<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number: 0-26532
PHOENIX INFORMATION SYSTEMS CORP.
- -------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 13-3337797
- -------------------------------------------- -------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
100 Second Avenue South, Suite 1100
St. Petersburg, Florida 33701
- -------------------------------------------- -------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (813) 894-8021
-----------------------------
Not Applicable
- ---------------------------------------------------------------------------------
(Former name, former address and former fiscal year if changed since last report)
</TABLE>
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 July 31, 1997, the Registrant had 49,211,121 shares of common stock issued
and outstanding.
<PAGE> 2
PHOENIX INFORMATION SYSTEMS CORP.
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1997 and
June 30, 1997 (Unaudited) 3
Unaudited Consolidated Statements of Operations
Three Months ended
June 30, 1997 and
June 30, 1996 and Inception to
June 30, 1997 4
Unaudited Consolidated Statements of Cash Flows
Three Months ended
June 30, 1997 and
June 30, 1996 and Inception to
June 30, 1997 5
Notes to Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 8
PART II. OTHER INFORMATION 9 - 10
SIGNATURE PAGE 11
EXHIBIT INDEX 12
</TABLE>
2
<PAGE> 3
PHOENIX INFORMATION SYSTEMS CORP. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, 1997
ASSETS (UNAUDITED) MARCH 31, 1997
-------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,508,456 $ 7,012,277
Securities 22,000 22,000
Trade receivables 576,751 437,707
Receivable from related parties 6,702 --
Interest receivable 18,536 26,112
Prepaids 500,263 699,390
------------ ------------
Total current assets 5,632,708 8,197,486
Property and equipment, net 1,637,118 1,672,522
Investment in American Aviation Ltd. 7,500,000 7,500,000
Deposits and other assets 173,964 154,113
Goodwill, net 233,326 256,660
------------ ------------
Total assets $ 15,177,116 17,780,781
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable 113,766 113,766
Accounts payable 1,191,041 1,640,406
Accrued payroll and payroll taxes 243,859 305,048
------------ ------------
Total current liabilities 1,548,666 2,059,220
Dividends payable 144,950 75,704
Minority interest 860,838 896,892
Notes payable, less current portion 22,966 50,268
------------ ------------
Total liabilities 2,577,420 3,082,084
------------ ------------
Commitments and contingencies
Stockholder's equity:
Series A convertible preferred stock, $.01 par value,
1,250,000 shares authorized, 201,820 and 209,750 issued
and outstanding at June 30, 1997 and March 31, 1997,
respectively 2,018 2,098
Series B convertible preferred stock, $.01 par value
1,250,000 shares authorized, 1,194,500 issued
and outstanding at June 30, 1997 and March 31, 1997,
respectively 11,945 11,945
Series C convertible preferred stock, $.01 par value,
1,500,00 shares authorized, 875,167 and 853,994 issued
and outstanding at June 30, 1997 and March 31, 1997
respectively 8,752 8,540
Common stock, $.01 par value, 125,000,000 shares authorized,
49,130,212 and 49,105,212 shares issued and outstanding
at June 30, 1997 and March 31, 1997, respectively 491,302 491,052
Additional paid-in capital 47,149,761 46,649,030
Losses that have accumulated during the development stage (34,974,082) (32,373,968)
------------ ------------
12,689,696 14,788,697
Treasury Stock, at cost, 31,579 common shares (90,000) (90,000)
------------ ------------
Total stockholders' equity 12,599,696 14,698,697
------------ ------------
Total liabilities and stockholders' equity $ 15,177,116 $ 17,780,781
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
PHOENIX INFORMATION SYSTEMS CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three months ended June 30, 1997 and 1996
and cumulative for the period from inception of development
stage activities, April 1, 1989, through June 30, 1997
-----------
<TABLE>
<CAPTION>
Three Months
Ended June 30 Cumulative
------------------------------ Since
1997 1996 April 1, 1989
---- ---- --------------
<S> <C> <C> <C>
Travel commissions, net $ -- 113,782 $ 813,879
Management fee income -- -- 138,021
Airline/Cargo booking revenues 30,562 -- 124,383
Reservation center revenues 516,787 100,992 1,598,264
License fee income 6,000 6,000 101,350
----------- ------------ ------------
Revenues 553,349 220,774 2,775,897
Start-up and organizational expenses (2,885,787) (2,582,348) (38,477,871)
Interest and dividend income 66,544 42,040 411,055
----------- ------------ ------------
Net loss before minority interest
in net loss of subsidiary (2,265,894) (2,319,534) (35,290,919)
----------- ------------ ------------
Minority interest in net loss of subsidiary 286,061 -- 2,299,169
----------- ------------ ------------
Net loss (1,979,833) (2,319,534) (32,991,750)
