<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 0-22047
GO2NET, INC.
-----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
DELAWARE 91-1710182
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1301 Fifth Avenue, Suite 3320
Seattle, WA 98101
----------------------------------------
(Address of principal executive offices)
(206) 447-1595
----------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the registrant: (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.
(1) Yes No X
----- -----
The Registrant has been subject to such filing requirements since April 22,
1997, the effective date of its Registration Statement on Form 8-A under the
Securities Exchange Act of 1934, which became effective simultaneously with its
Registration Statement on Form S-1 (File No. 333-19051) under the Securities Act
of 1933, as amended.
As of June 3, 1997, there were 4,497,850 shares of the Registrant's common stock
outstanding.
<PAGE> 2
PAGE
PART I FINANCIAL INFORMATION NUMBER
ITEM 1: Financial Statements
Condensed Balance Sheets as of March 31, 1997
and September 30, 1996................................... 3
Condensed Statements of Operations for the three
months ended March 31, 1997, the six
months ended March 31, 1997 and the period from
Inception (February 12, 1996) through
March 31, 1996........................................... 4
Condensed Statements of Cash Flows for the three
months ended March 31, 1997, the six
months ended March 31, 1997 and the period from
Inception (February 12, 1996) through
March 31, 1996........................................... 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 1: Legal Proceedings.............................................. 14
ITEM 2: Changes in Securities.......................................... 14
ITEM 3: Defaults Upon Senior Securities................................ 14
ITEM 4: Submission of Matters to a Vote of Security Shareholders....... 14
ITEM 5: Other Information.............................................. 14
ITEM 6: Exhibits and Reports on Form 8-K............................... 14
SIGNATURES..................................................... 15
Exhibit 11 Calculation of Shares Used in Determining Net Loss Per Share... 16
Exhibit 27 Financial Data Schedule........................................ 17
2
<PAGE> 3
<TABLE>
go2net, Inc.
CONDENSED BALANCE SHEETS
<CAPTION>
March 31, September 30,
1997 1996
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and Cash equivalents ............................... $ 135,090 $ 865,742
Prepaid Expenses ........................................ 21,429 8,216
----------- ----------
Total current assets .................................. 156,519 873,958
Property and equipment, net ............................... 247,953 179,328
Other assets .............................................. 297,918 12,955
----------- ----------
$ 702,390 $1,066,241
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued expenses ........................................ $ 74,590 $ 45,098
Line of credit .......................................... 125,000 --
----------- ----------
Total current liabilities .......................... $ 199,590 $ 45,098
Shareholders' equity:
9% Cumulative Redeemable Convertible Preferred Stock,
$1.00 par value, authorized 1,000,000 shares; no
shares and 927,500 shares outstanding ................. -- 1,505,000
Common stock, $0.01 par value, authorized 9,000,000
shares; outstanding 2,657,850 and 1,619,100 shares .... 1,696,436 13,900
Less 9% Cumulative Redeemable Convertible Preferred
Stock subscriptions receivable ........................ -- (80,000)
Accumulated deficit ..................................... (1,193,636) (417,757)
----------- ----------
Total shareholders' equity ............................ 502,800 1,021,143
Total liabilities and shareholders' equity ............ $ 702,390 $1,066,241
=========== ==========
</TABLE>
See notes to condensed financial statements.
3
<PAGE> 4
<TABLE>
go2net, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Period from Incept
Three Months (February 12, 1996
Ended March 31, Through March 31, Six Months Ended
1997 1996 March 31, 1997
--------------- ------------------ ----------------
<S> <C> <C> <C>
Operating expenses:
Advertising and marketing ............ $ 9,644 $ -- $ 22,156
Product development .................. 175,264 -- 312,659
General and administrative ........... 229,220 15,250 449,264
---------- ---------- ----------
Total operating expenses ............ 414,128 15,250 784,079
Loss from operations ................... (414,128) (15,250) (784,079)
Interest income, net ................... 921 -- 8,201
---------- ---------- ----------
Net loss ............................... $ (413,207) $ (15,250) $ (775,878)
========== ========== ==========
Net loss per share ..................... $ (.16) $ (.01) $ (.29)
Common shares and common equivalent
shares used to calculate net loss
per share .............................. 2,658,128 2,638,350 2,650,610
</TABLE>
See notes to condensed financial statements.
