<TABLE>
==================================
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 Quarterly Period Ended December 31, 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 No. 0-15271
===========================
CISTRON BIOTECHNOLOGY, INC.
(Exact Name of Registrant as Specified in its Charter)
===========================
Delaware 22-2487972
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
10 Bloomfield Avenue, Pine Brook, New Jersey 07058
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code:
(973) 575-1700
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 and 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months and (2) has been
subject to such filing requirements for the past 90 days.
Yes _X_ No ___
The aggregate number of Registrant's outstanding shares on February 10,
1998 was 22,983,687 shares of Common Stock, .01 par value.
Page 1 of 13 pages
<PAGE>
CISTRON BIOTECHNOLOGY, INC.
---------------------------
(A DEVELOPMENT STAGE COMPANY)
---------------------------
INDEX
-----
<S> <C>
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Balance sheets as of December 31, 1997 and June 30, 1997.............. 3
Statements of operations for the three months and six months ended
December 31, 1997 and 1996............................................. 4
Statements of cash flows for the six months ended
December 31, 1997 and 1996............................................. 6
Notes to financial statements.......................................... 7
Item 2. Management's discussion and analysis of results of
operations and financial condition..................................... 9
PART II - OTHER INFORMATION............................................ 12
Signatures............................................................. 13
2
<PAGE>
CISTRON BIOTECHNOLOGY,INC.
-------------------------
BALANCE SHEETS
--------------
<S> <C> <C>
June 30, December 31,
ASSETS 1997 1997
- ------ ------------ ------------
CURRENT ASSETS: (unaudited)
Cash and cash equivalents $ 6,368,228 $ 6,942,595
Accounts receivable-trade 55,309 30,501
Accounts receivable-other 3,000,000 2,861,575
Inventories 4,278 2,389
Prepaid expenses 475 -
Notes receivable $230,000; reserve $230,000 - -
---------- ----------
TOTAL CURRENT ASSETS 9,428,290 9,837,060
---------- ----------
ACCOUNTS RECEIVABLE - OTHER - Long Term 6,249,130 3,568,435
---------- ----------
PROPERTY AND EQUIPMENT:
Machinery and equipment 533,374 532,747
Furniture and fixtures 147,113 147,113
Leasehold improvements 77,674 77,674
---------- ----------
758,161 757,534
Less: Accumulated depreciation 726,877 728,927
---------- ----------
31,284 28,607
---------- ----------
SECURITY DEPOSITS 23,938 23,938
---------- ----------
PATENTS, Net of accumulated amortization
of $11,886 and $13,211, respectively 25,219 23,894
---------- ----------
TOTAL ASSETS $ 15,757,861 $ 13,481,934
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
====================================
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 869,909 $ 105,370
Taxes payable 46,175 -
Other current liabilities 705,000 672,470
---------- ----------
TOTAL CURRENT LIABILITIES 1,621,084 777,840
---------- ----------
Deferred income taxes 885,090 719,301
---------- ----------
Other non-current liabilities 1,505,980 877,136
---------- ----------
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value; 50,000,000 shares
authorized; issued 26,884,990 shares
and 26,930,187 shares, respectively 268,850 269,302
Additional paid-in capital 8,616,253 8,683,681
Earnings accumulated during the development stage 2,860,604 2,549,324
Treasury stock 3,946,500 shares at cost - (394,650)
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 11,745,707 11,107,657
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 15,757,861 $ 13,481,934
========== ==========
See accompanying notes to financial statements.
3
<PAGE>
CISTRON BIOTECHNOLOGY, INC.
