<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 DECEMBER 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)
999 Third Avenue, Suite 4700
Seattle, Wa 98104
----------------------------
(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 X No
--- ---
As of February 6, 1997, there were 4,503,092 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 December 31, 1997
and September 30, 1997................................... 3
Condensed Statements of Operations for the three
months ended December 31, 1997 and the three months
ended December 31, 1996.................................. 4
Condensed Statements of Cash Flows for the three
months ended December 31, 1997 and the three months
ended December 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............................................ 12
ITEM 2: Changes in Securities........................................ 12
ITEM 3: Defaults Upon Senior Securities.............................. 12
ITEM 4: Submission of Matters to a Vote of Security Shareholders..... 12
ITEM 5: Other Information............................................ 12
ITEM 6: Exhibits and Reports on Form 8-K............................. 12
SIGNATURES................................................... 13
Exhibit 27 Financial Data Schedule...................................... 14
2
<PAGE> 3
go2net, Inc.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ................................. $10,444,848 $10,891,801
Receivables ............................................... 224,784 59,462
Prepaid expenses and other assets ......................... 115,134 145,114
----------- -----------
Total current assets ................................... 10,784,766 11,096,377
Property and equipment, net ................................. 653,312 509,004
Intangibles, net ............................................ 631,296 688,107
Deposits .................................................... 300,000 307,365
Other assets ................................................ 17,533 18,861
----------- -----------
Total assets ........................................... $12,386,907 $12,619,714
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accrued expenses .......................................... $ 113,310 $ 134,890
Short term debt .......................................... 209,069 34,580
Deferred revenue ......................................... 126,566 15,923
----------- -----------
Total current liabilities .............................. 448,946 185,393
Shareholders' equity:
Preferred Stock, authorized 1,000,000 shares; no shares
Outstanding ............................................ - -
Common stock, $0.01 par value, authorized 9,000,000 shares;
Outstanding 4,503,092 at December 31, 1997 and 4,505,217
shares at September 30, 1997 ........................... 14,578,602 14,570,558
Accumulated deficit ....................................... (2,640,640) (2,136,237)
----------- -----------
Total shareholders' equity ............................. 11,937,962 12,434,321
----------- -----------
Total liabilities and shareholders' equity ............. $12,386,907 $12,619,714
=========== ===========
</TABLE>
See notes to condensed financial statements.
3
<PAGE> 4
go2net, Inc.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Revenue ........................................... $ 325,393 -
Cost of revenue .................................. 141,979 -
--------- ---------
Gross profit ..................................... 183,414 -
Operating expenses:
Advertising and marketing ....................... $ 97,033 $ 12,512
Product development ............................. 258,467 186,300
General and administrative ...................... 480,759 171,139
--------- ---------
Total operating expenses .......................... 836,259 369,951
Loss from operations .............................. (652,845) (369,951)
Interest income, net .............................. 148,442 7,280
--------- ---------
Net loss .......................................... $(504,403) $(362,671)
========= =========
Basic net loss per share (Note 2) ................. $ (.11) $ (.17)
Diluted net loss per share (Note 2) ............... $ (.11) $ (.14)
</TABLE>
See notes to condensed financial statements.
4
<PAGE> 5
go2net, Inc.
CONDENSED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Operating activities:
Net loss ........................................... $ (504,403) $(362,671)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization ...................... 123,698 21,620
Loss on sale of equipment .......................... 328 -
Changes in working capital:
Receivables ........................................ (165,322) -
Prepaid expenses and other assets .................. 42,895 (24,057)
Accrued interest ................................... (13,486) -
Deposits ........................................... 7,365 -
Deferred revenue ................................... 110,643 -
Accounts payable and accrued expenses .............. (21,580) (12,483)
----------- ---------
Net cash used in operating activities ................ (419,862) (377,591)
----------- ---------
Investing activities:
Acquisition of property and equipment .............. (210,724) (25,213)
Proceeds from sale of equipment .................... 1,100 -
----------- ---------
Net cash used in investing activities ................ (209,624) (25,213)
----------- ---------
Financing activities:
Proceeds from Issuance of Common Stock, net ........ 8,044 150,000
Borrowing on Line of Credit ........................ 200,000 -
Payment on short term borrowing .................... (25,511)
Proceeds from issuance of Preferred Stock .......... - 80,000
----------- ---------
Net cash provided by financing activities ............ 182,533 230,000
----------- ---------
Net increase in cash and cash
equivalents .......................................... (446,953) (172,804)
Cash and cash equivalents at beginning
of period ............................................ 10,891,801 865,742
----------- ---------
Cash and cash equivalents at end of period ........... $10,444,848 $ 692,938
=========== =========
</TABLE>
See notes to condensed financial statements.
