SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 September 30, 1999
[_] 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 000-24223
FRONTLINE COMMUNICATIONS CORPORATION
(Exact name of Small Business issuer as specified in its Charter)
Delaware 13-3950283
(State or other jurisdiction (I.R.S Employer
Of incorporation or organization) Identification number)
One Blue Hill Plaza, P.O. Box 1548, Pearl River, New York 10965
(Address of principal executive offices) (Zip Code)
(914) 623-8553
(Issuer's Telephone Number, including Area Code)
Indicate by a check mark whether the issuer: (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the last 90 days.
Yes __X__ No _____
As of November 10, 1999, there were outstanding 4,012,551 shares of the issuer's
Common Stock, $ .01 par value.
<PAGE>
INDEX
Page
Part I Financial Information
Item 1 Financial Statements
Condensed Consolidated Balance Sheets 1
Condensed Consolidated Statements of Operations 2
Condensed Consolidated Statements of Cash Flows 3
Notes to Condensed Consolidated Financial Statements 4
Item 2 Management's Discussion and Analysis or Plan
Of Operations 7
Part II Other information 11
Signatures 12
<PAGE>
Frontline Communications Corporation
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998 (1)
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current:
Cash and cash equivalents $ 913,782 $ 1,994,711
Accounts receivable, net of allowance for doubtful accounts 194,170 3,327
Prepaid expenses and other 210,059 202,081
------------ ------------
Total current assets 1,318,011 2,200,119
Property and equipment, net 2,903,855 981,785
Intangibles, net 3,596,347 3,081,326
Other 197,241 23,173
------------ ------------
$ 8,015,454 $ 6,286,403
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 1,161,585 $ 301,162
Deferred revenue 607,426 614,852
Current portion of capitalized lease obligation 416,668 38,569
------------ ------------
Total current liabilities 2,185,679 954,583
Capitalized lease obligations and notes payable- net of current portion 1,175,771 284,433
------------ ------------
Total liabilities 3,361,450 1,239,016
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 authorized, 10 issued and
outstanding
Common Stock, $.01 par value, authorized 25,000,000 and 10,000,000,
respectively, 3,934,156 and 3,361,364 issued, respectively and 3,702,636
and 3,129,844 outstanding, respectively 39,342 33,614
Additional paid-in capital 13,653,046 9,121,533
Accumulated deficit (8,736,771) (3,843,647)
Note receivable (37,500)
Treasury stock, at cost, 231,520 shares (264,113) (264,113)
------------ ------------
Total stockholders' equity 4,654,004 5,047,387
============ ============
$ 8,015,454 $ 6,286,403
============ ============
</TABLE>
(1) The balance sheet at December 31, 1998 is derived from audited financial
statements at that date.
See notes to condensed consolidated financial statements.
-1-
<PAGE>
FRONTLINE COMMUNICATIONS CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 744,167 $ 123,799 $ 2,159,585 $ 369,972
Cost of revenues 589,228 134,895 1,537,233 339,139
----------- ----------- ----------- -----------
Gross profit (loss) 154,939 (11,096) 622,352 30,833
Operating expenses:
Selling, general and administrative 2,169,967 302,157 4,848,573 677,956
Non-cash compensation charge 712,220
----------- ----------- ----------- -----------
Loss from operations (2,015,028) (313,253) (4,938,441) (647,123)
Other income (expense):
Interest income 17,522 45,897 73,117 64,949
Interest expense (11,735) (3,738) (27,800) (27,912)
----------- ----------- ----------- -----------
Net loss ($2,009,241) ($ 271,094) ($4,893,124) ($ 610,086)
=========== =========== =========== ===========
Loss per share-basic and diluted ($ 0.55) ($ 0.09) ($ 1.43) ($ 0.27)
=========== =========== =========== ===========
Weighted average number of shares
outstanding- basic and diluted 3,647,499 3,016,480 3,421,359 2,221,077
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
-2-
<PAGE>
FRONTLINE COMMUNICATIONS CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
September 30, September 30,
1999 1998
------------- -------------
<S> <C> <C>
Cash flow from operating activities:
Net loss ($4,893,123) ($ 610,084)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 1,189,080 55,590
Non-cash compensation charge 712,220
