UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the Quarterly Period Ended June 30, 1999
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to ______________
Commission file number 010690
____________________
Science Dynamics Corporation
-------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware
------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
22-2011859
-------------------------------
(IRS Employer Identification No.)
1919 Springdale Road, Cherry Hill, New Jersey 08003
-----------------------------------------------------
(Address of principal executive offices)
( 609 ) 424-0068
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(Issuer's telephone number)
N/A
---------------------------------------------------------------
(Former name, former address, and former fiscal year, if changed
since last report)
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
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
06/30/99 16,833,478 shares of common stock were outstanding.
<PAGE>
S C I E N C E D Y N A M I C S C O R P O R A T I O N
INDEX
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PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1999 1
(unaudited) and June 30, 1998 (audited)
Consolidated Statements of Income (loss) for Six
months and three months ended June 30, 1999
(unaudited) and six months and three months ended
June 39, 1998 (unaudited) 2
Consolidated Statements of Cash Flows for Six
months and three months ended June 30, 1999
(unaudited) and six months and three months ended
June 39, 1998 (unaudited) 3
Consolidated Statements of Shareholders' Equity for 4
the year ended December 31, 1998 (audited) and the
six months ending June 30, 1999 (unaudited)
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5-11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults upon Senior Securities 12
Item 4. Submission of Matters to Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports 12
Item 7. Signatures 13
<PAGE>
<TABLE>
SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
ASSETS
June 30, December 31,
1999 1998
Unaudited Audited
----------------------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 67,429 $ 32,249
Accounts receivable - trade 327,923 266,403
Accounts receivable - other 201,099 659,900
Inventories 442,754 478,494
Other current assets 14,221 46,266
------------ -----------
Total current assets 1,053,426 1,483,312
------------ -----------
Property and equipment, net 205,769 231,088
Software development costs, net of
accumulated amortization of $451,736
in 1999 and $382,239 in 1998 69,498 138,996
Deferred income taxes 308,000 308,000
Intangible Assets, net of accumulated
amortization of $750,000 in 1999 and
$600,000 in 1998. 750,000 900,000
Other assets 137,597 41,418
------------ -----------
Total assets $ 2,524,290 $ 3,102,814
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Loan Payable $ 243,224 $ 100,000
Accounts payable 337,890 638,493
Accrued expenses, principally
payroll related 119,055 181,492
------------ -----------
Total current liabilities 700,169 919,985
------------ -----------
Commitments
Shareholders' equity -
Common stock - .01 par value,
45,000,000 shares authorized,
16,833,478 and 15,861,449 issued
16,707,678 and 15,735,649 outstanding
in 1999 and 1998 respectively. 168,335 158,614
Additional paid-in capital 11,224,683 10,729,429
Retained earnings (deficit) (9,171,064) (8,307,381)
------------ -----------
2,221,954 2,580,662
Common stock held in treasury,
at cost (397,833) (397,833)
------------ -----------
Total shareholders' equity 1,824,121 2,182,829
------------ -----------
Total liabilities and shareholders'
equity $ 2,524,290 $ 3,102,814
============ ===========
- -1-
<PAGE>
</TABLE>
<TABLE>
SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
---------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements(Continued):
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $1,208,224 $2,325,306 $ 440,365 $ 752,599
---------- ---------- --------- ---------
Operating costs and expenses:
Cost of sales 433,948 897,643 185,549 295,301
Research and development 615,773 613,128 298,174 325,066
Selling, general
and administrative 1,015,281 1,242,494 453,707 634,737
---------- ---------- --------- ---------
2,065,002 2,753,265 937,430 1,255,104
---------- ---------- --------- ---------
Operating (loss) (856,778) (427,959) (497,065) (502,505)
Other (expenses):
Interest and other
investment income - - - -
Interest expense (6,905) - (3,814) -
---------- ---------- --------- ---------
Net (Loss) $ (863,683) $ (427,959) $(500,879) $(502,505)
========== ========== ========= =========
Net (Loss) per common share $ (0.05) $ (0.03) $ (0.03) $ (0.03)
========== ========== ========= =========
</TABLE>
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<PAGE>
<TABLE>
SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
---------
