<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 2000
or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from___________ to______________
Commission File Number: 0-37159
IOMED, INC.
(Exact name of registrant as specified in its charter)
UTAH 87-0441272
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3385 WEST 1820 SOUTH, SALT LAKE CITY, UTAH 84104
(Address of principal executive offices) (Zip Code)
(801) 975-1191
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (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 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days [X] Yes [ ] No.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. As of APRIL 30,
2000:
CLASSES OF COMMON STOCK NUMBER OF SHARES OUTSTANDING
----------------------- ----------------------------
Common Stock, no par value 6,527,535
<PAGE> 2
IOMED, INC.
------------
INDEX TO FORM 10-Q
PART I -- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements (unaudited) Page
<S> <C>
Condensed Consolidated Balance Sheets --
March 31, 2000 and June 30, 1999 ................................... 3
Condensed Consolidated Statements of Operations --
Three months ended March 31, 2000 and 1999 Nine months ended
March 31, 2000 and 1999 ............................................ 4
Condensed Consolidated Statements of Cash Flows --
Nine months ended March 31, 2000 and 1999 .......................... 5
Notes to Condensed Consolidated Financial Statements ............... 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ...................... 8
Item 3. Quantitative and Qualitative Disclosure about Market Risk
Not applicable
PART II - OTHER INFORMATION
Item 5. Other Information .................................................. 11
Item 6. Exhibits and Reports on Form 8-K ................................... 11
</TABLE>
Page 2 of 13
<PAGE> 3
IOMED, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
2000 1999
------------ ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 16,548,000 $ 17,263,000
Accounts receivable 1,340,000 1,292,000
Inventories 870,000 782,000
Prepaid expenses 117,000 43,000
------------ ------------
Total current assets 18,875,000 19,380,000
Equipment and furniture, net 893,000 603,000
Other assets 147,000 171,000
------------ ------------
TOTAL ASSETS $ 19,915,000 $ 20,154,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 139,000 $ 237,000
Accrued expenses and other liabilities 871,000 940,000
Current portion of long-term obligations 129,000 57,000
------------ ------------
Total current liabilities 1,139,000 1,234,000
Long-term obligations 421,000 129,000
Commitments
Shareholders' equity:
Common shares 34,456,000 34,413,000
Convertible preferred shares 6,881,000 6,881,000
Accumulated deficit (22,982,000) (22,503,000)
------------ ------------
Total shareholders' equity 18,355,000 18,791,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 19,915,000 $ 20,154,000
============ ============
</TABLE>
See accompanying notes.
Page 3 of 13
<PAGE> 4
IOMED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------------- -----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 2,561,000 $ 2,365,000 $ 7,736,000 $ 6,960,000
Contract research revenue, royalties &
license fees 52,000 38,000 125,000 836,000
----------- ----------- ----------- -----------
Total revenues 2,613,000 2,403,000 7,861,000 7,796,000
Operating costs and expenses:
Cost of products sold 891,000 992,000 2,720,000 2,979,000
Research and development 772,000 420,000 2,281,000 1,287,000
Selling, general and administrative 1,402,000 1,290,000 4,048,000 4,120,000
----------- ----------- ----------- -----------
Total costs and expenses 3,065,000 2,702,000 9,049,000 8,386,000
----------- ----------- ----------- -----------
Loss from operations (452,000) (299,000) (1,188,000) (590,000)
Interest expense 10,000 6,000 18,000 16,000
Interest income and other, net 248,000 208,000 727,000 660,000
----------- ----------- ----------- -----------
Net income (loss) $ (214,000) $ (97,000) $ (479,000) $ 54,000
=========== =========== =========== ===========
BASIC AND DILUTED INCOME (LOSS) PER
COMMON SHARE $ (0.03) $ (0.01) $ (0.07) $ 0.01
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
Page 4 of 13
<PAGE> 5
IOMED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
2000 1999
------------ ------------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (479,000) $ 54,000
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 279,000 271,000
Changes in assets and liabilities:
Accounts receivable (48,000) 436,000
Inventories (88,000) (103,000)
Prepaid expenses (74,000) 58,000
Trade accounts payable (98,000) (412,000)
Accrued expenses and other liabilities (69,000) 11,000
------------ ------------
Net cash provided by (used in) operating activities (577,000) 315,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and furniture (127,000) (171,000)
------------ ------------
Net cash provided by (used in) investing activities (127,000) (171,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 43,000 3,000
Payments on long-term obligations (54,000) (42,000)
------------ ------------
Net cash provided by (used in) financing activities (11,000) (39,000)
Net increase (decrease) in cash and cash equivalents (715,000) 105,000
Cash and cash equivalents at beginning of period 17,263,000 16,709,000
------------ ------------
Cash and cash equivalents at end of period $ 16,548,000 $ 16,814,000
============ ============
Non-cash activities:
Purchase of equipment under capital lease obligation $ 418,000 $ --
</TABLE>
See accompanying notes.
