SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended October 31, 1997; or
[ ] TRANSITION REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number: 0-28010
MEDWAVE, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1493458
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
4382 Round Lake Road West
Arden Hills, Minnesota 55112
(Address of principal executive offices,
zip code)
(612) 639-1227
(Registrant's telephone number, including
area code)
Indicate by mark whether the issuer (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 as 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 November 30, 1997, the issuer had 4,822,738 shares of Common Stock
outstanding.
<PAGE>
Medwave, Inc.
Form 10-Q
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - April 30, 1997 and October 31, 1997 2
Statements of Operations - Three Months Ended October 31, 1997 3
and 1996, Six Months Ended October 31, 1997 and 1996, and
Period from June 27, 1984 (Inception) to October 31, 1997
Statements of Cash Flows - Three Months Ended October 31, 1997 4
and 1996, Six Months Ended October 31, 1997 and 1996, and
Period from June 27, 1984 (Inception) to October 31, 1997
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition 6
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 7
Item 2. Changes in Securities and Use of Proceeds 8
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters To A Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE>
PART I - FINANCIAL INFORMATION
Medwave, Inc.
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
April 30, October 31,
1997 1997
--------------------------------------
(see note 2) (unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $1,240,100 $ 2,651,184
Short term investments 2,539,905 503,730
Accounts receivable 41,986 64,893
Inventories 114,467 159,037
Prepaid expenses 81,182 8,369
--------------------------------------
Total current assets 4,017,640 3,387,213
Investments 1,298,658 797,344
Property and equipment:
Research and development equipment 237,561 241,710
Office Equipment 121,193 118,690
Manufacturing and engineering equipment 68,262 71,582
Sales and marketing equipment 34,371 58,174
Leasehold improvements 31,613 31,613
--------------------------------------
493,000 521,769
Accumulated depreciation (336,320) (356,364)
--------------------------------------
156,680 165,405
Patents, net 78,818 66,118
======================================
Total Assets $5,551,796 $ 4,416,080
======================================
Liabilities and shareholders' equity Current liabilities:
Accounts payable $ 78,390 $ 149,233
Accrued payroll 50,810 53,898
--------------------------------------
Total current liabilities 129,200 203,131
Shareholders' equity:
Common Stock, no par value:
Authorized shares--50,000,000
Issues and outstanding shares -- 4,818,738 at 12,764,703 12,767,703
April 30, 1997 and 4,822,738 at Oct 31, 1997
Unrealized gain/(loss) on investments (24,919) ---
Deficit accumulated during the development stage (7,317,188) (8,554,754)
--------------------------------------
Total shareholders' equity 5,422,596 4,212,949
--------------------------------------
Total liabilities and shareholders' equity $5,551,796 $ 4,416,080
======================================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Medwave, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Period from
June 27, 1984
(Inception)
Three months ended October 31 Six months ended October 31 to
----------------------------------- -------------------------------------
1997 1996 1997 1996 October 31, 1997
----------------------------------- ------------------------------------- ---------------
<S> <C> <C> <C> <C> <C>
Revenue:
Net Sales $ 106,087 $ 4,995 $ 292,796 $ 4,995 $ 365,738
Operating expenses:
Cost of sales and product development 116,929 9,353 305,765 9,353 419,026
Research and development 304,698 238,439 581,355 414,459 5,169,087
Sales and marketing 307,543 126,159 560,071 199,559 1,208,348
General and administrative 112,875 110,847 206,714 219,261 2,421,204
----------------------------------- ------------------------------------- ---------------
Operating loss ($735,958) ($479,803) ($1,361,109) ($837,637) ($8,851,927)
Other income:
Interest income 61,541 85,862 123,542 172,642 923,932
=================================== ===================================== ================
Net loss $ (674,417) $ (393,941) $(1,237,567) $(664,995) $(7,927,995)
=================================== ===================================== ================
Net loss per share $ (0.14) $ (0.08) $ (0.26) $ (0.14) $ (3.45)
=================================== ===================================== ================
Weighted average number of common and
common equivalent shares outstanding 4,821,265 4,808,533 4,819,995 4,765,375 2,299,794
=================================== ===================================== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Medwave, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Period from