----------- ------------ ------------
Preferred stock dividends (620,281) -- (1,982,332)
Net loss applicable to common
stock (2,600,114) $ (2,319,534) (34,974,082)
=========== ============ ============
Net loss per common share
outstanding $ (.05) $ (.05)
=========== ============
Weighted average number of common
shares outstanding 49,123,962 45,814,875
=========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
PHOENIX INFORMATION SYSTEMS CORP. AND SUBSIDIARIES
(a development stage company)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended June 30, 1997 and 1996
and cumulative for the period from inception of development
stage activities, April 1, 1989, through June 30, 1997
-----------
<TABLE>
<CAPTION>
Three Months
Ended June 30, Cumulative
------------------------------------- Since
1997 1996 April 1, 1989
---- ---- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,979,833) $ (2,319,534) $(32,991,750)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization expense 350,556 266,479 2,904,945
Compensation paid through issuance of stock 216,000 75,000 1,021,964
Transaction fee - - 1,140,000
Services paid through issuance of stock - 75,000 1,698,307
Common stock options and warrants issued
as compensation - - 401,010
Common stock issued as an adjustment of the
Tranch E note conversion price - - 193,408
Warrants issued as preferred stock non-conversions
incentive - - 591,031
Write-off of amount due from joint venture partner - - 737,662
Rent paid through in-kind contribution 85,230 85,230 596,610
Minority interest in net loss of subsidiary (36,054) - (388,204)
Other - - 157,985
------------ ------------ ------------
(1,364,101) (1,817,825) (23,937,032)
Changes in assets and liabilities:
Prepaids, deposits and trade receivables (140,999) (77,592) (1,105,636)
Accounts payable (449,365) (1,361,653) 567,633
Accrued payroll and payroll taxes (61,189) (24,945) 187,282
Accrued interest 7,576 (11,007) 208,461
------------ ------------ ------------
Net cash used in operating activities (2,008,078) (3,293,022) (24,079,292)
------------ ------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (291,818) (236,196) (3,408,978)
Purchase of securities - - (22,000)
Investment in American Aviation Ltd. - - (7,500,000)
------------ ------------ ------------
Net cash used in investing activities (291,818) (236,196) (10,930,978)
------------ ------------ ------------
Cash flows from financing activities:
Issuance of common stock - - 1,858,095
Proceeds from exercise of stock options - - 147,557
Issuance of preferred stock - 4,794,000 23,320,521
Stock subscriptions - - 1,297,000
Proceeds from notes payable - - 538,000
Preferred stock dividends (169,921) - (426,355)
Proceeds from related parties - - 15,595,287
Payments on notes payable (27,302) (14,133) (663,292)
Payments to related parties (6,702) (1,025,779) (2,160,281)
Payments on capital lease obligation - (2,174) 12,194
------------ ------------ ------------
Net cash provided by financing activities (203,925) 3,752,914 39,518,726
------------ ------------ ------------
Increase (decrease) in cash and cash equivalents (2,503,821) 223,696 4.508,456
Cash and cash equivalents, beginning of period 7,012,277 2,078,510 -
------------ ------------ ------------
Cash and cash equivalents, end of period $ 4,508,456 $ 2,302,206 $ 4,508,456
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
PHOENIX INFORMATION SYSTEMS CORP. AND SUBSIDIARIES
(A development stage company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(unaudited)
NOTE A
The accompanying consolidated financial statements include the accounts of
Phoenix Information Systems Corp. ("Phoenix Information") and its subsidiaries,
Phoenix Systems Group, Inc. (wholly owned since March 27, 1995), Phoenix
Systems Ltd. ("PSL", wholly owned since November 11, 1993), Hainan Phoenix
Information Systems, Ltd. (70% owned since November 22, 1993), Phoenix
Transaction Services, Inc. (wholly owned since June 3, 1997), and American
International Travel Agency, Inc. ("AIT", wholly owned since September 15, 1994
and sold in November, 1996). The consolidated group of companies is collectively
referred to herein as "Phoenix" or the "Company". All significant intercompany
accounts and transactions have been eliminated.
On November 15, 1996, in a trilateral agreement between Phoenix, China
Southern Airlines Company Ltd. ("China Southern"), and the Company's former
Joint Venture partner, Hainan Airlines, China Southern acquired the entire
equity interest held by Hainan Airlines for $2,580,000. Furthermore, China
Southern agreed to invest an additional $4,780,000 in cash and real estate
capital contributions in exchange for an additional 15% interest in the Joint
Venture, which will raise China Southern's total stake to 45% upon the
completion of the additional contribution. Hainan Airlines continues as a
customer of the Joint Venture on a limited basis.