Page 5 of 13
<PAGE> 6
IOMED, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
IOMED, Inc., a Utah corporation (the "Company"), develops,
manufactures and commercializes controllable drug delivery systems using
proprietary iontophoretic technology. Iontophoresis is a method of
enhancing and controlling the transport of drugs through skin and other
body tissues using a low-level electrical current.
Basis of Presentation
In the opinion of management, the accompanying condensed
consolidated financial statements contain all normal recurring
adjustments necessary to present fairly the financial position of the
Company as of March 31, 2000, and the results of its operations and cash
flows for the interim periods ended March 31, 2000, and 1999. The
operating results for the interim periods are not necessarily indicative
of the results for a full year. Certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted. Therefore, these statements should be read in
conjunction with the Company's audited consolidated financial statements
for the year ended June 30, 1999, included in the Company's Annual
Report on Form 10-K, dated September 28, 1999.
Earnings (Loss) Per Share
For all periods presented, basic and diluted earnings per share
are computed in accordance with Statement of Financial Accounting
Standards (SFAS) No. 128 - Earnings per Share.
Net income (loss) as presented in the condensed consolidated
statements of operations represents the numerator used in computing both
basic and diluted earnings per share and the following table sets forth
the computation of the weighted average shares representing the
denominator used in determining basic and diluted earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
------------------ -------------------
2000 1999 2000 1999
---- ---- ----- -----
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Denominator for basic earnings per
share - weighted average shares
outstanding 6,527 6,503 6,514 6,501
Dilutive securities: preferred
stock and certain stock options -- -- -- 954
----- ----- ----- -----
Denominator for diluted earnings
per share -- adjusted weighted
average shares outstanding and
assumed conversions 6,527 6,503 6,514 7,455
===== ===== ===== =====
</TABLE>
Page 6 of 13
<PAGE> 7
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At March 31, 2000, the following potentially dilutive securities
were outstanding but were not included in the computation of diluted
earnings per share due to their anti-dilutive effect: options to
purchase approximately 1,227,169 common shares at a weighted average
exercise price of $3.33 per share; and warrants to purchase 339,792
common shares at a weighted average price of $13.70 per share; and
893,801 convertible Series D preferred shares convertible on a
share-for-share basis into common stock.
New Accounting Pronouncements
In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin (SAB) 101, Revenue Recognition in Financial
Statements. The effective date of SAB 101 is the second quarter of the
fiscal year ending after December 15, 1999. This SAB clarifies certain
existing guidance related to revenue recognition. The Company is
currently evaluating SAB 101 to determine the impact that it will have
on its revenue recognition policies and practices.
2. INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. Inventories consisted
of the following at March 31, 2000 and June 30, 1999:
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
2000 1999
-------- --------
<S> <C> <C>
Raw materials $571,000 $469,000
Work-in-progress 39,000 25,000
Finished goods 260,000 288,000
-------- --------
$870,000 $782,000
======== ========
</TABLE>
Page 7 of 13
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Condensed
Consolidated Financial Statements and the related Notes thereto included
elsewhere in this Report. The following Management's Discussion and Analysis of
Financial Condition and Results of Operations contains forward-looking
statements, within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, that involve risks and
uncertainties. The Company's actual results of operations could differ
significantly from those anticipated in such forward-looking statements as a
result of numerous factors including those discussed herein. Additional risks
and uncertainties are described in the Company's most recent Annual Report on
Form 10-K for its fiscal year ended June 30, 1999. This discussion should be
read in conjunction with such report, copies of which are available upon
request.