June 27, 1984
(Inception)
Three months ended October 31 Six months ended October 31 to
-------------------------------- ---------------------------------- October 31,
1997 1996 1997 1996 1997
-------------------------------- ---------------------------------- -------------
<S> <C> <C> <C> <C> <C>
Operating activities
Net loss $ (674,417) $ (393,941) $ (1,237,567) $ (664,995) $(7,927,995)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation 19,703 5,628 37,433 16,516 514,316
Amortization 6,349 7,254 12,699 16,951 69,898
Loss on sale of equipment --- --- --- --- 7,375
Issuance of Common Stock for
consulting services --- --- --- --- 3,413
Changes in operating assets
and liabilities:
Accounts receivable 88,082 (4,995) (22,907) (4,995) (64,893)
Inventories 27,113 (101,267) (44,570) (116,420) (159,037)
Prepaid expenses 38,355 (91,706) 72,813 (40,662) (8,369)
Accounts payable and accrued expenses (38,921) (20,294) 70,843 (44,924) 149,233
Accrued payroll and related taxes 4,293 9,190 3,088 12,300 53,898
-------------------------------- ---------------------------------- -----------------
Net cash used in operating activities (529,443) (590,131) (1,108,168) (826,229) (7,362,161)
Investing activities
Patent expenditures --- --- --- (27,157) (137,858)
Purchase of investments (1,000,045) (2,657,825) (1,488,051) (5,216,054) (30,355,669)
Sales and maturity of investments 4,050,460 2,741,704 4,050,460 5,241,477 29,056,438
Purchase of property and equipment (29,743) (19,186) (46,157) (58,650) (702,651)
Proceeds from sale of equipment --- --- --- --- 18,200
-------------------------------- ---------------------------------- -----------------
Net cash used in investing activities 3,020,672 64,693 2,516,252 (60,384) (2,121,540)
Financing activities
Net proceeds from issuance of Convertible
Preferred Stock --- --- --- --- 4,848,258
Net proceeds from issuance of Common Stock 3,000 --- 3,000 291,009 7,286,627
-------------------------------- ---------------------------------- -----------------
Net cash provided by financing activities 3,000 --- 3,000 291,009 12,134,885
-------------------------------- ---------------------------------- -----------------
(Decrease) increase in cash and cash
equivalents 2,494,229 (525,438) 1,411,084 (595,604) 2,651,184
Cash and cash equivalents at beginning
of period 156,955 698,955 1,240,100 769,121 ---
================================ ================================== =================
Cash and cash equivalents at end of period $ 2,651,184 $ 173,517 $ 2,651,184 $ 173,517 $ 2,651,184
================================ ================================== =================
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Medwave, Inc.
(A Development Stage Company)
Notes To Financial Statements
October 31, 1997
1. Organization and Description of Business
Medwave, Inc. (the Company) is a development stage enterprise engaged
exclusively in the development, manufacturing and marketing of a
proprietary, non-invasive system that continually monitors arterial blood
pressure of adults.
2. Basis of Presentation
The financial information presented as of October 31, 1997 has been
prepared from the books and records without audit. Financial information as
of April 30, 1997 is based on audited financial statements of the Company
but does not include all disclosures required by generally accepted
accounting principles. In the opinion of management, all adjustments,
consisting only of normal recurring adjustments necessary for a fair
presentation of the financial information for the periods indicated, have
been included. For further information regarding the Company's accounting
policies, refer to the financial statements and related notes included in
the Company's Annual Report on Form 10-KSB for the fiscal year ended April
30, 1997.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
The following discussion should be read in conjunction with, and is qualified
by, the Company's financial statements set forth in Item 1 of this Form 10-Q.
General
The Company, which was formed in 1984, is a development stage company that
currently employs sixteen full-time employees and two part-time employees. Since
its inception, the Company has been engaged exclusively in the development of a
non-invasive, blood pressure measurement and monitoring system. Utilizing the
Company's proprietary technology, the Vasotrac(R) system monitors blood pressure
continually, providing new readings about every fifteen heartbeats. The
continual, efficacious and non-invasive qualities of the Vasotrac(R) system make
it a new approach to blood pressure monitoring.
The Company has incurred an accumulated deficit of $(8,554,754) from its
inception through October 31, 1997. Significant additional losses from
development, testing, regulatory compliance, sales, and other expenses are
expected to be incurred by the Company at least until it emerges from the
development stage.