On November 20, 1996, the disinterested members of the Board of Directors
of Phoenix approved the sale of American International Travel Agency, Inc. to
Visitors Services, Inc. (a Company controlled by Robert P. Gordon, Chairman of
the Board of Phoenix) for 31,579 shares of Phoenix's common stock valued at
$90,000.
NOTE B
The financial information reflects all normal recurring adjustments that,
in the opinion of management, are deemed necessary for a fair presentation of
the results for the interim periods. The results for the interim periods are
not necessarily indicative of the results to be expected for the year.
NOTE C
The enclosed summarized financial information does not include all
disclosures required to be included in a complete set of financial statements
prepared in conformity with generally accepted accounting principles. The Form
10-K, for the fiscal year ended March 31, 1997 should be read in conjunction
with the data herein.
6
<PAGE> 7
PHOENIX INFORMATION SYSTEMS CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
INTRODUCTORY STATEMENT
Phoenix Information Systems Corp. ("Phoenix" or the "Company") is a
development-stage information systems and services company that has developed
airline and hotel travel reservation systems.
In fiscal 1996, Phoenix commenced operations in the United States and
China. Efforts are under way to enlist additional airlines, hotels and other
travel service providers. While Phoenix has now commenced operations, the
Company has only a brief operating history and has yet to generate significant
revenues or earnings. Consequently, Phoenix's continued existence has depended,
primarily, upon its ability to raise capital.
In China, Phoenix has installed and begun to operate its advanced
computerized travel information network for domestic airlines. Phoenix provides
state-of-the-art, travel-related information services to China through its 70%
owned joint venture with China Southern Airlines Company, Ltd.
RESULTS OF OPERATIONS
During the three months ended June 30, 1997, and the fiscal years ended
March 31, 1997, 1996 and 1995, the Company sustained net losses of $2,600,114,
$12,393,872, $9,704,318, and $4,841,824, respectively. Losses are anticipated
to continue until the data network in China is fully implemented and utilized
by China Southern for its reservation and data processing services.
While Phoenix has concentrated its sales efforts in China, the Company has
also focused on small to medium domestic carriers that could utilize the
Company's reservation system. In fiscal 1995, Phoenix entered into an Agreement
with Eastwind Airlines, Inc. ("Eastwind") to provide Eastwind with a complete
reservation system to manage all sales, airport and operations functions. In
addition, Phoenix implemented a reservation center that processed all Eastwind
reservations as of the second quarter of fiscal 1996. Furthermore, in May 1996,
the Company commenced commercial operations with Laker Airlines. Eastwind
terminated its relationship with the Company on May 17, 1997. The Company is
actively pursuing other small to medium carriers to expand the customer base
for its reservation center.
For the quarter ended June 30, 1997, the Company had revenues of $553,349
versus $220,774 for the quarter ended June 30, 1996, an increase of 151% as the
revenue from Laker Airlines more than offset the prior-year revenue associated
with AIT. For the quarter ended June 30, 1997, the Company had start-up and
organizational expenses of $2,885,787 compared to $2,582,348 for the quarter
ended June 30, 1996, an increase of $303,439 or 12%. The growth in expenses was
concentrated in stock option compensation (+$141,000), depreciation of
equipment (+$86,943) and increased business travel to China (+$96,137).
7
<PAGE> 8
LIQUIDITY AND CAPITAL RESOURCES
Working Capital; Financial Instability
As of June 30, 1997, Phoenix had stockholders' equity of $12,599,696 and
working capital of $4,084,042. Phoenix has not generated significant revenues,
earnings or history of operations from inception through June 30, 1997.
Phoenix continues its efforts to raise funds in order to assure that the Company
will have sufficient capital to meet its obligations and to implement its
proposed operations and plans through late 1998, at which time operating cash
flow is projected to turn positive. However, no assurances can be given that
such efforts will be successful.
For the quarter ended June 30, 1997 net cash used in operations declined by
$1,284,944 or 39% from the quarter ended June 30, 1996, principally due to a
significant paydown of accounts payable during the quarter ended June 30, 1996.
Net cash provided by financing activities declined by $3,956,839 during the
quarter ended June 30, 1997 from the comparable prior year quarter. A net
outflow of $203,925 occurred during the quarter ended June 30, 1997, primarily
associated with the payment of preferred stock dividends. The quarter ended June
30, 1996 had a net inflow of $3,752,914 that resulted from the issuance of the
Series A 6% convertible preferred stock, offset partly by payments to related
parties.
