<PAGE>
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 June 30, 1999
Commission file number: 0-21069
DATALINK.NET, INC.
----------------------------------------------------
(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)
Datalink Systems Corporation
---------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [ X ] No [ ]
There were 2,903,272 shares of the Registrant's Common Stock outstanding as of
June 30, 1999.
Transitional Small Business Disclosure Format: Yes [ ] No [ X ]
<PAGE>
DATALINK.NET, INC.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
a. Condensed Consolidated Balance Sheets
June 30, 1999 and March 31, 1999 3
b. Condensed Consolidated Statements of Operations
and Comprehensive Loss for the three months ended
June 30, 1999 and 1998 4
c. Condensed Consolidated Statements of Cash Flows
for the three months ended June 30, 1999 and 1998 5-6
d. Notes to the Condensed Consolidated Financial
Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 8
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. 14
SIGNATURES 13
EXHIBITS
INDEX TO EXHIBITS
EXHIBIT 27 FINANCIAL DATA SCHEDULE
2
<PAGE>
DATALINK.NET, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30 March 31
1999 1999
(unaudited)
CURRENT ASSETS: ----------- -----------
Cash and cash equivalents $ 2,218,123 $ 3,169,443
Trade receivables 56,144 63,319
Other receivables 6,372
Prepaid expenses 46,846 41,612
----------- -----------
Total current assets 2,321,113 3,280,746
Property and equipment, net 654,866 699,591
Other assets 85,461 76,730
----------- -----------
Total assets $ 3,061,440 $ 4,057,067
=========== ===========
LIABILITIES:
Current liabilities:
Accounts payable $ 403,793 $ 617,456
Accrued expenses and other
current liabilities 169,949 220,919
Current portion of capital
lease obligation 14,356 14,004
Current portion of advances
on technology sales 424,208 432,022
Deferred revenue 290,458 332,212
----------- -----------
Total current liabilities 1,302,764 1,616,613
Capital lease obligation,
net of current portion 43,385 47,439
Advances on technology sales, net
of current portion 1,627,580 1,730,610
----------- -----------
Total liabilities 2,973,729 3,394,662
----------- -----------
SHAREHOLDERS' EQUITY
Convertible Preferred stock 1,896 2,366
Common stock 29,033 24,143
Additional paid-in capital 28,096,871 28,084,147
Accumulated other comprehensive loss (78,870) (82,002)
Notes receivable (1,243,913) (1,261,675)
Accumulated deficit (26,717,306) (26,104,574)
----------- -----------
Total shareholders' equity 87,711 662,405
----------- -----------
Total liabilities and
shareholders' equity $ 3,061,440 $ 4,057,067
=========== ===========
See accompanying notes to condensed consolidated financial statements.
3
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DATALINK.NET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
Three Months Ended
June 30,
1999 1998
----------- -----------
Revenue $ 436,885 $ 587,535
Cost of revenue 199,135 213,297
Research and development 142,349 217,923
Sales and marketing 356,445 980,398
General and administrative 523,685 675,665
Other income 171,997 213,744
----------- -----------
Net loss available to (612,732) (1,286,004)
common shareholders
Other comprehensive income
(loss) - Translation 3,132 (7,874)
----------- -----------
Comprehensive Loss $ (609,600) $(1,293,878)
=========== ===========
Net loss per share:
Basic $ (0.24) $ (0.63)
Diluted $ (0.24) $ (0.63)
Shares used in per share
calculation basic and diluted 2,508,724 2,027,657
=========== ===========
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
DATALINK.NET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
June 30,
1999 1998
----------- -----------
Cash flows from operating activities:
Net loss $ (612,732) $(1,286,004)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 63,596 39,094
Foreign currency translation adjustment 3,132 (7,874)
Amortization of technology advances (110,843) (117,568)
Amortization of note receivable 17,762 103,430
Changes in assets and liabilities:
Accounts and other receivables 13,547 9,105
Prepaid expenses and other assets (5,234) (5,933)
Accounts payable and accrued liabilities (264,633) 20,728
Deferred revenue (41,754) 102,604
----------- -----------
Net cash used in operating activities (937,159) (1,142,418)
----------- -----------
Cash flows from investing activities:
Acquisition of property and equipment (18,871) (163,732)
Other assets (8,731) -
----------- -----------
Net cash used in investing activities (27,602) (163,732)
----------- -----------
Cash flows from financing activities:
Proceeds from sale of common stock 17,143 46,888
Payments on capital lease (3,702) (3,292)
----------- -----------
Net cash provided by (used in) financing
activities 13,441 43,596
----------- -----------
Net increase (decrease)in cash and
cash equivalents (951,320) (1,262,554)
Cash and cash equivalents, beginning
of period 3,169,443 7,353,719
----------- -----------
Cash and cash equivalents, end of period $ 2,218,123 $ 6,091,165
=========== ===========
See accompanying notes to condensed consolidated financial statements.
