<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED
JUNE 30, 1999
Commission file number 0-26337
NETIVATION.COM, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 82-0514605
(State or jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
806 West Clearwater Loop, Suite N, Post Falls, ID 83854
(208) 777-4203
(Address and telephone number of principal executive offices and
principal place of business)
Check whether the issuer (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
periods 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date:
Outstanding Shares
CLASS as of August 3, 1999
----- ----------------------
Common Stock, par value $01 per share 8,615,055
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
NETIVATION.COM, INC.
FORM 10-QSB
June 30, 1999
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets at June 30, 1999 and December 31, 1998
Condensed Statements of Operations for the Three Month Periods and Six
Month Periods Ended June 30, 1999 and June 30, 1998
Condensed Statements of Cash Flows for the Six Month Periods Ended June
30, 1999 and June 30, 1998
Item 2. Management's Discussion and Analysis or Plan of Operation
PART II OTHER INFORMATION
Item 2. Change in Securities and Use of Proceeds
SIGNATURE
EXHIBITS
Exhibit 27 Financial Data Schedule
<PAGE>
NETIVATION.COM, INC.
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Condensed Balance Sheets
Dollars in thousands June 30 December 31
1999 1998
-------------------- --------------------
Unaudited
--------------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $22,591 $ 1,907
Short-term investments 880
Subscription receivable for preferred stock 1,183
Accounts receivable 86
Prepaid & other 573 35
-------------------- -------------------
Total current assets 23,250 4,005
------- -------
Equipment and furniture, net 224 94
------- -------
Intangible assets, net 3,624
Deposits 12
-------------------- -------------------
Total assets $27,110 $ 4,099
======= =======
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 891 $ 172
Accrued compensation 49 163
Accrued expenses 873 28
Deferred revenue 39
Convertible note payable to stockholder, net 501
Advances from stockholders 95
-------------------- -------------------
Total current liabilities 1,852 959
------- -------
Mandatorily redeemable common stock option 391
Other long-term liabilities 14 24
-------------------- -------------------
Total liabilities 1,866 1,374
------- -------
Stockholders' equity:
8% Convertible preferred stock 3,317
Subscription receivable 1,183
Common stock and additional paid in capital 31,145 628
Retained earnings (deficit) (5,901) (2,403)
-------------------- -------------------
Total stockholders' equity 25,244 2,725
------- -------
Total liabilities & stockholders' equity $27,110 $ 4,099
======= =======
</TABLE>
See notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Condensed Statements of Operations
Dollars in thousands, except per
share data
Three Month Six Month Three Month Six Month
Period Ended Period Ended Period Ended Period Ended
June 30, 1999 June 30, 1999 June 30, 1998 June 30,
-------------------- ------------------- ------------------ 1998
Unaudited Unaudited Unaudited -----------
-------------------- ------------------- ------------------ Unaudited
-----------
<S> <C> <C> <C> <C>
Revenues $ 48 $ 129 $ 0 $ 0
Cost of revenues 21 21
----------------- ---------------- --------------- -----------
Gross profit 27 108 0 0
----------------- ---------------- --------------- -----------
Operating expense:
Sales & marketing 357 780 128 206
General & administrative 417 664 190 290
Product development 368 691 53 65
Stock compensation 201 1,232
Amortization of goodwill 23 23
----------------- ---------------- --------------- -----------
Total operating expenses 1,366 3,390 371 561
---------- ---------- ---------- ----------
Loss from operations (1,339) (3,282) (371) (561)
Interest-net (10) 3 51 57
----------------- ---------------- --------------- -----------
Loss before income taxes (1,329) (3,285) (422) (618)
Provision for income taxes 0 0 0 0
----------------- ---------------- --------------- -----------
Net loss (1,329) (3,285) (422) (618)
Preferred stock dividend 99 209
----------------- ---------------- --------------- -----------
Net loss available to common stock ($1,428) ($3,494) ($422) ($618)
========== ========== ========== ==========
Historical weighted average shares
outstanding used to