In April 1996, Phoenix issued $5,000,000 of Series A 6% convertible
preferred stock. The preferred stock was convertible into common stock at a 15%
discount to market, originally subject to a maximum conversion price of $4.00
per share and a minimum of $2.00 per share. The market value of the Company's
common stock at the date of issuance of the Series A 6% convertible preferred
stock was below the $2.00 per share minimum conversion price. If not converted
by the purchaser prior to the second anniversary of the issuance date, the
preferred stock will automatically be converted into common stock. During the
quarter ended June 30, 1997 7,930 shares of Series A convertible preferred
stock were converted into 25,000 shares of the Company's common stock.
In September 1996, Phoenix issued $4,000,000 of Series B 6% convertible
preferred stock. The preferred stock is convertible into common stock at the
market value of the Company's common stock at the date of conversion. If not
converted by the purchaser prior to the second anniversary of the issuance
date, the preferred stock will automatically be converted into common stock. In
conjunction with the issuance of the Series B shares, the discount on the
Series A convertible preferred stock was amended from 15% to 20% and the
maximum conversion price of $4.00 per share and minimum of$2.00 per share were
removed. The Company recorded a Series A 6% convertible preferred stock
dividend of $658,015 for the difference between the conversion prices of the
Series A 6% convertible preferred stock and the fair market value of the
Company's common stock at the date of the amendment.
On December 23, 1996, Phoenix acquired for $7,500,000 a 25% interest in
American Aviation Limited, through the exercise of an option. The acquisition
was financed by the issuance of 833,333 shares of Series C Convertible
Preferred Stock for $15,000,000 to S-C Phoenix Partners. American Aviation is a
company owned by affiliates of Quantum Industrial Holdings Ltd., George Soros
and Purnendu Chatterjee. American Aviation's sole asset is a 25% interest in
Hainan Airlines, which it purchased for $25,000,000 in December 1995. Phoenix
accounted for the investment by the cost method, because it has no influence on
the operations of American Aviation Ltd. despite holding a 25% interest.
Phoenix can neither sell or collateralize the investment without the unanimous
consent of the owners, who have stated that material financial concessions
would be required of Phoenix for such consent.
S-C Phoenix Partners ("SC"), an investment partnership also comprised of
affiliates of Quantum Industrial Holdings Ltd., George Soros, and Purnendu
Chatterjee, is a major shareholder of Phoenix, holding both common stock and
Series C convertible preferred stock
Reference is made to the Company's Form 10-K for the fiscal year ended
March 31, 1997, for a complete description of certain financing transactions
entered into by the Company to meet its operating and investment objectives.
8
<PAGE> 9
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings:
Ungerleider v. Robert P. Gordon, Phoenix Information Systems Corp., et al.
On August 7, 1996, the District Court granted Phoenix's motion to dismiss
substantial portions of Plaintiff's claims. The court rejected Plaintiff's
claims of fraudulent inducement to enter into the Settlement Agreement, which
effectively precludes Plaintiff from trying to enforce a finders fee agreement
or any of the options, payments, or other rights which he released as part of
the Settlement Agreement. Plaintiff was given leave to amend his Complaint, but
the court's order required him to do so in a manner consistent with the court's
order, which precludes Plaintiff's claims related to alleged oral promises made
prior to the signing of the Settlement Agreement. On August 22, 1996, Plaintiff
filed a Second Amended Complaint, which in its first eight counts essentially
reiterated the claims which the District Court dismissed on August 7, 1996.
Plaintiff also has sued Phoenix for allegedly participating in repossessing 1.2
million shares of Phoenix stock from Plaintiff and failing to perform oral
promises which Plaintiff contends were part of the Settlement Agreement. The
Defendants have moved to dismiss or strike the Second Amended Complaint, in
part because the allegations contradict the rulings contained in the
District Court's August 7, 1996 order. The case was referred to mediation
for settlement discussions. However, mediation has been postponed because
Plaintiff's counsel moved for and was granted leave to withdraw from the case
as reflected by the court's September 2, 1996 order. On January 16, 1997, new
counsel entered appearance on behalf of Plaintiff.
Reference is made to Item 3 of the Company's Form 10-K, for the fiscal
year ended March 31, 1997, for additional information regarding this
proceeding.
Charles Chang and Juliette Chang v. Robert P. Gordon and Phoenix Information
Systems Corp.
