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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 1998
Commission file number: 33-21508
DATALINK SYSTEMS CORPORATION
----------------------------------------------------
(Exact name of small business issuer in its charter)
Nevada 35-3574355
- ------------------------------- -------------------------------
(State or other jurisdiction of (IRS Employer Identification
Incorporation or Organization) Number)
1735 Technology Drive, Suite 790, San Jose, CA 95110
-----------------------------------------------------------
(Address of Principal Executive Offices including zip code)
(408) 367-1700
---------------------------
(Issuer's telephone number)
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 [ ]
There were 2,033,499 shares of the Registrant's Common Stock outstanding as of
September 30, 1998.
Transitional Small Business Disclosure Format: Yes [ ] No [ X ]
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DATALINK SYSTEMS CORPORATION
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
a. Condensed Consolidated Balance Sheets
September 30, 1998 and March 31, 1998 3
b. Condensed Consolidated Statements of Operations
for the three months ended September 30, 1998 and 1997,
and the six months ended September 30, 1998 and 1997 4
c. Condensed Consolidated Statements of Cash Flows
for the six months ended September 30, 1998 and 1997 5
d. Notes to the Condensed Consolidated Financial
Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. 13
ITEM 2. CHANGES IN SECURITIES. 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 13
ITEM 5. OTHER INFORMATION. 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
SIGNATURES 13
EXHIBITS
INDEX TO EXHIBITS
EXHIBIT 11 STATEMENT REGARDING COMPUTATION OF NET
LOSS PER SHARE
EXHIBIT 27 FINANCIAL DATA SCHEDULE
2
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DATALINK SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
September 30 March 31
1998 1998
(unaudited) (audited)
----------- -------------
ASSETS
Current assets:
Cash and cash equivalents $ 4,791,143 $ 7,353,719
Accounts receivable 43,539 65,241
Other receivables 4,425 500
Prepaid expenses 73,702 42,537
----------- ------------
Total current assets 4,912,809 7,461,997
Fixed assets, net 794,182 629,696
Other assets 45,665 23,625
----------- ------------
Total assets $ 5,752,656 $ 8,115,318
=========== ============
LIABILITIES
Current liabilities:
Accounts payable $ 392,420 $ 236,469
Accrued liabilities 329,921 300,450
Current portion of capital
lease obligation 13,285 13,699
Current portion on advance
on technology sales 446,795 460,501
Deferred revenue 447,906 269,538
----------- ------------
Total current liabilities 1,630,327 1,280,657
Obligation under capital lease,
net of current portion 55,237 62,640
Advances on technology sales, net
of current portion 1,942,789 2,162,628
----------- ------------
Total Liabilities 3,628,353 3,505,925
SHAREHOLDERS' EQUITY
Preferred stock 2,740 2,740
Common stock 20,334 20,183
Additional paid-in capital 28,071,950 28,007,037
Foreign currency translation
adjustment (49,685) (53,923)
Notes receivable (1,471,590) (1,692,234)
Accumulated deficit (24,449,446) (21,674,410)
----------- ------------
Total shareholders' equity 2,124,303 4,609,393
----------- ------------
Total liabilities and
shareholders' equity $ 5,752,656 $ 8,115,318
=========== ============
The accompanying notes are an integral part of these consolidated
financial statements.