4
<PAGE> 5
<TABLE>
go2net, Inc.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months
Three Months Period from Inception Ended
Ended Through March 31, March 31,
March 31, 1997 1996 1997
-------------- --------------------- ----------
<S> <C> <C> <C>
Operating activities:
Net loss ............................... (413,207) (15,250) (775,878)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization .......... 16,025 -- 37,645
Stock Compensation ..................... 28,000 -- 28,000
Changes in assets and liabilities:
Prepaid expenses ....................... (13,213) -- (13,213)
Other assets ........................... (1,087) -- (2,087)
Accrued expenses ....................... 41,975 4,153 29,492
-------- ------- --------
Net cash used in operating activities .... (341,507) (11,097) (696,041)
Investing activities:
Acquisition of property and equipment .. (75,551) (11,943) (100,764)
Other assets ........................... (265,327) (6,536) (288,384)
-------- ------- --------
Net cash used in investing activities .... (340,878) (18,479) (389,148)
Financing activities:
Other .................................. (463) -- (463)
Issuance of Common Stock ............... -- 13,750 150,000
Borrowings from line of credit ......... 125,000 -- 125,000
Proceeds from issuance of 9% Cumulative
Redeemable Convertible Preferred Stock -- 350,000 80,000
-------- ------- --------
Net cash used in financing activities .... 124,537 363,750 354,537
Net (decrease) increase in cash and cash
equivalents .............................. (557,848) 334,174 (730,652)
Net cash at beginning of period .......... 692,938 -- 865,742
-------- ------- --------
Net cash at end of period ................ 135,090 334,174 135,090
======== ======= ========
</TABLE>
5
<PAGE> 6
GO2NET, INC.
NOTES TO FINANCIAL STATEMENTS
1. THE COMPANY AND BASIS OF PRESENTATION.
go2net, Inc. ("go2net" or the "Company") was incorporated on February 12,
1996 and is an interactive technology and media company that provides through
its Internet sites proprietary content and commodity information relating to
business and finance, sports and the Internet. In addition, the Company offers
MetaCrawler, a search/index guide that combines various existing search/index
guides into one guide (a "metasearch engine"), and go2vision, a Java-based
desktop content delivery system. The Company provides such content and
technology through its Internet sites located at <URL:http://www.go2net.com/>
and <URL:http://www.metacrawler.com/>.
The unaudited condensed financial statements included herein have been
prepared by the Company in accordance with generally accepted accounting
principles and reflect all adjustments, consisting only of normal recurring
adjustments, which in the opinion of management are necessary to fairly state
the Company's financial position, result of operations and cashflows for the
periods presented. These financial statements should be read in conjunction with
the Company's audited financial statements as included in the Company's
Registration Statement on Form S-1 which was declared effective by the
Securities and Exchange Commission on April 22, 1997 (Reg. No. 333-19051). The
results of operations for the period ended March 31, 1997 are not necessarily
indicative of the results to be expected for any subsequent quarter or for the
entire fiscal year ending September 30, 1997.
2. INITIAL PUBLIC OFFERING
In April 1997, the Company completed its initial public offering and
issued 1,600,000 shares of its common stock to the public at a price of $8.00
per share. The Company received approximately $11.2 million of cash, net of
underwriting discounts, commissions and other offering costs. On May 13, 1997,
pursuant to the exercise of an over-allotment option granted to the underwriters
of the Company's initial public offering, the Company issued an additional
240,000 shares of its common stock at a price of $8.00 per share. The Company
received an additional $1.7 million of cash, net of underwriting discounts and
commissions.
3. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net Loss Per Share
Net loss per share is computed using the weighted average number of shares
of common stock and preferred stock outstanding during such period, including
shares of common stock issued after such period. Pursuant to the Securities and
Exchange Commission Staff Accounting Bulletins, 9% Cumulative Convertible
Redeemable Preferred Stock and common stock issued by the Company
- 6 -
<PAGE> 7
GO2NET, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
at prices below the assumed public offering price during the twelve-month period
prior to the proposed offering have been included in the calculation as if they
were outstanding throughout the periods presented, regardless of whether they
are antidilutive (using the treasury stock method at an assumed public offering
price of $8.00).
- 7 -
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The matters discussed in this report contain forward-looking statements
that involve risks and uncertainties. The Company's actual results could differ
materially from those discussed herein. Factors that could cause or contribute
to such differences include, but are not limited to, those discussed below in
"Additional Factors that May Affect Future Results" as well as those discussed
in this section and elsewhere in this Report, and the risks discussed in the
"Risk Factors" section included in the Company's Registration Statement on Form
S-1 declared effective by the Securities and Exchange commission on April 22,
1997 (Registration No. 333-19051) and in the Prospectus.
OVERVIEW
The Company was incorporated on February 12, 1996 and is an interactive
technology and media company that provides through its Internet sites
proprietary content and commodity information relating to business and finance,
sports and the Internet. In addition, the Company offers MetaCrawler, a
search/index guide that combines various existing search/index guides into one
guide (a "metasearch engine"), and go2vision, a Java-based desktop content
delivery system. The Company provides such content and technology through its
Internet sites located at <URL:http://www.go2net.com/> and
<URL:http://www.metacrawler.com/>. As of March 31, 1997, the Company had not
generated any cash revenues.
The Company has no operating history upon which an evaluation of the
Company and its prospects can be based. The Company anticipates that advertising
revenues from the Company's Internet site will constitute substantially all of
the Company's revenues, if any, during the foreseeable future. Because the
Company anticipates that its operations will incur significant operating losses
for the foreseeable future, the Company believes that its success will depend
upon its ability to obtain revenues from advertising on its Internet site, which
cannot be assured. The Company's ability to generate revenues is subject to
substantial uncertainty. The Company's prospects must be considered in light of
the risks, expenses and difficulties frequently encountered by start-up
companies in general, and specifically with respect to the new and rapidly
evolving market for Internet products, content and services. To address these
risks, the Company must, among other things, effectively establish, develop and
maintain relationships with advertising customers, advertising agencies and
other third parties, provide original, informative, entertaining and compelling
content to Internet users, develop and upgrade its technology, respond to
competitive developments, attract new qualified personnel and retain existing
qualified personnel. There can be no assurance that the Company will succeed in
addressing such risks and the failure to do so would have a material adverse
effect on the Company's business, financial condition and operating results.
Additionally, the Company's lack of an operating history makes prediction of
future operating results difficult. Accordingly, there can be no assurance that
the Company will be able to generate revenues or that the Company will achieve,
or maintain. profitability or generate revenues from operations in the future.
Since inception, the Company has incurred significant losses and, as of March
31, 1997, had an accumulated deficit of $1,193,636. The Company currently
intends to
- 8 -
<PAGE> 9
increase substantially its operating expenses in order to, among other things,
expand and improve its Internet operations, fund increased advertising and
marketing efforts, expand and improve its Internet user support capabilities and
develop new Internet content and applications. The Company expects to continue
to incur significant losses on a quarterly and annual basis for the foreseeable
future. To the extent such increases in operating expenses are not offset by
revenues, the Company will incur greater losses than anticipated.
The Company's quarterly operating results may fluctuate significantly as a
result of a variety of factors, many of which are outside of the Company's
control. Factors that may adversely affect the Company's quarterly operating
results include the level of use of the Internet, demand for advertising,
seasonal trends in both Internet use and advertising placements, the addition or
loss of advertisers, advertising budgeting cycles of individual advertisers, the
level of use of the Company's Internet sites, the amount and timing of capital
expenditures and other costs relating to the development, operation and
expansion of the Company's Internet operations, the introduction of new sites
and services by the Company or its competitors, price competition or pricing
changes in the industry, technical difficulties or system failures, general
economic conditions and economic conditions specific to the Internet and
Internet media. In seeking to effectively implement its operating strategy, the
Company may elect from time to time to make certain advertising and marketing or
acquisition decisions that could have a material adverse effect on the Company's
business, financial condition and operating results. The Company believes that
period to period comparisons of its operating results are not meaningful and
should not be relied upon for an indication of future performance. Due to all of
the foregoing factors, it is likely that in some future quarters, the Company's
operating results may be below the expectations of public market analysts and
stockholders. In such event, the price of the Company's Common Stock would
likely be materially adversely affected.
