U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-QSB
Quarterly Report under Section 13 or 15(d)
of the Securities and Exchange Act of 1934
For quarterly period ended March 31, 1997
Commission file number 10039
DYNAMICWEB ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
New Jersey 22-2267658
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
271 Route 46 West, Building F
Suite 209, Fairfield, New Jersey 07004
(Address of Principal Executive Offices)
(973) 244-1000
(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. Yes [ X ] No [ ]
As of March 31, 1997, there were 7,658,511 shares of Common
Stock, $0.0001 par value, of the registrant outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Consolidated Balance Sheets as at
March 31, 1997 (unaudited) and September 30,
1996
Condensed Consolidated Statements of
Operations for the three and six months
ended March 31, 1997 and 1996 (unaudited)
Condensed Consolidated Statements of Cash
Flows for the six months ended March 31, 1997
and 1996 (unaudited)
Notes to Condensed Financial Statements
<PAGE>
DYNAMICWEB ENTERPRISES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, September 30,
A S S E T S 1997 1996
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents. . . . . . . . . $ 48,998 $ 174,403
Accounts receivable, less allowance for
doubtful accounts. . . . . . . . . . . . 161,295 70,518
Prepaid and other current assets . . . . . 29,084 32,068
Total current assets . . . . . . . . . . 239,377 276,989
Property and equipment, net. . . . . . . . . 275,513 239,889
Patents and trademarks, net. . . . . . . . . 20,950 19,299
Customer list, net . . . . . . . . . . . . . 93,333
Deferred registration cost . . . . . . . . . 30,000 _________
T O T A L. . . . . . . . . . . . . . . . $ 659,173 $ 536,177
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . $ 186,373 $ 34,581
Accrued expenses and other . . . . . . . . 76,871 18,487
Current maturities of long-term debt . . . 9,234 12,434
Loan payable - bank. . . . . . . . . . . . 14,750
Due to officer/stockholder . . . . . . . . 50,000
Deferred revenue . . . . . . . . . . . . . 19,295 11,330
Total current liabilities. . . . . . . . 356,523 76,832
Long-term debt, less current maturities. . . 189,938 197,661
Total liabilities. . . . . . . . . . . . 546,461 274,493
Stockholders' equity:
Common stock - $.0001 par value; 50,000,000
authorized, 7,658,511 and 6,548,511
issued and outstanding at March 31,
1997 and September 30, 1996. . . . . . . 766 655
Additional paid-in capital . . . . . . . . 1,811,103 676,215
Accumulated deficit. . . . . . . . . . . . (1,699,157) (415,186)
Total stockholders' equity . . . . . . 112,712 261,684
T O T A L. . . . . . . . . . . . . . . $ 659,173 $ 536,177
</TABLE>
The accompanying notes are an integral part
of these condensed financial statements.
<PAGE>
DYNAMICWEB ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Net sales:
System sales . . . . . . . . . . $ 42,264 $ 26,916 $ 59,883 $ 80,534
Services . . . . . . . . . . . . 139,634 72,021 216,912 171,512
T o t a l . . . . . . . . 181,898 98,937 276,795 252,046
Cost of sales:
System sales . . . . . . . . . . 10,282 13,656 23,625 42,690
Services . . . . . . . . . . . . 50,183 22,150 75,054 44,498
T o t a l . . . . . . . . 60,465 35,806 98,679 87,188
Gross profit. . . . . . . . . . . . 121,433 63,131 178,116 164,858
Expenses:
Selling, general and
administrative . . . . . . . . 361,340 131,922 644,657 229,992
Research and development . . . . 65,348 3,750 92,573 6,750
T o t a l . . . . . . . . 426,688 135,672 737,230 236,742
Operating (loss). . . . . . . . . . (305,255) (72,541) (559,114) (71,884)
Purchased research and development
(Note C). . .. . . . . . . . . . (738,710)
Interest expense. . . . . . . . . . (6,230) (5,577) (10,275) (10,884)
Interest income . . . . . . . . . . 670 642 2,428 1,058
Net (loss) before benefit for
income taxes . . . . . . . . . . (310,815) (77,476) (1,305,671) (81,710)
Benefit for income taxes. . . . . . 21,700 21,700
NET (LOSS). . . . . . . . . . . . . $(289,115) $ (77,476) $(1,283,971) $ (81,710)
========= ========== =========== ==========
Net (loss) per common share . . . . $(.04) $(.01) $(.18) $(.01)
===== ===== ===== =====
Weighted-average number of shares
outstanding. . . . . . . . . . . 7,658,511 6,205,000 7,300,214 6,205,000
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part
of these condensed financial statements.