Changes in assets and liabilities
Accounts receivable (190,843) (1,485)
Prepaid expenses and other (7,977) (33,042)
Other assets (156,576) (31,095)
Accounts payable and accrued expenses 860,423 (293,336)
Deferred revenue (7,426) 11,307
----------- -----------
Net cash used by operating activities (2,494,222) (902,145)
----------- -----------
Cash flows from investing activities:
Acquisition of property and equipment (821,538) (164,763)
Acquisition of businesses (681,661)
----------- -----------
Net cash used in investing activities (1,503,199) (164,763)
----------- -----------
Cash flows from financing activities:
Proceeds from sale of common stock, net 2,769,420 6,042,976
Proceeds from exercise of stock options 215,000
Principal payments on capitalized lease obligations (67,928)
Deferred registration costs
Purchase of Treasury Stock (264,113)
Repayments of stockholder and bank loans (482,884)
----------- -----------
Net cash provided by financing activities 2,916,492 5,295,979
----------- -----------
Net increase (decrease) in cash and cash equivalents (1,080,929) 4,229,071
Cash and cash equivalents, beginning of period 1,994,711 39,725
=========== ===========
Cash and cash equivalents, end of period $ 913,782 $ 4,268,796
=========== ===========
Supplemental information:
Approximate interest paid during the period $ 28,000 27,000
=========== ===========
</TABLE>
The Company entered into capital lease obligations in the aggregate amount of
approximately $1,337,000 during the nine months ended September 30, 1999.
See notes to condensed consolidated financial statements.
-3-
<PAGE>
FRONTLINE COMMUNICATIONS CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1999
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 (b)
of Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of the management, all adjustments
(consisting of normal recurring accruals) considered necessary for fair
presentation have been included. The results for the interim periods are not
necessarily indicative of the results that may be attained for an entire year or
any future periods. For further information, refer to the Financial Statements
and footnotes thereto in the Company's annual report on Form 10-KSB for the
fiscal year ended December 31, 1998.
The condensed consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
NOTE B -- LOSS PER SHARE
The Company has adopted SFAS No. 128, "Earning per Share", which provides
for calculation of "basic" and "diluted" earning per share. Basic earnings per
share includes no dilution and is computed by weighted average number of common
shares outstanding for the period. Diluted earnings per share reflect, in
periods in which they have dilutive effect, the effect of common shares issuable
upon exercise of stock options and warrants. Diluted earnings per share amounts
have not been reported because the Company has a net loss and the impact of the
assumed conversion of preferred stock and exercise of stock options and warrants
would be anti-dilutive.
NOTE C -- CAPITAL STOCK
In March 1999, the Company sold 158,856 shares of its Common Stock to two
investors for an aggregate purchase price of $2,000,000, with net proceeds to
the Company of $1,770,000. The Company also issued warrants to purchase an
aggregate of 21,662 shares of Common Stock at an exercise price of $13.85 per
share. The Company granted repricing rights with respect to the shares, and
anti-dilution rights with respect to the warrants, subject to an aggregate
maximum issuance of 450,000 shares. As of September 30, 1999, the Company had
issued 99,010 additional shares of Common Stock pursuant to the repricing
rights.
In May 1999, an officer of the Company exercised options granted under the
Company's stock option plan and acquired 15,000 shares of Common Stock for
$37,500. The payment was made by an interest bearing secured promissory note.
The amounts due under the note are secured by certain personal assets of the
officer in addition to shares of Common Stock acquired by the officer.
-4-
<PAGE>
FRONTLINE COMMUNICATIONS CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1999
In June 1999, the Company's shareholders approved an amendment to the
Certificate of Incorporation of the Company increasing the number of authorized
shares of Common Stock to 25,000,000.