RESULTS OF OPERATIONS
REVENUES
The Company launched its Internet site on November 7, 1996 at which time
it was still in the process of evaluating the technical features of the site.
From the date of inception through March 31, 1997, the Company did not generate
any cash revenues. As of March 31, 1997, the Company was not a party to any
advertising or other agreement or arrangement from which it could record
deferred revenues or reasonably expect to generate cash revenue. The sole source
of funds for the Company from the date of inception through March 31, 1997,
other than the sale of equity, has been interest income in the amount of
$21,584.
COSTS OF REVENUES
Since inception and through March 31, 1997, the Company had not incurred
any cost of revenues as the Company had not generated revenues during such
period. Costs incurred during the period from inception to March 31, 1997 were
recognized as product development expenses. There can be no assurance that the
Company will be able to generate sufficient revenues, advertising or
- 9 -
<PAGE> 10
otherwise, to cover its costs of revenues. The failure to generate sufficient
revenues in order to cover its costs of revenues will result in continued losses
and will continue to have a material adverse effect on the Company's business,
financial condition and operating results.
OPERATING EXPENSES
Advertising and Marketing. Advertising and marketing expenses consist
primarily of public relations, travel and costs of marketing literature.
Advertising and marketing expenses incurred by the Company for the period from
inception through March 31, 1996, the three months ended March 31, 1997 and the
six months ended March 31, 1997 were $0, $9,644 and $22,156, respectively. The
Company intends to significantly increase its advertising and marketing expenses
in future periods.
Product Development. Product development expenses consist of expenses
incurred by the Company's initial development and creation of its Internet
sites. Product development expenses include compensation and related expenses,
costs of computer hardware and software, and the cost of acquiring, designing,
developing and editing Internet content. All of the costs incurred to date in
connection with the development of the Company's Internet sites have been
expensed. Product development expenses incurred by the Company for the period
from inception through March 31, 1996, the three months ended March 31, 1997,
and the six months ended March 31, 1997 were $0, $175,264 and $312,659,
respectively. The Company believes that significant investments in enhancing its
Internet sites will be necessary to become competitive. As a result, the Company
may continue to incur, or increase the level of, product development expenses.
General and Administrative. General and administrative expenses consist
primarily of compensation not otherwise attributable to development expenses,
rent expense, fees for professional services and other general corporate
purposes. General and administrative expenses incurred by the Company for the
period from inception through March 31, 1996, the three months ended March 31,
1997 and the six months ended March 31, 1997 were $15,250, $229,220 and
$449,264, respectively. The Company expects general and administrative expenses
to significantly increase in future periods as a result of, among other things,
the additional costs of being a public company.
Income Taxes. The Company has not recorded an income tax benefit because
it has incurred net operating losses since its inception. As of March 31, 1997,
the Company had Federal net operating loss carry forwards of approximately
$1,100,000. The Federal net operating loss carry forwards will expire beginning
in 2011 if not utilized. Utilization of the net operating losses and credits may
be subject to a substantial annual limitation due to the ownership change
limitations provided in the Internal Revenue Code of 1986, as amended, and
similar state provisions.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company's principal source of liquidity was
$135,090 in cash and cash equivalents derived from private sales of the
Company's equity securities. The Company also has a $750,000 revolving line of
credit with a commercial bank which expires on November 15, 1997. All borrowings
under such line of credit accrue interest at such bank's prime annual lending
- 10 -
<PAGE> 11
rate plus 1%. In January 1997, the Company borrowed $125,000 under this line of
credit. The Company has primarily financed its operations through the private
sale of equity securities.