The motion of defendants Robert P. Gordon and Phoenix to dismiss the
Amended Complaint in this action has been fully submitted and is awaiting
decision. The Court has stayed discovery in the action pending a decision on
the motion to dismiss.
Reference is made to Item 3 of the Company's Form 10-K for the fiscal
year ended March 31, 1997 for additional information regarding this
proceeding.
ITEM 2. Changes in Securities: None
ITEM 3. Defaults Upon Senior Securities: None
ITEM 4. Submissions of Matters to a Vote of Security Holders: None
ITEM 5. Other Information:
Phoenix Transaction Services, Inc. ("PTS"), a wholly-owned subsidiary
of the Company, was established on June 3, 1997. PTS now manages the existing
U.S. reservations and call center operation, which was previously controlled by
PSL. The goal of PTS is to establish ventures in volume-intensive
9
<PAGE> 10
transaction environments such as passenger reservation services, airline cargo
services, and hotel reservation services. These ventures will be created
through alliances, partnerships, and acquisitions. PTS would bring industry
knowledge and proprietary solutions, built or acquired, to the ventures, while
the partners would have the facility, manpower, and management
responsibilities. PTS is responsible for securing strategic partners and
achieving revenue growth.
On June 23, 1997, the Company and China Southern Airlines, China's
largest airline, with a 21 percent domestic market share, executed the
PHOENIX-AIR Management System (PAMS) Service Contract with Hainan Phoenix
Information Systems Ltd., Phoenix's 70 percent-owned joint venture company in
China. Under the terms of this 46 year agreement, China Southern will book all
of its airline reservations and procure data processing and other services from
the Joint Venture. The Joint Venture has already installed a Stratus fault
tolerant server as a test system in Guangzhou and is proceeding with
installation of the data network across China.
On June 26, 1997, Hainan Airlines Co., Ltd. completed a Public Offering
and was listed on the Shanghai Stock Exchange. The Offering was for 71 million
Chinese B-shares at $0.47 per share, representing 15 percent of Hainan's
outstanding shares. The B-shares are a class of Chinese stock that can be
purchased by foreigners. In December 1996, Phoenix paid $0.30 per Hainan share
to exercise its option to purchase a 25 percent interest in American Aviation
Limited, which owns 100.04 million shares of Hainan Airlines. Affiliates of
Quantum Industrial Holdings Ltd., George Soros, and Purnendu Chatterjee
established American Aviation in December 1995, and Phoenix arranged for
American Aviation to purchase a 25 percent interest in Hainan Airlines. For
arranging this purchase, Phoenix obtained an option to purchase a portion of
American Aviation. The American Aviation investment in Hainan Airlines
represented the first equity investment in a Chinese airline by a foreign
investor. Hainan Airlines is one of China's fastest growing regional
carriers and a customer of the Joint Venture with China Southern on a limited
basis.
On July 30, 1997 China Southern, the Company's Joint Venture partner,
completed its public offering in the United States of 20.6 million American
Depository Shares (ADS). The shares are trading on the New York Stock Exchange
under the ZNH symbol. The offering, managed by Goldman Sachs (Asia) L.L.C. as
the global coordinator, was priced at $30.66 per ADS share.
ITEM 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
11) Earnings Per Share - See Consolidated Statement of Operations
27) Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K - None
10
<PAGE> 11
PHOENIX INFORMATION SYSTEMS CORP.
SIGNATURES
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.
PHOENIX INFORMATION SYSTEMS CORP.
---------------------------------
(Registrant)
Dated: August 11, 1997 /s/ DELBERT F. BLOSS
-----------------------------------------
Delbert F. Bloss, Chief Executive Officer
/s/ PETER J. FORD
-----------------------------------------
Peter J. Ford, Vice President and Chief
Financial Officer
11
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT DESCRIPTION
<S> <C>
11) Earnings Per Share - See Consolidated Statement
of Operations
27) Financial Data Schedule (for SEC use only)
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 4,508,456
<SECURITIES> 22,000
<RECEIVABLES> 576,751
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,632,708
<PP&E> 4,089,477
<DEPRECIATION> 2,452,359
<TOTAL-ASSETS> 15,177,116
<CURRENT-LIABILITIES> 1,548,666
<BONDS> 0
0
22,715
<COMMON> 491,302
<OTHER-SE> 12,085,679
<TOTAL-LIABILITY-AND-EQUITY> 15,177,116
<SALES> 553,349
<TOTAL-REVENUES> 553,349
<CGS> 0
<TOTAL-COSTS> 2,885,787
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,600,144)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,600,114)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> 0
</TABLE>