In July 1999, the Company sold 99,900 shares of its Common Stock to two
investors for an aggregate purchase price of $1,000,000. The Company also issued
warrants to purchase an aggregate of 13,625 shares of Common Stock at an
exercise price of $11.01 per share. The Company granted repricing rights with
respect to the shares, and anti-dilution rights with respect to the warrants,
subject to an aggregate maximum issuance of 225,000 shares.
In 1999, the Company issued 60,436 shares of its Common Stock for
acquisition of businesses. See Note D.
NOTE D -- ACQUISITIONS OF BUSINESSES
In May 1999, the Company acquired substantially all of the assets of
channel I Shop.com and, acquired all of the issued and outstanding stock of
WebPrime, Inc. In August 1999, the Company acquired certain dial-up access
assets of United Computer Specialists, Inc. The aggregate consideration
consisted of $325,000 in cash (including transaction-related costs) and 50,436
shares of Common stock (approximately $675,000). The acquisitions resulted in
intangibles of $988,000, which are being amortized over their expected benefit
period of 3 years. In addition, the Company issued 10,000 shares of its Common
Stock as a purchase price adjustment to a business it acquired in 1998. $128,000
representing the value of the additional consideration was adjusted to the cost
of related intangibles.
In July 1999, the Company entered into a stock purchase agreement (the
"Agreement") to purchase all of the outstanding stock of Sovernet, Inc.
("Sovernet") from its three shareholders (the "Sellers"). The transaction is
subject to the Company securing adequate financing to fund the purchase and
other customary closing conditions. The Company paid a $250,000 deposit to the
Sellers, which is only refundable under certain limited circumstances as set
forth in the Agreement. The Agreement expired on September 30, 1999 and the
Company has not exercised its right to extend the Agreement. Discussions and
negotiations with the Sellers are continuing, but there is no assurance that the
Company will obtain the financing to consummate the transaction or the sellers
will agree to consummate the transaction. Accordingly, the deposit and related
transaction costs in the aggregate amount of $280,000 were charged to operations
during the three months ended September 30, 1999.
NOTE E -- NON-CASH COMPENSATION CHARGE
The Company granted to certain employees options to purchase an aggregate
amount of 245,768 shares of its Common Stock which required shareholder approval
prior to its issuance. The shareholders approved the issuance in June 1999, and
accordingly the approval date is deemed to be the grant date. Since the fair
market value of the shares at the grant date exceeded the exercise price,
compensation costs have been recognized during the nine months ended September
30, 1999.
-5-
<PAGE>
FRONTLINE COMMUNICATIONS CORPORATION
Notes to Condensed Consolidated Financial Statements (Unaudited)
September 30, 1999
NOTE F -- CAPITAL LEASE OBLIGATIONS
In September, the Company purchased communications equipment in the
aggregate amount of $1.3 million from a major telecommunications equipment
manufacturer. The manufacturer provided the financing through a lease for
$957,000. As per the term of the lease, the Company is required to pay $ 36,000
a month for 30 months commencing from February of 2000. In addition, $376,000
due to the manufacturer is payable over four quarterly installments of $93,650
commencing from March 2000.
NOTE G -- SUBSEQUENT EVENTS
In October 1999, the Company sold 105,263 shares of its Common Stock to two
investors for an aggregate purchase price of $500,000. The Company also issued
warrants to purchase an aggregate of 14,354 shares of Common Stock at an
exercise price of $5.23 per share. The Company granted repricing rights with
respect to the shares, and anti-dilution rights with respect to the warrants,
subject to an aggregate maximum issuance of 200,000 shares.
In October 1999, the Company acquired the Web design and hosting assets of
United Computer Specialists, Inc ("UCS"). The purchase price consisted of
$50,000 in cash, $275,000 in non interest bearing promissory notes and 33,065
shares of the Company's Common Stock valued at $175,000. The principal amounts
of the promissory notes are subject to downward revision based on revenues
derived from UCS's customers during the nine months following the closing date.
The promissory note for $100,000 is payable on the six month anniversary of the
closing date and the promissory note for $175,000 is payable on the one year
anniversary of the closing date.
