<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
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 0-20584
ABIOMED, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-2743260
(State of incorporation) (IRS Employer No.)
33 CHERRY HILL DRIVE
DANVERS, MASSACHUSETTS 01923
(Address of principal executive offices, including zip code)
(978) 777-5410
(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) or 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 June 30, 1998, there were 8,584,571 shares outstanding of the
registrant's Common Stock, $.01 par value.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page No.
<S>
<C>
Part I - Financial Information:
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1998 and March 31, 1998
3-4
Consolidated Statements of Operations
Three Months Ended June 30, 1998
and June 30, 1997
5
Consolidated Statements of Cash Flows
Three Months Ended June 30, 1998 and
June 30, 1997
6
Notes to Consolidated Financial Statements
7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
10-13
Part II - Other Information
14
Signatures
15
</TABLE>
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30,
1998
March 31,
1998
(unaudited)
(audited)
<S>
<C>
<C>
Current Assets:
Cash and cash equivalents (Note 7)
$2,389,324
$2,683,151
Short-term marketable securities (Note 7)
21,392,736
23,714,641
Accounts receivable, net of allowance for
doubtful accounts of $204,000 at June 30, 1998
and March 31, 1998, respectively
6,211,604
5,356,348
Inventories (Note 4)
2,831,629
2,327,442
Prepaid expenses and other current assets
345,321
208,387
Total current assets
33,170,614
34,289,969
Property and Equipment, at cost:
Machinery and equipment
4,876,207
4,316,852
Furniture and fixtures
558,598
533,460
Leasehold improvements
1,630,303
1,561,189
7,065,108
6,411,501
Less: Accumulated depreciation and amortization
3,063,366
2,724,442
4,001,742
3,687,059
Other Assets, net (Notes 2 and 8)
474,890
638,176
$37,647,246
$38,615,204
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (continued)
CONSOLIDATED BALANCE SHEETS (continued)
LIABILITIES AND STOCKHOLDERS' INVESTMENT
<TABLE>
<CAPTION>
June 30,
1998
March 31,
1998
(unaudited)
(audited)
<S>
<C>
<C>
Current Liabilities:
Accounts payable
$1,538,844
$2,057,473
Accrued expenses
2,840,217
2,872,288
Total current liabilities
4,379,061
4,929,761
Liabilities of Discontinued Operations, net (Note 3)
645,158
667,466
Stockholders' Investment (Note 5):
Class B Preferred Stock, $.01 par value-
Authorized 1,000,000 shares
Issued and outstanding-none
- -
- -
Common Stock, $.01 par value-
Authorized 25,000,000 shares
Issued and Outstanding- 8,584,571 shares at
June 30, 1998 and 8,567,015 shares at
March 31, 1998
85,846
85,670
Additional paid-in capital
57,601,914
57,454,983
Accumulated deficit
(25,064,733)
(24,522,676)
Total stockholders' investment
32,623,027
33,017,977
$37,647,246
$38,615,204
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1998
June 30,
1997
<S>
<C>
<C>
Revenues:
Products
$3,524,510
$3,836,423
Contracts
2,278,733
1,829,045
5,803,243
5,665,468
Costs and expenses:
Cost of product revenues
1,436,865
1,308,102
Research and development
3,033,780
1,643,475
Selling, general and administrative
2,231,867
1,884,993
6,702,512
4,836,570
(Loss) income from operations
(899,269)
828,898
Interest and other income
357,212
124,495
(Loss) income from continuing operations
(542,057)
953,393
Loss from discontinued operations (Note 3)
- -
(82,432)
Net (loss) income
$(542,057)
$870,961
(Loss) income from continuing operations per share (Note 6):
Basic
$(0.06)
$0.13
Diluted
$(0.06)
$0.13
Loss from discontinued operations per share (Note 6):
Basic
- -
$(0.01)
Diluted
- -
$(0.01)
Net (loss) income per share (Note 6):
Basic
$(0.06)
$0.12
Diluted
$(0.06)
$0.12
Weighted average shares outstanding (Note 6):
Basic
8,573,302
7,011,600
Diluted
8,573,302
7,124,168
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (continued)
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1998
June 30,
1997
<S>
<C>
<C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income
$(542,057)
$870,961
Adjustments to reconcile net (loss) income to net cash
used in operating activities-
