Operations" may not be meaningful or
representative of future results.
8
<PAGE>
On September 23, 1997, the Company completed a public offering of 1,600,000
units, each consisting of one share of common stock and one Class A warrant, at
a price to the public of $5.00 per unit. The net proceeds of the offering to the
Company, after deducting all associated costs, were approximately $6,400,000.
The home education and entertainment software business is highly seasonal.
Typically, revenues are highest during the third and fourth calendar quarters
(which includes the holiday buying season), decline in the first calendar
quarter and are lowest in the second calendar quarter. This seasonal pattern is
due primarily to the increased demand for home education and entertainment
software titles during the year-end holiday buying season.
To date in 1998, the Company has released four educational software titles,
including the sequel to the popular REDSHIFT astronomy series, all in the last
month of the first quarter. The Company also executed two license agreements in
the first quarter, one for the strategy game title, EXTREME TACTICS and the
other for the adventure game title, MORPHEUS, which are planned for release in
the second quarter and second half of 1998, respectively. The 3-D action game,
DEAD RECKONING, will also be launched in the second half of 1998 in order to
strategically market that title for the 1998 fourth quarter holiday buying
season.
For the three month period ended March 31, 1998, three distributors comprised
approximately 25%, 24% and 17%, respectively, of the Company's net sales. The
Company currently has a distribution agreement with a fourth distributor which
permits the distributor to delay payment until the product is sold by its retail
customers. Consequently, the Company's revenue recognition for such sales is
deferred until receipt of payment from the distributor. If the Company's
shipments to such distributor had been recognized as revenue by the Company
during the three month period ended March 31, 1998, net sales to such
distributor would have represented 49% of the Company's net sales for the
period.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1997
NET SALES
The Company's net sales for the three month period ended March 31, 1998 were
$204,520 which represents a $146,812 or 254% increase from the comparable 1997
period. Net sales for 1997 were adversely affected by the Company's working
capital deficiency. This deficiency, which continued through September 23, 1997,
the date of the Company's initial public offering, prevented the Company from
acquiring, launching and marketing new products in time to realize significant
sales in the first quarter of 1998.
GROSS PROFIT
The Company experienced a gross profit of $100,041 during the three month period
ended March 31, 1998 as compared to $29,612 during the three month period ended
March 31, 1997. Cost of goods sold increased from 49% of net sales during the
three month period ended March 31, 1997 to 51% of net sales during the
corresponding 1998 period.
During the three month period ended March 31, 1998, the Company liquidated much
of its older inventory at reduced prices, resulting in lower gross profits for
the period. The Company anticipates improved gross profits in the future due to
higher sales volumes of new and future titles.
9
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses increased to approximately $765,000
during the three month period ended March 31, 1998, compared with approximately
$334,000 during the corresponding 1997 period. The increase was primarily
attributable to the hiring of additional personnel subsequent to March 31, 1997
and the Company's expanded marketing efforts related to new and future products
during the three months ended March 31, 1998. Selling, general and
administrative expenses decreased from 579% of net sales during the three month
period ended March 31, 1997 to 374% of net sales during the three months ended
March 31, 1998. Management expects that such expenses will continue to decrease
as a percentage of net sales as the Company's revenues from product sales
increase; however, the Company cannot predict when such increase in revenues
will occur, if ever.
INTEREST EXPENSE
Interest expense decreased to approximately $1,000 during the three month period
ended March 31, 1998, compared to approximately $112,000 during the
corresponding 1997 period. Interest expense in the 1997 period was primarily
amortization expense associated with deferred financing costs and interest
expense related to the bridge notes issued in the fourth quarter of 1996. These
notes were repaid in September of 1997 out of proceeds from the initial public
offering.
NET LOSS
Due primarily to the Company's inability to generate sufficient sales to offset
selling, general and administrative expenses, the Company had a net loss for the
three month period ended March 31, 1998 of $(634,664) or $(0.32) per share,
compared to a net loss of $(416,303) or $(1.11) per share for the three month
period ended March 31, 1997.
FINANCIAL CONDITION
The Company's primary source of liquidity during 1997 was cash generated from
the issuance of various notes payable and the sale of securities in connection
with the Company's initial public offering.
The Company's cash and cash equivalent balance totaling $1,983,149 as of March
31, 1998, is invested primarily in an investment grade money market fund in
order to fund immediate cash needs.
The Company's long-term debt consists primarily of notes payable to officers in
the aggregate amount of $41,213, including interest, which are due August 1,
1999.
The Company's expenditures have continued to substantially exceed its revenues.
The Company's cash used in operating activities was $936,250 during the three
month period ended March 31, 1998, while revenues for the same period were
$204,520. The Company anticipates that its actual expenditures will continue to
increase in the aggregate as it attempts to expand its business by acquiring new
products and increasing sales and marketing efforts and other operations. The
Company expects to continue to incur losses until such time as it is able to
sell a sufficient volume of products at prices that provide adequate gross
profit to cover operating costs. The Company's working capital requirements will
depend upon numerous factors, including payment cycles for its shipped products,
credit arrangements with suppliers, the scale-up of its sales and marketing
resources, acquisition of new products and the terms upon which such products
are acquired, competitive factors including costs associated with obtaining
adequate levels of retail shelf space, and marketing activities.