OVERVIEW
The Company develops, manufactures and commercializes controllable drug
delivery systems using iontophoretic technology. The majority of the Company's
revenues have been generated through the sale of its iontophoretic drug delivery
products in the physical therapy market for use in the delivery of
dexamethasone. The Company introduced its local dermal anesthesia products into
the market place in January 1997 and, to date, has not realized significant
revenue from the sales of such products. Since its inception, the Company has
generally incurred operating losses and may incur additional operating losses
over the next several years as a result of anticipated costs associated with
increases in internally funded research, development and clinical trial
activities relating to new applications for its iontophoretic drug delivery
technologies. As of March 31, 2000, the Company's accumulated deficit was
approximately $22,982,000. The Company's ability to achieve and sustain
profitability will depend on its ability to achieve market acceptance and
successfully expand sales of its existing products; successfully complete the
development of, receive regulatory approvals for, and successfully manufacture
and market its products under development; as well as successfully negotiate and
enter into agreements with collaborative partners, licensors, licensees and
other parties for the development, clinical testing, manufacture, marketing or
sale of certain of its products or products in development, as to which there
can be no assurance.
The Company's results of operations may vary significantly from quarter
to quarter and depend, among other factors, on the signing of new product
development agreements, the timing of contract research revenues and milestone
payments made by collaborative partners, the progress of clinical trials,
product sales levels and costs associated with manufacturing processes. The
timing of the Company's research and development revenues may not match the
timing of the associated expenses. The amount of revenue in any given period is
not necessarily indicative of future revenue.
Page 8 of 13
<PAGE> 9
RESULTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 2000 AND 1999
Revenues. Product sales increased 8% and 11% to $2.6 million and $7.7
million in the three and nine months ended March 31, 2000, respectively, from
$2.4 million and $7.0 million in the three and nine months ended March 31, 1999,
respectively. The increase can be attributed primarily to higher sales of the
Company's iontophoretic drug delivery products for the treatment of local
inflammation resulting from the continued success of new products, expanded
distribution efforts and increased market acceptance of iontophoresis.
Contract research revenues, royalties and license fees increased to
$52,000 and decreased to $125,000 in the three and nine months ended March 31,
2000, respectively, from $38,000 and $836,000 in the three and nine months ended
March 31, 1999, respectively. The nine month period decrease is attributable to
the expiration of the Company's collaborative research and development program
with a pharmaceuticals corporation ("Novartis") in December 1998. Without new
collaborative research and product development programs, such revenues, in the
current quarter, are indicative of the Company's expectations for the remainder
of the fiscal year.
Costs of Products Sold. Costs of products sold decreased 10% and 9% to
$891,000 and $2.7 million in the three and nine months ended March 31, 2000,
respectively, from $1 million and $3 million in the three and nine months ended
March 31, 1999, respectively. This decrease reflects a more favorable product
mix and improved operating efficiencies during the current periods. Gross
margins on product sales reached 65% in both the current three and nine month
periods compared to 58% and 57%, respectively, in the prior year's three and
nine month periods.
Research and Development Expense. Research and development expenditures
increased 84% to $772,000 for the three months ended March 31, 2000, compared to
$420,000 reported for the three months ended March 31, 1999. Research and
development expenditures of $2.3 million for the nine months ended March 31,
2000, increased 77% from the $1.3 million reported for the nine months ended
March 31, 1999. This increase primarily reflects the initiation and progress of
the Phase III clinical studies for IontoDex, a formulation of dexamethasone for
the treatment of acute local inflammatory conditions, as well as increased
expenditures in support of the Company's other product development programs. In
addition, the Company has been funding preclinical work on the iontophoretic
delivery of drugs to the eye. Last year's costs included expenses incurred in
connection with the Novartis program, which were declining as the project neared
completion.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased 9%, to $1.4 million in the three months ended
March 31, 2000, compared to $1.3 million in the three months ended March 31,
1999. Selling, general and administrative expenses of $4.0 million for the nine
months ended March 31, 2000, decreased 2% from the $4.1 million for the nine
months ended March 31, 1999. The current quarter's increase reflects increased
administrative costs, including business development costs and patent related
costs. The nine month period decrease is due to higher sales and marketing costs
in last year's first and second quarters that were primarily attributable to
one-time costs associated with the restructuring of the Company's field sales
force and higher marketing and promotional expenses for the Numby product line.