3
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DATALINK SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
1998 1997 1998 1997
------------ ----------- ----------- -----------
Revenue $ 509,121 $ 222,812 $ 1,096,656 $ 372,265
Cost of revenue 219,047 105,770 432,344 205,467
Research and develop-
ment 224,135 171,261 442,058 318,672
Sales and marketing 929,158 428,692 1,909,556 815,640
General and adminis-
trative 856,081 804,614 1,531,746 1,283,142
Other income (Note 3) 230,268 205,038 444,012 292,361
------------ ----------- ----------- -----------
Net loss $ (1,489,032) $(1,082,487) $(2,775,036) $(1,958,295)
============ =========== =========== ===========
Net loss per share:
Basic $ (0.73) $ (0.56) $ (1.37) $ (1.02)
Diluted $ (0.73) $ (0.56) $ (1.37) $ (1.02)
Shares used in per
share calculations,
basic and diluted 2,032,116 1,923,836 2,027,937 1,925,670
============ =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
4
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DATALINK SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
September 30,
1998 1997
------------ -----------
Cash flows from operating activities:
Net loss $(2,775,036) $(1,958,295)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 94,485 65,054
Amortization of technology advances (233,545) (233,874)
Amortization of note receivable 220,644 239,408
Changes in assets and liabilities:
Accounts and other receivables 17,777 (43,046)
Prepaid and other assets (31,165) (22,603)
Accounts payable and accrued liabilities 203,598 250,076
Deferred revenue 178,368 113,749
----------- -----------
Net cash used in operating activities (2,324,874) (1,589,531)
----------- -----------
Cash used in investing activities:
Acquisition of fixed assets (254,733) (123,522)
Deposits (22,040) (15,892)
----------- -----------
Net cash used in investing activities (276,773) (139,414)
----------- -----------
Cash flows provided by (used in) financing
activities:
Proceeds from sale of common stock 46,888 --
Payments on capital leases (7,817) --
Advances on technology fee -- 1,303,565
----------- -----------
Net cash provided by financing
activities 39,071 1,303,565
----------- -----------
Net decrease in cash and cash equivalents (2,562,576) (425,380)
Cash and cash equivalents, beginning
of period 7,353,719 1,916,509
----------- -----------
Cash and cash equivalents, end of period $ 4,791,143 $ 1,491,129
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES:
Foreign currency translation adjustment $ 4,238 $ 18,559
=========== ===========
Common stock exchanged for accrued expenses $ 18,176 $ --
=========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
5
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DATALINK SYSTEMS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
1. Formation and Business of the Company:
Datalink Systems Corporation (the "Company") was established in 1993 and is
engaged in the marketing of wireless communication technologies.
2. Summary of Significant Accounting Policies
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of Management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the six-month
period ended September 30, 1998 are not necessarily indicative of the results
that may be expected for the year ending March 31, 1999. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-KSB for the year
ended March 31, 1998.
3. Other Income:
Other income (expense) consists of the following items:
Three Months Ended Six Months Ended
September 30, September 30,
---------------------- ----------------------
Description 1998 1997 1998 1997
- ----------- ---------- --------- --------- ---------
Owners fee sale of
technology $(392,500) $(392,500) $(785,000) $(785,000)
Interest on note from
sales of technology 392,500 392,500 785,000 785,000
Amortization of tech-
nology advance 115,977 166,869 233,545 233,874
Interest income 122,287 80,391 226,858 106,054
Miscellaneous (7,996) (42,222) (16,391) (47,567)
--------- --------- --------- ---------
Total other income
(expense) $ 230,268 $ 205,038 $ 444,012 $ 292,361
========= ========= ========= =========
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Revenue increased from $372,265 in the six months ending September 30, 1997 to
$1,096,656 in the six months ending September 30, 1998. The increase in
revenue is due to the development of a sales and marketing strategy, the
release of new products, and the development of a direct and indirect sales
force. The following table illustrates the comparative revenues of products
by product type for the six month periods ended September 30, 1998 and 1997:
Net Revenues for the Six Months
Ended September 30,
-------------------------------
Product 1998 1997 Increase
- ------- ------------ ------------- ----------
QuoteXpress $ 497,617 $329,723 $167,894
SplitXpress 560,493 41,980 518,513
CommodityXpress 33,798 0 33,798
Other 4,748 562 4,186
---------- -------- --------
Totals $1,096,656 $372,265 $724,391
========== ======== ========
During the periods subsequent to September 30, 1997, the Company recruited a
group of executives to refine and execute the Company's sales and marketing
plan. These individuals developed a strategic sales and marketing initiative
which identified key markets and business opportunities, and required the
development of a suite of sophisticated financial information products. In
order to execute the plan, the team of executives established direct and
indirect sales forces, a comprehensive marketing team, an extensive
engineering group, and a major Internet marketing initiative, which involved
creating a new, advanced web site. Beginning in May 1998, the executive team
amended the strategic sales and marketing plan to include a series of non-
financial products. The first products developed in this category were a
real-time sports alert service and a general lifestyle service that provides
daily updates on weather, horoscopes, lottery reports, ski and surf reports,
headline news and top ten video rentals. During the quarter ending September
30, 1998, the Company finalized a series of marketing and sales objectives for
these new products, which include launching the products at two major trade
shows and on the Company's new advanced web site.