<PAGE>
DYNAMICWEB ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net (loss) . . . . . . . . . . . . . . . . . . . $(1,283,971) $(81,710)
Adjustment to reconcile net (loss) to net
cash (used in) operating activities:
Depreciation and amortization. . . . . . . . . 21,038 6,265
Purchased research and development . . . . . . 738,710
Common stock issued for services . . . . . . . 10
Deferred income taxes. . . . . . . . . . . . . (21,700)
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable . 27,369 (14,204)
(Increase) decrease in prepaid expenses
and other current assets . . . . . . . . . 2,984 (5,886)
Increase (decrease) in accounts payable. . . 148,488 (3,235)
Increase in accrued expenses . . . . . . . . 3,362 12,067
Increase in deferred revenue . . . . . . . . 7,965 3,017
Net cash (used in) operating activities. (355,755) (83,676)
Cash flows from investing activities:
Acquisition of property and equipment. . . . . . (52,576) (10,670)
Proceeds form sale of equipment. . . . . . . . . 1,954
Acquisition of patents and trademarks. . . . . . (3,893) (14,773)
Cash acquired upon acquisition . . . . . . . . . 15,235
Net cash (used in) investing activities. (39,230) (25,443)
Cash flows from financing activities:
Payment of long-term debt. . . . . . . . . . . . (5,120) (5,636)
Proceeds from loan - bank. . . . . . . . . . . . 4,750
Proceeds from issuance of common stock . . . . . 250,000 150,000
Due to officer/stockholder . . . . . . . . . . . 50,000
Payment of deferred registration costs . . . . . (30,000)
Net cash provided by (used in) financing
activities . . . . . . . . . . . . . . 269,630 144,364)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS. . . . . . . . . . . . . . . . . . . (125,405) 35,245
Cash and cash equivalents - beginning of period. . 174,403 45,164
CASH AND CASH EQUIVALENTS - END OF PERIOD. . . . . $ 48,998 $ 80,409
</TABLE>
The accompanying notes are an integral part
of these condensed financial statements.
<PAGE>
Supplemental disclosure of noncash investing and financing
activities:
The Company acquired Software Associates, Inc. on
November 30, 1996 for 860,000 shares of the Company's stock in
exchange for all of the stock issued and outstanding of Software
Associates, Inc. (Note C)
During the six months ended March 31, 1997, the Company sold
equipment for approximately $10,000 which had a book value of
approximately $10,000 and related debt of approximately $8,000.
The accompanying notes are an integral part
of these condensed financial statements.
<PAGE>
DYNAMICWEB ENTERPRISES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
(NOTE A) - Basis of Presentation and the Company:
Basis of presentation:
The accompanying unaudited condensed 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 Article 3 of Regulations 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 management,
all adjustments (consisting of normal recurring accruals)
considered necessary for fair presentation have been included.
Operating results for the six-month period ended March 31, 1997
are not necessarily indicative of the results that may be
expected for the year ending September 30, 1997.
The balance sheet at September 30, 1996 has been derived
from the audited financial statements at that date but does not
include all the information and footnotes required by generally
accepted accounting principles for complete financial statements.
For further information, refer to the audited financial
statements and footnotes thereto included in the annual report on
Form 10-KSB.
