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, 1999
Commission file number 10039
DYNAMICWEB ENTERPRISES, INC.
(Exact name of registrant as specified in this 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) 276-3100
(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 May 14, 1999, there were 2,587,844 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, 1999
(unaudited) and September 30, 1998.
Condensed Consolidated Statements of Operations for the
three months and six months ended March 31, 1999 and 1998
(unaudited).
Condensed Consolidated Statement of Cash Flows for the six
months ended March 31, 1999 and 1998 (unaudited).
Notes to Condensed Financial Statements
PAGE 1
<PAGE>
DYNAMICWEB ENTERPRISES, INC.
CONDENSED CONSOLIDATED
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 208,000 $ 290,000
Accounts receivable, less allowance for
doubtful accounts $53,000 and $41,000 567,000 271,000
Prepaid expenses and other current assets 40,000 26,000
Total Current Assets 815,000 587,000
Property and equipment, less accumulated
depreciation of $161,000 and $157,000 354,000 450,000
Patents and trademarks, less accumulated
amortization of $19,000 and $11,000 31,000 31,000
Customer list, less accumulated amortization
of $47,000 and $37,000 53,000 63,000
Software development cost, less accumulated
amortization of $51,000 and $27,000 103,000 123,000
Cost in excess of fair value of net assets
acquired net of accumulated amortization
of $47,000 and $21,000 461,000 487,000
Other assets 9,000 9,000
Total Assets $ 1,826,000 $1,750,000
LIABILITIES AND CAPITAL DEFICIENCY
Current Liabilities:
Accounts payable $ 575,000 $ 239,000
Accrued expenses 339,000 118,000
Current maturities of long-term debt 101,000 6,000
Deferred revenue 208,000 17,000
Total current liabilities 1,223,000 380,000
Long term debt, less current liabilities 181,000
Total liabilities 1,223,000 561,000
STOCKHOLDERS EQUITY
Preferred Stock- par value to be determined with
Each issue; 5,000,000 shares authorized:
Series A - 6% cumulative, convertible preferred
Stock - aggregate liquidation value
$1,787,500 and $1,137,500, respectively; $.001
par value; 1375 and 875 shares issued and
outstanding, respectively 775,000 402,000
Series B - 6% cumulative convertible Preferred
Stock - aggregate liquidation value $650,000
and $0, respectively; $.001 par value; 500
and 0 shares issued and outstanding,
respectively 158,000
<PAGE 2>
Common stock, $.0001 par value, 50,000,000
shares authorized; 2,351,737 and 2,255,947
shares issued and outstanding respectively
Additional paid-in capital 7,629,000 7,408,000
Unearned portion of compensatory stock options (147,000) (89,000)
Accumulated deficit (7,812,000) (6,532,000)
Total Stockholders Equity 603,000 1,189,000
Total liabilities and stockholders equity $ 1,826,000 $1,750,000
</TABLE>
The accompanying notes are an integral part of these
financial statements.
PAGE 3
<PAGE>
DYNAMICWEB ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998* 1999 1998*
<S> <C> <C> <C> <C>
Net sales:
Transaction/Subscription
processing $ 205,000 $ 97,000 $ 345,000 192,000
Consulting services 355,000 84,000 697,000 139,000
Network Development 142,000 22,000 199,000 39,000
Total 702,000 203,000 1,241,000 370,000
Cost of sales:
Transaction/Subscription
processing 142,000 66,000 260,000 129,000
Consulting services 216,000 39,000 416,000 68,000
Network development 74,000 15,000 140,000 29,000
Total 432,000 120,000 816,000 226,000
Gross profit 270,000 83,000 425,000 144,000
Expenses:
Marketing and selling 372,000 190,000 721,000 332,000
General and administrative 425,000 337,000 812,000 656,000
Research and development 97,000 129,000 192,000 190,000
Total 894,000 656,000 1,725,000 1,178,000
Operating loss (624,000) (573,000) (1,300,000) (1,034,000)
Interest expense (including
$310,500 of amortization of
deferred financing fees and debt
discount for 1998) (19,000) (364,000)
Interest income 2,000 11,000 3,000 12,000
Other income sale of real estate 15,000
Net loss (622,000) (581,000) (1,282,000) (1,386,000)
Adjustment:
Dividends on cumulative referred
stock, including imputed dividends
of $414,000 for the three months
ended March 31,1999 and $558,000
for six months ended March 31,1999 (450,000) (614,000)
Net loss attributed to common
stockholders $(1,072,000) $ (581,000) $(1,894,000) $(1,386,000)
Net loss per common share
basic and diluted $ (0.46) $ (0.31) $ (0.82) $ (0.72)
=========== ========== =========== ===========
Weighted average number of shares
outstanding basic and diluted 2,351,737 1,851,965 2,320,370 1,935,288
=========== ========== =========== ==========
</TABLE>
* Reclassified to conform to current period presentation.