5
<PAGE>
DATALINK.NET, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
1999 1998
----------- -----------
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest $ 2,253 $ 2,230
=========== ===========
Cash paid for income taxes $ 1,365 $ 800
=========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Preferred stock converted to common
stock $ 469 $ -
=========== ===========
See accompanying notes to consolidated financial statements.
6
<PAGE>
DATALINK.NET, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. FORMATION AND BUSINESS OF THE COMPANY:
Datalink.net, Inc., formerly Datalink Systems Corporation (the "Company") was
formed under the laws of the State of Nevada on June 18, 1996. On June 27,
1996, the Company went public through an acquisition of a public corporation,
Datalink Communications Corporation ("DCC"), which was previously Lord Abbott,
Inc., a Colorado corporation formed in 1986. The Company is in the business
of developing and marketing "Web to Wireless" information products for
consumer users and business-level services utilizing the Company's XpressLink
technology platform. The Company's products and services extend the World
Wide Web and non-Web based customized information to individuals using
wireless devices such as pagers, digital cellular phones, or personal digital
assistant devices.
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 three-month
period ended June 30, 1999 are not necessarily indicative of the results that
may be expected for the year ending March 31, 2000. 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,
1999.
7
<PAGE>
3. Other Income
Other income (expense) consists of the following items:
Three Months Ended
June 30,
----------------------
Description 1999 1998
- ----------------------------- ---------- ----------
Owners fee sales of technology $(392,500) $(392,500)
Interest on note from sales of
technology 392,500 392,500
Amortization of technology advances 110,844 117,568
Interest income 59,675 104,571
Miscellaneous 1,478 (8,395)
--------- --------
Total other income (expenses) $ 171,997 $ 213,744
========= =========
4. Calculations of Net Loss per share
Three Months Ended
June 30,
1999 1998
---------- -----------
Weighted average common shares
outstanding for the period 2,508,724 2,027,657
Shares used in per share
calculations 2,508,724 2,027,657
Net loss available to common
shareholders $ (612,732) $(1,286,004)
Net loss per share $ (0.24) $ (0.63)
Calculated in accordance with the guidelines of Item 601 of Regulation S-B.
Basic and diluted calculations are substantially the same.
Common stock equivalents resulting from convertible preferred shares, warrants
and stock options amounted to 4,601,672 and 5,353,431 as of June 30, 1999 and
1998, respectively. These common stock equivalents are excluded from the
weighted average common shares outstanding for the periods because their
inclusion would be anti-dilutive.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the attached
financial statements and notes thereto. Except for the historical information
contained herein, the matters discussed in this document are forward-looking
statements that involve certain risks and uncertainties, including, among
others, the risks and uncertainties discussed below and in the Company's Form
10-KSB for the year ended March 31, 1999:
RESULTS OF OPERATIONS
The net loss available to common shareholders decreased from $1,286,004 during
the three months ended June 30, 1998 to $612,732 for the three months ended
June 30, 1999, due to the factors described below.
Revenues for the three months ended June 30, 1999 amounted to $436,885, as
compared to $587,535 in the same period of 1998. The decrease in revenues was
principally due to a decrease in sales of the SplitXpress product from prior
periods, while sales of the QuoteXpress and lifestyle products increased
somewhat. During the prior year period, the marketing strategies provided for
the use of a direct sales channel utilizing extensive television and print
media advertising and direct mail in order to sell its financial suite of
products, including SplitXpress. Many of the customers added during that
period signed up for twelve month contracts which have now terminated and
which have been renewed or replaced with new sales at a much slower pace.
Since January, 1999, only incidental amounts have been spent on advertising
and the direct sales channel, as the Company has evolved to an indirect sales
channel initiative which involves developing joint marketing alliances with
various wireless carriers, information service providers, Internet companies
and retail stores. Development of new alliances continues as does the
development of the marketing initiatives needed in order to capitalize on the
customer base of these channels. Due to the effort and time involved in
jointly producing these sales and marketing initiatives, no meaningful sales
volume has yet been generated from these indirect channels at this time.
