<PAGE> 1
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UNITED STATES
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 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 NO. 0-19222
GENELABS TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
CALIFORNIA 94-3010150
(State or other jurisdiction of (I.R.S. employer identification number)
incorporation or organization)
505 PENOBSCOT DRIVE,
REDWOOD CITY, CALIFORNIA 94063
(Address of principal executive offices) (Zip code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (650)369-9500
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
There were 39,667,803 shares of the Registrant's Common Stock issued and
outstanding on July 31, 1998.
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<PAGE> 2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
GENELABS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- --------
(Unaudited) (Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 2,218 $ 4,230
Short-term investments 18,069 16,869
-------- ---------
Cash, cash equivalents and short-term investments 20,287 21,099
Accounts receivable 1,926 2,014
Inventories 2,327 2,281
Other current assets 224 554
-------- ---------
Total current assets 24,764 25,948
Property and equipment, net 1,960 1,239
Investment in Genelabs Biotechnology Co., Ltd. 1,174 3,658
Other assets 256 294
-------- ---------
$ 28,154 $ 31,139
======== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and other accrued liabilities $ 3,992 $ 4,458
Accrued compensation and related expenses 1,753 1,932
Unearned contract revenue 975 843
-------- ---------
Total current liabilities 6,720 7,233
Long-term obligations 600 696
-------- ---------
Total liabilities 7,320 7,929
-------- ---------
Shareholders' equity:
Preferred stock 9,682 9,682
Common stock 137,982 137,604
Accumulated deficit (127,072) (123,892)
Cumulative foreign currency translation adjustment 242 (184)
-------- ---------
Total shareholders' equity 20,834 23,210
-------- ---------
$ 28,154 $ 31,139
======== =========
</TABLE>
See notes to condensed consolidated financial statements.
Note: The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited financial statements at that date but does not include
all the information and footnotes required by generally accepted accounting
principles for complete financial statements.
2
<PAGE> 3
GENELABS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the three For the six
months ended months ended
June 30, June 30,
------------------- -------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 1,902 $ 2,444 $ 4,096 $ 5,019
Contract 1,623 739 3,437 1,556
------- ------- ------- -------
Total revenues 3,525 3,183 7,533 6,575
------- ------- ------- -------
Operating costs and expenses:
Cost of product sales 996 1,442 2,165 3,062
Research and development 3,277 2,847 6,438 5,640
Selling, general and administrative 2,019 2,134 4,024 4,324
------- ------- ------- -------
Total operating costs and expenses 6,292 6,423 12,627 13,026
------- ------- ------- -------
Operating loss (2,767) (3,240) (5,094) (6,451)
------- ------- ------- -------
Interest income 237 356 492 694
Equity in loss of affiliate (81) (120) (223) (229)
Gain on sale of investment 1,645 -- 1,645 --
------- ------- ------- -------
Net loss $ (966) $(3,004) $(3,180) $(5,986)
======= ======= ======= =======
Net loss per share $ (0.02) $ (0.08) $ (0.08) $ (0.16)
======= ======= ======= =======
Weighted average shares outstanding 39,554 39,217 39,526 38,598
======= ======= ======= =======
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE> 4
GENELABS TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
(INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS)
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
For the six months ended
------------------------
1998 1997
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (3,180) $ (5,986)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization expense 374 285
Equity in loss of affiliate 223 229
Gain on sale of investment (1,645) --
Changes in assets and liabilities:
Receivables 88 711
Inventories (46) 555
Accounts payable, accrued liabilities, accrued
compensation and long-term obligations (741) (791)
Unearned contract revenue 132 (637)
Other 381 418
-------- --------
Net cash used in operating activities (4,414) (5,216)
-------- --------
Cash flows from investing activities:
Purchases of securities available-for-sale (9,820) (10,606)
Proceeds from sales and maturities of securities
available-for-sale 8,620 5,310
Proceeds from sale of investment 4,300 --
Capital expenditures (1,108) (162)
-------- --------
Net cash provided by/(used in) investing activities 1,992 (5,458)
-------- --------
Cash flows from financing activities - proceeds from
issuance of common stock, net 378 7,507
Effect of exchange rate change on cash 32 (10)
-------- --------
Net decrease in cash and cash equivalents (2,012) (3,177)
Cash and cash equivalents, beginning of the period 4,230 4,377
-------- --------
Cash and cash equivalents, end of the period 2,218 1,200
Short-term investments, end of the period 18,069 24,431
-------- --------
Cash, cash equivalents and short-term investments,
end of the period $ 20,287 $ 25,631
======== ========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE> 5
GENELABS TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1998
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements include
the accounts of Genelabs Technologies, Inc. and its wholly-owned subsidiaries
("Genelabs" or the "Company") after elimination of all significant intercompany
accounts and transactions. These financial statements have been prepared in
accordance with generally accepted accounting principles ("GAAP") for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring adjustments)
considered necessary for a fair presentation have been included. Certain prior
year amounts have been reclassified to conform to the current year presentation.