Depreciation and amortization
374,462
150,606
Changes in assets and liabilities-
Accounts receivable
(855,256)
(1,082,546)
Inventories
(504,187)
(211,844)
Prepaid expenses and other assets
(9,186)
(29,990)
Accounts payable
(518,629)
(72,799)
Accrued expenses
(32,071)
268,268
Liabilities of discontinued operations, net
(22,308)
103,222
Net cash used in operating activities
(2,109,232)
(4,122)
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of short-term marketable securities, net
2,321,905
584,101
Purchases of property and equipment
(653,607)
(644,698)
Net cash provided by (used in) investing activities
1,668,298
(60,597)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options
147,107
66,244
Net cash provided by financing activities
147,107
66,244
NET (DECREASE) INCREASE IN CASH AND EQUIVALENTS,
EXCLUDING INVESTMENTS
(293,827)
1,525
CASH AND CASH EQUIVALENTS, EXCLUDING INVEST-
MENTS, AT BEGINNING OF PERIOD
2,683,151
1,579,972
CASH AND CASH EQUIVALENTS , EXCLUDING INVEST-
MENTS, AT END OF PERIOD
$2,389,324
$1,581,497
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. Basis of Preparation
The unaudited consolidated financial statements of ABIOMED, Inc.
(the Company), presented herein have been prepared in accordance with the
instructions to Form 10-Q and do not include all of the information and note
disclosures required by generally accepted accounting principles. These
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's latest audited
financial statements, which are contained in the Company's Form 10-K for
the year ended March 31, 1998, which was filed with the Securities and
Exchange Commission. In the opinion of management, the accompanying
consolidated financial statements include all adjustments (consisting only
of normal, recurring adjustments) necessary to summarize fairly the
Company's financial position and results of operations. The results of
operations for the three months ended June 30, 1998 may not be indicative
of the results that may be expected for the full fiscal year.
2. Principles of Consolidation
The consolidated financial statements include the accounts of the
Company, and its wholly owned subsidiaries, and the accounts of its
majority-owned subsidiary Abiomed Limited Partnership. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
3. Discontinued Operations
In it's fiscal year ended March 31, 1998, the Company made the
decision to shift all of its focus to the Company's core cardiovascular
business and to sell, license or otherwise dispose of its dental business.
The accompanying consolidated financial statements contain certain
accounts that have been reclassified in each of the periods presented to
reflect this decision by the Company. Reported revenue, cost and expenses
from continuing operations exclude the operating results of the Company's
dental business.
The amount accrued by the Company at March 31, 1998 included
estimated operating losses of $370,000 to be incurred during fiscal 1999.
During the three months ended June 30, 1998, the operating loss from the
Company's dental business applied against the accrual was $112,000.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)
4. Inventories
Inventories include raw materials, work-in-process, and finished
goods and are priced at the lower of cost (first-in, first-out) or market and
consist of the following:
<TABLE>
<CAPTION>
June 30,
1998
March 31,
1998
<S>
<C>
<C>
Raw materials
$1,401,392
$1,320,600
Work-in-process
636,653
483,723
Finished goods
793,584
523,119
$2,831,629
$2,327,442
</TABLE>
Finished goods and work-in-process inventories consist of direct
material, labor and overhead.
5. Stockholders' Investment
During the three months ended June 30, 1998, no options to purchase
shares of Common Stock were granted. Options to purchase 29,700 shares
were canceled during the quarter and there were 17,525 options to purchase
shares exercised at prices ranging from $5.625 to $8.50 per share during the
three months ended June 30, 1998.
6. Net Income (Loss) Per Common Share
The Company has calculated net income (loss) per common share in
accordance with Statement of Financial Accounting Standards (SFAS) No.