COST OF REVENUES AND GROSS MARGIN
The cost of revenues has increased from the six months ending September 30,
1997 to the six months ending September 30, 1998, due to the increase in net
revenues. Cost of revenues represents the costs necessary to provide the
services to customers and as more services are provided to more customers, the
cost of providing those services increases. Examples of this type of cost are
the costs to obtain data feeds from the exchanges, costs to maintain the
Customer Service Department, and pager rental costs. The following tables
show the net revenues, cost of revenues, and gross margin for the three months
and six months ended September 30, 1998 and 1997:
7
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Three Months Ended September 30, Increase
-------------------------------- --------------------
1998 1997 $ %
------------- --------------- -------- --------
Net revenues $509,121 $222,812 $286,309 128.5%
Cost of revenues 219,047 105,770 113,277 107.1%
Gross margin 290,074 117,042 173,032 147.8%
Six Months Ended September 30, Increase
------------------------------ --------------------
1998 1997 $ %
------------- ------------- -------- --------
Net revenues $1,096,656 $372,265 $724,391 194.6%
Cost of revenues 432,344 205,467 226,877 110.4%
Gross margin 664,312 166,798 497,514 298.3%
As can be noted from the tables, the increase in revenues has not resulted in
a proportional increase in the cost of revenues. This is due to the fact that
as the Company increases its revenues, economies of scale are achieved, and
the Company operates more efficiently. In effect, each dollar of net revenues
costs less to produce.
OPERATING EXPENSES
Operating expenses have increased from the prior year period. Operating
expenses are classified into three categories: research and development,
sales and marketing, and general and administrative. The following table
illustrates the changes in these three categories of operating expenses:
Three Months Ended September 30, Increase
-------------------------------- ---------------------
Description 1998 1997 $ %
- ----------- ------------- --------------- ---------- --------
Research and
development $ 224,135 $ 171,261 $ 52,874 30.9%
Sales and
marketing 929,158 428,692 500,466 116.7%
General and
administrative 856,081 804,614 51,467 6.4%
---------- ---------- ---------- -----
Totals $2,009,374 $1,404,567 $ 604,807 43.1%
========== ========== ========== =====
Six Months Ended September 30, Increase
------------------------------ ---------------------
Description 1998 1997 $ %
- ----------- ------------- ------------- ---------- --------
Research and
development $ 442,058 $ 318,672 $ 123,386 38.7%
Sales and
marketing 1,909,556 815,640 1,093,916 134.1%
General and
administrative 1,531,746 1,283,142 248,604 19.4%
---------- ---------- ---------- -----
Totals $3,883,360 $2,417,454 $1,465,906 60.6%
========== ========== ========== =====
8
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Research and development expenses are expenses incurred in developing new
products and product enhancements for current products. These expenses are
incurred by the Company's engineering offices located in Vancouver, B.C.
Research and development expenses increased in both the quarter and six month
periods ending September 30, 1998, when compared to the comparable periods
ended September 30, 1997. This increase was due to the Company incurring
costs for product development of new products, including Sports2go, RumorsX
and InfoXtra (released in September 1998) and to develop enhancements for
existing products.
Sales and marketing expenses consist of costs incurred to market the Company's
products through media development, advertising in media such as television
and financial publications, attendance at trade shows, and the costs required
to develop an effective sales and marketing strategy. Also included in this
category are costs for the maintenance of both an inside sales staff and an
outside key account sales force. Sales and marketing costs have increased
when compared with the same periods in the prior fiscal year. Prior to the
current fiscal year, the Company's primary products were QuoteXpress and
SplitXpress which were marketed through a direct sales force. Advertising was
only in a limited number of publications, and a minimal number of employees
were maintained in the marketing and sales departments. During the periods
subsequent to September 30, 1997, and as is reflected in both the quarter and
six month periods ending September 30, 1998, the Company hired additional
marketing and sales staff, conducted market research, developed new sales and
marketing materials for QuoteXpress and SplitXpress, and created sales and
marketing materials for the new products, Sports2go, RumorsX, InfoXtra and
Company News as well as SplitXpress and CommodityXpress. The web site for
product sales and account maintenance was developed and the programming
necessary for e-commerce was initiated. Television advertising was initiated
and additional written publications were selected for advertising.
Development of promotional materials for two major trade shows was also
completed.