5
<PAGE> 6
GO2NET, INC.
NOTES TO FINANCIAL STATEMENTS
1. THE COMPANY AND BASIS OF PRESENTATION
go2net, Inc. (the "Company") <URL: http://www.go2net.com/> is an
interactive technology company that operates a group of Web sites and develops
software. MetaCrawler <URL: http://www.metacrawler.com/> is a search/index guide
that combines various existing search/index guides into one guide (a "metasearch
engine"); PlaySite <URL: http://www.playsite.com/> is a Java-based multi-user
games network; and StockSite <URL: http://www.stocksite.com/> offers proprietary
articles, portfolio tracking tools, company research and news relating to
business and finance. The Company focuses on utilizing innovative technologies
to deliver its content and to enhance the attractiveness and utility of its
product offerings.
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 cash flows for the
periods presented.
These financial statements should be read in conjunction with the Company's
audited financial statements and related notes included in the Company's Annual
Report on Form 10-K for the year ended September 30, 1997. The results of
operations for the period ended December 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, 1998.
2. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Net Loss Per Share
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share," ("Statement No. 128"), which the Company adopted
for the period ended December 31, 1997. Basic net loss per share is computed
using the weighted average number of shares of common stock outstanding during
the period. Diluted earnings per share includes the dilutive effect of options,
warrants and any convertible securities. All such dilutive securities are
anti-dilutive, and therefore, excluded from dilutive loss per share, except in
accordance with Securities and Exchange Commission requirements the effect of
dilutive securities issued during the 12-month period prior to the Company's
initial public offering have been included even though they are anti-dilutive on
the basis that the convertible preferred stock was converted on November 15,
1996.
The weighted average number of shares used in the calculation are as
follows.
<TABLE>
<CAPTION>
December 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Weighted average Common Shares-basic ................... 4,502,341 2,180,510
Weighted average Common Shares issued upon
conversion of Preferred Stock for periods prior
to actual conversion, using the treasury stock method .. - 463,750
--------- ---------
Weighted average Common Shares-diluted ................. 4,502,341 2,644,260
========= =========
</TABLE>
Revenue Recognition
The Company derives its revenue from the sale of advertisements on
short-term contracts and barter transactions. Advertising revenues are
recognized ratably over the period in which the advertisements are displayed.
Deferred revenues result from billings in excess of recognized revenue relating
to contracts. Barter transactions are recorded at the lower of the estimated
fair value of services received or the estimated fair value of the
advertisements given. Barter revenue and the related advertising is recorded
based on impressions delivered and received with the difference recorded as an
advance or prepaid. For the three months ended December 31, 1997, the
6
<PAGE> 7
Company generated $325,393 in revenues, of which $261,431 were cash revenues and
$63,962 were non-cash barter transactions.
Restricted Investments
The Company has restricted investments at December 31, 1997 of
approximately $300,000. This amount consists of a restricted certificate of
deposit of $300,000 held as collateral by a financial institution as a security
deposit on the lease of the Company's corporate headquarters.
Reclassifications
Certain prior years' balances have been reclassified to conform with the
current year presentation.
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
"Additional Factors that May Affect Future Results" section included in the
Company's Annual Report on Form 10-K for the year ended September 30, 1997.
OVERVIEW
go2net, Inc. (the "Company") <URL: http://www.go2net.com/> is an
interactive technology company that operates a group of Web sites and develops
software. MetaCrawler <URL: http://www.metacrawler.com/> is a search/index guide
that combines various existing search/index guides into one guide (a "metasearch
engine"); PlaySite <URL: http://www.playsite.com/> is a Java-based multi-user
games network; and StockSite <URL: http://www.stocksite.com/> offers proprietary
articles, portfolio tracking tools, company research and news relating to
business and finance. The Company focuses on utilizing innovative technologies
to deliver its content and to enhance the attractiveness and utility of its
product offerings.
The Company has an extremely limited 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 sites 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 sites, 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 early stage companies in general, and
specifically with respect to the new and rapidly evolving market for
Internet-based products 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 and compelling products and services 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 extensive operating history makes prediction of future operating results
difficult. Accordingly, there can be no assurance that the Company will be able
to generate significant revenues or that the Company will achieve, or maintain,
profitability or continue to generate revenues from operations in the future.