128, Earnings Per Share, a new accounting standard that requires the
Company to present both basic and diluted net income (loss) per share for
all periods presented. Basic earnings (loss) per share ("Basic EPS") is
computed by dividing net income (loss) by the weighted average number of
common shares outstanding during the period. Diluted earnings (loss) per
share ("Diluted EPS") is computed by dividing net income (loss) by the
weighted average number of common and common equivalent shares
outstanding during the period using the treasury stock method. Under the
Diluted EPS method, no common equivalent shares are considered dilutive in
periods, such as the three months June 30, 1998, in which a net loss is
reported because such common equivalent shares are antidilutive. The
number of shares that otherwise would have been dilutive is 263,617 for the
three months ended June 30, 1998. In accordance with SFAS No. 128, the
Company has recomputed net income per share for the three month period
ended June 30, 1997 and as a result has restated reported basic and diluted
net income per share from $0.11 to $0.12 per share.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 1: FINANCIAL STATEMENTS (continued)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited, continued)
7. Cash and Cash Equivalents
The Company classifies any marketable security with a maturity date
of 90 days or less at the time of acquisition to be a cash equivalent.
Securities, including marketable securities, with original maturities of
greater than 90 days are classified as investments.
8. Other Assets
Other assets include approximately $307,000 in unamortized purchase
cost of the Company's majority interest of the Abiomed Limited Partnership.
The interest in the Abiomed Limited Partnership is being amortized over
five years, its estimated useful life. Abiomed Limited Partnership (the
Partnership) was formed in March 1985 and provided initial funding for the
design and development of certain of the Company's products.
Through August 3, 2000, the Company owes a royalty to the
Partnership of 5.5% of certain revenues from these products. Because the
Company owns 61.7% of the Partnership, the net royalty expense to the
Company is approximately 2.1% of these product revenues. This royalty
formula is subject to certain maximum amounts and to certain additional
adjustments in the event that the Company sells the technology. The
Partnership is inactive except with respect to receiving and distributing
proceeds from these royalty rights.
Also included in other assets are long-term accounts receivable
related to sales-type leases. The terms of these non-cancelable leases are
one to three years. As of June 30, 1998, approximately $168,000 is included
in other assets for these sales-type leases.
9. Recent Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, Accounting for Derivative Instruments and Hedging Activities.
SFAS No. 133 is effective for fiscal years beginning after June 15, 1999.
The Company does not believe the adoption of this accounting standard will
have any impact on the Company's financial position or results of
operations.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998
NET INCOME
Net loss and net loss per share for the three months ended June 30,
1998, were approximately $542,000 and $0.06 per share, respectively. This
loss compares to net income and net income per share of approximately
$871,000 and $0.12 per share, respectively, in the same period of the
previous year. The net loss for the three months ended June 30, 1998 is
primarily attributable to the Company's undertaking to accelerate the
development of its battery-powered heart replacement device ("HRD").
REVENUES
Total revenues, excluding interest income, increased by 2% to $5.8
million in the three months ended June 30, 1998 from $5.7 million in the
three months ended June 30, 1997. This increase was attributable to an
increase in contract revenues.
Product revenues decreased by 8% to $3.5 million in the three months
ended June 30, 1998 from $3.8 million in the three months ended June 30,
1997. Sales of BVS blood pumps in the quarter ended June 30, 1997
benefited from $356,000 of product backlog carried into and shipped in the
quarter. The Company generally operates with only limited backlog.
Without the effect of backlog on the quarter ended June 30, 1997 revenues,
product revenues were relatively unchanged between these respective
quarters. During the quarter ended June 30, 1998, relatively slow customer
reorders of the BVS single-use blood pumps during the early part of the
quarter were partially offset by record blood pump reorders in June and a
slight increase in BVS console sales, as compared to the first quarter of the
prior year. More than 90% of total product revenues in the three months
ended June 30, 1998 were derived from domestic sources.