The accompanying notes are an integral part of these
financial statements.
PAGE 4
<PAGE>
DYNAMICWEB ENTERPRISES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,282,000) $(1,386,000)
Adjustments to reconcile net (loss) to net cash
used in operating activities:
Gain on sale of office condominium (15,000)
Depreciation and amortization 72,000 35,000
Stock options issued for compensation 86,000 57,000
Amortization of debt discount and deferred
financing fees 311,000
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable (296,000) 11,000
(Increase) decrease in prepaid expenses
and other current assets (14,000) (20,000)
Increase in accounts payable 336,000 30,000
Increase (decrease) in accrued expenses 35,000 (151,000)
Increase in deferred revenue 191,000 1,000
Net cash used in operating activities $ (887,000) $(1,112,000)
Cash flows from investing activities:
Acquisition of property and equipment (19,000) (16,000)
Acquisition of patents and trademarks (8,000) (11,000)
Proceeds from sale of property net of
selling expense 189,000
Increase in software development cost (65,000) (61,000)
Net cash provided by (used in)
investing activities 97,000 (88,000)
Cash flows from financing activities:
Payment of long-term debt (187,000) (3,000)
Proceeds from issuance of stock - 3,189,000
Proceeds from issuance of preferred stock
And warrants 795,000
Proceeds from loans - banks 75,000
Loans from stockholders/officers 100,000 118,000
Payment of loan - bank (99,000)
Payment due to stockholders/officers loans (235,000)
Payment of subordinated debt (1,100,000)
Decrease of deferred registration costs 128,000
Net cash provided by financing activities 708,000 2,073,000
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ( 82,000) 874,000
Cash and cash equivalents, beginning of period 290,000 188,000
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 208,000 $ 1,062,000
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
financial statements.
PAGE 5
<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 Regulation S-B).
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management,
all adjustments (consisting of normal recurring accruals)
considered necessary for fair presentation have been included.
Operating results of the six-month period ended March 31, 1999
are not necessarily indicative of the results that may be
expected for the year ending September 30, 1999.
The balance sheet at September 30, 1998 has been derived
from the audited financial statements at the 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 Company:
The Company is involved in the business of electronic
commerce. The term electronic commerce is a shorthand expression
for how businesses use computers to electronically send and
receive business documents. Primarily the Company provides
electronic commerce services, including computer equipment and
software for customers who want to engage in electronic commerce.
The Company is in the business of facilitating electronic
commerce transactions between business entities, developing,
marketing and supporting software products and other services
that enable business entities to engage in electronic commerce
utilizing the Internet and traditional Electronic Data
Interchange ("EDI"). The Company offers electronic commerce
solutions in EDI and Internet-based transactions processing.
Second the Company provides consulting services in the area of
electronic commerce.
<PAGE 6>
(NOTE B) -- Summary of Significant Accounting Policies:
[1] Basic loss per share of common stock:
The Company adopted Statement of Financial Accounting
Standards No. 128 Earnings Per Share ("SFAS No. 128") for the
year ended September 30, 1998. SFAS No. 128 replaced the
calculation of primary and fully diluted earnings per share with
basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. In addition,
contingently issuable shares are included in basic earnings per
share when all necessary conditions have been satisfied. Diluted
earnings per share is very similar to fully diluted earnings per
share and gives effect to all dilutive earnings per share and
gives all dilutive potential common shares outstanding during the
reporting period.
The Company adopted statement No. 128 and has retroactively
applied the effects thereof for all periods presented. The impact
on the per share amounts previously reported was not significant.
The effects of potential common shares such as warrants, options,
and convertible preferred stock has not been included, if the
effect will be antidilutive.