Compute basic loss per share 3,964,058 3,732,105 3,460,770 3,380,162
========== ========== ========== ==========
Basic loss per share ($0.36) ($0.94) ($0.12) ($0.18)
========== ========== ========== ==========
</TABLE>
See notes to Financial Statements
<PAGE>
<TABLE>
<CAPTION>
Condensed Statements of Cash Flows
Dollars in thousands Six Months Six Months
Ended Ended
June 30, 1999 June 30, 1998
---------------------------- --------------------------------------
Unaudited Unaudited
---------------------------- --------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) ($3,285) ($618)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 28 4
Amortization of goodwill 23
Amortization of debt discount 49 48
Expense associated with issuance of stock options 1,335
Changes in assets and liabilities:
Accounts receivable (48) (2)
Prepaid expenses (538) (42)
Intangible assets (3,659)
Deposits (12)
Accounts payable 626 8
Accrued compensation (127) 19
Accrued expenses 829 2
Deferred revenue 39
Dividend payable (209)
-------------------------- ---------------------------------
Net cash used by operating activities (4,949) (581)
-------- ------
Cash flows from investing activities:
Purchase of equipment and furniture (127) (61)
-------------------------- ---------------------------------
Net cash flows from investing activities (127) (61)
-------- ------
Cash flows from financing activities:
Proceeds from lease financing 16
Proceeds from 8% convertible note payable to 550
stockholder
Issuance of common stock for cash 126
Proceeds from loan from related party notes 9
Proceeds for short-term investments 880
Proceeds from sale of 8% preferred stock 1,582
Proceeds from sale of common stock, net of 20,808
offering cost
Issuance of shares in connection with 3,193
acquisitions
Repayment of 8% convertible note payable (550)
Repayment of advances from shareholders (95)
Repurchase of preferred shares (112)
Repayment of other long-term liabilities (10)
------------------------- ---------------------------------
Net cash provided by financing activities 25,696 701
-------- ------
Net increase in cash and equivalents 20,620 59
Cash and cash equivalents at beginning of period 1,971 46
-------------------------- --------------------------------
Cash and cash equivalents at end of period $ 22,591 $ 105
======== ======
</TABLE>
See notes to Financial Statements
<PAGE>
NETIVATION.COM, INC.
Notes to Financial Statements
June 30, 1999
Note 1 - Netivation.com, Inc. and Basis of Presentation
Description of Netivation.com, Inc.
Netivation.com, Inc.("Netivation") develops and operates topic specific Internet
communities designed to permit persons sharing a common interest to access our
suite of services and the resources of the Internet. We currently operate two
communities, Votenet, a public policy and political site and Medinex, a
healthcare focused site .
On June 23, 1999, Netivation completed its initial public offering ("IPO") of
2,500,000 shares of its common stock at $10.00 per share. Aggregate net proceeds
to Netivation were approximately $20,808,000 (less underwriters' commission and
offering expenses totalling approximately $4,200,000). As of the closing date of
the IPO, all of the convertible preferred stock outstanding was converted into
2,280,000 shares of common stock. Simultaneous with the effectiveness of the IPO
Netivation completed the acquisitions of Interlink Services, Inc. and The Online
Medical Bookstore, Inc. with the payment of $175,000 cash and the issuance of
319,286 shares of common stock.
The accompanying unaudited concensed statements as of June 30, 1999 and for the
three month and six month periods ended June 30, 1999 and June 30, 1998,
included in this report, have been prepared by Netivation, pursuant to the rules
and regulations of the Securities and Exchange Commission. Management believes,
the accompanying unaudited interim financial statements reflect all adjustments,
consisting only of normal recurring adjustments, necessary to fairly present the
results of Netivation's operations and its cash flows for the three month and
six month periods ended June 30, 1999 and June 30, 1998. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations relating to interim financial
statements. Netivation believes that the results of operations for the three
months ended June 30, 1999, are not necessarily indicative of the results to be
expected for any future period.