In April 1997, the Company completed its initial public offering and
issued 1,600,000 shares of its common stock to the public at a price of $8.00
per share. The Company received approximately $11.2 million of cash, net of
underwriting discounts, commissions and other offering costs. On May 13, 1997,
pursuant to the exercise of an over-allotment option granted to the underwriters
of the Company's initial public offering, the Company issued an additional
240,000 shares of its common stock at a price of $8.00 per share. The Company
received an additional $1.7 million of cash, net of underwriting discounts and
commissions.
Capital expenditures were approximately $11,943, $75,551 and $100,764 for
the period from inception through March 31, 1996, the three months ended March
31, 1997, and the six months ended March 31, 1997, respectively. The Company has
no material commitments for capital expenditures other than $96,000 relating to
the purchase of computer hardware and software. The Company anticipates a
substantial increase in its capital expenditures through the remainder of fiscal
1997 consistent with its anticipated growth.
The Company currently believes that available funds, cash flows expected
to be generated from operations, if any, the existing line of credit and the net
proceeds of the Offering will be sufficient to fund its working capital and
capital expenditures requirements for the twelve months following completion of
the Offering. Thereafter, the Company may need to raise additional funds. The
Company's ability to grow will depend in part on the Company's ability to expand
and improve its Internet operations, expand its advertising and marketing
efforts, expand and improve its Internet user support capabilities and develop
new Internet content and applications. In connection therewith, the Company may
need to raise additional capital in the foreseeable future from public or
private equity or debt sources in order to finance such possible growth. In
addition, the Company may need to raise additional funds in order to avail
itself to unanticipated opportunities (such as more rapid expansion,
acquisitions of complementary businesses or the development of new products or
services), to react to unforeseen difficulties (such as the loss of key
personnel or the rejection by Internet users or potential advertisers of the
Company's Internet content and/or applications) or to otherwise respond to
unanticipated competitive pressures. If additional funds are raised through the
issuance of equity securities, then the percentage ownership of the Company's
then existing stockholders will be reduced, stockholders may experience
additional and significant dilution and such equity securities may have rights,
preferences or privileges senior to those of the Company's Common Stock. There
can be no assurance that additional financing will be available on terms
acceptable to the Company or at all. If adequate funds are not available or are
not available on terms acceptable to the Company, the Company may be unable to
implement its business, sales or marketing plan, respond to competitive forces
or take advantage of perceived business opportunities, which could have a
material adverse effect in the Company's business, financial condition and
operating results.
- 11 -
<PAGE> 12
Additional Factors that May Affect Future Results
The Company has an extremely limited operating history upon which an
evaluation of the Company and its prospects can be based. The Company and its
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of development,
particularly companies in new and rapidly evolving markets. To address these
risks, the Company must, among other things, respond to competitive
developments, continue to attract, retain and motivate qualified persons and
continue to upgrade its technologies and commercialize products and services
incorporating such technologies. There can be no assurance that the Company will
be successful in addressing such risks. As of March 31, 1997, the Company had
generated no revenue, and there can be no assurance that the Company will
generate revenues in the future. The limited operating history of the Company
makes the prediction of future results of operations difficult or impossible,
and therefore there can be no assurance that the Company will achieve revenue
growth or profitability. The Company has incurred significant net losses since
inception and expects to continue to incur significant losses on a quarterly and
annual basis for the foreseeable future.
As a result of the Company's extremely limited operating history, the
Company does not have historical financial data for any significant period of
time on which to base planned operating expenses. The Company's expense levels
are based in part on its expectations as to future revenues and to a large
extent are fixed. Quarterly sales and operating results generally depend on
advertising revenues, which are difficult to forecast. The Company may be unable
to adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Accordingly, any significant shortfall in relation to the Company's
expectations would have an immediate adverse impact on the Company's business,
results of operations and financial condition. In addition, the Company plans to
significantly increase its operating expenses to fund greater levels of research
and development, increase its sales and marketing operations, broaden its
customer support capabilities and establish brand identity and strategic
alliances. To the extent that such expenses precede or are not subsequently
followed by increased revenues, the Company's business, results of operations
and financial condition will be materially adversely affected.