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements(Continued):
Six Months Ended June 30, Three Months Ended June 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Cash flows from operating
activities:
Net income (loss) $(863,683) $(427,959) $(500,879) $(502,505)
--------- --------- --------- ---------
Adjustments to reconcile
net (loss) to net cash
provided by (used for)
operating activities:
Depreciation 44,630 32,597 22,646 17,500
Amortization of
capitalized software 69,498 52,123 34,749 26,061
Amortization of
Intangible assets 150,000 150,000 75,000 75,000
Changes in operating assets
and liabilities:
(Increase) decrease in:
Accounts receivable (61,520) 213,416 250,115 432,190
Other receivable 458,801 (16,024)
Inventories 35,740 (230,669) 12,568 (201,893)
Other current assets 32,045 22,946 15,410 17,842
Other assets (96,179) (5,697) 1,910 (500)
Increase (decrease) in:
Accounts payable and
accrued expenses (363,040) 270,782 (123,163) 141,625
--------- --------- --------- ---------
Total adjustments 269,975 505,498 273,211 507,825
--------- --------- --------- ---------
Net cash provided by
(used for) operating
activities (593,708) 77,539 (227,668) 5,320
--------- --------- --------- ---------
Cash flows from investing
activities:
Purchase of property and
equipment - net (19,311) (74,878) (9,165) (31,402)
--------- --------- --------- ---------
Net cash (used) in
investing activities (19,311) (74,878) (9,165) (31,402)
--------- --------- --------- ---------
Cash flows from financing
activities:
Increase (decrease) in
Loan Payable 143,224 - (10,577) -
Issuance of common stock
and warrants 504,975 - 254,975 -
--------- --------- --------- ---------
Net cash (used in) provided
by financing activities 648,199 - 244,398 -
--------- --------- --------- ---------
Net increase (decrease) in
cash and cash equivalents 35,180 2,661 7,565 (26,082)
Cash and cash equivalents -
beginning of period 32,249 21,181 59,864 49,924
--------- --------- --------- ---------
Cash and cash equivalents -
end of period $ 67,429 $ 23,842 $ 67,429 $ 23,842
========= ========= =========== ===========
- -3-
<PAGE>
</TABLE>
<TABLE>
SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998 AND
SIX MONTHS ENDED JUNE 30, 1999
<CAPTION>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements(Continued):
Common Stock Additional Treasury
------------ Paid-In --------
Shares Amount Capital (Deficit) Shares Amount
------ ------ ------- --------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance
December 31, 1997 14,661,449 $146,614 $10,166,429 $(7,271,075) 125,800 $397,833
---------- -------- ----------- ----------- ------- --------
Issuance of common stock
net of related expenses 1,200,000 12,000 563,000 - - -
Net loss - - - (1,036,306) - -
---------- -------- ----------- ----------- ------- --------
Balance
December 31, 1998 15,861,449 158,614 10,729,429 (8,307,381) 125,800 397,833
========== ======== =========== =========== ======= =======
Issuance of common stock
net of related expenses 972,029 9,721 495,254 - -
Net loss - - - (863,683) - -
---------- -------- ----------- ----------- ------- --------
Balance
June 30, 1999 16,833,478 $168,335 $11,224,683 $(9,171,064) 125,800 $397,833
========== ======== =========== =========== ======= ========
</TABLE>
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<PAGE>
SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
PART I
Item 1. (continued)
Basis of Presentation
---------------------
The unaudited financial statements included in the Form 10-QSB have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation SB. The
financial information furnished herein reflects all adjustments,
which in the opinion of management are necessary for a fair
presentation of the Company's financial position, the results of
operations and the cash flows for the periods presented.
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.
These interim statements should be read in conjunction with the
audited financial statements and notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1998. The Company presumes that users of the interim
financial information herein have read or have access to the audited
financial statements for the preceding fiscal year and that the
adequacy of additional disclosure needed for a fair presentation may
be determined in that context. The results of operations for any
interim period are not necessarily indicative of the results for the
full year.
Income per share
----------------
Per-share data has been computed on the basis of the weighted average
number of shares of common stock outstanding during the periods.
Shares issuable upon exercise of common stock options and warrants
are not included for the periods presented, as they would be
anti-dilutive.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND
RESULTS OF OPERATIONS FOR SIX MONTHS ENDED JUNE 30, 1999 AND FOR
THE SIX MONTHS ENDED JUNE 30, 1998.