Operating results for the three and six month periods ended June 30, 1998 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1998.
These unaudited condensed consolidated financial statements are meant to be read
in conjunction with the audited consolidated financial statements and footnotes
thereto included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
2. INVENTORIES
The components of inventory are as follows:
<TABLE>
<CAPTION>
(in thousands) June 30, 1998 December 31, 1997
------------- -----------------
<S> <C> <C>
Raw materials $ 1,233 $ 1,113
Work-in-process 576 542
Finished goods 518 626
------- -------
$ 2,327 $ 2,281
======= =======
</TABLE>
3. BUSINESS SEGMENTS
The Company operates in two business segments, biopharmaceuticals and
diagnostics. The biopharmaceutical business is engaged in research and
development directed towards drugs that treat human disease. Headquarters for
the biopharmaceutical business is integrated with the corporate headquarters in
Redwood City, California. The diagnostics business primarily sells tests for
detection of infectious diseases. The diagnostics' manufacturing headquarters
are located in Singapore and the principal sales office is based in Switzerland.
Revenues from external customers for the biopharmaceutical segment are reported
as contract revenues on the Condensed Consolidated Statement of Operations and
revenues from external customers for the diagnostics segment are reported as
product sales. For the three months ended June 30, 1998 and 1997,
biopharmaceutical operating loss was $(2,791,000) and $(3,161,000),
respectively, and diagnostics operating income/(loss) was $24,000 and $(79,000),
respectively. For the six months ended June 30, 1998 and 1997, biopharmaceutical
operating loss was $(5,149,000) and $(6,250,000), respectively, and diagnostics
operating income/(loss) was $55,000 and $(201,000), respectively.
5
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4. CHANGES IN ACCOUNTING STANDARDS
As of January 1, 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No.
130 establishes new rules for the reporting and display of comprehensive income
and its components; however, the adoption of this Statement has no impact on the
Company's net income or shareholders' equity. SFAS No. 130 requires, among other
things, unrealized gains or losses on the Company's foreign currency translation
adjustments to be included in comprehensive income or loss. For the three months
ended June 30, 1998 and 1997, the Company's comprehensive loss amounted to
$(676,000) and $(2,977,000), respectively, and for the six months ended June 30,
1998 and 1997, the Company's comprehensive loss amounted to $(2,754,000) and
$(6,041,000), respectively.
5. INVESTMENT IN GENELABS BIOTECHNOLOGY CO., LTD.
During the second quarter of 1998, through two separate events the Company
reduced its ownership interest in its Taiwan based affiliate, Genelabs
Biotechnology Co., Ltd. ("GBL"). The first reduction occurred when GBL closed an
equity financing in which Genelabs chose not to invest additional cash, reducing
the Company's holdings in GBL from 40% to 30%. The second reduction occurred
when Genelabs sold a portion of its shares in GBL, reducing the Company's
holdings in GBL to 16%. Prior to the sale of a portion of this investment,
Genelabs recorded its relative share of GBL's operating results as equity income
or loss in the Consolidated Statement of Operations. With the ownership
reduction to less than 20%, Genelabs now accounts for this investment at the
lower of cost or market instead of using the equity method.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
All statements in Management's Discussion and Analysis of Financial Condition
and Results of Operations that are not historical are forward-looking statements
which involve a number of risks and uncertainties, including, but not limited
to, those statements concerning the commencement and completion of clinical
trials and the announcement of trial data results, the Company's strategic
plans, anticipated expenditures and the timing and need for additional funds.