Contract revenues increased by 25% to approximately $2.3 million in
the three months ended June 30, 1998 from $1.8 million in the three months
ended June 30, 1997. Approximately $1.8 million of the contract revenue
recognized in the three months ended June 30, 1998 was derived from the
Company's HRD government contract compared to $1.7 million of contract
revenue recognized under this contract for the three months ended June 30,
1997. The Company accounts for revenue under its government contracts and
grants as work is performed, provided that the government has appropriated
sufficient funds for the work. Through June 30, 1998, the government had
appropriated $6.7 million of the $8.5 million HRD contract amount,
including $1.7 million appropriated in June 1998, which had previously
been scheduled to be appropriated in October 1998. To date, the Company's
expenditures under the HRD contract have exceeded the appropriated
amount. The government appropriation schedule calls for no further
appropriation for the HRD contract until October 1999. This schedule is
subject to change at the discretion of the government.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued)
REVENUES (continued)
While the Company currently plans to further increase its
expenditures in connection with the development of the HRD, the Company
will not recognize any further contract revenues under the HRD contract
until such time as additional funds are appropriated under the HRD contract,
if ever. The Company believes that certain of its costs incurred prior to
further appropriation may be reimbursable under the HRD contract, if and
when additional appropriation under the HRD contract is made. Due to the
Company's accelerated HRD development activity and the timing of
government appropriations, the Company believes that it will experience
significant quarterly fluctuations in contract revenues. The Company also
believes that the Company's total expenses to complete the development of
the HRD will significantly exceed the remaining $1.8 million HRD contract
amount.
As of June 30, 1998, the Company's total backlog of research and
development contracts and grants was $5.3 million, including $1.8 million
for HRD research and development and $2.2 million for Heart Booster*
research and development. Funding for the Company's government research
and development contracts is subject to government appropriation, and all
of these contracts contain provisions that make them terminable at the
convenience of the government. The Company retains rights to all
technological discoveries and products resulting from these efforts.
COSTS AND EXPENSES
Total costs and expenses increased to $6.7 million, 115% of total
revenues, for the three months ended June 30, 1998, from $4.8 million, 85%
of total revenues, for the three months ended June 30, 1997. The majority
of this increase in costs and expenses was incurred to support increased
development activities related to the HRD.
Cost of product revenues as a percentage of product revenues was 41%
for the three months ended June 30, 1998 as compared to 34% in the three
months ended June 30, 1997. The majority of this increase in cost of
products sold as a percentage of product revenues was attributable to higher
product costs for both the console and blood pumps due to higher indirect
engineering costs to support expanded manufacturing capabilities and to a
change in the relative mix of products sold.
Research and development expenses increased by 85% to $3.0 million,
52% of total revenues, for the three months ended June 30, 1998, from $1.6
million, 29% of total revenues for the three months ended June 30, 1997.
The increase primarily reflected higher levels of spending by the Company
to advance the development of the HRD, higher level of activity under the
Company's non-HRD cost-plus-fixed-fee research and development contracts
and grants and higher levels of spending to enhance the BVS. Research and
development expenses during the three months ended June 30, 1998 included
$2.1 million of expenses incurred in connection with the Company's
development activities for the HRD. The Company anticipates that its
research and development expenses will continue to increase as a result of
its plans to further increase its research and development efforts to further
develop and test the HRD and enhance the BVS.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued)
COSTS AND EXPENSES (continued)
Selling, general and administrative expenses increased by 18% to $2.2
million, 38% of total revenues, for the three months ended June 30, 1998,
from $1.9 million, 33% of total revenues, for the three months ended June
30, 1997. The increase primarily reflects higher selling and employee
recruiting costs, including increased sales and administrative headcount and
additional travel costs, and additional legal expense. The higher selling
costs were incurred primarily to continue the growth of the Company's U.S.
customer base. The higher employee recruiting costs were incurred to
support the Company's growing employee base, particularly in the areas of
product development, manufacturing, sales and marketing related to the HRD
and BVS.
