<PAGE>
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 # 000-24547
SCIENTIFIC LEARNING CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 94-3234458
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1995 University Avenue, Suite 400
Berkeley, California 94704
(510) 665-9700
(Address of Registrants principal executive offices, including zip code, and
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.
Yes /X/ No / /
The number of shares of the Registrant's Common Stock, $.001 par value
per share, outstanding at May 1, 2000 was 11,241,708.
<PAGE>
SCIENTIFIC LEARNING CORPORATION
INDEX TO FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 2000
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PAGE
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited):
Condensed Balance Sheets as of March 31, 2000 and December 31, 1999..................... 3
Condensed Statement of Operations for the Three Months
Ended March 31, 2000 and 1999.................................................. 4
Condensed Statements of Cash Flows for the Three Months
Ended March 31, 2000 and 1999.................................................. 5
Notes to Condensed Financial Statements................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations...................................................... 8
Item 3. Quantitative and Qualitative Disclosures about Market Risk.............................. 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings....................................................................... 13
Item 2. Changes in Securities and Use of Proceeds............................................... 13
Item 3. Defaults Upon Senior Securities......................................................... 13
Item 4. Submission of Matters to a Vote of Security Holders..................................... 13
Item 5. Other Information....................................................................... 13
Item 6. Exhibits and Reports on Form 8-K........................................................ 13
Signature............................................................................... 15
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SCIENTIFIC LEARNING CORPORATION
CONDENSED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
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<CAPTION>
March 31, December 31,
2000 1999
-------------------------- ---------------------------
(Unaudited)
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ASSETS
Current assets:
Cash and cash equivalents $ 9,498 $ 15,662
Investments in government securities 13,993 13,903
Accounts receivable, net 2,342 3,472
Prepaid expenses and other current assets 1,468 733
-------------------------- ---------------------------
Total current assets 27,301 33,770
Property and equipment, net 2,178 1,913
Other assets 1,084 641
-------------------------- ---------------------------
TOTAL ASSETS $ $ 36,324
30,563
========================== ===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 692 $ 802
Accrued liabilities 881 1,366
Deferred revenue 2,749 4,205
-------------------------- ---------------------------
Total current liabilities 4,322 6,373
Other liabilities 203 211
-------------------------- ---------------------------
Total liabilities 4,525 6,584
Stockholders' equity:
Common stock 63,674 62,696
Deferred compensation (428) (566)
Accumulated deficit (37,208) (32,390)
-------------------------- ---------------------------
Total stockholders' equity 26,038 29,740
-------------------------- ---------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 30,563 $ 36,324
========================== ===========================
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
SCIENTIFIC LEARNING CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
UNAUDITED
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<CAPTION>
Three months ended March 31,
-------------------------------------------------------------
2000 1999
----------------------------- ----------------------------
<S> <C> <C>
Revenues:
Programs and products $ 3,156 $ 1,076
Services 275 264
----------------------------- ----------------------------
Total revenues 3,431 1,340
Cost of revenues:
Programs and products 493 181
Services 252 152
----------------------------- ----------------------------
Total cost of revenues 745 333
Gross profit 2,686 1,007
Operating expenses:
Sales and marketing 5,087 2,857
Research and development 1,337 829
General and administrative 1,428 946
----------------------------- ----------------------------
Total operating expenses 7,852 4,632
Operating loss (5,116) (3,625)
Interest income, net 348 88
----------------------------- ----------------------------
Net loss $ (4,818) $ (3,537)
============================= ============================
Basic and diluted net loss per share $ (0.45) $ (1.26)
============================= ============================
Shares used in computing basic and diluted net loss per share 10,699,388 2,805,044
============================= ============================
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
SCIENTIFIC LEARNING CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
UNAUDITED
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------------------------------------
2000 1999
---------------------------- ----------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (4,818) $ (3,537)
Adjustments to reconcile net loss to cash used in operating
activities:
Depreciation and amortization 248 177
Amortization of deferred compensation 138 223
Changes in operating assets and liabilities:
Accounts receivable 1,130 (249)
Prepaid expenses and other assets (1,178) (82)
Accounts payable (110) (101)
Accrued liabilities (485) (381)
Deferred revenues (1,456) 293
Other liabilities (8) 2
---------------------------- ----------------------------
Net cash used in operating activities (6,539) (3,655)
INVESTING ACTIVITIES:
Purchases of government securities (90) --
Purchases of property and equipment, net (513) (259)
---------------------------- ----------------------------
Net cash used in investing activities (603) (259)
FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net 978 3
Proceeds from issuance of preferred stock, net -- 4,896
Repayments of borrowings under bank line of credit -- (94)
Repayments of capital lease obligations -- (4)
---------------------------- ----------------------------
Net cash provided by financing activities 978 4,801
(Decrease) increase in cash and cash equivalents (6,164) 887
Cash and cash equivalents at beginning of period 15,662 6,362
---------------------------- ----------------------------
Cash and cash equivalents at end of period $ 9,498 $ 7,249
============================ ============================
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS
Scientific Learning Corporation (the "Company") was incorporated on
November 30, 1995 in the State of California and was reincorporated on May 2,
1997 in the State of Delaware. The Company commenced operations in February
1996. The Company operates in one business segment, which is the development,
marketing and sale of proprietary training software and other education
products and services designed to increase human learning and performance.