General and administrative expenses are classified as costs incurred in the
development and operation of the infrastructure of the organization. These
consist of accounting, legal, rent, depreciation of Company fixed assets,
utilities, and other overhead related costs. Also included in this category
are salaries of all administrative personnel, and the recruitment costs
necessary to obtain those individuals. General and administrative expenses
have increased during both the quarter and six months ending September 30,
1998, when compared to the same periods in the prior year. The Company has
grown considerably in the last year, and has moved to a larger facility, hired
additional staff, and increased expenditures for utilities, and other costs
related to increases in space and personnel. These additional expenditures
resulted in an increase of 19% over the six months ending September 30, 1997,
but only an increase of 6% over the comparable three month period in the
previous year. In the three month period ending September 30, 1997, the
Company was incurring costs related to a private placement, which partially
offsets the increases in the current period mentioned above.
NON-OPERATING REVENUES AND EXPENSES
Non-operating revenues and expenses consist of interest income, amortization
of technology advance deferred revenue, and owners fees and associated
interest income related to the sale of technology. The following table
illustrates the changes in the other income (expense) account.
9
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Three Months Ended September 30, Increase (Decrease)
------------------------------- ---------------------
Description 1998 1997 $ %
- ----------- ------------- --------------- ---------- ---------
Owner's fee-sales
of technology $(392,500) $(392,500) $ 0 0%
Interest income
sales of tech-
nology 392,500 392,500 0 0%
Amortization of
technology
advance 115,977 166,869 (50,887) (30%)
Interest income 122,287 80,391 41,896 52%
Miscellaneous (7,996) (42,222) (34,221) (81%)
--------- --------- -------- ----
Totals $ 230,268 $ 205,038 $ 25,230 12%
========= ========= ======== ====
Six Months Ended September 30, Increase (Decrease)
----------------------------- ----------------------
Description 1998 1997 $ %
- ----------- ------------- ------------- ----------- ---------
Owner's fee-sales
of technology $(785,000) $(785,000) $ 0 0%
Interest income
sales of tech-
nology 785,000 785,000 0 0%
Amortization of
technology
advance 233,545 233,874 (324) 0%
Interest income 226,858 106,054 120,804 114%
Miscellaneous (16,391) (47,567) (31,171) (66%)
--------- --------- -------- ----
Totals $ 444,012 $ 292,361 $151,651 52%
========= ========= ======== ====
As reflected in the above table, most other income (expense) items have
remained relatively constant. The amortization of technology advances has
decreased due to the application of the effective interest method of
amortization on the balance. Interest income has increased due to an increase
in the cash balance held on deposit as a result of the Private Placement which
occurred in November 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company completed a private placement during the quarter ending December
31, 1997. As a result of the private placement, the Company netted
approximately $8,000,000. The Company also completed, during the six month
period ending September 30, 1997, the sale of the QuoteXpress product which
generated an up-front payment of approximately $1,300,000. The sources and
uses of cash during the six month periods ending September 30, 1998 and 1997
were as follows:
10
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Six Months Ended September 30,
------------------------------
Product 1998 1997 Change
- ------- ------------ ------------- -----------
Cash used in operating
activities $(2,324,874) $(1,589,531) $ 735,343
Cash used in investing
activities (276,773) (139,414) 137,359
Cash provided by financ-
ing activities 39,071 1,303,565 (1,264,494)
----------- ----------- -----------
Net decrease in cash $(2,562,576) $ (425,380) $(2,137,196)
=========== =========== ===========
As of September 30, 1998, the Company had cash and cash equivalents in the
amount of $4,791,143. Working capital has decreased from $6,181,340 as of
March 31, 1998, to $3,282,482 as of September 30, 1998, due in part to
aggressive development of new products and increases in advertising of
existing product lines. As of September 30, 1998, the Company had
substantially reduced its advertising commitments for the next quarter now
that it has achieved certain brand name recognition. There are no material
commitments for capital expenditures. Management believes that it has
adequate working capital for the next 12 months. The Company has a letter of
credit with a bank in the amount of $200,000 and has obtained a credit line in
the amount of $1,000,000.
YEAR 2000 COMPLIANCE
The Company is aware of the issues associated with the functioning of the
programming code in computer systems as the Year 2000 approaches. The Year
2000 issues result from the inability of some computer programs to distinguish
the year 1900 from the year 2000. Many computer programs and operating
systems were written using two digits to define the applicable year rather
than four digits. This means that any equipment containing computer programs
with time-sensitive software may recognize a date using "00" as the year 1900
rather than the year 2000. In some instances, this could result in system
failures, disruption in operations and possible inaccuracies of data.