NOTE H -- LEGAL PROCEEDINGS
In September 1999, the former principal stockholder of WoWFactor, Inc. who
also served as the Company's Vice President of Sales and Marketing commenced
litigation against the Company in the United States District Court for the
Southern District, New York, seeking damages in the amount of $200,000 as well
as delivery of certain options and Common Stock certificates allegedly owed by
the Company pursuant to the terms of her Employment Agreement and Stock Purchase
Agreement relating to the purchase of WOWFactor, Inc. The shares that are
subject of the stock certificates are shares of Common Stock allegedly due to
her upon conversion of series A convertible Preferred Stock. The Company is
currently considering the plaintiff's claim for the shares. This litigation is
in its early stages and the Company believes that it will not have a material
impact on its operations and financial conditions.
-6-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995:
The statements contained herein which are not historical facts are "forward
looking statements" within the meaning of Section 27A of the Securities Act of
1933, as amended and Section 21E of the Exchange Act. These "forward looking
statements" are subject to risks and uncertainties, including but not limited
to, risks associated with the Company's future growth and operating results, the
ability of the Company to successfully integrate newly acquired subscribers,
business entities and personnel into its operations, changes in consumer
preference and demographics, technological change, competitive factors,
unfavorable general economic conditions, Year 2000 compliance and other factors
described herein. The Company assumes no obligation to update the
forward-looking information. Actual results may vary significantly from such
forward-looking statements.
The Company's revenues are derived primarily from providing Internet access
services to individual and business subscribers. Revenues are comprised
principally of recurring revenues from the Company's customer base,
non-recurring start-up fees for modem and leased line connections and from
various ancillary services. The Company charges subscription fees, which are
billed monthly or quarterly, in advance, typically pursuant to pre-authorized
credit card accounts.
The Company acquired all of the issued and outstanding capital stock of
WOWFactor, Inc. in October 1998. In addition, the Company acquired substantially
all of the assets of Roxy Systems, Inc. d/b/a Magic Carpet, US Online, Inc. and
Webspan Communications, Inc. in the fourth quarter of 1998. In May 1999, the
Company acquired substantially all of the assets of channel I Shop.com and
acquired all of the issued and outstanding stock of WebPrime, Inc. In August
1999, the Company acquired certain dial-up access assets of United Computer
Specialists, Inc. All of the acquisitions were accounted for using the purchase
method of accounting with the results of each acquisition included in the
consolidated financial statements from the respective acquisition date.
RESULTS OF OPERATIONS
Comparison of the three and nine months ended September 30, 1999 and 1998
Revenues: Revenues increased for the three months and nine months ended
September 30, 1999 by $620,368 or 501.1% and by $1,789,613 or 483.7%,
respectively, over the same periods of prior year. The increase was attributable
to an expanded subscriber base. The Company had approximately 15,000 and 2,000
subscribers at September 30, 1999 and 1998, respectively. The increase in
subscriber base was principally due to acquisitions.
Cost of Revenues: For the three month period ended September 30, 1999 cost of
revenues increased by $454,333 to $589,228. For the nine month period ended
September 30, 1999 cost of revenues increased by $1,198,094 to $1,537,233. The
increase in cost of revenues was primarily due to increased communication,
depreciation and technical personnel expenses incurred to support the increased
subscriber base and in anticipation of future subscriber growth. The Company
expects these costs to increase in absolute dollars as additional subscribers
are added.
-7-
<PAGE>
Operating Expenses: For the three month period ended September 30, 1999,
operating expenses increased by $1,867,810 to $2,169,967. For the nine month
period ended September 30, 1999 operating expenses excluding non-cash
compensation costs and acquisition related costs increased by $4,170,617 to
$4,848,573. The increase in operating expenses was primarily attributable to
higher payroll, amortization, depreciation, advertising, promotion, and
professional fees incurred in 1999 due to the increased revenue base and in
anticipation of future growth. In September 1999, the Company had 65 employees
compared to 14 in September 1998. In addition, $280,000 of acquisition related
costs were charged to operations for the three and nine month periods ended
September 30,1999 (See Note D). Management anticipates future increases in
operating expenses related to advertising, promotion, payroll, depreciation and
professional fees.