9
<PAGE>
COST OF REVENUES AND GROSS MARGIN
Cost of revenues has decreased principally due to the decrease in net
revenues. Cost of revenues represents the direct costs necessary to provide
the services to customers. This cost of revenues is not directly proportional
to revenues, and when revenues decrease as they have in the current quarter,
the cost of revenues has not come down proportionally. Cost of revenues
principally includes costs to obtain data feeds from various exchanges, costs
for pager rental or depreciation and pager airtime for those customers without
their own pagers, and certain telephone, computer and other direct operational
costs. The following tables show the net revenues, cost of revenues and gross
margin for the three month periods ended June 30, 1999 and 1998:
Three Months Ended June 30, Increase (Decrease)
-------------------------------- ---------------------
1999 1998 $ %
----------- ------------- --------- ---------
Net revenues $ 436,885 $ 587,535 $(150,650) (25.6)%
Cost of revenues $ 199,135 $ 213,297 $ (14,162) (6.6)%
Gross margin $ 237,750 $ 374,238 $(136,488) (36.5)%
OPERATING EXPENSES
Operating expenses decreased during the three months ended June 30, 1999 from
the same period of 1998. The Company categorizes operating expenses into
three major categories: research and development, sales and marketing and
general and administrative. The tables below summarize the decreases in these
three categories of operating expenses:
Three Months Ended June 30, Increase (Decrease)
------------------------------ ---------------------
Description 1999 1998 $ %
- ------------- ------------ ------------- ----------- --------
Research and
Development $ 142,349 $ 217,923 $ (75,574) (34.7)%
Sales and
Marketing 356,445 980,398 (623,953) (63.6)%
General and
Administrative 523,685 675,665 (151,980) (22.5)%
---------- ---------- ---------- ------
Totals $1,022,479 $1,873,986 $ (851,507) (45.8)%
========== ========== ========== ======
Research and development expenses are expenses incurred in developing new
products and product enhancements for current products. These expenditures
are charged to expense as incurred. The decrease in these costs is due
principally to additional personnel and consultants engaged in the prior year
period in the development of lifestyle and other new products, such efforts
having leveled off somewhat during the current quarter. Additionally, last
year's quarter included one additional management person.
10
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Sales and marketing expenses consist of costs incurred to develop and
implement marketing and sales programs for the Company's product line. These
include costs required to staff and execute a sales and marketing strategy,
participation in trade shows, media development and advertising, and web site
development and maintenance. These costs also include the expenses of sales
personnel and a customer support call center. These costs have decreased
substantially in the quarter ended June 30, 1999 from the quarter ended June
30, 1998, due principally to elimination of virtually all advertising in the
current quarter. This advertising decrease amounted to a savings of
approximately $600,000.
General and administrative expenses include accounting and legal, including
the costs associated with being a publicly traded company, rent, depreciation
of furniture and fixtures and other fixed assets, administrative personnel,
and other overhead related costs. These costs decreased in the current
quarter due in part to reductions in administrative and accounting personnel
and the cessation during the current period of non-cash costs associated with
a loan forgiveness agreement with the Company's chief executive officer, due
to the completion of the amortization of the loan forgiveness period.
NON-OPERATING REVENUES AND EXPENSES
Non-operating revenues and expenses are primarily made up of interest income
from invested cash, amortization of deferred revenue from technology sales
advances received in previous periods, and the owner's fees and offsetting
interest income recognized, related to the technology sales. The following
tables reflect the changes in other income (expense):
Three Months Ended June 30, Increase (Decrease)
----------------------------- ---------------------
Description 1999 1998 $ %
- ----------------- ------------ ------------- ---------- ---------
Owner's fee-sales
of technology $ (392,500) $ (392,500) $ 0 0 %
Interest on notes
from sales of
technology 392,500 392,500 0 0 %
Amortization of
technology
advances 110,844 117,568 (6,724) (5.7)%
Interest income 59,675 104,571 (44,896) (42.9)%
Miscellaneous 1,478 (8,395) 9,873 126.8 %
---------- ----------- --------- ------
Totals $ 171,997 $ 213,744 $ (41,747) (19.5)%
========== =========== ========= ======
The resultant non-operating income decreased during the three months ended
June 30, 1999 from the three months ended June 30, 1998 due principally to the
reduction in interest income from the cash available for investment over the
periods, due to cash being utilized in operations, as reflected in the
following table of Liquidity and Capital Resources.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Sources and uses of cash during the periods are summarized below:
Three Months Ended June 30,
------------------------------
Product 1999 1998 Change
- --------------- ------------ ------------- -----------
Cash used in operating
activities $ (937,159) $(1,142,418) $ 205,259
Cash used in investing
activities (27,602) (163,732) 136,130
Cash provided by (used in)
financing activities 13,441 43,596 (30,155)
------------ ------------- -----------
Net increase (decrease)
in cash and cash
equivalents $ (951,320) $(1,262,554) $ 311,234
============ ============= ===========
As of June 30, 1999, the Company had cash and cash equivalents amounting to
$2,218,123 exclusive of reserves on deposit with our merchant bank of $77,007,
which reserves may not all be immediately available for usage. Cash and cash
equivalents decreased $951,320 during the three months ended June 30, 1999.