Computation of Historical and Pro Forma Earnings Per Share
Basic earnings per share is computed using the weighted average number of common
shares outstanding during the period. Diluted earnings per share is computed
using the weighted average number of common and dilutive common equivalent
shares outstanding during the period. Common equivalent shares consist of the
incremental common shares issuable upon the exercise of stock options and
warrants, as well as the incremental common shares issuable upon the conversion
of the convertible preferred stock (using the if-converted method). Common
equivalent shares are excluded from the calculation if their effect was anti-
dilutive. Pursuant to SEC Staff Accounting Bulletin No. 98, common stock and
convertible preferred stock issued for nominal consideration, prior to the
anticipated effective date of an IPO, are required to be included in the
calculation of basic and diluted net loss per share as if they were outstanding
for all periods presented. To date, Netivation has not had any issuances or
grants for nominal consideration.
Pro forma net loss per share was computed using the weighted average number of
shares of common stock outstanding, including common equivalent shares from the
convertible preferred stock (using the if-converted method), which automatically
converted into common stock upon the completion of the IPO as if converted at
the original date of issuance, for both basic and diluted net loss per share,
even though inclusion is anti-dilutive.
The following table sets forth the computation of loss per share:
<TABLE>
<CAPTION>
Dollars in thousands, except per share data Three Months Ended Year To Date
June 30, 1999 June 30, 1999
-------------------------------------- -------------------------------------
<S> <C> <C>
Basic and diluted net loss per share
Numerator: Net loss available to common ($1,428) ($3,494)
stock
Denominator:
Weighted average shares outstanding basic 3,964,058 3,732,105
and diluted
Basic and diluted net loss per share ($0.36) ($0.94)
Pro forma net loss per share
Numerator: Net loss available to common ($1,428) ($3,494)
stock
Denominator:
Weighted average shares outstanding basic 6,043,619 5,798,404
and diluted
Pro forma basic and diluted net loss per ($0.24) ($0.60)
share
</TABLE>
<PAGE>
Note 2. Investments
Netivation principally invests its excess cash in debt instruments of the United
States Government and its agencies. All highly liquid instruments with an
original maturity of three months or less are considered cash equivalents and
those instruments with original maturaties greater than three months and current
maturaties less than twelve months from the balance sheet date are considered
short-term investments.
Note 3. Acquisitions
Netivation completed two acquisitions for the three months ended June 30, 1999.
The acquisitions of Interlink Services, Inc., a web site design and hosting
services company and The Online Medical Bookstore, Inc., a discount medical book
and medical supply e-commerce company on June 22,1999. Netivation paid aggregate
cash consideration for the acquisitions of $300,000 and 319,286 shares of its
common stock. Both subsidiaries are wholly-owned subsidiaries of Netivation. The
revenues from these subsidiaries amounted to $24,000, for the seven days from
the acquisition date through the end of the quarter.
Note 4. Subsequent Events
On July 28, 1999, Netivation signed a Letter of Intent to acquire Net.Capitol,
Inc. The parties are negotiating the terms of the definitive agreement and
expect to sign the definitive agreement prior to the end of August 1999.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Except for the, historical financial information, this report contains forward
looking statements that involve risks and uncertainties. These forward looking
statements will likely be impacted by factors outside Netivation's control and
may differ materially from actual future events or results. There are a number
of important factors that could cause actual results to differ materially from
those anticipated by any forward looking information. A description of risks and
uncertainties relating to Netivation and its industry along with other factors
which could affect Netivation's financial results are included in Netivation's
SB-2 filing.
OVERVIEW
We have yet to achieve significant revenue and our ability to generate
significant revenue is uncertain. In view of the rapidly evolving nature of our
business and our very limited operating
<PAGE>
history, we have little experience forecasting our revenues. We believe that
period to period comparisons of our financial results are not necessarily
meaningful and you should not rely upon them as an indication of our future
performance.
To date, we have incurred substantial costs to create, introduce and enhance our
products and services, to develop content, to build brand awareness and to grow
our business. As a result, we have incurred operating losses in each fiscal
quarter since inception. We expect operating losses and negative cash flows to
continue for the foreseeable future as we intend to significantly increase our
operating expenses to grow our business. We may incur additional costs and
expenses related to content creation, technology, marketing or acquisitions of
businesses and technologies to respond to changes in our rapidly changing
industry. These costs could have an adverse effect on our future financial
condition or operating results.