The Company's revenues have been derived primarily from the Fast ForWord
family of programs, which are designed to improve language and reading
skills. The Company's products are delivered through a variety of
distribution channels, including sales to public schools, speech and language
professionals in private practice and direct-to-consumer channels.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
INTERIM FINANCIAL INFORMATION
The interim financial information as of March 31, 2000 and for the three
months ended March 31, 2000 and 1999 is unaudited, but includes all
adjustments, consisting only of normal recurring adjustments, that the
Company considers necessary for a fair presentation of its financial position
at such date and its results of operations and cash flows for those periods.
These condensed financial statements and notes should be read in
conjunction with the Company's audited financial statements and notes
thereto, together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1999, filed with the Securities
and Exchange Commission.
Operating results for the three months ended March 31, 2000 are not
necessarily indicative of results that may be expected for any future periods.
NET LOSS PER SHARE
Basic and diluted net loss per share information for all periods is
presented under the requirement of FAS No. 128, "Earnings per Share". Basic
net loss per share has been computed using the weighted-average number of
shares outstanding during the period and excludes any dilutive effects of
stock options, warrants, and convertible securities. Potentially dilutive
securities
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have been excluded from the computation of diluted net loss per share as
their inclusion would be antidilutive.
The calculation of basic and diluted net loss per share, as well as
basic and diluted pro forma net loss per share showing the effect of the
conversion of preferred stock to common upon completion of the Company's
initial public offering in July 1999, is as follows (in thousands, except
share and per share amounts):
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<CAPTION>
Three months ended
March 31,
------------------------------
2000 1999
---- ----
(Unaudited)
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Historical:
Net loss $ (4,818) $ (3,537)
========- ========-
Weighted average shares of common stock outstanding used in computing basic
and diluted net loss per share 10,699,388 2,805,044
========== =========
Basic and diluted net loss per share $ (0.45) $ (1.26)
======= =======
Pro forma:
Net loss $ (4,818) $ (3,537)
======== ========
Shares used in computing basic and diluted net loss per share (from above) 10,699,388 2,805,044
Adjustment to reflect the effect of the assumed conversion of preferred stock
from the date of issuance -- 5,195,131
-- ---------
Weighted average shares used in computing pro forma basic and diluted net loss
per share 10,699,388 8,000,175
========== =========
Pro forma basic and diluted net loss per share $ (0.45) $ (0.44)
======= =======
</TABLE>
RECLASSIFICATIONS
Certain balance sheet accounts as of March 31, 1999 and operating
expenses for the three months then ended have been reclassified to conform to
the presentation adopted in 2000.
2. COMPREHENSIVE LOSS
The Company has no items of other comprehensive income (loss), and
accordingly the comprehensive loss is the same as the net loss for all periods
reported.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The statements herein that are not purely historical are
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from the results discussed herein. Factors
that could cause or contribute to such differences include, but are not
limited to, those discussed herein within this quarterly report on Form 10-Q,
our Annual Report on Form 10-K for the year ended December 31, 1999, and
other documents filed with the Securities and Exchange Commission, which
factors are incorporated herein by reference. All forward-looking statements
included in this document are based on information available to us on the
date hereof, and we assume no obligation to update any such forward-looking
statements or to update the reasons why actual results could differ from
those projected in the forward-looking statements.