Business Overview
-----------------
Science Dynamics Corporation designs, develops and markets a
variety of Telecommunication products and applications, including
intelligent call processing platforms which provide
telecommunications service capabilities to both the IP and public
switched telephone network. These platforms are sophisticated
software based systems that satisfy a wide range of computer
- -5-
<PAGE>
telephony integration applications. The Company's development is
driven by user needs for cost effective, easy to use multiservice
products that provide an array of telecommunications solutions and
services to the customers. These opportunities are primarily in the
areas of Voice over Internet Protocol, Inmate Systems, Video over
Frame Relay, Voice Announcements, Interactive Communications,
Intelligent Network Control and Administration. The Company's
strategy is to deliver quality software products and services that
empower its customers to improve their applications and deploy
quality services worldwide.
The second quarter has been a building quarter for Science Dynamics
in regards to the Telephony over IP IntegratorC-2000(R) series
platform and the VFX product lines. The Company has entered into an
arrangement with a next generation telco assisting in the funding for
the promotion, consulting and further development of the IP Telephony
product.
IntegratorC-2000(R) IP Telephony Products
-----------------------------------------
The development effort on the IntegratorC-2000(R) series platform has
progressed markedly in the second quarter. There was continual
development on the Gateway products, adding the latest billing system
components, working towards interoperability testing and creating a
more stable product.
During the second quarter the contract with One Stop Communication
was finalized for more than 50,000 lines of gateway equipment,
contingent upon customer approval of operational tests. The initial
installation was completed in New York and Los Angeles and the
trials are currently underway. The Company anticipates the testing
to be completed the end of August. Once the tests are completed,
OSCM has stated that it will provide SDC with a rollout schedule
defining equipment requirements and timeframes. An order for
the initial rollout of 1000 ports is expected upon the successful
completion of the test phase. The Company has been conducting sales
presentations to prospective customers worldwide for its Voice over
IP Telephony System.
Currently in development are new service modules for the
IntegratorC-2000(R) VoIP family of products. The SS7 Interface will
allow an Integrator Gateway to connect to Carrier networks as an End
Office Gateway. The H323 Interface allows interoperability between
Gateways of various vendors as well as desktop clients such as
Microsoft NetMeeting. An H323 compliant gatekeeper also in
development helps complete the suite of IP based voice and switching
products.
- -6-
<PAGE>
VFX Product
-----------
Though the VFX was launched into the market over a year ago the
effort of building awareness of the product has been focused
primarily on creating and building the distribution channels. The
channels have given SDC an access point to the market place, however
without a strong marketing message and focus the channels have
underperformed.
In the past three months the issue has been readdressed by dedicating
a sales person to maintain active contact with the distribution
channels, seek out endorser opportunities, develop an awareness in
the frame relay user market place and increase press coverage. The
biggest hurdle in launching this product is the major portion of the
Frame Relay and video conferencing market continues to be unaware
that it is possible to use frame relay networks to carry video
conferencing.
A public relations firm has also been hired to promote to the video
conferencing and frame relay user groups the cost effectiveness of
video over frame relay as well as the availability.
Since these additions, there has been a notable improvement in market
awareness, though this is not reflected in the second quarter sales
figures. As these changes build and grow the initial indications
point to a stronger third and fourth quarter.
COMMANDER
---------
The absence of purchase orders from the Company's largest inmate
phone control customer primarily responsible for the soft sales
performance during the second quarter. This customer has an edict to
be Y2K compliant prior to September 1 of this year. With this
priority directive the customer has been busy managing Y2K activities
including hardware and software testing for all systems for the
PayPhone and Inmate markets. Accordingly, new system and existing
system expansions purchases have been placed on hold until the
customer is certain that all Y2K testing and compliance is compete.
The Company expects to see an improvement in sales revenues from this
customer throughout Q4 and continuing into Q1 of 2000.
Inmate sales opportunities are currently underway with other RBOC's
and Independents. The Commander system is currently undergoing
testing at a different RBOC's correctional facility and is
progressing well. It is anticipated that the Company's patented
Three Way Call Detection software modules will meet their
expectations. New business potential as a result of this testing
could be realized in Q4 of this year and throughout 2000.