INTEREST AND OTHER INCOME
Interest and other income consists primarily of interest on the
Company's investment balances, net of interest and other expenses. Interest
income and other income increased to $357,000, 6% of total revenues, for
the three months ended June 30, 1998 from $124,000, 2% of total revenues,
for the three months ended June 30, 1997. This increase primarily reflects
interest earned on the Company's higher average investment balances.
Income taxes incurred during these periods were not material and the
Company continues to have significant net tax operating loss carryforwards
and tax credit carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1998, the Company had $23.8 million in cash and
short-term marketable securities. The Company also has a $3,000,000 line of
credit from a bank that expires in September 1998, and which was entirely
available at June 30, 1998.
In the three months ended June 30, 1998, operating activities used
cash of $2,109,000. Net cash used by operating activities during the three
months ended June 30, 1998 reflected a net loss of $542,000, increases in
accounts receivable, inventory and prepaid expenses of $855,000, $504,000
and $9,000, respectively, and decreases in accounts payable, accrued
expenses and net assets of discontinued operations of $519,000, $32,000 and
$22,000, respectively. These uses of cash were partially offset by
depreciation and amortization expense of $374,000 included in the net loss.
The increase in accounts receivable is primarily attributable to the timing
of billings related to the Company's HRD government contract.
During the three months ended June 30, 1998, investing activities
provided $1,668,000 of cash. Net cash provided by investing activities
included $2,322,000 of maturities of short-term investments partially offset
by $654,000 of purchases and improvements of equipment and property
primarily to support the advanced development of the HRD and the
expansion of the manufacturing facility.
During the three months ended June 30, 1998, financing activities
provided $147,000 of cash from the exercise of stock options.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART 1. FINANCIAL INFORMATION (continued)
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS(continued)
LIQUIDITY AND CAPITAL RESOURCES (continued)
Although the Company does not currently have significant capital
commitments, the Company believes that it will continue to make significant
investments over the next several years to support the development and
commercialization of its products and the expansion of its manufacturing
and product development facilities. The Company is currently negotiating
with its landlord to enter into a new or amended lease that would allow the
Company to extend the current lease and consolidate its operations into one
building. There is no guarantee that the Company will be able to negotiate
acceptable terms and the Company is exploring alternative sites as well. In
either case, the Company estimates that it will incur costs of approximately
two million dollars for improvements.
The Company believes that its revenues and existing resources will be
sufficient to fund its planned operations, including planned increases in its
internally funded HRD development efforts, for at least the next twelve
months.
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
No material change.
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
a) Exhibits
None
b) Reports on Form 8-K
None
<PAGE>
ABIOMED, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
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.
ABIOMED, Inc.
Date: July 28, 1998 /s/ David M. Lederman
David M. Lederman
CEO and President
Date: July 28, 1998 /s/ John F. Thero John F. Thero
Vice President Finance
and Treasurer
Chief Financial Officer
Principal Accounting Officer
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains financial information extracted form the Company's
Consolidated Income Statement, Consolidated Balance Sheet and Consolidated
Statements of Cash Flow and is qualified in its entirety by reference to Form
10-Q for the period ending June 30, 1998
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 2389324
<SECURITIES> 21392736
<RECEIVABLES> 6211604
<ALLOWANCES> 204000
<INVENTORY> 2831629
<CURRENT-ASSETS> 33170614
<PP&E> 7065108
<DEPRECIATION> 3063366
<TOTAL-ASSETS> 37647246
<CURRENT-LIABILITIES> 4379061
<BONDS> 0
0
0
<COMMON> 85846
<OTHER-SE> 32537181
<TOTAL-LIABILITY-AND-EQUITY> 37647246
<SALES> 5803243
<TOTAL-REVENUES> 5803243
<CGS> 1436865
<TOTAL-COSTS> 6702512
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (357212)
<INCOME-PRETAX> (542057)
<INCOME-TAX> (542057)
<INCOME-CONTINUING> (542057)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (542057)
<EPS-PRIMARY> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