The following should be read in conjunction with the audited financial
statements and the notes thereto and Management's Discussion and Analysis of
Financial Condition and Results of Operations included in our Annual Report
on Form 10-K for the year ended December 31, 1999.
OVERVIEW
We develop, market and sell proprietary training software and other
educational products and services. Our programs, products and services are
based on research on how the brain works and are designed to increase human
learning and performance. Language and reading skills are the foundation for
all learning, and we have developed programs to help children, adolescents
and adults learn how to read or become better readers. Our language and
reading programs, Fast ForWord, Step 4word and 4wd, are intensive,
computer-based training programs that focus on improving critical language
and reading skills. Fast ForWord was launched in 1997, Step 4word in 1998 and
4wd in 1999. These training programs are based on scientific research and
have been extensively field-tested. In 1999, we also began selling Reading
Edge, a language and reading assessment product, the Away We Go! family of
software and storybooks, and CrossTrain professional development software.
We also offer professional development seminars in which educators,
speech and language professionals and other professionals can learn about
recent developments in brain research and the practical application of our
programs as well as earn continuing education credit. Our products are
delivered through a variety of distribution channels, including sales to
public schools, referrals from speech and language professionals in private
practice and direct-to-consumer channels through our web sites.
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, various
financial data expressed as a percentage of revenues (unless otherwise noted).
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<CAPTION>
Three months ended March 31,
----------------------------------------------
2000 1999
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Revenues:
Programs and products 92.0 % 80.3 %
Services 8.0 19.7
Total revenues 100.0 100.0
Cost of revenues:
Programs and products (1) 15.6 16.8
Services (2) 91.6 57.6
Total cost of revenues 21.7 24.9
Gross margin 78.3 % 75.1 %
</TABLE>
(1) Program and product costs are expressed as a percentage of program and
product revenues.
(2) Service costs are expressed as a percentage of service revenues.
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
REVENUES. Total revenues increased by $2.1 million, or 156.0%, to $3.4
million for the three months ended March 31, 2000 compared to the same period
in 1999. Program and product revenues increased by $2.1 million, or 193.3%,
to $3.2 million for the quarter ended March 31, 2000 compared to the same
period in 1999 because of increased program activations in speech and
language professional and public school markets. Service revenues increased
by $11,000, or 4.2%, to $275,000 for the quarter ended March 31, 2000
compared to the same period in 1999 due to an increased number of
professional development seminars and software installations in public
schools.
COST OF REVENUES. Total cost of revenues increased by $412,000, or
123.7%, to $745,000 for the three months ended March 31, 2000 compared to the
same period in 1999. As a percentage of revenues, cost of revenues decreased
to 21.7% from 24.9% for the quarter ended March 31, 2000 compared to the
prior year. Cost of program revenues decreased to 15.6% from 16.8% for the
quarter ended March 31, 2000 due to lower royalties and because technical
support and Internet hosting costs declined as a percentage of revenues,
reflecting growth in program volume. Cost of services revenues increased to
91.6% from 57.6% for the quarter ended March 31, 2000 due to costs of
training and installations of programs in public schools. To encourage
schools to adopt Fast ForWord, we have offered discounts on training and
installation services.
SALES AND MARKETING EXPENSES. Sales and marketing expenses increased
$2.2 million, or 78.1%, to $5.1 million for the quarter ended March 31, 2000
compared to the same period in 1999. This increase was primarily attributable
to increased personnel, marketing and travel costs.
<PAGE>
RESEARCH AND DEVELOPMENT EXPENSES. Research and development expenses
increased $508,000, or 61.3%, to $1.3 million for the quarter ended March 31,
2000 compared to the same period in 1999. We expect to increase research and
development expenses in the future as we continue to refine current products
and develop additional products based upon our proprietary technology and our
neuroscience expertise.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses
increased $482,000, or 51.0%, to $1.4 million for the quarter ended March 31,
2000 compared to the same period in 1999. This increase was primarily
attributable to increased personnel, consulting, legal and travel costs.
PROVISION FOR INCOME TAXES. We recorded no provision for income taxes in
the quarters March 31, 2000 and March 31, 1999 as we incurred losses during
such periods.