The Company's success is dependent upon the successful development and marketing
of the Vasotrac(R) system. However, there can be no assurance that the
Vasotrac(R) system will be successfully marketed or sold in sufficient
quantities and at margins necessary to achieve or maintain profitability. The
Company is conducting a controlled market rollout of the Vasotrac(R). This
<PAGE>
controlled market rollout is designed to provide the Company with user feedback
on the Vasotrac(R). The Company is using the feedback to make minor product
enhancements. The Company hopes to be ready for nationwide sales by April 1998.
This is highly dependent on the development process for the system, the scale-up
process, customer acceptance, and distribution methods that become available to
the Company. This strategy also includes limited unit sales to larger healthcare
organizations for review and trial before any significant unit orders are
considered by the customer.
As the Company emerges from the development stage, its success will also depend
on its ability to hire additional employees for key operating positions,
including sales and marketing positions. Competition for such employees is
intense and there can be no assurance that the Company will be successful in
hiring such employees on acceptable terms or when required, or in maintaining
the services of its present employees. The Company estimates that within the
next twelve months, it may require approximately 10 additional persons,
including two in the area of general and administrative, three in sales and
marketing, two in research and development, and three in manufacturing. The
Company preliminarily estimates that these employees will increase
employee-related expenses in excess of $500,000 during the next twelve months.
However, such requirements are subject to change and are highly dependent on the
development process for the system, including the manufacturing scale-up
process, market acceptance, and the Company's distribution methods.
Cash and cash equivalents, and short and long-term investments are being used
primarily to continue clinical testing of the Vasotrac(R) system, to begin
manufacturing and marketing, to conduct any additional research and product
development efforts that may be necessary, and to provide working capital. Over
the next twelve months, the Company expects to spend in excess of $500,000 for
research and development, including amounts expected to be spent on clinical
trials. The funds are expected to be used to develop improved sensors and wrist
holders and to sustain engineering support for manufacturing. No significant
amount of equipment is expected to be required. The Company believes that the
cash and cash equivalents, and short and long-term investments will allow the
Company to meet its cash requirements for approximately fifteen months from
October 31, 1997. If the development process for the system does not proceed as
expected because significant product design changes are required to achieve
market acceptance or unexpected difficulties are encountered in attaining
cost-effective manufacturability, the Company may require additional capital at
an earlier date. Such capital may be sought through bank borrowing, equipment
financing, equity financing, and other methods. The Company's financing needs
are subject to change depending on, among other things, market conditions and
opportunities, equipment or other asset-based financing that may be available,
and cash flow from operations. Any material favorable or unfavorable deviation
from its anticipated expense could significantly affect the timing and amount of
additional financing that may be required. However, additional financing may not
be available when needed or, if available, may not be on terms that are
favorable to the Company or its security holders. In addition, any such
financing could result in substantial dilution to then existing security
holders.
Results of Operations
The results of operations compares the three months and six months ended October
31, 1997 and 1996, respectively. The analysis of liquidity and capital resources
compares October 31, 1997 to April 30, 1997.
Operating revenue was $106,087 and $4,995 for the quarter ended October 31, 1997
and 1996, respectively. Operating revenue was $292,796 and $4,995 for the six
months ended October 31, 1997 and 1996 respectively. The Company commenced sales
in the second quarter of fiscal year 1997.
Cost of sales and product development was $116,929 and $9,353 for the quarter
ended October 31, 1997 and 1996, respectively. Cost of sales and product
development was $305,765 and $9,353 for the six months ended October 31, 1997
and 1996, respectively. The Company commenced sales during the second quarter of
fiscal year 1997.
<PAGE>
The Company incurred $304,698 and $238,439 for research and development expenses
for the quarter ended October 31, 1997 and 1996, respectively. The Company
incurred $581,355 and $414,459 for research and development expenses for the six
months ended October 31, 1997 and 1996, respectively. The research and
development expense increase was primarily attributed to conducting a multi-site
clinical study on the accuracy of the Vasotrac(R) system.
The Company incurred $307,543 and $126,159 for sales and marketing expenses for
the quarter ended October 31, 1997 and 1996, respectively. The Company incurred
$560,071 and $199,559 for sales and marketing expenses for the six months ended
October 31, 1997 and 1996 respectively. The sales and marketing expense increase
was attributable to the hiring of additional sales associates and an increase in
travel expenses as the Company continues the sales rollout of the Vasotrac(R).