The Company granted to certain employees options to purchase an aggregate
amount of 245,768 shares of its Common Stock which required shareholder approval
prior to its issuance. The shareholders approved the issuance in June 1999, and
accordingly the approval date is deemed to be the grant date. Since the fair
market value of the shares at the grant date exceeded the exercise price,
compensation costs of $712,220 have been recognized during the three months
ended June 30,1999.
Interest Income: Interest income net of interest expense decreased by $36,372
for the three-month period. Interest income net of interest expense increased by
$8,280 for the nine-month period. The increase in interest income was due to
investment of unutilized proceeds of the Company's initial public offering
completed in May 1998. As a significant portion of the unutilized proceeds was
used to fund operating losses in 1999, net interest income decreased in the
three-month period ended September 30, 1999.
Net Loss: The Company has incurred significant losses and anticipates that it
will continue to incur losses until sufficient revenues are generated to offset
the substantial up-front expenditures and operating costs associated with
attracting and retaining additional subscribers. For the three months ended
September 30, 1999 and 1998, the Company incurred net losses of $2,009,241 and
$271,094, respectively. For the nine months ended September 30, 1999 and 1998,
the Company incurred net losses of $4,893,124 and $610,086, respectively. There
can be no assurance that the Company will be able to attract and retain a
sufficient number of subscribers to significantly increase its revenues or ever
achieve profitable operations.
Liquidity and Capital Resources
The Company's working capital deficiency at September 30, 1999 was $867,668
compared to a positive working capital $1,245,536 at December 31, 1998. The
decrease in working capital was due to operating losses and lease financing
incurred for equipment (See Note F).
In March 1999, the Company sold 158,856 shares of its Common Stock to two
investors for an aggregate purchase price of $2,000,000, with net proceeds to
the Company of $1,770,000. The Company also issued warrants to purchase an
aggregate of 21,662 shares of Common Stock at an exercise price of $13.85 per
share. The Company granted repricing rights with respect to the shares, and
anti-dilution rights with respect to the warrants, subject to an aggregate
maximum issuance of 450,000 shares.
-8-
<PAGE>
In July 1999, the Company sold 99,900 shares of its Common Stock to two
investors for an aggregate purchase price of $1,000,000. The Company also issued
warrants to purchase an aggregate of 13,625 shares of Common Stock at an
exercise price of $11.01 per share. The Company granted repricing rights with
respect to the shares, and anti-dilution rights with respect to the warrants,
subject to an aggregate maximum issuance of 225,000 shares
In October 1999, the Company sold 105,263 shares of its Common Stock to two
investors for an aggregate purchase price of $500,000. The Company also issued
warrants to purchase an aggregate of 14,354 shares of Common Stock at an
exercise price of $5.23 per share. The Company granted repricing rights with
respect to the shares, and anti-dilution rights with respect to the warrants,
subject to an aggregate maximum issuance of 200,000 shares.
The Company's primary capital requirements are to fund acquisition of
subscriber bases and related Internet businesses, establish additional POPs,
install network equipment, lease space for consolidated POPs, and working
capital. To date, the Company has financed its capital requirements primarily
through issuance of debt and equity securities. The Company currently does not
have any lines of credit. The availability of capital resources is dependent
upon prevailing market conditions, interest rates, and the financial condition
of the Company. The Company will require additional cash resources for its
working capital and in connection with its continued expansion.
Year 2000
The "Year 2000" problem involves the ability of computer hardware and
software systems to accurately recognize and process date sensitive information
when the year changes to 2000. Systems that do not properly recognize such
information could generate wrong data or fail.
The Company has undertaken a two-phase process to evaluate its internal
status with respect to the Year 2000 problem. In the first phase, the Company
conducted an assessment of its systems including both IT systems and non-IT
systems such as hardware embedded technology, for Year 2000 compliance. The
Company utilized certain employees in its evaluation of possible Year 2000
problems. The costs and expenses of such employees have not been material. To
date, the Company has not discovered Year 2000 issues in the course of its
assessment that would have a material adverse effect on its business, results of
operations or financial condition; however, the Company cannot assure that all
Year 2000 issues were discovered during the assessment or that it will not
discover additional Year 2000 issues that could have such an effect.