[2] Software development costs:
Costs relating to the conceptual formulation and design of
software are expensed as research and development. Costs
incurred subsequent to establishment of technological feasibility
to produce the finished product are generally capitalized.
Technological feasibility was established when a product design
and a working model were completed. Capitalized software costs
are amortized by the straight-line method over a maximum of five
years or the expected life of the product whichever is less.
[3] Subsequent event:
In April 1999 the Company sold 235,295 shares of its common
stock for $1,000,000 in a private placement transaction.
In May 1999 the Company sold 1,000 shares of Series B 6%
convertible preferred stock and 90,000 common stock purchase
warrants for $1,000,000 in a private placement transaction.
PAGE 7
<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, 1998. 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, 1998.
Liquidity and Capital Resources
As of March 31, 1999, the Company had cash of approximately
$208,000 and total current assets of approximately $815,000.
The Company had a net loss of approximately $1,282,000 for
the six months ended March 31, 1999 and negative operating cash
flow of approximately $887,000. The Company's negative cash flow
for the six months was funded by proceeds from two private
placement transactions with the Shaar Fund, Ltd. (Shaar Fund) and
a short term shareholder loan.
-- Series A Preferred Stock: On August 7, 1998, the
Company closed on the first tranche of a private placement with
the Shaar Fund. It issued to the Shaar Fund 875 shares of Series
A 6% Convertible Preferred Stock and 87,500 Common Stock Purchase
Warrants for an aggregate price of $875,000. It received net
proceeds of approximately $779,000. On December 3, 1998, the
Company closed on the second tranche of that private placement.
It issued to the Shaar Fund an additional 625 shares of the
Series A 6% Convertible Preferred Stock and 50,000 Common Stock
Warrants for an aggregate price of $500,000. It received net
proceeds of approximately $455,000.
-- Series B Preferred Stock: On February 12, 1999, the
Company closed the first tranche of a second private placement
with the Shaar Fund. It issued to the Shaar Fund 500 shares of
Series B 6% Convertible Preferred Stock, par value $0.001 per
share, and 45,000 Common Stock Purchase Warrants for an aggregate
price of $500,000. It received net proceeds of approximately
$375,000.
On March 31, 1999 the Company received $100,000 from a
short-term loan from a shareholder that bears interest at 18% and
<PAGE 8> is due at such time as the Company receives proceeds
from its next private placement transaction.
On March 31, 1999, the capital resources available to the
Company were not adequate to finance the Company's activities for
the full year ended September 30, 1999. The Company is presently
experiencing operating cash flow deficiencies of approximately
$200,000 per month. Management expects that the Company's cash
flow deficiency will continue during 1999. The Company will
require substantial additional financing during the 1999 calendar
year to continue its operations. There is no assurance that the
Company will receive additional financing.
Results of Operations
Our revenue is now classified into three categories:
Transaction/Subscription Processing Revenues, Consulting Revenues
and Network Development Revenues. Previously, we classified
revenues as Transaction Processing, Professional Services and
Other. Accordingly, some revenues from prior periods have been
reclassified to where they are now reflected. The Company had
net sales of $702,000 for the three months ended March 31, 1999,
compared to $203,000 for the same period in 1998, an increase of
approximately $499,000, or 246%. It had net sales of $1,241,000
the six month period ending March 31, 1999 compared to $370,000
for the same period in 1998. The increase in sales was
attributable to increased sales of the Company's new EDI/Internet
products and services, particularly transaction processing
services consulting services.
Transaction/subscription processing revenues include initial
subscription fees and monthly transaction fees. These revenues
for the three months ended March 31, 1999 were $205,000, as
compared to $97,000 in the same period in 1998, an increase of
$108,000 or 111%. Transaction/subscription revenues recognized
for the six month period ending March 31, 1999 were $345,000 as
compared to $192,000 in the same period in 1998, an increase of
$153,000 or 80%. $20,000 of the increase is attributable to an
increase in the initial subscription fees from customers who use
the EDIxchange Suite of Services and the balance is attributable
to an increase in monthly transaction fees.