The Company incurred $112,875 and $110,847 for general and administrative
expenses for the quarter ended October 31, 1997 and 1996, respectively. The
Company incurred $206,714 and $219,261 for the six months ended October 31, 1997
and 1996 respectively. For the six months ended October 31, 1997 compared to the
six months ended October 31, 1996, the decrease in general and administrative
expenses was primarily attributable to lower insurance expenses.
Interest income was $61,541 and $85,862 for the quarter ended October 31, 1997
and October 31, 1996, respectively. Interest income was $123,542 and $172,642
for the six months ended October 31, 1997 and 1996 respectively. The decrease
reflects lower cash, cash equivalents, and short and long-term investments as
the Company increases the cost of rolling out the Vasotrac(R) system.
Liquidity and Capital Resources
The Company's cash, cash equivalents, and short- and long-term investments were
$4,154,557 and $5,078,663 at October 31, 1997 and April 30, 1997, respectively.
The Company incurred cash expenditures of $529,443 for operations for the
quarter ended October 31, 1997.
With the cash and cash equivalents, and short and long-term investments, the
Company believes that sufficient liquidity is available to satisfy its working
capital needs for approximately fifteen months from October 31, 1997. The
Company has no significant capital expenditure commitments.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
<PAGE>
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Use of proceeds for the period ending: October 31, 1997
(1) Effective Date: November 9, 1995
SEC File Number: 33-96878C
(2) Offering Date: November 9, 1995
(4)(ii) Managing Underwriter: Miller, Johnson & Kuehn, Inc.
(4)(iii) Title of Security: Common Stock
(4)(iv) Amount Registered: 1,610,000
Aggregate Offering Price: $8,050,000
Amount Sold: 1,610,000
Aggregate Offering Price Sold: $8,050,000
(4)(v) Underwriting Discount and Commissions: $ 805,000
Expenses paid to or for underwriters: $ 194,169
Other expenses: $ 217,263
Total expenses: $ 1,216,432
All 4(v) are direct or indirect payments to others
(4)(vi) Net offering proceeds: $6,833,568
<TABLE>
<CAPTION>
(4)(viii)Temporary Investments (specify)
<S> <C> <C> <C>
Construction of Plant, building and (A) Direct or indirect payments to directors,
Facilities officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: None
(B) Direct or indirect payment to others: $ 31,613
Purchases and installation of (A) Direct or indirect payments to directors,
machinery and equipment officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: None
(B) Direct or indirect payment to others: $ 211,504
Reserve Asset Management Account: (A) Direct or indirect payments to directors,
officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: None
(B) Direct or indirect payment to others: $ 1,799,706
<PAGE>
Marketing & Manufacturing: (A) Direct or indirect payments to directors,
officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: $ 324,754
(B) Direct or indirect payment to others: $ 1,681,569
Research & Development: (A) Direct or indirect payments to directors,
officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: $ 227,493
(B) Direct or indirect payment to others: $ 1,544,669
General & Administrative: (A) Direct or indirect payments to directors,
officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: $ 194,581
(B) Direct or indirect payment to others: $ 817,679
</TABLE>
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) On September 25, 1997, the Company held its annual meeting of
shareholders. The Company's shareholders elected the following four
persons as directors, each to serve until the next annual meeting of
shareholders or until their successor is elected and qualified:
Election of Directors Votes For Votes Withheld
- ---------------------------------- --- ----------------- --- -------------------
G. Kent Archibald 4,068,610 2,050
Norman Dann 4,066,610 4,050
Jeffrey W. Green 4,068,610 2,050
Jerry E. Robertson 4,066,610 4,050
b) A proposal to set the number of directors at four was adopted by a
vote of 4,055,966 shares in favor, with 3,100 shares against, 11,594
shares abstaining and no broker non-votes.
c) The shareholders approved a 300,000 increase in the number of shares
reserved for issuance under the Amended and Restated Stock Option Plan
by a vote of 2,438,424 shares in favor, with 430,470 shares against,
20,393 shares abstaining, and 1,181,373 shares represented by broker
non-votes.