FACTORS THAT MAY AFFECT QUARTERLY RESULTS OF OPERATIONS
Our quarterly operating results have varied significantly in the
past and are expected to fluctuate significantly in the future as a result of
a variety of factors, many of which are beyond our control. Factors that may
affect our quarterly operating results include those discussed herein with
this quarterly report on Form 10-Q, in our Annual Report on Form 10-K for the
year ended December 31, 1999, under the heading "Business - Risk Factors",
and as disclosed in other documents filed with the Securities and Exchange
Commission. Significant fluctuations in future quarterly operating results
may be caused by many factors including, among others:
- the demand for technology-based education and training programs and
products;
- the long sales cycle of our products;
- the size and timing of product orders and implementation;
- the revenue mix among our programs, products and services;
- the timely development, introduction and market acceptance of our
existing and future products, if any;
- the pricing of our programs, products and services and the programs,
products and services of our competitors;
- seasonality in product purchase and usage;
- competitive conditions;
- our ability to attract and retain experienced personnel;
- the availability of government funding for public schools;
- public school calendars and budget cycles;
- our ability to protect and maintain our intellectual property rights;
<PAGE>
- the number and timing of Fast ForWord training seminars for educators,
speech and language professionals and other professionals; and
- general economic and market conditions.
We cannot assure you that we will be able to predict our future
revenues accurately, and we may not be able to adjust spending in a timely
manner to compensate for any unexpected revenue shortfall. Accordingly, any
significant shortfall of revenues in relation to our expectations could cause
significant fluctuations in quarterly operating results, which would have an
adverse effect on our business, financial condition and results of operations.
Demand for our programs and services is subject to various seasonal
influences which can vary depending on the distribution channel being
employed. We do not have sufficient operating experience in our various
distribution channels to predict the overall effect of various seasonal
factors and their effect on future quarterly operating results. We believe
that, because of the intensive nature of our training programs, demand for
our programs from speech and language professionals in private practice may
be lower during the school year than in the summer. We may also experience
seasonality in the public school market due to public school calendars and
budget cycles.
As a result of all the foregoing factors, and in light of our
limited operating history, our quarterly revenues and operating results are
difficult to forecast, and we believe that period-to-period comparisons of
our operating results will not necessarily be meaningful and should not be
relied upon as an indication of future performance. It is likely that our
future quarterly operating results from time to time will not meet the
expectations of market analysts or investors, which may have an adverse
effect on the price of our common stock.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operating activities was $6.5 million for the three
months ended March 31, 2000 compared to $3.7 million in the same period in
1999. This increase was primarily attributable to operating losses of $4.8
million and increases in prepaid expenses and other assets and decreases in
deferred revenues of $1.2 million and $1.5 million, respectively, partially
offset by decreases in accounts receivable of $1.1 million. The increase in
prepaid expenses and other assets is due primarily to increased inventory and
capitalization of research and development expenditures.
Cash used in investing activities was $603,000 for the three months
ended March 31, 2000 compared to $259,000 in the same period in 1999. The
cash outlays consisted principally of the acquisition of computer equipment,
furniture and fixtures.
As of March 31, 2000, we had cash and short-term investments of
$23.5 million. We believe that these funds will be sufficient to finance our
presently anticipated operating losses, planned capital expenditure
requirements and internal growth for at least the next 18 months.
<PAGE>
We currently have no significant long-term obligations which extend
beyond 18 months except in connection with the lease of our current corporate
office facility which requires minimum lease payments of approximately $80,000
per month through September 2002, and a new office facility which will require
payments of approximately $160,000 per month starting in January 2001 for a
period of eight years.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk for changes in interest rates relates
primarily to the increase or decrease in the amount of interest income we can
earn on our investment portfolio. We do not use derivative financial
instruments in our investment portfolio. We ensure the safety and
preservation of our invested principal funds by limiting default risks,
market risk and reinvestment risk. We mitigate default risk by investing in
safe and high-credit quality securities. A hypothetical increase or decrease
in market interest rates by 10% from the market interest rates at March 31,
2000 would not cause the fair value of our cash and cash equivalents to
change by a material amount. Declines in interest rates over time will
however reduce our interest income.