---------------------------
STATEMENTS OF OPERATIONS
------------------------
(UNAUDITED)
---------
<S> <C> <C> <C>
February 2, 1982
Three Months ended December 31, (commencement of
------------------------------- operations) to
1996 1997 December 31, 1997
------------ ------------ -----------------
Sales...................................... $ 126,805 $ 90,545 $ 9,125,615
Cost of sales.............................. 119,299 66,445 3,955,411
---------- ---------- ----------
Gross profit........................ 7,506 24,100 5,170,204
Other revenues:
Litigation settlements................... 14,857,523 - 14,684,206
License fees and funded research......... 100,000 100,000 4,106,149
---------- ---------- ----------
Operating income before expenses.... 14,965,029 124,100 23,960,559
---------- ---------- ----------
Research and development................... 24,524 271,487 8,365,688
Administrative and marketing............... 233,993 283,324 10,763,959
Occupancy.................................. 47,094 47,756 2,366,328
---------- ---------- ----------
Total expenses............................. 305,611 602,567 21,495,975
---------- ---------- ----------
Operating income (loss)............. 14,659,418 (478,467) 2,464,584
Interest income - net...................... 53,745 146,901 592,882
Other expense.............................. - - 59,895
Amortization of deferred financing costs... - - 173,079
Acquisition expense........................ - - 429,620
Income (loss) before income taxes ---------- ---------- ----------
and extraordinary credit................. 14,713,163 (331,566) 2,394,872
Income tax provision (benefit)............. 2,573,000 (88,626) 1,607,864
---------- ---------- ----------
Income/(loss) before extraordinary credit.. 12,140,163 (242,940) 787,008
Extraordinary credit - benefit of tax loss
carryforward............................. - - 262,838
---------- ---------- ----------
Net income/(loss)................... $ 12,140,163 $ (242,940) $ 1,049,846
========== ========== ==========
Net income (loss) per share................ $ 0.45 $ (0.01)
========== ==========
Weighted average shares outstanding........ 26,884,990 26,903,167
Net income (loss) per share - ========== ==========
assuming dilution........................ $ 0.42 $ (0.01)
Weighted average shares outstanding - ========== ==========
assuming dilution........................ 29,045,151 26,903,167
========== ==========
See accompanying notes to financial statements
4
<page)
CISTRON BIOTECHNOLOGY, INC.
---------------------------
STATEMENTS OF OPERATIONS
------------------------
(UNAUDITED)
---------
<S> <C> <C> <C>
February 2, 1982
Six Months ended December 31, (commencement of
----------------------------- operations to
1996 1997 December 31, 1997
------------ -------------- -----------------
Sales...................................... $ 302,285 $ 265,835 $ 9,125,615
Cost of sales.............................. 182,276 147,760 3,955,411
---------- ---------- ----------
Gross profit........................ 120,009 118,075 5,170,204
Other revenues:
Litigation settlement, net............... 14,857,523 - 14,684,206
Funded research and royalty income....... 200,419 200,000 4,106,149
---------- ---------- ----------
Operating income before expenses.... 15,177,951 318,075 23,960,559
---------- ---------- ----------
Research and development................... 48,594 369,907 8,365,688
Administrative and marketing............... 619,231 602,717 10,763,959
Occupancy.................................. 91,847 93,878 2,366,328
---------- ---------- ----------
Total expenses............................. 759,672 1,066,502 21,495,975
---------- ---------- ----------
Operating income (loss)............. 14,418,279 (748,427) 2,464,584
Interest income - net...................... 53,745 285,183 592,882
Other expense.............................. - - 59,895
Amortization of deferred financing costs... - - 173,079
Acquisition expense........................ - - 429,620
Loss before income taxes ---------- ---------- ----------
and extraordinary credit................. 14,472,024 (463,244) 2,394,872
Income tax provision....................... 2,573,000 (151,964) 1,607,864
---------- ---------- ----------
Income (loss) before extraordinary credit.. 11,899,024 (311,280) 787,008
---------- ---------- ----------
Extraordinary credit - benefit of tax loss
carryforward............................. - - 262,838
---------- ---------- ----------
Net income (loss)................... $ 11,899,024 $ (311,280) $ 1,049,846
========== ========== ==========
Net income (loss) per share................ $ 0.44 $ (0.01)
========== ==========
Weighted average shares outstanding........ 26,884,990 26,894,079
Net income (loss) per share ========== ==========
assuming dilution........................ $ 0.41 $ (0.01)
Weighted average shares outstanding - ========== ==========
assuming dilution........................ 29,048,469 26,894,079
========== ==========
See accompanying notes to financial statements
5
<PAGE>
CISTRON BIOTECHNOLOGY, INC.