The accompanying financial statements include the accounts
of DynamicWeb Enterprises, Inc. ("DWE") and its wholly owned
subsidiaries, Megascore, Inc., DynamicWeb Transaction Systems,
Inc. ("DWTS") and Software Associates, Inc. (collectively the
"Company"). All significant intercompany balances and
transactions have been eliminated.
The Company:
DWE is in the business of facilitating electronic commerce
transactions between business entities, developing, marketing and
supporting software products and other services that enable
businesses to engage in electronic commerce utilizing the
Internet and traditional Electronic Data Interchange ("EDI").
DWE offers electronic commerce solutions in EDI and Internet-
based transactions processing.
Megascore, Inc. is a full-service systems integrator
specializing in distribution, accounting and point-of-sale
computer software consulting services for suppliers and
retailers.
DWTS, formerly a division of Megascore, Inc. was established
as a separate legal entity on October 31, 1995. On February 7,
1996 DWTS issued all of its shares of its common stock to
Megascore, Inc. On September 30, 1996, DynamicWeb Enterprises,
Inc. acquired all the common stock of Megascore, Inc. for 50,000
shares of its common stock. The transaction was accounted as a
combination of entities under common control. The accompanying
financial statements retain the historical accounting basis for
the net assets of Megascore, Inc. and gives effect to the
operations of Megascore, Inc. for all periods presented.
On March 26, 1996 DWTS was acquired by Seahawk Capital
Corporation ("Seahawk"), a publicly held corporation which had
431,369 shares of common stock outstanding and no assets. Prior
to the acquisition, Seahawk distributed all of its assets to its
shareholders. In the acquisition, the shareholders of DWTS
received 4,913,631 shares of Seahawk's common stock. The
acquisition is being accounted for as if DWTS were the acquiring
entity. The shares of Seahawk are accounted for as being
outstanding for all periods presented. In connection with the
acquisition, 735,000 shares were issued to a finder and 75,000
shares were issued for legal fees. At the conclusion of this
transaction, there were 6,155,000 shares outstanding.
On May 14, 1996, Seahawk changed its name to DynamicWeb
Enterprises, Inc. and concurrently increased the authorized
number of shares of its common stock to 50,000,000 at a $.0001
par value. The accompanying financial statements give
retroactive effect to the above transaction.
On November 30, 1996, the Company acquired Software
Associates, Inc. (Note C).
On March 7, 1997, the Board of Directors, approved a reverse
stock split for each share of common stock to be converted into
.2608491 of one share and authorized 5,000,000 shares of
preferred stock to be effected when a public offering occurs.
Cash is to be issued to the stockholders for any fractional
shares. The stockholders approved these transactions on June 12,
1997 and the accompanying financial statements do not give
retroactive effect to the above transactions.
(NOTE B) - Summary of Significant Accounting Policies:
Net loss per share of common stock:
Net loss per share of common stock is based upon the
weighted average number of shares outstanding.
(NOTE C) - Acquisition:
On November 30, 1996, the Company entered into a stock
purchase agreement with Software Associates, Inc. and its sole
shareholder (the "SA Agreement") whereby the Company acquired all
the issued and outstanding common stock of Software Associates,
Inc. Software Associates, Inc. is an EDI service bureau engaged
in the business of helping companies realize the benefits of
expanding their data processing and electronic communications
infrastructures through the use of EDI. The Company exchanged
860,000 shares of its common stock for all of the issued and
outstanding shares of Software Associates, Inc. The Company
further agreed to issue up to 1,140,000 additional shares of its
common stock in the event that the average closing bid price of
the Company's common stock does not equal $3.375 per share for
the five trading days immediately prior to January 30, 1999. In
connection with this transaction, the Company incurred
approximately $25,000 of professional fees. The results of
operations includes Software Associates, Inc. from December 1,
1996 through March 31, 1997.
The SA Agreement also requires that the Company issue
options for the purchase of 25,000 shares of its common stock to
employees of Software Associates, Inc.