Consulting service revenues represent fees from contract
computer programming. These revenues for the quarter ended
March 31, 1999 were $355,000 as compared to $84,000 for the same
period in 1998, an increase of $271,000 or 323%. Revenues for
the six month period ended March 31, 1999 were $697,000 as
compared to $139,000 for the same period in 1998, an increase of
$558,000 or 401%. Approximately $234,000 or 42% of the increase
is attributable to Design Crafting, Inc, which was acquired on
May 1, 1998. The remaining increase resulted from additional
customers coupled with an increase in the average amount billed
per programmer.
<PAGE 9>
Network development revenues primarily relate to the
development of EDI maps and to the custom development of
EDIxchange, of EDIxchangeBuy and EDIxchangeSell (extranets) from
which the Transaction/Subscription Processing revenues are
derived. Network development revenues for the quarter ended
March 31, 1999 were $142,000 as compared to $22,000 for the same
period in 1998, resulting in an increase of $120,000 or 545%.
This increase is attributable to the increased development of
maps for customers using the EDIxchange Suite of Services and
also the new customer setup of the EDIxchange Suite. The
revenues for the six month period ending March 31, 1999 were
$199,000 as compared to $39,000 for the same period in 1998, an
increase of $160,000 or 410%.
Total cost of sales for the quarter ending March 31, 1999
increased to $432,000 from $120,000 in the preceding year's
quarter, an increase of $312,000 or 260%. Cost of sales for the
six month period ending March 31, 1999 increased $590,000 or 261%
from $226,000 for the prior period ending March 31, 1998 to
$816,000 for the six months ended March 31, 1999. A portion of
the increase in Cost of Sales is attributable to salary increases
that took effect in the second and third quarters of fiscal 1998.
The aggregate salary increase consists of the salary expense of
the addition of three new employees and the normal course of
business pay raises for all other employees at prevailing market
rates. The increase is also attributable to increased costs for
maintaining and upgrading equipment and communications for better
service to our customers. In addition, certain amounts
previously recorded as operating expenses in the quarter ending
March 31, 1998 have been reclassified as Cost of Sales.
Cost of transaction/subscription processing was $142,000 for
the three months ended March 31, 1999 compared to $66,000 for the
same period ending March 31, 1998, resulting in gross margins of
31% and 32% respectively. Cost of transaction/subscription
processing for the six month period ending March 31, 1999 was
$260,000 for a gross profit of $85,000 or 25% as compared to a
gross profit of $63,000 or 33% for the prior period ending
March 31, 1998.
Cost of consulting service revenues provided by the Company
was $216,000, for the three months ended March 31, 1999 or a
gross profit of 39%. This compares to a gross profit of $45,000
or 54% for the same period in 1998. The decrease is primarily
attributable to the higher compensation noted above. Cost of
consulting service revenues provided by the Company for the six
months ended March 31, 1999 was $416,000 for a gross profit of
$281,000 or 40%. This compares to a gross profit of $71,000 or
51% for the same period in 1998.
Cost of network development revenues was $74,000 for the
three months ended March 31, 1999, or a gross profit of $68,000
or 48%, as compared to $7,000, or a gross profit of 32% in 1998.
This increase is attributable to the development of additional
staff and the higher compensation noted above. Cost of network
<PAGE 10> development revenues was $140,000 for the six months
ended March 31, 1999, for a gross profit of $59,000 or 30%, as
compared to gross profit of $10,000, or a gross margin of 27% in
1998.
Quarterly marketing and sales expenses increased
approximately $182,000 from approximately $190,000 for the three
months ended March 31, 1998 to approximately $372,000 in the same
period in 1997. For the six month period ending March 31, 1999,
marketing and sales expenses increased $389,000 from $332,000 to
$721,000 in the same period in 1998. The increase is attributable
to salaries for new hires and the costs of attendance at trade
shows associated with the Company's efforts to market its
EDI/Internet services. The increase is also a result of
additional advertising expenses.
General and administrative expenses increased by
approximately $88,000 from approximately $337,000 for the three
months ended March 31, 1998 to approximately $425,000 for the
same period in 1999. For the six month period ending March 31,
1999, general and administrative expenses increased $156,000 from
$656,000 to $812,000 in the same period in 1998. The increase is
attributable to new hiring of employees, professional services,
the cost of benefits and administrative support for new hires in
other departments, and compensation expense for options issued.