Since inception, the Company has incurred significant losses and as of December
31, 1997 had an accumulated deficit of $2,640,640. The Company currently intends
to 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 technologies, applications and other products and
services. 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
8
<PAGE> 9
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 initial Internet site on November 7, 1996 at which
time it was still in the process of evaluating the technical features of the
site. For the three months ended December 31, 1997, the Company generated
$325,393 in revenues, of which $261,431 were cash revenues and $63,962 were
non-cash barter transactions. The Company did not generate any revenue for the
three months ended December 31, 1996.
COSTS OF REVENUES
For the three months ended December 31, 1997, the Company incurred $63,962
in costs associated with barter transactions. Other costs incurred during the
three months ended December 31, 1997 were related to commissions and royalties
on revenues. The company did not incur any cost of revenues for the three months
ended December 31, 1996, as it did not generate any revenues.
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 three months
ended December 31, 1997 and December 31, 1996 were $97,033 and $12,512,
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 in its 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
and developing Internet technologies, products and services. 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 three months ended December 31, 1997 and December 31, 1996 were $258,467
and $186,300, respectively. The Company believes that significant investments in
enhancing its Internet sites will be necessary to be 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
three months ended December 31, 1997 and December 31, 1996 were $480,759 and
$171,139, 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.
Interest Income. The increase in interest income is due to the funds
available for investment as a result of the Company's initial public offering.
Interest income for the three months ended December 31, 1997 and December 31,
1996 was $148,442 and $7,280, respectively.
Income Taxes. The Company has not recorded an income tax benefit because it
has incurred net operating losses since its inception. As of December 31, 1997,
the Company had Federal net operating loss carry forwards of approximately
$2,600,000. 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.
9
<PAGE> 10
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company's principal source of liquidity was
$10,444,848 in cash and cash equivalents derived primarily from the sale of the
Company's equity securities. The Company also has a $1,000,000 revolving line of
credit with a commercial bank that expires on December 13, 1998. All borrowings
under such line of credit accrue interest at such bank's prime annual lending
rate. As of December 31, 1997, the Company had $200,000 outstanding under this
line of credit.
Capital expenditures were approximately $210,724 and $25,213 for the three
months ended December 31, 1997 and December 31, 1996, respectively. The Company
has no material commitments for capital expenditures other than approximately
$150,000 relating to the purchase of computer hardware and software. The Company
anticipates a substantial increase in its capital expenditures through the
remainder of fiscal 1998 consistent with its anticipated growth.
The Company currently believes that available funds, cash flows expected to
be generated from operations, if any, and the existing line of credit will be
sufficient to fund its working capital and capital expenditures requirements for
at least the next twelve months. 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-based products and services. 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-based products and services) 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.
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. 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
10
<PAGE> 11
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 revenues being
somewhat lower during the summer and year-end vacation and holiday periods, when
usage of the Company's Interest sites 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 has designed and tested the most current versions of its
products to be year 2000 compliant. There can be no assurances that the
Company's current products do not contain undetected errors or defects with year
2000 date functions that may result in material costs to the Company. Although
the Company is not aware of any material operational issues or costs associated
with preparing its internal systems for the year 2000, there can be no
assurances that the Company will not experience serious unanticipated negative
consequences and/or material costs caused by undetected errors or defects in the
technology used in its internal systems, which are comprised predominantly of
acquired technology and the Company's own software developments.
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 "Additional Factors that May Affect Future Results" section
included in the Company's Annual Report on Form 10-K for the year ended
September 30, 1997.
11
<PAGE> 12
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
None.
ITEM 5: Other Information
None.
ITEM 6: Exhibits and Reports on Form 8-K
No reports on Form 8-K filed during the period
Exhibit 27 - Financial Data Schedule
12
<PAGE> 13
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: February 6, 1998
By: /s/ Russell C. Horowitz
------------------------------------------
Russell C. Horowitz
President, Chief Executive Officer, Chief
Financial Officer and Director (Principal
Executive and Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<EXCHANGE-RATE> 1
<CASH> 10,444,848
<SECURITIES> 0
<RECEIVABLES> 224,784
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,784,766
<PP&E> 836,806
<DEPRECIATION> 183,494
<TOTAL-ASSETS> 12,386,907
<CURRENT-LIABILITIES> 448,946
<BONDS> 0
0
0
<COMMON> 14,578,602
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,386,907
<SALES> 325,393
<TOTAL-REVENUES> 325,393
<CGS> 141,979
<TOTAL-COSTS> 836,259
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (504,403)
<INCOME-TAX> 0
<INCOME-CONTINUING> (504,403)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (504,403)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