Phase two of the Company's process involves taking any needed corrective
action to bring systems into compliance and develop a contingency plan in the
event any non-compliant critical systems remain by January 1,2000. As part of
phase two, the Company will attempt to quantify the impact, if any, of the
failure to complete any necessary corrective action. Although the Company cannot
currently estimate the magnitude of such impact; if systems material to its
operations have not been made Year 2000 compliant upon completion of this phase,
the Year 2000 issue could materially adversely affect the Company. To date, the
costs incurred with respect to phase two have not been material. Future costs
are difficult to estimate; however, the Company does not currently anticipate
that such costs will be material.
-9-
<PAGE>
Concurrently with the analysis of the Company's internal systems, the
Company has begun to survey third-party entities with which it transacts
business, including critical vendors and financial institutions, for Year 2000
compliance. With respect to the most critical vendors, the Company is in the
process of evaluating the Year 2000 preparedness of its telecommunications
providers, on which the Company is reliant for the network services crucial to
Web hosting and Internet connectivity services. The Company is actively working
to mitigate any potential impact by maintaining diverse providers for such
network services. However, failure of any one provider may have a material
adverse impact on the Company's operations.
-10-
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
In September 1999, the former principal stockholder of WoWFactor, Inc.
who also served as the Company's Vice President of Sales and Marketing
commenced litigation against the Company in the United States District
Court for the Southern District, New York, seeking damages in the
amount of $200,000 as well as delivery of certain options and Common
Stock certificates allegedly owed by the Company pursuant to the terms
of her Employment Agreement and Stock Purchase Agreement relating to
the purchase of WOWFactor, Inc. The shares that are subject of the
stock certificates are shares of Common Stock allegedly due to her
upon conversion of series A convertible Preferred Stock. The Company
is currently considering the plaintiff's claim for the shares. This
litigation is in its early stages and the Company believes that it
will not have a material impact on its operations and financial
conditions.
Item 2. Recent Sales of Unregistered Securities
During the three months ended September 30, 1999, the Company issued
13,700 shares of its Common Stock upon exercise of Warrants, sold
99,900 shares of Common Stock and issued Warrants to purchase an
aggregate of 13,625 shares of Common Stock to two institutional
investors, and issued 5,974 shares of Common Stock to a consultant. In
addition, the Company issued 99,010 shares of Common Stock pursuant to
repricing rights. The foregoing securities were issued in private
offerings pursuant to an exemption from registration offered by
section 4(2) of the Securities Act of 1933.
Item 6. Exhibits an Reports on Form 8-K
(a) Exhibits:
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K--None
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
November 12, 1999
By: /s/ Stephen J. Cole-Hatchard
----------------------------------
Stephen J. Cole-Hatchard
Chief Executive Officer and President
By: /s/ Vasan Thatham
----------------------------------
Vasan Thatham
Principal Financial Officer and Vice President
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS INCLUDED IN FORM 10-QSB AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 913,782
<SECURITIES> 0
<RECEIVABLES> 219,696
<ALLOWANCES> 25,526
<INVENTORY> 0
<CURRENT-ASSETS> 1,318,011
<PP&E> 3,281,884
<DEPRECIATION> 378,029
<TOTAL-ASSETS> 8,015,454
<CURRENT-LIABILITIES> 2,185,679
<BONDS> 0
0
0
<COMMON> 39,342
<OTHER-SE> 4,614,662
<TOTAL-LIABILITY-AND-EQUITY> 8,015,454
<SALES> 0
<TOTAL-REVENUES> 2,159,585
<CGS> 1,537,233
<TOTAL-COSTS> 5,560,793
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,893,124)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,893,124)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,893,124)
<EPS-BASIC> (1.43)
<EPS-DILUTED> (1.43)
</TABLE>