---------------------------
STATEMENTS OF CASH FLOWS
------------------------
(UNAUDITED)
---------
<S> <C> <C> <C>
February 2, 1982
Six Months ended December 31, (commencement of
----------------------------- operations) to
1996 1997 December 31, 1997
CASH FLOWS FROM OPERATING ACTIVITIES: ------------ ------------ -----------------
Cash received from customers $ 305,145 $ 296,511 $ 11,030,248
Cash paid to suppliers and employees (2,198,142) (2,674,802) (29,626,555)
Interest received 53,745 147,929 455,633
Acquisition expenses paid - - (429,620)
Royalties, research funding, license fees received 200,419 200,000 2,672,987
Litigation settlement and other receipts 11,252,026 3,000,426 15,135,767
---------- ---------- ----------
Net cash provided by (used in) operating activities 9,613,193 970,064 (761,540)
---------- ---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Collection of note receivable - - 15,097
Issuance of note receivable (230,000) - (230,000)
Purchase of property and equipment - (3,926) (762,472)
---------- ---------- ----------
Net cash (used in) investing activities (230,000) (3,926) (977,375)
CASH FLOWS FROM FINANCING ACTIVITIES: ---------- ---------- ----------
Proceeds from issuance of capital stock and
additional contributions 354 2,879 9,946,398
Principal payments on notes payable - - (870,238)
Purchase of treasury stock - (394,650) (394,650)
---------- ---------- ----------
Net cash provided by financing activities 354 (391,771) 8,681,510
---------- ---------- ----------
Net change in cash and cash equivalents 9,383,547 574,367 6,942,595
CASH AND CASH EQUIVALENTS, beginning of period 359,600 6,368,228 -
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period $ 9,743,147 $ 6,942,595 $ 6,942,595
RECONCILIATION OF NET INCOME (LOSS) TO NET CASH ========== ========== ==========
PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss) $ 11,899,024 $ (311,280) $ 1,049,846
Adjustments to reconcile net income (loss) to net
cash provided used in operating activities:
Depreciation and amortization 2,251 3,377 739,152
Issue of warrants - 65,000 65,000
Deferred income taxes - (165,789) 719,301
Loss on disposal of property and equipment - 4,552 8,531
Increase in reserve for note receivable - - 230,000
Amortization of deferred financing costs - - 195,179
Decrease (increase) in assets:
Accounts receivable (3,182) 24,808 (30,501)
Inventory 1,751 1,889 (2,389)
Prepaid expenses 500 475 -
Notes and other receivables (7,398,390) 2,819,120 (6,445,710)
Security deposit - - (23,938)
Intangible assets - - (37,105)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 5,111,239 (810,714) 1,221,488
Other current and non-current liabilities - (661,374) 1,549,606
---------- ---------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES: $ 9,613,193 $ 970,064 $ (761,540)
========== ========== ===========
See accompanying notes to financial statements
6
<PAGE>
CISTRON BIOTECHNOLOGY, INC.
---------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
A. BASIS OF PRESENTATION
---------------------
The financial statements for the periods ended December 31, 1997 and
1996 have been prepared without audit and, in the opinion of management,
all adjustments (which include only normal recurring adjustments)
necessary to fairly present the Company's financial position, results of
operations, and cash flows at December 31, 1997 and 1996 and for the
periods then ended have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. These financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997. The results of operations for the
periods ended December 31, 1997 and 1996 are not necessarily indicative
of the operating results for the full year.
B. OTHER INCOME
------------
During the three and six-month periods ended December 31, 1997 and 1996,
the Company received non-refundable research and development funding of
$100,000 respectively, representing the tenth and sixth of 10
consecutive quarterly research and development payments of $100,000
which another company has agreed to make to Cistron.
Additionally, net litigation settlement income of $14.9 million was
recorded in the three and six-month periods ended December 31, 1996
representing the amount the Company will receive during the period
November 1996 to November 2000 from the $21 million settlement agreement
with Immunex Corporation ("Immunex"), after deducting amounts to be paid
to counsel and the Institutions.