Among the factors that could cause actual results of the Company's activities to
differ materially are product non-approval or delays by the U.S. Food and Drug
Administration and foreign regulatory authorities, product development,
manufacturing and market acceptance risks, the impact of competitive products,
pricing and intellectual property rights, the results of current and future
licensing and other collaborative relationships and other factors and risks
detailed under the caption "Risk Factors" in the Company's 1997 Annual Report on
Form 10-K and other filings with the U.S. Securities and Exchange Commission.
The Company disclaims any obligation to update these statements for subsequent
events.
OVERVIEW
Genelabs Technologies, Inc. (together with its subsidiaries, "Genelabs" or the
"Company") is a biopharmaceutical company engaged in the discovery of small
molecule drugs that act by binding to DNA or RNA to regulate gene expression or
inactivate pathogens. The Company's drug discovery program is based on an
integrated platform of technologies that encompass genomics, transcription
biology, structure-biased combinatorial chemistry, high-throughput screening
with proprietary assays, and several proprietary validation and characterization
assays. The Company's clinical development efforts are focused on its lead
compound, GL701, which is in Phase III clinical trials as a new therapy for
systemic lupus erythematosus ("SLE").
The Company conducts its diagnostic business through its wholly-owned subsidiary
Genelabs Diagnostics (Pte.) Ltd. ("GLD"), located in Singapore, which sells
diagnostic tests for infectious diseases primarily in Europe and Asia. In
addition, Genelabs has an investment in a Taiwan-based pharmaceutical company,
Genelabs Biotechnology Co., Ltd. ("GBL").
The Company expects to continue to invest in biopharmaceutical product research
and development. Revenue from the sale of therapeutic products is not expected
until the launch of its first product, which is not expected to occur for
several years, if at all. The Company has several collaborations and is seeking
additional collaborations with other pharmaceutical companies for some of its
technologies to maximize its profitability for products that may result from
those technologies and to obtain funding for a portion of its research and
development expenses. However, Genelabs expects to continue to incur operating
losses for at least the next several years.
RESULTS OF OPERATIONS
Revenues
Total revenues for the quarter ended June 30, 1998 were $3.5 million, compared
to $3.2 million for the same period in 1997. For the six months ended June 30,
1998, total revenues were $7.5 million compared to $6.6 million for the same
period in 1997. Total revenues include both diagnostic product sales and
contract revenue.
Diagnostic product sales were $1.9 million for the quarter ended June 30, 1998,
compared to $2.4 million for the same period in 1997. For the six months ended
June 30, 1998, diagnostic product sales were $4.1 million compared to $5.0
million for the same period in 1997. The decrease in diagnostic product sales
for both the three and six month periods occurred in Europe and Asia for the
Company's western blot products and rapid tests.
7
<PAGE> 8
Contract revenues were $1.6 million for the quarter ended June 30, 1998,
compared to $0.7 million for the same period in 1997. For the six months ended
June 30, 1998, contract revenues were $3.4 million compared to $1.6 million for
the same period in 1997. Contract revenues include licensing, milestone,
research and development payments and government grants. The increase in
contract revenues for both the three and six month periods of 1998, compared to
the same periods in 1997, was primarily due to recognition of revenue under a
grant from the Defense Advanced Research Projects Agency ("DARPA"). Contract
revenues recognized in the future will be dependent in part upon the
continuation of existing corporate collaborations and this grant, achievement of
milestones under existing corporate collaborations and establishment of new
research, development and/or licensing agreements.
Cost of Product Sales
Cost of product sales were $1.0 million for the quarter ended June 30, 1998,
compared to $1.4 million for the same period in 1997. Gross margins increased to
48% for the second quarter of 1998 from 41% for the same period a year ago. For
the six months ended June 30, 1998, cost of product sales were $2.2 million
compared to $3.1 million for the same period in 1997. Gross margins increased to
47% for the first six months of 1998 from 39% for the same period a year ago.
The increase in gross margins was primarily due to an increase in the proportion
of higher margin product sales and higher production yields than that of the
previous year.