Other Costs and Expenses. Net interest income increased to $238,000 and
$709,000 in the three and nine months ended March 31, 2000, respectively,
compared to $202,000 and $644,000 in the same periods last year. Amounts in both
periods reflect interest earnings on the invested cash balances.
Income Taxes. The Company has substantial net operating loss
carryforwards, which, under the current "change of ownership" rules of the
Internal Revenue Code of 1986, as amended, may be subject to substantial annual
limitation. No income tax benefit was recognized for the three and nine month
periods ended March 31, 2000, which reflects management's estimate of the
Company's fiscal 2000 tax position. In
Page 9 of 13
<PAGE> 10
addition, no income tax benefit was recognized for the three months ended March
31, 1999 and no income tax expense was recognized on the Company's pre-tax
income for the nine month period ended March 31, 1999.
Net income (loss). The Company recognized a net loss of $214,000 or
$0.03 per share during the three months ended March 31, 2000, compared to a net
loss of $97,000 or $0.01 per share in the three months ended March 31, 1999. The
Company recognized a net loss of $479,000 or $0.07 per share during the nine
months ended March 31, 2000, compared to net income of $54,000 or $0.01 per
share in the nine months ended March 31, 1999. During the current three and nine
month periods, interest earnings on invested cash balances offset a loss from
operations, in part. With anticipated increases in internally funded research
and development programs, including the IontoDex Phase III clinical studies, the
Company expects to report a net loss for the fiscal year. Net interest earnings
on invested cash balances offset, in part, a loss from operations for the three
months ended March 31, 1999 and more than offset a loss from operations for the
nine months ended March 31, 1999.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 2000, the Company's operating losses, including its
research and development programs, will be internally funded. In the prior
period such losses were internally funded with cash flows from operations and
from contract research and development revenues the Company received from
Novartis. In December 1998, the Company's collaborative research and development
agreement with Novartis expired. Accordingly, the Company's contract research
revenues declined during the first nine months of fiscal 2000. If successful in
its efforts to enter into new collaborative research and development
arrangements, the Company may earn additional contract research revenues in
fiscal 2000 and in future years.
As of March 31, 2000, the Company had cash and cash equivalents totaling
approximately $16.5 million. Cash in excess of immediate requirements is
invested in a manner which is intended to maximize liquidity and return while
minimizing investment risk, and, whenever possible, the Company seeks to
minimize the potential effects of concentration of credit risk.
The Company consumed $577,000 in cash for operating activities during
the nine months ended March 31, 2000, compared to generating $315,000 during the
nine months ended March 31, 1999. The increased cash consumption in the current
period can be attributable primarily to the reported net loss during the nine
months ended March 31, 2000 and an increased investment in working capital
during the period.
Historically, the Company's operations have not been capital intensive
and investment in property, plant and equipment during the periods presented has
not been significant. However, the Company entered into a master lease agreement
with a bank to provide up to an additional $1 million in lease financing for the
Company's anticipated investments in capital equipment. As of March 31, 2000,
the Company had approximately $418,000 outstanding under the lease agreement,
all of which was classified as long-term debt. The Company intends to use the
available credit under the agreement to fund the majority of its capital
equipment needs during the next 12 months. The Company's expenditures for
equipment and furniture were $545,000 and $171,000 in each of the nine months
ended March 31, 2000 and 1999, respectively.
Other uses of cash were $54,000 and $42,000 in principal reductions
under capital lease obligations during the nine months ended March 31, 2000 and
1999, respectively. The Company recorded $43,000 in proceeds from the exercise
of stock options in the nine months ended March 31, 2000.