C. INCOME TAXES
------------
At December 31, 1997, the Company had investment and research and
development tax credits of $372,000. Tax benefits of $88,626 and
$151,964 were recorded in the three and six-month periods ended December
31, 1997 against the net loss incurred.
The Company may be in an Alternative Minimum Tax (AMT) position for the
fiscal year principally due to the limitations placed on the utilization
of the Company's Federal Net Operating Loss (NOL) carryforwards; and,
will receive an AMT credit in future years for the amount of AMT paid.
7
<PAGE>
D. ACCOUNTS RECEIVABLE
-------------------
Accounts receivable - other consists of amounts due in November 1998
(current) and amounts due in November 1999 and 2000 (long term) pursuant
to a litigation settlement agreement entered into in 1996. Long term
amounts have been discounted to reflect their present value.
E. CHANGES IN SHAREHOLDERS' EQUITY
-------------------------------
During the three-month and six-month periods ended December 31, 1997,
shareholders' equity decreased due to net losses of $242,940 and
$311,280, respectively, and due to the repurchase of approximately 4
million shares of the Corporation's common stock that has been recorded
as treasury stock.
F. EARNINGS PER SHARE CALCULATIONS
-------------------------------
In February 1997, The Financial Accounting Standards Board issued
Statement of Accounting Standards ("SFAS") No. 128, "Earnings Per
Share". SFAS No. 128 specifies the computation, presentation and
disclosure requirements for earnings per share ("EPS") and became
effective for both interim and annual periods ending after December 15,
1997. All prior period EPS data has been restated to conform with the
provisions of SFAS No. 128. The following is a reconciliation of the
numerators and denominators used to calculate Earnings per Share:
<S> <C> <C> <C> <C>
Three Months Ended Six Months Ended
December 31, December 31,
1997 1996 1997 1996
--------------------------------------------------------
Earnings per common share:
- -------------------------
Net income (loss)(numerator) $ (242,940) $ 12,140,163 $ (311,280) $ 11,899,024
Weighted average shares
(denominator) 26,903,167 26,884,990 26,894,079 26,884,990
Income (loss) per share $ (0.01) $ 0.45 $ (0.01) $ 0.44
=========== ========== ========== ==========
Earnings per common share -
assuming dilution:
- ---------------------------
Net income(loss) (numerator) $ (242,940) $ 12,140,163 $ (311,280) $ 11,899,024
Weighted average shares 26,903,167 26,884,990 26,894,079 26,884,990
Effect of dilutive options - 2,160,161 - 2,163,479
---------- ---------- ---------- ----------
Weighted average shares -
assuming dilution
(denominator) 26,903,167 29,045,151 26,894,079 29,048,469
Income (loss) per share $ (0.01) $ 0.42 $ (0.01) $ 0.41
========== ========== ========== ==========
8
<PAGE>
Item 2. Management's Discussion and Analysis of Results of
--------------------------------------------------
Operations and Financial Condition
----------------------------------
The following discussion should be read in conjunction with and is
qualified in its entirety by the accompanying financial information and
notes thereto, and the financial information, notes thereto and
management's discussion and analysis of results of operations and financial
condition contained in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997.
Certain statements in this discussion and analysis constitute forward-
looking statements, are not historical facts, and involve risks and
uncertainties that could cause actual results to differ from those expected
and projected. Such risks and uncertainties include but are not limited
to: (i) general economic conditions; (ii) conditions specific to the
biotechnology industry; (iii) the Company's ability to develop or acquire
new technology or products through licensing, merger or acquisition and to
obtain regulatory approval to commercialize diagnostic or therapeutic
products; (iv) the effectiveness and ultimate market acceptance of any
such products; (v) limitations on third party reimbursements with respect
to any such products; and (vi) competition . The Company does not
undertake to update or revise any forward-looking statements contained
herein whether as a result of new information, future events or otherwise.
Results of Operations
- ---------------------
The Company sells its products to the research market and has not generated
significant revenues therefrom. None of its products have been submitted
to or received approval from the Food and Drug Administration for the sale
of such products to the diagnostic or therapeutic markets.