Research and Development Expenses
The Company's research and development expenses were $3.3 million for the
quarter ended June 30, 1998, compared to $2.8 million for the same period in
1997. For the first six months of 1997, research and development expenses were
$6.4 million compared to $5.6 million for the same period in 1997. The increases
were primarily due to additional expenditures as the Company expanded its drug
discovery research programs.
Selling, General and Administrative Expenses
Selling, general and administrative expenses were $2.0 million for the quarter
ended June 30, 1998, compared to $2.1 million for the same period in 1997. For
the first six months of 1997, selling, general and administrative expenses were
$4.0 million compared to $4.3 million for the same period in 1997. The Company
presently anticipates that further reductions are not likely in the near future.
Gain on Sale of Investment
During the second quarter of 1998, Genelabs sold a portion of its investment in
GBL for net proceeds of $4.3 million, resulting in a gain of $1.6 million.
Net Loss
The Company has operated at a loss since its inception and had an accumulated
deficit of $127.1 million as of June 30, 1998. The net loss was $1.0 million for
the three months ended June 30, 1998, compared to $3.0 million for the same
period in 1997. For the first six months of 1998, the net loss was $3.2 million
compared to $6.0 million for the same period in 1997. The gain on the sale of
shares in GBL was a major factor in the reduced net loss for both the three and
six month periods ending June 30, 1998 compared to the same periods in 1997.
Increased contract revenues also contributed significantly to the reduced net
loss for both periods, despite increased spending on research and development.
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash, cash equivalents and short-term investment balances
totaling $20.3 million at June 30, 1998, compared to $21.1 million at December
31, 1997. During the six months ended June 30, 1998, Genelabs used $4.4 million
to fund operations as the Company expanded its drug discovery research and
continued development of GL701 for SLE. This use of cash was offset by receipt
of $4.3 million from the
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<PAGE> 9
sale of shares in GBL. Purchases of capital equipment for drug discovery
research also contributed to the use of cash during the period ended June 30,
1998.
The Company has funded its operations since inception primarily through public
and private offerings of its common stock, private offerings of its preferred
stock, contract revenues and product sales. The Company has no bank debt or open
credit lines. Genelabs expects to incur substantial additional costs, including
costs for clinical trials for products currently under development and costs for
further research on drug discovery. The amount of the additional costs, as well
as increased expenditures necessary for working capital and capital
requirements, will depend on numerous factors including the timing and outcome
of any regulatory actions related to the Company's products. In addition,
funding requirements will depend on the progress of the Company's research and
development programs as well as its ability to establish and maintain
collaborations with other pharmaceutical companies to fund these programs.
The Company anticipates that its current resources and expected revenues from
existing collaborative agreements will enable it to maintain its current and
planned operations at least through 1999. The Company anticipates realizing a
net loss at least until 2000, and profitability thereafter is subject to
significant uncertainty. There can be no assurance that revenues from product
sales or royalties or from other sources will be sufficient to fund operations
or that the Company will achieve profitability or positive cash flow. Additional
financing may be required to fund the Company's continuing operations and
research and development activities in the form of debt or equity securities or
bank financing. There can be no assurance that such financing will be available
on acceptable terms, if at all. The unavailability of such financing could delay
or prevent the development, testing, regulatory approval, manufacturing or
marketing of some or all of the Company's products and technologies and could
have a material adverse effect on the Company's business, financial condition
and results of operations.
CERTAIN BUSINESS RISKS
Genelabs' technology and product candidates are at an early stage of
development. The Company has experienced significant operating losses since its
inception and expects to incur significant losses over the next several years.
The Company's technologies, including the DNA and RNA-binding technologies, are
in many cases new and still under development. These approaches have not yet
been proven to have a therapeutic effect. There can be no assurance that these
technologies or any of the Company's product candidates resulting therefrom will
be successfully developed. All of Genelabs' proposed therapeutic products,
including GL701 for the treatment of SLE, are in research or development and
will require substantial additional research and development efforts prior to
any commercial use, including extensive clinical testing as well as potentially
lengthy regulatory approval. There can be no assurance that any of these
therapeutic products or others resulting from Genelabs' research programs will
be successfully developed, prove to be safe and efficacious at each stage of
clinical trials, meet applicable regulatory standards, be capable of being
produced in commercial quantities at reasonable costs or be successfully
marketed.