We considered the provisions of Financial Reporting Release No. 48,
"Disclosure of Accounting Policies for Derivative Financial Instruments and
Derivative Commodity Instruments, and Disclosure of Quantitative and
Qualitative Information about Market Risk Inherent in Derivative Financial
Instruments, Other Financial Instruments and Derivative Commodity
Instruments." We had no holdings of derivative financial or commodity
instruments at March 31, 2000. Our revenue, capital expenditures and nearly
all of our expenses are transacted in U.S. dollars. We believe we have
minimal exposure to financial market risks associate with changes in foreign
currency exchange rates at this time.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, the Company is involved in legal proceedings in the
ordinary course of business. None of such proceedings are expected to have a
material impact on our business, results of operations or financial condition.
ITEMS 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Our Registration Statement (SEC File No. 333-77133) for our initial
public offering became effective July 21, 1999, covering an aggregate of
2,645,000 shares of common stock, including the underwriters' over-allotment
option. Our use of proceeds from our initial public offering does not
represent a material change in the use of proceeds as described in our
prospectus dated July 21, 1999, comprising part of our Registration Statement
on Form S-1, as amended, filed with the Securities and Exchange Commission.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5: OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
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3.3* Restated Certificate of Incorporation.
3.4* Amended and Restated Bylaws.
4.1* Reference is made to Exhibits 3.3 and 3.4.
4.2** Amended and Restated Registration Rights Agreement, dated as of
December 31, 1998.
4.3* Specimen Stock Certificate.
10.1* Form of Indemnity Agreement with each of our directors and executive
officers.
10.2* 1999 Equity Incentive Plan.
10.3* Form of Stock Option Agreement under the Incentive Plan.
10.4* Form of Stock Option Grant Notice under the Incentive Plan.
10.5* 1999 Non-Employee Directors' Stock Option Plan.
10.6* Form of Nonstatutory Stock Option Agreement under the Non-Employee
Directors' Stock Option Plan (Initial Grant).
<PAGE>
10.7* Form of Nonstatutory Stock Option Agreement under the Non-Employee
Directors' Stock Option Plan (Annual Grant).
10.8* 1999 Employee Stock Purchase Plan.
10.9* Form of 1999 Employee Stock Purchase Plan Offering under the Employee
Stock Purchase Plan.
10.10* Consulting Agreement, dated as of September 20, 1996, with Dr. Michael
M. Merzenich, as modified on January 19, 1998.
10.11* Consulting Agreement, dated as of September 19, 1996, with Dr. Paula
A. Tallal, as modified on January 22, 1998.
10.13* Exclusive License Agreement, dated September 27, 1996, with the
Regents of the University of California.
10.14* Lease Agreement, dated as of July 31, 1997, with GBC-University
Associates, L.P.
10.15* Securities Purchase Agreement, dated September 24, 1996, with Warburg,
Pincus Ventures, L.P.
27 Financial Data Schedule
</TABLE>
- ----
* Incorporated by reference to the same numbered exhibit previously filed with
the Company's Registration Statement on Form S-1 (SEC File No. 333-77133).
** Incorporated by reference to the same numbered exhibit previously filed
with the Company's Form 10-K for the year ended December 31, 1999 (SEC File
No. 000-24547).
(b) Reports on Form 8-K. The Company did not file any reports on Form 8-K during
the quarter ended March 31, 2000.
<PAGE>
SIGNATURE
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.
SCIENTIFIC LEARNING CORPORATION
(Registrant)
/s/ JANE A. FREEMAN
- ---------------------------------
JANE A. FREEMAN
Chief Financial Officer
(Authorized Officer and Principal Financial and Accounting Officer)
Dated: May 9, 2000
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 9,498
<SECURITIES> 13,993
<RECEIVABLES> 2,587
<ALLOWANCES> 245
<INVENTORY> 276
<CURRENT-ASSETS> 27,301
<PP&E> 4,146
<DEPRECIATION> 1,968
<TOTAL-ASSETS> 30,563
<CURRENT-LIABILITIES> 4,322
<BONDS> 0
0
0
<COMMON> 63,674
<OTHER-SE> 428
<TOTAL-LIABILITY-AND-EQUITY> 30,563
<SALES> 3,156
<TOTAL-REVENUES> 3,431
<CGS> 493
<TOTAL-COSTS> 745
<OTHER-EXPENSES> 7,852
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,818)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,818)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,818)
<EPS-BASIC> (0.45)
<EPS-DILUTED> (0.45)
</TABLE>