Revenues and expenses from our newly acquired subsidiaries, Interlink Services,
Inc. and The Online Medical Bookstore, Inc. included in this quarter amounted to
seven days of revenue and operating expenses. As a result of these acquisitions
we expect our revenues and operating expenses to increase. We also, anticipate
we will incur significant non-cash charges, due to the amortization of
intangible assets associated with these acquisitions. We expect this
amortization expense to be approximately $1,200,000 on an annual basis for the
next three years.
On July 28, 1999, Netivation signed a Letter of Intent to acquire Net.Capitol,
Inc., a developer of Internet-based products and services for public affairs and
political organizations. Management believes the Netivation.com-Net.Capitol team
will offer a comprehensive suite of Internet-based tools for politics and
increase the value of our products to our customers.
RESULTS OF OPERATIONS
Net Revenues
We commenced selling advertising and sponsorships in January 1999. We did not
recognize any revenues from inception through December 31, 1998 and we have
generated minimal revenues since January 1, 1999. Revenues were $48,000 for the
second quarter of 1999. Revenues for the first half of 1999 were $129,000.
Barter transactions, in which Netivation received advertising in exchange for
advertising on its web sites accounted for approximately $16,000 of total
revenues for the three months ended June 30, 1999, this compares to $81,000 of
total revenues for the first quarter of 1999. We expect barter revenues to
decrease as product-based revenues increase in future quarters. With the
addition of Interlink Services, Inc. and The Online Medical Bookstore, Inc. as
well as the release of the physicians office management software system and a
greater awareness in the market of our other products, we expect subsequent
quarters will reflect an increase in revenues. As of June 30, 1999, we had
deferred revenues of $39,000.
We expect that advertising, sponsorship and e-commerce revenues will account for
a substantial portion of revenues in the foreseeable future. To increase
revenues in 1999, management will continue to broaden the scope of Netivation's
products and its business opportunities through the development and introduction
of Netivation's first user product, a physicians office management
<PAGE>
software system, management anticipates the first version of this software
system to be released in the third quarter of 1999.
Cost of Revenues
Cost of revenues of $21,000 for the three month period ended June 30, 1999 is
primarily the cost of books sold over the Internet by The Online Medical
Bookstore, Inc. and costs associated with web development. The cost of revenues
will likely consist primarily of expenses related to the maintenance and
technical support of our network, the costs of web site development and the
direct costs of products sold. In addition, when the physicians office
management software system is introduced we will need to add a customer service
and support group.
Operating Expenses
In the second quarter of 1999 operating expenses increased by 268% to
$1,366,000 compared to $371,000 in the same period of 1998. For the six month
period ended June 30, 1999, total operating expenses increased by 604% to
$3,390,000 compared to $561,000 in the same period of 1998.
Product development expenses increased 693% to $368,000 for the quarter ended
June 30, 1999, compared to $53,000 reported for the same quarter in 1998. The
product development expenses for the quarter ended June 30, 1999, represented
approximately 27% of Netivation's total operating expenses. For the six month
period ended June 30, 1999, Netivation's total research and development expenses
increased approximately 1069% to $691,000 from $65,000 reported for the same
period in 1998 and represented 20% of Netivation's total operating expenses. The
increase in research and product development expenses is attributable to
Netivation's development efforts relating to the physicians office management
software system. We intend to increase the dollar level of future product
development expenditures to further enhance Netivation's product lines.
Increases in Netivation's sales and marketing expenses are primarily a result of
increased compensation for our sales force and additional advertising
expenses. Sales and marketing costs were $357,000 for the three months ended
June 30, 1999, and $128,000 for the three months ended June 30, 1998. This is an
increase of $229,000 or 179%. As a percentage of total operating expenses, sales
and marketing expenses were 26% for the three month period ended June 30, 1999
and 34% for the three month period ended June 30, 1998. We anticipate that sales
and marketing expenses will increase in future periods as we continue to pursue
an aggressive building strategy through advertising and expanding our sales
organization.