The Company's operating results may fluctuate significantly in the future
as a result of a variety of factors, some of which are outside of the Company's
control. These factors include general economic conditions, specific economic
conditions in the Internet industry, usage of the Internet, demand for Internet
advertising, seasonal trends in advertising sales, the advertising budgeting
cycles of individual advertisers, capital expenditures and other costs relating
to the expansion of operations, the introduction of new products or services by
the Company or its competitors, the mix of services sold, the channels through
which those services are sold and pricing changes. As a strategic response to a
changing competitive environment, the Company may elect from time to time to
make certain pricing, service or marketing decisions or acquisitions that could
have a material adverse effect on the Company's business, results of operations
and financial condition. The Company believes that period to period comparisons
of its operating results are not meaningful and should not be relied upon for an
indication of future performance. The Company also expects that, in the future,
it may experience seasonality in its business, with advertising
- 12 -
<PAGE> 13
revenues being somewhat lower during the summer and year-end vacation and
holiday periods, when usage of the Company's Interest site and services may be
expected to decline. Due to all of the foregoing factors, it is likely that in
some future quarter, the Company's operating results may be below the
expectations of public market analysts and investors. In such event, the price
of the Company's common stock would likely be materially adversely affected.
The Company operates in a rapidly changing environment that involves a
number of risks and uncertainties, some of which are beyond the Company's
control. In addition to the factors discussed in this report, factors that could
cause or contribute to such differences include, but are not limited to, those
discussed in the "Risk Factors" section included in the Company's Registration
Statement on Form S-1 and the Prospectus contained therein.
- 13 -
<PAGE> 14
PART II OTHER INFORMATION
ITEM 1: Legal Proceedings
None.
ITEM 2: Changes in Securities
None.
ITEM 3: Defaults Upon Senior Securities
None.
ITEM 4: Submission of Matters to a Vote of Security Shareholders
On February 12, 1997, the stockholders of the Company, by
written consent, approved amendments to the Company's Certificate of
Corporation and By-laws, which are now in the form filed as exhibits
to the Company's Registration Statement on Form S-1.
ITEM 5: Other Information
None.
ITEM 6: Exhibits and Reports on Form 8-K
Exhibit 11 - Calculation of Shares Used in Determining Net Loss Per
Share
Exhibit 27 - Financial Data Schedule
- 14 -
<PAGE> 15
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.
GO2NET, INC.
Date: June 5, 1997 By: /s/ Russell Horowitz
-----------------------------------
Russell Horowitz
President, Chief Executive Officer,
Chief Financial Officer and Director
(Principal Executive and Accounting
Officer)
- 15 -
<PAGE> 1
EXHIBIT 11
go2net, Inc.
Computation of Net Loss Per Share
<TABLE>
<CAPTION>
Period from
Inception
(February 12
Three Months 1996) through Six Months
Ended March 31, March 31, Ended March 31,
1997 1996 1997
--------------------------------------------------------
<S> <C> <C> <C>
Net loss $ (413,207) $ (15,250) $ (775,878)
========================================================
Weighted average common shares 2,658,128 1,451,224 2,395,732
Weighted average common shares,
calculated using the treasury stock method
at an assumed offering price of $8 per share,
and treated as outstanding for the periods -- 259,626 23,003
presented
Weighted average number of common shares
assumed issued upon the conversion of the
9% Cumulative, Redeemable, Convertible
Preferred Stock, calculated using the
treasury stock method at an assumed
offering price of $8 per share, and
treated as outstanding for the periods -- 927,500 231,875
presented through the date of conversion
--------------------------------------------------------
2,658,128 2,638,350 2,650,610
========================================================
Net loss per share $ (0.16) $ (0.01) $ (0.29)
========================================================
</TABLE>
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 135,090
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 156,519
<PP&E> 297,966
<DEPRECIATION> 50,013
<TOTAL-ASSETS> 702,390
<CURRENT-LIABILITIES> 199,590
<BONDS> 0
0
0
<COMMON> 1,696,436
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 702,390
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 784,079
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (775,878)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (775,878)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> 0
</TABLE>