- -7-
<PAGE>
CIMS/Voice Intercept
--------------------
CIMS and Voice Intercept sales have reflected limited sales
activities for the same Y2K reasons. We are projecting limited
revenue growth for this niche market in Q4 and throughout 2000.
Year 2000 Technology
--------------------
The Company continues the investigation on the Year 2000 issue to
ensure its operations and systems will not be adversely impacted by
the inability of the Company's and supplier systems to process data
affected by Year 2000 date corruption.
There are six major suppliers of products incorporated into the
Company's final systems. Each of those suppliers has attested that
the components are Y2K compliant. With those sub-systems installed
in the Company's newest platform, compliance testing, following the
defined test plan was satisfactorily completed during June.
There are twenty-two identified critical facilities such as telephone,
utilities, banks, etc., thirteen have attested to be compliant with
the remaining nine in the testing phase to prove compliance or
correction. If any company should fail to attest compliance, that
supplier will be replaced, if practical.
Results of Operations
---------------------
The following table summarizes the basic results of operations for
the periods indicated in the Consolidated Statement of Operations.
Six Months ended June 30, 1999 compared to the Six Months ended
June 30, 1998 (unaudited).
For the Six Months Ended June 30,
1999 1998
---- ----
Sales $1,208,224 $2,325,306
Net Loss (863,683) (427,959)
Net Loss Per Share $(0.05) $(.03)
- -8-
<PAGE>
OPERATING EXPENSES PERCENT OF SALES
------------------ ----------------
1999 1998 1999 1998
---- ---- ---- ----
Cost of Goods Sold $433,948 $897,643 35.9% 38.6%
Research & Development 615,773 613,128 51.0% 26.4%
Selling, General & Admin 1,015,281 1,242,494 84.0% 53.4%
Total Operating Costs
and Expenses $2,065,002 $2,753,265 170.9% 118.4%
Sales for the six-month period of 1999 were $1,208,224 a decrease of
$1,117,082 from sales of $2,325,306 in the corresponding period in
1998. The decrease in revenues was attributable to a lack of sales of
the Commander II inmate call control system and the underperformance
of the distribution channels for the Video Over Frame Relay VFX 250S
product. Such quarter over quarter differences continue to plague
the business due to the Company being unable to specifically work
from any significant backlog. Management of the Company believes
as the marketing and sales strategies for the IP Telephony and the
VFX products are implemented the Company will be less dependent on
a single product line and will be able to achieve a continual sales
growth pattern.
Cost of Goods sold decreased to $433,948 in the first six months of
1999 from $897,643 in the corresponding six-month period of 1998. The
decrease in the cost of goods sold was directly related to the
decrease in sales revenue.
Research & Development expenses increased to $615,773 in the first
six months of 1999 as compared to $613,128 in the comparable six-month
period of 1998. The Company expects to continue to invest significant
resources for sustaining product engineering and new product
development to be well positioned to enter the emerging IP
marketplace.
Sales, General & Administrative expenses decreased to $1,015,281 in
the first six months of 1999, compared to $1,242,494 in the
corresponding period of 1998. The decrease was attributable to the
sharing of the overhead for the promotion of the IP Telephony
Product. The Company expects that selling and marketing expenses will
increase from the current level as the Company continues to increase
our internal sales staff and marketing efforts to further expose
our products to the business and special applications markets.
- -9-
<PAGE>
Three Months ended June 30, 1999 compared to the Three Months ended
June 30, 1998 (unaudited).
Three Months ended June 30, 1999 compared to the Three Months ended
June 30, 1998 (unaudited).
For the Quarter Ended June 30,
1999 1998
---- ----
Sales $440,365 $752,559
Net Loss $(500,879) $(502,505)
Net Loss Per Share $(0.03) $(0.03)
OPERATING EXPENSES PERCENT OF SALES
------------------ ----------------
1999 1998 1999 1998
---- ---- ---- ----
Cost of Goods Sold $185,549 $295,301 42.1% 39.2%
Research & Development 298,174 325,066 67.7% 43.2%
Selling, General & Admin 453,707 634,737 103.0% 84.3%
Total Operating Costs
and Expenses $937,430 $1,255,104 212.8% 166.7%
Cost of Goods sold in the three months ended June 30, 1999 was
$185,549 as compared to $295,301 in the corresponding period of 1998.
The decrease is directly attributable to the low sales captured in
the second quarter of 1999.