Three Months Ended December 31, 1997 and Three Months
-----------------------------------------------------
Ended December 31, 1996
-----------------------
Sales decreased $36,260 (28.6%) in the quarter ended December 31, 1997
versus the same quarter of the prior year due to reduced sales of bulk
cytokine proteins and assay kits offset, in part, by increased sales of
bulk cytokine assays. This change in product mix resulted in higher
manufacturing material expense in the quarter which was offset by lower
manufacturing salary expense and lower cost of sales due to the lower sales
volume.
During the periods ended December 31, 1997 and 1996, respectively, the
Company received non-refundable research and development funding of
$100,000 in each period representing the tenth and sixth, respectively, of
10 consecutive quarterly research and development payments of $100,000
which another company has agreed to make to Cistron. In the quarter ended
December 31, 1996, the Company also recorded a net litigation settlement of
$14.9 million as other income.
Operating expenses increased $296,956 (97.2%) in the quarter ended December
31, 1997 versus the same quarter of the prior year. Research and
development expenses increased $246,963 or approximately 11 times from the
December quarter of last year. This increase was due to expenditures made
on the pre-clinical periodontal disease study, preparations for initiating
a clinical trial related to periodontitis and the funding of research in
additional IL-1 vaccine adjuvant studies and in wound healing. The results
of the pre-clinical periodontal study were analyzed in January 1998 and
revealed that IL-1 levels generally increased in patients with disease, but
were not conclusive as to a tooth site specific correlation to disease
activity, which was the premise of the Company's planned clinical trial
using the its IL-1 assay to measure IL-1 in gingival fluid. As such, the
trial has been cancelled.
9
<PAGE>
Administrative and marketing expenses increased $49,331 (21.1%). Legal
expenses were netted against the litigation settlement in the December
quarter of 1996 which reduced last year's administrative expenses. Higher
salary, legal and advertising expenses in the quarter ended December 31,
1997 were partially offset by lower consulting expenses. The Company had
incurred litigation related consulting expenses in the prior year which
were not incurred in the current year's quarter. Occupancy expenses were
essentially unchanged.
Interest income of $146,901 was comprised of $78,274 earned on the
investment of higher cash balances and net interest income of $68,627
recognized on accounts receivable - other and other non-current liabilities
to reflect the increase in their present value.
Six Months Ended December 31, 1997 and Six Months Ended
-------------------------------------------------------
December 31, 1996
-----------------
Sales decreased $36,450 (12.1%) in the six-month period ended December 31,
1997 versus the same period of the prior year due to reduced sales of
cytokine proteins and assay kits offset, in part, by increased sales of
bulk cytokine assays. This change in product mix resulted in higher
manufacturing material expense in the six month period ended December 31,
1997 offset by lower manufacturing salary expense and lower cost of sales
due to the lower sales volume.
During the six-month periods ended December 31, 1997 and 1996,
respectively, the Company received non-refundable research and development
funding of $200,000, in each period representing the tenth and sixth,
respectively, of 10 consecutive quarterly research and development payments
of $100,000 which another company has agreed to make to Cistron. In the
six months ended December 31, 1996, the Company also recorded a net
litigation settlement income of $14.9 million as other income.
Operating expenses increased $306,830 (40.4%) in the six-month period ended
December 31, 1997 versus the same period of the prior year. Research and
development expenses increased $321,313 or approximately 7.5 times from the
six months ended December 31, 1996. The increased expense was due to
expenditures made on the pre-clinical periodontal disease study,
preparations for initiating a clinical trial related to periodontitis and,
the funding of research in additional IL-1 vaccine adjuvant studies and in
wound healing.
Administrative and marketing expenses decreased $16,514 (2.7%) due to lower
consulting expenses that were offset, in part, by higher salary,
advertising, and insurance expenses. Occupancy expenses were essentially
unchanged.
Interest income of $147,929 was earned on the investment of higher cash
balances. In addition, net interest income of $137,254 was recognized on
accounts receivable - other and other non-current liabilities to reflect
the increase in their present value.