In an effort to meet anticipated future growth and to consolidate its
research and administrative functions and manufacturing operations, the Company
expects to execute a lease agreement in the fourth quarter of fiscal year 2000
for an approximate 34,000 square foot facility. Accordingly, the Company expects
to record a non-recurring charge of approximately $300,000 to $400,000, or $0.05
to $0.06 per share, against fiscal year 2000 fourth quarter income relating to
the abandonment of its current facilities.
Page 10 of 13
<PAGE> 11
The Company may continue to incur costs associated with its research and
development activities, including clinical trials, and make additional
investments in working capital. The Company anticipates that its existing cash
balances and cash generated from operations will be sufficient to fund the
operations of the Company at least through fiscal 2001. However, the Company may
be required or elect to raise additional capital before that time. The Company's
actual capital requirements will depend on many factors, some of which are
outside the Company's control.
IMPACT OF THE YEAR 2000
The Year 2000 computer issue refers to a condition in computer software
where a two-digit field rather than a four-digit field is used to distinguish a
calendar year. Unless corrected, some computer programs, hardware and
non-information technology systems could be unable to process information
containing dates subsequent to December 31, 1999. As a result, such programs and
systems could experience miscalculations, malfunctions or disruptions.
As of the date of this filing, there has been no internal system
disruptions caused by the changeover from year 1999 to year 2000. The Company's
information systems are operating effectively and the Company has noticed no
third party system failures associated with the Year 2000. The Company will
continue to monitor the situation for any internal or third party system
disruptions, but expects none at this time. However, there can be no assurances
that such disruptions will not be discovered or arise in the future or that the
Company will be able to identify and validate an alternative source for any
service or material which may be affected by such disruptions.
Prior to January 1, 2000, the Company completed detailed programs to
address Year 2000 readiness of its primary operating systems (including its
financial systems, material requirements planning, and production lot tracking
systems) and those of its suppliers and other vendors whose systems might impact
the Company's operations. The custom circuitry and software utilized in the
Company's iontophoretic dose controllers do not include any date driven
functions and therefore have not exhibited any change in performance due to the
arrival of the year 2000. Costs incurred in connection with the Company's Year
2000 efforts have not been material.
PART II -- OTHER INFORMATION
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
EXHIBITS:
27.1 Financial Data Schedule for the nine months ended March 31, 2000.
REPORTS ON FORM 8-K:
<TABLE>
<CAPTION>
Date Item Reported
---- -------------
<S> <C>
February 9, 2000 The Registrant's February 2, 2000 press release
regarding second quarter earnings and the
appointments of James R. Weersing to President and
Chief Executive Officer and Peter J. Wardle to
Chairman.
</TABLE>
Page 11 of 13
<PAGE> 12
IOMED, INC.
------------
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.
IOMED, Inc.
----------------
(Registrant)
Date: May 12, 2000 By: /s/ James R. Weersing
-------------------------------------
James R. Weersing
President and Chief Executive Officer
Date: May 12, 2000 By: /s/ Robert J. Lollini
-------------------------------------
Robert J. Lollini
Vice President, Finance and
Chief Financial Officer
Page 12 of 13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2000 AND THE
RELATED UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE
MONTHS ENDED MARCH 31, 2000 INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE PERIOD
ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001041652
<NAME> IOMED, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 16,548,000
<SECURITIES> 0
<RECEIVABLES> 1,418,000
<ALLOWANCES> 78,000
<INVENTORY> 870,000
<CURRENT-ASSETS> 18,875,000
<PP&E> 3,695,000
<DEPRECIATION> 2,802,000
<TOTAL-ASSETS> 19,915,000
<CURRENT-LIABILITIES> 1,139,000
<BONDS> 421,000
0
6,881,000
<COMMON> 34,456,000
<OTHER-SE> (22,982,000)
<TOTAL-LIABILITY-AND-EQUITY> 19,915,000
<SALES> 7,736,000
<TOTAL-REVENUES> 7,861,000
<CGS> 2,720,000
<TOTAL-COSTS> 9,049,000
<OTHER-EXPENSES> (727,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,000
<INCOME-PRETAX> (479,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (479,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (479,000)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