Research and development expenses decreased by approximately
$32,000 for the three months, from approximately $129,000 for the
three months ending March 31, 1998 to approximately $97,000 in
1999. The decrease is attributable to a portion of what was
previously recorded as research and development expenses being
capitalized and recorded as capitalized software due to the
establishment of technological feasibility of products. For the
six month period ending March 31, 1999, research and development
expenses increased $2,000 from $190,000 to $192,000 in the same
period in 1998.
PAGE 11
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Private placement
On February 16, 1999, the Company completed a private
placement to the Shaar Fund, Ltd. of 500 shares of Series B 6%
Convertible Preferred Stock, par value $0.001 per share (the
"Preferred Stock") and 45,000 Common Stock Purchase Warrants (the
"Common Stock Purchase Warrants").
The total offering price was $500,000, and the Company
received net proceeds of approximately $375,000. This private
placement transaction did not involve an underwriter, although
Trautman Kramer & Company Inc. acted as placement agent and
received a fee of $50,000 and 50,000 common stock purchase
warrants exercisable at $7.00 as compensation in connection
therewith.
This transaction was deemed to be exempt from registration
under the Securities Act of 1933, as amended, by virtue of
Section 4(2) or Regulation D promulgated thereunder, including
Rule 506 of Regulation D. The Shaar Fund, Ltd. is an "accredited
investor" within the meaning of Rule 501 of Regulation D under
the Securities Act. The purchaser represented its intention to
acquire the securities for investment only and not with a view to
the distribution thereof. Required disclosure was provided, or
access to information in lieu of disclosure was present. Required
legends are affixed to the securities issued in such transaction.
The terms of exercise and conversion are as follows:
The Warrants have a term of five years and an exercise price of
$8.93 per share. The Series B Preferred Stock has a conversion
value of $1,000 per share. That conversion value is credited
towards the purchase of shares of common stock at an agreed-upon
purchase or conversion price. The applicable purchase or
conversion price is a discount to the "market price" of the
common stock at the time of conversion. For these purposes, the
"market price" is the average of the lowest 7 days closing bid
prices of the common stock for the 20 trading days immediately
preceding the conversion.
The applicable purchase or conversion prices are the lesser
of $9.75 per share, or the following:
<PAGE 12>
(1) For the preferred stock converted up to 180 days after
purchase, 85% of the market price of DynamicWeb common
stock.
(2) For preferred stock converted after 180 days after
purchase, 80% of the market price of DynamicWeb common
stock.
The Shaar Fund may elect when to convert the Series B
Preferred Stock, except that all the remaining shares will
be converted automatically on February 12, 2002.
The Company used the net proceeds for general purposes.
The Company and the Shaar Fund also agreed that the Shaar
Fund will invest an additional $1,000,000 for 1,000 additional
shares of Series B Preferred Stock and 90,000 additional Common
Stock Purchase Warrants, under the same terms and conditions as
the original offering. That additional investment closed on
May 12, 1999
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
The Company filed a Form 8-K on February 19, 1999,
to report the closing of a private placement of
securities.
The Company also filed a Form 8-K/A on
February 23, 1999, to file exhibits relating to
that private placement of securities.
PAGE 13
<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)
May 14, 1999 By: /s/ Steve Vanechanos, Jr.
Chief Executive Officer
<PAGE 14>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the
Consolidated
Statements of Operations and consolidated balance sheets of
DynamicWeb
Enterprises, Inc. and is qualified in its entirety by reference
to such
financial statements.
</LEGEND>
<CIK> 0000031778
<NAME> DYNAMICWEB ENTERPRISES, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 208,000
<SECURITIES> 0
<RECEIVABLES> 620,000
<ALLOWANCES> 53,000
<INVENTORY> 0
<CURRENT-ASSETS> 815,000
<PP&E> 515,000
<DEPRECIATION> 161,000
<TOTAL-ASSETS> 1,826,000
<CURRENT-LIABILITIES> 1,223,000
<BONDS> 0
0
933,000
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,826,000
<SALES> 1,241,000
<TOTAL-REVENUES> 1,241,000
<CGS> 816,000
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,725,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,282,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,282,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,282,000)
<EPS-PRIMARY> (.82)
<EPS-DILUTED> (.82)
</TABLE>