The active ingredient in GL701 for the treatment of SLE is
dehydroepiandrosterone ("DHEA"). DHEA is currently being marketed by others as a
dietary supplement. The Company believes that DHEA is a drug that should be
subject to regulation and approval by the FDA. The Company further believes that
in a few instances these supplements do not contain true DHEA, but instead
contain related substances that are not biologically equivalent. The Company has
submitted documentation to the FDA requesting clarification of DHEA's status as
a drug and removal from the market as a dietary supplement. However, to date the
FDA has taken no action to limit or regulate the sale of these dietary
supplements, and no assurance can be given as to the willingness or ability of
the FDA to do so in the future. In the event that clinical trials for GL701 are
promising and the drug candidate receives FDA marketing approval, the concurrent
sale of these dietary
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<PAGE> 10
supplements could adversely affect the market for or the selling price of GL701.
While the Company has obtained U.S. patents relating to the use of GL701 to
treat SLE and reduce steroid dose in SLE patients, Genelabs is unable to obtain
patent protection for the compound itself.
The Company has no internal manufacturing capabilities for pharmaceutical
products and is entirely dependent on contract manufacturers to manufacture
clinical and, if successfully developed, commercial-scale quantities of GL701
pursuant to supply agreements. There can be no assurance that these third party
manufacturers will continue to meet FDA or product specification standards or
that the Company's manufacturing requirements can be met in a consistent and
timely manner. In addition, the Company has only limited sales, marketing and
distribution capabilities. If the Company successfully develops any new
products, Genelabs must either rely on large pharmaceutical companies to market
such products or must develop a marketing and sales force with technical
expertise and supporting distribution capability in order to market such
products directly. Also inherent in the Company's stage of development is a
range of additional risks, including competition, uncertainties regarding
protection of patents and proprietary rights and the possibility of infringement
of the proprietary rights of others, government regulation, and uncertainties
regarding health care reform.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 21, 1998, the Company held its Annual Meeting of shareholders. Matters
voted upon at the meeting and the number of affirmative votes, negative votes,
withheld votes and abstentions cast with respect to each such matter were as
follows:
<TABLE>
<CAPTION>
Affirmative Withheld
Votes Votes
----------- --------
<S> <C> <C> <C>
1. Election of the Company's Directors:
Irene A. Chow 28,525,311 125,493
Frank L. Douglas 28,534,572 116,232
Edgar G. Engleman 28,530,244 120,560
Arthur Gray, Jr. 28,546,072 104,732
H.H. Haight 28,546,911 103,893
Nina K. Wang 28,547,111 103,693
2. A proposal to ratify the selection of Ernst & Young LLP as the Company's
independent certified public accountants for the fiscal year ending
December 31, 1998 was approved with 28,559,103 affirmative votes, 62,675
negative votes, and 29,026 abstentions.
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
27 Financial Data Schedule.
(B) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the quarter ended June 30, 1998.
10
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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.
GENELABS TECHNOLOGIES, INC.
(Registrant)
Chief Executive Officer:
/s/ IRENE A. CHOW
Date: August 7, 1998 -------------------------------------
Irene A. Chow
President and Chief Executive Officer
Principal Accounting Officer:
/s/ MATTHEW M. LOAR
Date: August 7, 1998 -------------------------------------
Matthew M. Loar
Director of Finance and Controller
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF GENELABS TECHNOLOGIES, INC. FOR THE SIX
MONTHS ENDED JUNE 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,218
<SECURITIES> 18,069
<RECEIVABLES> 1,926
<ALLOWANCES> 0
<INVENTORY> 2,327
<CURRENT-ASSETS> 24,764
<PP&E> 12,345
<DEPRECIATION> 10,385
<TOTAL-ASSETS> 28,154
<CURRENT-LIABILITIES> 6,720
<BONDS> 0
0
9,682
<COMMON> 137,982
<OTHER-SE> (126,830)
<TOTAL-LIABILITY-AND-EQUITY> 28,154
<SALES> 4,096
<TOTAL-REVENUES> 7,533
<CGS> 2,165
<TOTAL-COSTS> 2,165
<OTHER-EXPENSES> 10,685
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (492)
<INCOME-PRETAX> (3,180)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,180)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,180)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