10
<PAGE>
Generally, the Company is obligated to pay its vendors within 30 days of
shipment, although the Company's customers' payment cycles are often much
longer, generally from between 90 to 120 days. Previously, this discrepancy in
payment cycles has resulted in inconsistent cash flows and reduced working
capital for the Company, which condition may recur in the future.
The Company does not currently have a credit facility or other commitment for
additional financing. The Company may require additional financing in the future
to further expand its product offerings, to make strategic acquisitions, or in
the event the Company does not realize anticipated revenues. There can be no
assurance that such additional financing will be available, or that, if
available, such financing will be obtainable on terms favorable to the Company
or its stockholders.
The Company adopted the provisions of Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income" in the quarter
ended March 31, 1998. SFAS No. 130 requires the Company to report in its
financial statements, in addition to its net income (loss), comprehensive income
(loss), which includes all changes in equity during the period from non-owner
sources including, as applicable, foreign currency items, minimum pension
liability adjustments and unrealized gains and losses on certain investments in
debt and equity securities. During the quarter ended March 31, 1998, such items
were not significant, and the Company's comprehensive loss approximated its net
loss.
11
<PAGE>
PART II -- OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On September 18, 1997, the Company's Registration Statement on Form SB-2 (File
No. 333-18605) (the "Form SB-2"), was declared effective by the U.S. Securities
and Exchange Commission. The Form SB-2 was prepared in connection with an
initial public offering by the Company of 1,600,000 units, each consisting of
one share of common stock and one Class A Warrant. The units and the components
thereof were each separately tradable upon issuance. Each Class A Warrant
entitles the holder to purchase one share of the Company's Common Stock at an
exercise price of $6.50 at any time prior to September 18, 2002. The offering of
units pursuant to the Form SB-2 commenced on September 18, 1997 and terminated
September 23, 1997, the date on which all of the units were sold. The offering
was underwritten by D.H. Blair Investment Banking Corp. on a firm commitment
basis. The units were offered to the public at a price of $5.00 per unit, or
$8,000,000 in the aggregate for all 1,600,000 units offered, all of which were
sold as of the date the offering terminated.
The Company's actual expenses incurred in connection with the issuance and
distribution of the units registered pursuant to the Form SB-2 equaled
approximately $1,600,000 in the aggregate, which consisted of the following: (i)
$760,000 in aggregate underwriting discounts and commissions, (ii) $240,000 in
expenses paid to or for the underwriter and (iii) $600,000 in other expenses.
None of the $600,000 in other expenses consisted of direct or indirect payments
to the Company's officers, directors, holders of at least 10% of any class of
the Company's outstanding securities or other affiliates (collectively
"Affiliates").
After deducting the foregoing expenses, the offering resulted in approximately
$6,400,000 in net proceeds to the Company. Since the offering, the Company used
approximately $2,245,000 of the net proceeds for the repayment of indebtedness,
approximately $400,000 toward acquisition of software programs, approximately
$580,000 toward marketing and sales and approximately $1,100,000 for working
capital. Approximately $60,000 was paid to affiliates for payment of accrued
salaries. The preceding discussion of the Company's use of net proceeds reflects
reasonable estimates of amounts paid by the Company. The Company's use of
proceeds from the offering, as described herein, does not represent a material
change from that described in the prospectus included in the Form SB-2.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit
Number Description
------ -----------
27.1 -- Financial Data Schedule
(b) Reports on Form 8-K.
None.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PIRANHA INTERACTIVE PUBLISHING, INC.
Date: May 14, 1998 /s/ Timothy M. Brannan
----------------------- -------------------------------------------
Timothy M. Brannan, Chief Executive Officer
Date: May 14, 1998 /s/ Keith P. Higginson
----------------------- -------------------------------------------
Keith P. Higginson, Chief Financial Officer
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS AND NOTES.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,983,149
<SECURITIES> 0
<RECEIVABLES> 187,299
<ALLOWANCES> 42,097
<INVENTORY> 246,949
<CURRENT-ASSETS> 2,877,604
<PP&E> 159,387
<DEPRECIATION> 53,962
<TOTAL-ASSETS> 2,987,376
<CURRENT-LIABILITIES> 258,584
<BONDS> 0
0
0
<COMMON> 3,200
<OTHER-SE> 2,676,861
<TOTAL-LIABILITY-AND-EQUITY> 2,987,376
<SALES> 204,520
<TOTAL-REVENUES> 204,520
<CGS> 104,479
<TOTAL-COSTS> 104,479
<OTHER-EXPENSES> 765,112
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,006
<INCOME-PRETAX> (634,664)
<INCOME-TAX> 0
<INCOME-CONTINUING> (634,664)
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<NET-INCOME> (634,664)
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<EPS-DILUTED> (0.32)
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