In connection with the acquisition, the Company entered into
a five year employment contract with the sole
shareholder/President of Software Associates, Inc. The agreement
provides for an annual salary of approximately $136,000 and
includes a discretionary bonus as determined by the Company's
Board of Directors.
Software Associates, Inc. leases its office space from a
partnership whose partner is the Executive Vice President of the
Company. Annual rental payments are approximately $38,000 and
the lease expires on June 30, 2018. Software Associates, Inc.
has guaranteed the debt (United States Small Business
Administration guaranteed loan) of the condominium office space
which was approximately $249,000 as at November 30, 1996; the
debt matures in August 2019.
The purchase price was recorded as follows:
Current assets . . . . . . $133,381
Fixed assets . . . . . . . 5,167
Purchased research and
development. . . . . . . 738,710
Customer list . . . . . . 100,000
Current liabilities. . . . (92,258)
Total. . . . . . $885,000
The purchased research and development was charged to
operations upon acquisition. The acquisition was accounted for
as a purchase.
The condensed unaudited pro forma information of the Company
for the six months ended and Software Associates, Inc. for the
two months ended November 30, 1996 is as follows as if the
acquisition of Software Associates, Inc. occurred on October 1,
1996. In addition, the pro forma adjustments are computed
assuming the transaction was consummated at the beginning of the
fiscal period presented giving effect to events directly
attributable to the transaction and expected to have continuing
impact. A material nonrecurring charge representing purchased
research and development in the amount of $738,710 will be
charged to operations but has been omitted from the pro forma
results. The pro forma information is not necessarily indicative
of the results that would have been reported had the acquisition
occurred September 30, 1996, nor is it indicative of the
Company's future results:
<TABLE>
<CAPTION>
Historical
Six Two
Months Ended Months Ended
DynamicWeb Software
Enterprises, Associates, Pro Forma Pro Forma
Inc. Inc. Adjustments Results
<S> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . $ 276,795 $ 126,967 $ 403,762
Cost of sales . . . . . . . . . . . . . . . 98,679 28,615 127,294
Gross profit. . . . . . . . . . . . . . . . 178,116 98,352 276,468
Expenses:
Selling, general and administrative . . . (644,657) (66,527) (8,000) (719,184)
Research and development. . . . . . . . . (92,573) _________ (92,573)
T o t a l . . . . . . . . . . . . . (737,293) (66,527) $ (8,000) (811,757)
Operating (loss) income . . . . . . . . . . (559,114) 31,825 (8,000) (535,289)
Interest income . . . . . . . . . . . . . . 2,428 2,428
Interest expense. . . . . . . . . . . . . . (10,275) (61) (10,336)
Benefit (provision) for income taxes. . . . 21,700 ( 12,700) _________ 9,000
Net (loss) income before
nonrecurring charge . . . . . . . . . . . $ (545,261) $ 19,064 $ (8,000) $ (534,197)
Per share data:
(Loss) before nonrecurring charge . . . . $(.07)
Weighed average common shares outstanding 6,728,456 860,000 7,588,456
</TABLE>
(NOTE D) - Proposed Public Offering:
On February 1, 1997, the Company signed a letter of intent
with an underwriter with respect to a proposed public offering of
the Company's securities. The Company expects to incur
significant additional costs in this connection therewith. In
the event that the offering is not successfully completed, such
costs will be charged to expense.
(NOTE E) - Subsequent Events:
[1] On April 28, 1997, the Board of Directors adopted and
on June 12, 1997 the stockholders approved a stock option plan
for outside directors (the "Director Plan") under which
nonqualified stock options may be granted to its outside
directors to purchase up to 300,000 shares of the Company's
common stock. Directors will be granted an option to purchase
15,000 of the Company's common stock at fair market value at the
earlier of the public offering or September 30, 1997 and at each
subsequent annual meeting of shareholders at which directors are
elected. Options may be exercised for ten years and one month
after the date of grant and may not be exercised during an
eleven-month period following the date of grant unless there is a
change in control, as defined in the Director Plan or the
compensation committee waives the eleven-month continuous service
requirement.