Research & Development expenses decreased from $325,066 in the second
quarter of 1998 to $298,174 in the corresponding quarter of 1999.
Although the Company continues to expend resources in this area to
accomplish its growth strategy, it was offset by the financial
assistance extended by the next generation telco during the second
quarter.
Sales, General & Administrative expenses, decreased $181,030 in 1999
over the corresponding quarter in 1998. This decrease is attributable
to the funding agreement to promote and expand the IP Telephony sales
effort into the international marketplace.
LIQUIDITY AND CAPITAL RESOURCES:
-------------------------------
Cash and cash equivalents increased to $67,429 for the period ended
June 30, 1999 from $32,249 at December 31, 1998. Net cash used for
operating activities was $593,708 for the six months period ended
June 30, 1999 compared to $77,539 net cash provided by operating
activities in six month ended June 30, 1998. Net cash used for
operating activities was $227,668 for the quarter ended June 30, 1990
compared to net cash provided by operating activities of $5,320 in
the comparable quarter of 1998. The change was primarily a result
of the loss from operations, the increase in receivables and a
decrease in accounts payable.
- -10-
<PAGE>
Net cash used in investing activities was $19,311 during the
six-month period of 1999 compared to $74,878 in the corresponding
six-month period of 1998. Net cash used in investing activities in
the current quarter of 1999 was $9,165 compared to $31,402 in the
quarter ended June 30, 1998.
Net cash provided by financing activities was $648,199 for the
six-month period ended June 30, 1999 and $244,398 for the three-month
period ended June 30, 1999.
The Company has financed its recent operations primarily from the
proceeds of private placements of its securities, to subsidize its
working capital needs. The accounts receivable purchase agreement
with CIT/Commercial Services has provided the bridge to augment the
periods of revenue fluctuation. Management believes that the
forecasted sales generating cash flow from operations along with
funds originating from the next generation telco will be sufficient
to finance the Company's operations and meet its foreseeable cash
requirements.
Certain statements contained in the 10QSB concerning the Company's
business outlook on future performance and statements concerning
assumptions made or expectations as to any future events, conditions
or other matters are "forward-looking statements" as that term is
defined under the Federal Securities Laws. Forward-looking
statements are subject to risks, uncertainties and other factors,
which may cause actual results to differ materially from those set
forth in this report. These factors include industry specific factors
including significant competition in the communications
infrastructure equipment industry characterized by rapid technological
change, new product development, product obsolescence, and
significant price erosion over the life of a product, our ability to
timely develop and produce commercially viable products at
competitive prices, the ability of our products to operate and be
compatible with various OEM equipment, our ability to produce
products which meet the quality standards of both existing and
potential new customers, our ability to accurately anticipate
customer demand, our ability to manage expense levels, the
availability and cost of components, our ability to maintain our
financial liquidity and worldwide economic and political conditions.
- -11-
<PAGE>
PART II. OTHER INFORMATION
SCIENCE DYNAMICS CORPORATION AND SUBSIDIARY
_____________________________________________
Item 1. Legal Proceedings
No material developments.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K.
None.
- -12-
<PAGE>
Item 7. Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, registrant has duly caused this
report to be signed in its behalf by the undersigned thereunto
duly authorized.
Signature Title Date
--------- ----- ----
By: /s/ Alan C. Bashforth CEO, President, Director August 16, 1999
---------------------
Alan C. Bashforth
By: /s/ Joy C. Hartman Exec. Vice President, CFO, August 16, 1999
--------------------- Treasurer, Secretary and
Joy C. Hartman Director
- -13-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 67
<SECURITIES> 0
<RECEIVABLES> 328
<ALLOWANCES> 0
<INVENTORY> 443
<CURRENT-ASSETS> 14
<PP&E> 206
<DEPRECIATION> 45
<TOTAL-ASSETS> 2524
<CURRENT-LIABILITIES> 700
<BONDS> 0
0
0
<COMMON> 168
<OTHER-SE> 11,225
<TOTAL-LIABILITY-AND-EQUITY> 2524
<SALES> 440
<TOTAL-REVENUES> 440
<CGS> 186
<TOTAL-COSTS> 000
<OTHER-EXPENSES> 751
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4
<INCOME-PRETAX> (501)
<INCOME-TAX> 0
<INCOME-CONTINUING> (501)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (501)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