General and administrative expenses primarily consist of compensation for
administrative and finance personnel, professional fees and occupancy costs.
General and administrative costs were $417,000 for the three months ended June
30, 1999 and $190,000 for the three months ended June 30, 1998, an increase of
$227,000. As a percentage of total operating expenses general and administrative
costs were 31% for the three month period ended June 30, 1999 and 51% for the
three month period ended June 30, 1998. General and administrative expenses
increased due to
<PAGE>
increased head count, occupancy, legal and consulting expenses. We also hired
additional personnel and incurred additional costs related to our IPO. These
costs included travel expenses, directors and officers liability insurance and
professional fees. We believe that the level of general and administrative
expense will increase in future periods as a result of an increase in personnel
to support Netivation's anticipated additional revenues and increased fees for
professional services.
STOCK COMPENSATION
Stock compensation relates to noncash charges incurred in connection with
certain stock option grants with exercise prices below the fair market value of
the common stock. During 1999, we recognized significant noncash charges related
to stock option grants to Netivation employees, consultants and directors. For
the quarter ended June 30, 1999, we recorded $201,000 in noncash charges and for
the six month period ended June 30, 1999, we recorded $1,232,000 in noncash
charges. Approximately $1,562,000 was charged to earnings as a result of our
issuing a stock option during 1999 and 1998 with a mandatory buyback provision.
As a public company, we will not incur any additional charges for the above-
mentioned stock option as the buyback provision has expired.
INTEREST INCOME (EXPENSE)
Interest income of $10,000 for the three months ended June 30, 1999, resulted
from interest income on the proceeds from the sale of Netivation's preferred
stock. Interest expenses of $51,000 for the three month period ended June 30,
1998, resulted from the borrowings on a convertible note payable to a
stockholder.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1999, Netivation's primary source of liquidity consisted of cash
and cash equivalents that are highly liquid so such funds are readily available
for operating purposes. On June 23, 1999, Netivation completed its IPO of
2,500,000 shares of common stock, resulting in net proceeds of $20,808,000. As
of June 30, 1999, Netivation had cash and cash equivalents totaling $22,591,000
compared to $105,000 as of June 30, 1998.
We have several capital leases with a financial institution for computer and
communications equipment which expire in the year 2000. We are required to make
total payments on these capital leases of approximately $14,000. Additionally,
we have an insurance premium financing agreement for liability insurance for our
directors and officers. Under the terms of this agreement the interest rate is
7% and we are required to make total monthly payments of approximately $45,000.
For the three months ended June 30, 1999, cash used in operating activities was
$3,572,000 and for the six month period ended June 30, 1999, it was $4,949,000.
Cash used in operating activities consisted mostly of net operating losses.
<PAGE>
Net cash used in investing activities was $62,000 for the three months ended
June 30,1999 and $127,000 for the six month period ended June 30, 1999. Our
investing activities were mainly for the purchase of additional computer
equipment for the additional personnel.
For the three month period ended June 30, 1999, cash provided by financing
activities of $23,887,000 was primarily due to our IPO which raised net proceeds
of $20,808,000. For the six month period ended June 30, 1999, the cash provided
by financing activities was $25,696,000.
Netivation estimates that its current cash balance and the cash to be generated
from revenues will be sufficient to fund its operations working capital, capital
expenditures and business growth through the year 2000. At its current stage
of business development, Netivation's quarterly revenues and results of
operations may be materially affected by, among other factors, development and
introduction of products, time to market, market acceptance, demand for
Netivation's products, the affects of competition and general economic
conditions. As a result, there can be no assurance that Netivation will be
sufficiently funded beyond 2000.
Year 2000
Netivation is aware of the Year 2000 issue. During 1999, Netivation performed an
internal analysis of its primary software product and assessed the readiness of
its other products, its internal computer systems, as well third party equipment
and software for handling Year 2000 issues. Netivation believes that its current
products are currently Year 2000 compliant. Netivation expects to be able to
successfully address and implement any necessary changes to ensure Year 2000
compliance. Netivation's management team believes that the impact of the Year
2000 on its computer systems will not result in material costs to Netivation.