[2] On March 7, 1997 the Board of Directors adopted and on
June 12, 1997 the stockholders approved the Company's 1997
employee stock option plan (the "Plan"), amended by the Board of
Directors on April 29, 1997, under which incentive stock option
and nonqualified stock options may be granted to purchase up to
900,000 shares of the Company's common stock. Grants to any one
employee shall not exceed 250,000 options during any twelve-month
period. Incentive stock options are to be granted at a price not
less than the fair market value, or 110% of fair market value to
an individual who owns more than ten percent of the voting power
of the outstanding stock. Nonqualified stock options are to be
granted at a price determined by the Company's compensation
committee.
[3] On April 30, 1997, pursuant to Regulation D, the
Company completed a private placement whereby it sold 24 units
for an aggregate amount of $600,000. The placement agent is
entitled to a fee and nonaccountable expense allowance
aggregating $78,000 or 13% of the private placement offering.
The Company incurred $30,000 of deferred financing cost. Each
unit consists of a $25,000 promissory note bearing interest at 8%
and 11,943 shares of the Company's common stock. The notes are
due at the earlier of the closing of the proposed public offering
as described in Note D[2] or when the Company obtains an
aggregate financing of $2,000,000 excluding expenses or March 31,
1999. The number of shares of common stock included within a
unit will be adjusted for the reverse stock split as described in
Note A and by a formula as defined in the Private Placement
Memorandum relating to this offering.
The value assigned to the common stock is based upon fair
value and the remaining balance is allocated to the promissory
notes. The difference between the stated value of the $600,000
promissory notes and the value of the notes assigned by the
Company, represents debt discount. The debt discount and
deferred financing fees will be amortized over the expected
proposed public offering date. The Company will incur a
significant charge to operations as a result of the amortization
expense.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The following discussion and analysis should be read in
conjunction with the financial statements included in this report
and in conjunction with the description of the Company's Business
included in the Company's Form 10-KSB for the year ended
September 30, 1996. It is intended to assist the reader in
understanding and evaluating the financial position of the
Company.
This discussion contains, in addition to historical
information, forward looking statements that involve risks and
uncertainty. The Company's actual results could differ
materially from the results discussed in the forward-looking
statements. Factors that could cause or contribute to such
differences include those discussed in the Company's Form 10-KSB
for the year ended September 30, 1996.
The financial statements included in this report are the
Company's consolidated result of operations for the Company's and
its three subsidiaries, DynamicWeb Transaction Services Inc.
(DWTS), Megascore, Inc. (Megascore) and Software Associates, Inc.
(Software Associates).
Financial Condition
As of March 31, 1997, the Company had cash of $48,998 and
total current assets of $239,377.
The Company had a net loss of $289,115 and $1,283,971,
respectively, for the three months and six months ended March 31,
1997, and negative operating cash flow for the six months ended
March 31, 1997 of $355,755, which negative cash flow was funded
by cash from a short-term officer's loan of $50,000, from a
$250,000 private placement of common stock that closed in
November, 1996, and from a $600,000 private placement of 24 units
consisting of common stock and promissory notes that closed in
April, 1997.
Results of Operation
The Company recognized net sales of $181,898 for the quarter
ended March 31, 1997 and $276,795 for the six months ended March
31, 1997, compared to $98,937 and $252,046 for the three and six
months ended March 31, 1996. The increase in sales was
attributable to sales of the Company's new EDI/Internet products
and services offered through Software Associates, Inc., a
subsidiary acquired on November 30, 1996.