This decrease was partially due to the reduction in accounts payable and
accrued liabilities of approximately $264,000 during the quarter. The
Company has not yet generated sufficient revenues to cover the costs
associated with product support and development, marketing and sales, and
administrative costs, as the Company is continuing to develop its markets as
mentioned under Results of Operations. These marketing and sales initiatives
through indirect channel sales include retail and resellers such as Office
Depot, Totally Wireless, Progressive Communications and others, wireless
communications carriers such as SkyTel and BellSouth, Internet marketing
through the Company's affiliate membership program with "Linkshare" and other
Internet-based e-commerce marketing activities. There are no material
advertising contracts or commitments for capital expenditures at June 30,
1999. The Company has a letter of credit with a bank in the amount of
$200,000, and a credit line of $1,000,000 at June 30, 1999. Subsequent to
June 30, 1999, the Company has borrowed $250,000 on the credit line. While
working capital appears adequate for the year, management anticipates the need
to raise additional funds during this period in order to fund new marketing
and development initiatives and to insure adequate working capital for
continued expansion.
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.
12
<PAGE>
The Company does not use mainframe computers in its internal operations.
Consequently, it does not have the extent of Year 2000 issues of other
companies that depend on what is commonly know as "legacy" systems. The
Company uses PCS and "server class" systems in its operations and the
operating system for its software platform and technology is Microsoft
Windows NT.
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. Ninety 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 ten 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 ninety percent of the Company's
vendors, and the remaining ten 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 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.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. None.
ITEM 2. CHANGES IN SECURITIES.
The Company issued securities which were not registered under the Securities
Act of 1933, as amended as follows:
During the quarter ended June 30, 1999, the Company issued a total of 11,639
shares of common stock to seven investors in exchange for warrants to purchase
shares of the Company's common stock in "cashless exercise" transactions under
the terms of such warrants. In addition, the Company issued 2,000 shares of
its common stock to one investor upon the exercise of warrants for which the
Company received $7,500 in cash.
With respect to these transactions, the Company relied on Sections 3(a)(9)
and/or 4(2) of the Securities Act of 1933, as amended. The investors were
give complete information concerning the Company. The appropriate restrictive
legend was placed on the certificates and stop transfer instructions were
issued to the transfer agent.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.
13
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On June 22, 1999, the Company held a Special Meeting of its shareholders at
which the shareholders considered the approval of an amendment to Articles of
Incorporation to increase the number of shares of authorized common stock from
8,000,000 shares to 50,000,000 shares; the approval of an increase in the
number of shares of common stock included in the Company's Employee Stock
Option Plan from 500,000 shares to 1,000,000 shares; and the approval of an
amendment to the Company's Articles of Incorporation to change the name of the
Company to "Datalink.net, Inc." The Amendments to the Articles of
Incorporation to increase the number of shares of common stock authorized and
to change the name of the company were approved. The amendment to the
Employee Stock Option Plan was not approved.
The number of shares voted for and against, as well as the number of
abstentions and broker non-votes, as to each of the matters presented is set
forth below:
AMENDMENT TO INCREASE AUTHORIZED STOCK
FOR AGAINST ABSTAINED
2,478,340 votes 97,286 votes 4,734 votes
AMENDMENT TO STOCK OPTION PLAN
FOR AGAINST ABSTAINED BROKER NON-VOTES
1,644,156 votes 76,022 votes 5,519 votes 854,763 votes
CHANGE OF NAME
FOR AGAINST ABSTAINED
2,572,966 votes 3,128 votes 4,363 votes
ITEM 5. OTHER INFORMATION. None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
None
14
<PAGE>
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: August 13, 1999 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)
15
<PAGE>
INDEX TO EXHIBITS
EXHIBIT METHOD OF FILING
- ------- -------------------------
27. Financial Data Schedule Filed herewith electronically
<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-QSB for the year to date, and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 2,218,123
<SECURITIES> 0
<RECEIVABLES> 77,644
<ALLOWANCES> (21,500)
<INVENTORY> 0
<CURRENT-ASSETS> 2,321,113
<PP&E> 1,112,228
<DEPRECIATION> (457,362)
<TOTAL-ASSETS> 3,061,440
<CURRENT-LIABILITIES> 1,302,764
<BONDS> 0
<COMMON> 29,033
0
1,896
<OTHER-SE> 56,782
<TOTAL-LIABILITY-AND-EQUITY> 3,061,440
<SALES> 436,885
<TOTAL-REVENUES> 436,885
<CGS> 199,135
<TOTAL-COSTS> 1,221,614
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (612,732)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (612,732)
<EPS-BASIC> (0.24)
<EPS-DILUTED> (0.24)
</TABLE>