The Company had an operating loss of $311,280 in the six-month period ended
December 31, 1997 and expects research expenditures to increase. There can
be no assurance that its operations will reach profitability.
10
<PAGE>
Liquidity and Capital Resources
- -------------------------------
At December 31, 1997, the Company had current assets of $9,837,060
including cash and cash equivalents of $6,942,595 and had current
liabilities of $777,840. Cash used in the quarter ended December 31, 1997
was due to the payment of amounts due to the Institutions and attorneys
pursuant to litigation settlements received in November 1997. In
addition, the Company used funds to repurchase approximately 4 million
shares of the Company's Common Stock from Med-Tech Ventures, Inc. and for
outside research funding in the areas of IL-1 adjuvants, wound healing and
pre-clinical periodontal disease studies.
Management believes that it will have sufficient assets to fund the
Company's current programs and plans through fiscal 1998 and beyond. The
Company expects to continue to fund research throughout fiscal 1998 and
fiscal 1999. The pre-clinical studies in periodontal disease were concluded
and analyzed in January 1998. The results of the longitudinal study
indicated that IL-1 levels were elevated in patients with disease.
However, the results were not conclusive as to specific tooth disease
predictability. As such, the planned clinical trial using the Company's
IL-1 assay has been cancelled and the associated agreements related to the
conduct of the trial have been terminated.
In September 1997, the Company engaged the services of BlueStone Capital
Partners, LP to act as Cistron's financial advisor as to corporate,
strategic and financial initiatives. The initial engagement is for a period
of six months and may be renewed upon mutual consent of the parties.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Company has been informed that in December 1997 Dr. Grausz
filed a petition under Chapter 11 of the Federal Bankruptcy Code.
The Company is an unsecured creditor as to the judgment against
Dr. Grausz entered in favor of the Company in October 1997.
Item 2. Changes in Securities
---------------------
a. Not applicable
b. Not applicable
c. Not applicable
Item 3. Defaults upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
In December 1997, the Company sent Genetic Therapy, Inc. ("GTI")
a letter of mutual agreement terminating the March 1992
sublicense to GTI. GTI executed the mutual agreement letter in
January 1998.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Exhibit.
27. Financial Data Schedule
b. Reports on Form 8-K. Not applicable.
12
<PAGE>
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.
Date: February 10, 1998 CISTRON BIOTECHNOLOGY, INC.
(Registrant)
BRUCE C. GALTON
---------------------------
Bruce C. Galton
Acting Chairman & CEO
President, Chief Operating
and Financial Officer,
Secretary and Treasurer
(Principal Financial and
Accounting Officer)
13
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTILCE> 5
<LEGEND>
This Schedule contains summary financial informaiton taken from the balance
sheet as of December 31, 1997 (unaudited) and the statement of operations for
the six-month period ended December 31, 1997 (unaudited), and is qualified in
its entirety by reference to the Company's Annual Report on Form 10-K for the
fixcal year ended June 30, 1997.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUNE-30-1997
<PERIOD-END> DEC-31-1997
<CASH> 6,942,595
<SECURITIES> (0)
<RECEIVABLES> 2,892,076
<ALLOWANCES> (0)
<INVENTORY> 2,389
<CURRENT-ASSETS> 3,568,435
<PP&E> 757,534
<DEPRECIATION> 728,927
<TOTAL-ASSETS> 13,481,934
<CURRENT-LIABILITIES> 777,840
<BONDS> (0)
(0)
(0)
<COMMON> 8,558,333
<OTHER-SE> 2,549,324
<TOTAL-LIABILITY-AND-EQUITY> 13,481,934
<SALES> 265,835
<TOTAL-REVENUES> 465,835
<CGS> 147,760
<TOTAL-COSTS> 147,760
<OTHER-EXPENSES> 1,066,502
<LOSS-PROVISION> (0)
<INTEREST-EXPENSE> (0)
<INCOME-PRETAX> (463,244)
<INCOME-TAX> (151,964)
<INCOME-CONTINUING> (0)
<DISCONTINUED> (0)
<EXTRAORDINARY> (0)
<CHANGES> (0)
<NET-INCOME> (311,280)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