The main risk to Netivation with respect to the Year 2000 is the failure of
major vendors and infrastructure providers, to be Year 2000 compliant. Year 2000
failure by third parties could result in delays or inability to communicate with
customers or suppliers and an overall inability to conduct business. Netivation
cannot estimate the financial impact of any failure to be Year 2000 compliant by
such third party vendors and service providers.
In an effort to determine third parties' Year 2000 readiness, management has
sent correspondence to its outside vendors and third party suppliers to inquire
about the Year 2000 readiness of their products or services. Netivation has
received returned correspondence from the outside vendors and third party
suppliers, and to the extent that such vendors and suppliers can ensure Year
2000 compliance, Netivation anticipates the continued use and dependence on such
suppliers. However, there can be no assurance that these suppliers will be able
to become Year 2000 compliant. The lack of Year 2000 readiness by outside
vendors and third party suppliers could have an adverse effect on Netivation.
Netivation does not have a contingency plan for Year 2000 compliance because it
does not anticipate that it will fail to be Year 2000 compliant, particularly in
relation to those systems, software programs, and hardware that are under its
control. However, there can be no assurances that all measures being taken to
avoid Year 2000 problems will be effective and as such,
<PAGE>
unforeseen issues could arise that would have a material adverse effect upon
Netivation's business, operating results and financial condition.
PART II
OTHER INFORMATION
Item 2. CHANGE IN SECURITIES AND USE OF PROCEEDS
On June 22, 1999, the Company's Registration Statement on Form SB-2 covering the
offering of 2,500,000 shares of the Company's Common Stock, Commission file
number 333-74569 was declared effective. The offering commenced on June 23,
1999, managed by EBI Securities Corporation and Millennium Financial Group, Inc.
The total price to the public for the shares offered and sold by the Company was
$25,000,000.
The amount of expenses incurred by the Company in connection with the offering
are as follows:
<TABLE>
<S> <C>
Underwriting discounts and commissions $2,625,000
Finders fees
Expenses paid to or for the Underwriter 136,000
Other expenses 1,431,000
----------
Total expenses $4,192,000
</TABLE>
All of the foregoing expenses were direct or indirect payments to persons other
than (i) directors, officers or their associates; (ii) persons owning ten
percent (10%) or more of the Company's common stock; or (iii) affiliates of the
Company.
The net proceeds of the offering to the Company (after deducting the
Underwriter's discounts and commissions) was $22,460,000. From the settlement
date, the net proceeds have been used in the following manner:
Investments in debt instruments of the United States Government and its
agencies: $22,460,000.
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.
Dated: August 13, 1999 Netivation.com, Inc.
(Registrant)
/s/ Anthony J. Paquin
--------------------------------------
Anthony J. Paquin
President and Chief Executive Officer
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONDENSED
BALANCE SHEET AS OF JUNE 30, 1999 AND CONDENSED STATEMENT OF OPERATION FOR THE
THREE MONTH PERIOD ENDED JUNE 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 22,591,000
<SECURITIES> 0
<RECEIVABLES> 86,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23,250,000
<PP&E> 269,000
<DEPRECIATION> 45,000
<TOTAL-ASSETS> 27,100,000
<CURRENT-LIABILITIES> 1,852,000
<BONDS> 14,000
0
0
<COMMON> 31,145,000
<OTHER-SE> (5,901,000)
<TOTAL-LIABILITY-AND-EQUITY> 27,100,000
<SALES> 0
<TOTAL-REVENUES> 48,000
<CGS> 0
<TOTAL-COSTS> 21,000
<OTHER-EXPENSES> 1,366,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (10,000)
<INCOME-PRETAX> (1,329,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,329,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 99,000
<CHANGES> 0
<NET-INCOME> (1,428,000)
<EPS-BASIC> 0
<EPS-DILUTED> (.36)
</TABLE>