ITEM 5. OTHER INFORMATION
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Statements in this filing, and elsewhere, which look forward in time
involve risks and uncertainties which may affect the actual results of
operations. The following important factors, among others, have affected and, in
the future, could affect the Company's actual results: resistance to the
acceptance of new biotechnology and medical monitoring products, the market
acceptance of the Vasotrac(R) system, hospital budgeting cycles, and the
possibility of adverse findings or negative commentary from clinical researchers
or other users of the product.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
EXHIBITS DESCRIPTION
11 Statement regarding Computation of Earnings Per Share
27 Financial data schedule
(B) REPORTS ON FORM 8K:
No reports on Form 8-K were filed by the Company during
the quarter ended October 31, 1997
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: December 15, 1997 Medwave, Inc.
By: /s/ G. Kent Archibald
G. Kent Archibald
President and Chief Executive Officer
/s/ Mark T. Bakko
Mark T. Bakko
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
MEDWAVE, INC.
FORM 10-Q
FOR QUARTER ENDED
OCTOBER 31, 1997
Exhibit No. Description
- ----------- -----------
11 Statement regarding Computation of Earnings Per Share
27 Financial Data Schedule (filed in electronic format only)
EXHIBIT 11
Exhibit 11.1 - Statement Regarding Computation of Earnings Per Share
<TABLE>
<CAPTION>
Period from
June 27, 1984
(Inception)
Three Months Ended Oct 31 Six Months Ended Oct 31 to
---------------------------- ------------------------------
1997 1996 1997 1996 Oct 31, 1997
---------------------------- -----------------------------------------------
<S> <C> <C> <C> <C> <C>
Primary loss per share:
Shares outstanding 4,822,738 4,808,533 4,822,738 4,808,533 4,822,738
Effect of using weighted average common and (1,473) None (2,743) (43,176) (2,765,252)
common equivalent shares
Effect of shares issuable under common stock * * * * *
warrants using the treasury stock method
Effect of shares issuable under stock options * * * * *
using the treasury stock method
SAB No. 83 - for stock options granted at
exercise price less than the
initial public offering price during the
12 months preceding the initial
public offering using the treasury
method N/A N/A N/A N/A 242,308
------------- ------------- --------------- ------------- -----------------
Total 4,821,265 4,808,533 4,819,995 4,765,357 2,299,794
============= ============= =============== ============= =================
Net loss $ (674,417) $ (393,941) $(1,237,567) $ (644,995) $ (7,927,995)
============= ============= =============== ============= =================
Net loss per share ($0.14) ($0.08) ($0.26) ($0.14) ($3.45)
============= ============= =============== ============= =================
Fully diluted loss per share:
Shares used in computing primary earnings per share 4,821,256 4,808,533 4,819,995 4,765,352 2,299,794
Assumed conversion of all series of redeemable
convertible preferred stock None None None None None
------------- ------------- --------------- ------------- -----------------
Total 4,821,256 4,808,533 4,819,995 4,765,352 2,299,794
============= ============= =============== ============= =================
Net Loss $ (674,417) $ (393,941) $ (1,237,567) $ (393,941) $ (7,927,995)
============= ============= =============== ============= =================
Pro forma net loss per share $ (0.14) $ (0.08) $ (0.26) $ (0.08) $ (3.45)
============= ============= =============== ============= =================
</TABLE>
* Antidilutive
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE FINANCIAL STATEMENTS CONTAINED IN THE REGISTRANT'S FORM 10-Q FOR
QUARTER ENDED OCTOBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> OCT-31-1997
<EXCHANGE-RATE> 1
<CASH> 2,651,184
<SECURITIES> 503,730
<RECEIVABLES> 64,893
<ALLOWANCES> 0
<INVENTORY> 159,037
<CURRENT-ASSETS> 3,387,213
<PP&E> 521,769
<DEPRECIATION> 356,364
<TOTAL-ASSETS> 4,416,080
<CURRENT-LIABILITIES> 203,131
<BONDS> 0
0
0
<COMMON> 12,767,730
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,416,080
<SALES> 292,796
<TOTAL-REVENUES> 292,796
<CGS> 305,765
<TOTAL-COSTS> 305,765
<OTHER-EXPENSES> 1,348,140
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,237,567)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,237,567)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,237,567)
<EPS-PRIMARY> (.26)
<EPS-DILUTED> (.26)
</TABLE>