The Company had an increase in system sales, to $42,264 for
the quarter ended March 31, 1997 from $26,916 in 1996, which was
due to sales of custom software related the Company's new EDI
Service Bureau. However, system sales declined for the six
months ended March 31, 1997 to $59,883 from $80,534 for the prior
year. This decline was attributable to ongoing efforts, before
the acquisition of Software Associates, to migrate away from
some of the Company's historical products and to focus on the
Company's core business. System sales include sales of hardware
and software to customers.
Service sales increased to $139,634 for the three months
ended March 31, 1997 from $72,021 for the three months ended
March 31, 1996. Service sales also increased from $216,912 for
the six months in 1997 as compared to $171,512 for the six months
in fiscal 1996. In each case, the increase was due largely to
transaction processing through the Company's new EDI Service
Bureau, and the rollout of EDIxchange, one of the Company' new
EDI/Internet services.
Cost of system sales was $10,282 for the quarter and $23,625
for the six months ended March 31, 1997, for a gross profit of
75.7% and 60.5% respectively. This compares to cost of system
sales of $13,656 and $42,690, for gross profit of 49.3% and 46.9%
in 1996. The increase in profitability is attributable to sales
of higher margin customized EDI software to facilitate
transaction processing through the EDI Service Bureau.
Cost of services was $50,183 in 1997 for the quarter and
$75,054 for the six months ended March 31, 1997, for a gross
profit of 64.1% and 65.4%. This compares to cost of services of
$22,150 and $44,498, for gross profit of 69.2% and 74.1% in 1996.
The decrease in profit margins on service sales is attributable
to the costs associated with the addition of new employees who
were added to increase the Company's EDI/Internet capabilities,
in anticipation of the growth in demand for the Company's
EDI/Internet services.
Quarterly selling, general and administrative expenses
increased by $229,418, from $131,922 in 1996 to $361,340 in 1997.
For the six month period, they increased by $414,665, from
$229,992 in 1996 to $644,657 in 1997. The increase is
attributable to the higher marketing expenses, salaries and
office expenses associated with the Company's increased effort to
market its EDI/Internet services and to implement an outreach
program directed at the electronic commerce community.
Management expects the outreach program to provide the Company
with access and introductions to talent and expertise within the
electronic commerce community, with the intention to assist the
Company in its marketing, recruiting, and operations. There is
no assurance that the outreach program will be successful.
Research and development expenses increased $61,598 for the
quarter, from $3,750 in 1996 to $65,348 in 1997, and by $85,823
for the six months ended March 31, from $6,750 in 1996 to $92,573
in 1997. The increase is attributable to expanded development of
existing services, and ongoing development of new services (EC
Integrator and ShipTrac).
Liquidity and Capital Resources
The capital resources available to the Company, including
the $600,000 of proceeds received from the private placement in
April 1997, are not adequate to finance the Company's activities
for the full year ended September 30, 1997. The Company will
require substantial additional financing in order to continue its
operations. There is no assurance, however, that the Company
will receive additional financing.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities
Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
Not applicable
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities
Exchange of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized.
DynamicWeb Enterprises, Inc.
(Registrant)
July 31, 1997 By: /s/ Steve Vanechanos, Jr.
(Date) Steve Vanechanos, Jr.
President and Chief Executive
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 48,998
<SECURITIES> 0
<RECEIVABLES> 222,222
<ALLOWANCES> (60,927)
<INVENTORY> 0
<CURRENT-ASSETS> 239,377
<PP&E> 376,970
<DEPRECIATION> (101,457)
<TOTAL-ASSETS> 659,173
<CURRENT-LIABILITIES> 356,523
<BONDS> 0
0
0
<COMMON> 766
<OTHER-SE> 111,946
<TOTAL-LIABILITY-AND-EQUITY> 658,203
<SALES> 276,795
<TOTAL-REVENUES> 276,795
<CGS> 98,679
<TOTAL-COSTS> 737,230
<OTHER-EXPENSES> 738,710
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,275
<INCOME-PRETAX> (1,305,671)
<INCOME-TAX> (21,700)
<INCOME-CONTINUING> (1,283,971)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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