Phase I of the Company's Year 2000 initiative has been to substantially
complete an inventory of all its IT and non-IT systems and equipment, and
based on this inventory, review its IT and non-IT proprietary systems and
contact its significant vendors to determine how their IT and non-IT products
and services might be effected by the Year 2000 issues. The Company's review
of its internal systems has resulted in the Company's determination that its
proprietary IT and non-IT systems meet the compliance requirements of the Year
2000. Seventy-five percent of the Company's vendors have provided statements
that their IT and non-IT systems are Year 2000 compliant. The Company
continues to collect statements from the remaining twenty-five percent of its
vendors.
The Company anticipates that there will be little or no Year 2000 issues and
therefore little or no cost will be incurred therefrom. However, although
compliance confirmation has been provided by seventy-five percent of the
Company's vendors, and the remaining twenty-five percent have indicated that
they are currently Year 2000 compliant, there can be no assurance that these
vendors will not experience some level of Year 2000 issues that in some way
may have an adverse effect on the Company's systems. The level of risk
related to this occurrence has been assessed as very low. The Company's
contingency plan in the event that an unforeseen Year 2000 issues should occur
11
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will be to change to another vendor that is Year 2000 compliant. For this
reason, Phase II of the Company's Year 2000 initiative is to develop an
inventory of back-up vendors for each vendor whose systems are currently used
so that if a current vendor develops a Year 2000 issue, the back-up vendor may
be called upon to provide services in accordance with Year 2000 compliance
standards.
12
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PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. None.
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) The following exhibits have been filed with this report:
Exhibit 11.1 - Statement Regarding Computation of Net Loss
Per Share.
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K.
The Company filed Current Reports on Form 8-K dated July 17, 1998
and September 3, 1998, both of which reported information under Item 4 -
Changes in the Registrant's Certifying Accountant.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
DATALINK SYSTEMS CORPORATION
Date: November 14, 1998 By:/s/ Anthony N. LaPine
Anthony N. LaPine, President and
Chief Executive Officer (Principal
Executive Officer)
By:/s/ William Mahan
William Mahan, Chief Financial
Officer (Principal Financial Officer)
13
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INDEX TO EXHIBITS
EXHIBIT METHOD OF FILING
- ------- -------------------------
11.1 Statement Regarding Computation of
Net Loss Per Share Filed herewith electronically
27. Financial Data Schedule Filed herewith electronically
DATALINK SYSTEMS CORPORATION
COMPUTATION OF NET LOSS PER SHARE
(unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
1998 1997 1998 1997
----------- ------------ ----------- ------------
Weighted average common
shares outstanding for
the period 2,032,116 1,923,836 2,027,937 1,925,670
Shares used in per
share calculations 2,032,116 1,923,836 2,027,937 1,925,670
Net loss $(1,489,032) $(1,082,487) $(2,775,036) $(1,958,295)
Net loss per share $ (0.73) $ (0.56) $ (1.37) $ (1.02)
Calculated in accordance with the guidelines of Item 601 of Regulation S-B.
Primary and fully diluted calculations are substantially the same.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheets and statements of operations found on pages 3 and 4 of the
Company's Form 10-Q for the year to date, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,791,143
<SECURITIES> 0
<RECEIVABLES> 76,968
<ALLOWANCES> (33,429)
<INVENTORY> 0
<CURRENT-ASSETS> 4,912,809
<PP&E> 1,072,890
<DEPRECIATION> (278,708)
<TOTAL-ASSETS> 5,752,656
<CURRENT-LIABILITIES> 1,630,327
<BONDS> 0
<COMMON> 20,334
0
2,740
<OTHER-SE> (2,035,783)
<TOTAL-LIABILITY-AND-EQUITY> 5,752,656
<SALES> 1,096,656
<TOTAL-REVENUES> 1,096,656
<CGS> 432,344
<TOTAL-COSTS> 4,315,704
<OTHER-EXPENSES> (444,012)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,775,036)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,775,036)
<EPS-PRIMARY> (1.37)
<EPS-DILUTED> (1.37)
</TABLE>
