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 January 31, 1999; 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)
(651) 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 February 28, 1999, the issuer had 5,415,396 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, 1998 and January 31, 1999 2
Statements of Operations - Three Months Ended January 31, 1999 3
and 1998, Nine Months Ended January 31, 1999 and 1998, and
Period from June 27, 1984 (Inception) to January 31, 1999
Statements of Cash Flows - Three Months Ended January 31, 1999 4
and 1998, Nine Months Ended January 31, 1999 and 1998, and
Period from June 27, 1984 (Inception) to January 31, 1999
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition 5
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
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
ITEM 1. FINANCIAL STATEMENTS
Medwave, Inc.
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
April 30, January 31,
1998 1999
--------------------------------------
(see note 2) (unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 1,926,697 $1,520,670
Short term investments 759,758 3,476,391
Accounts receivable 59,618 83,105
Inventories 249,079 207,891
Prepaid expenses 74,975 106,143
--------------------------------------
Total current assets 3,070,127 5,394,200
Investments 3,484,515 1,235,774
Property and equipment:
Research and development equipment 242,606 237,136
Office Equipment 115,243 111,745
Manufacturing and engineering equipment 65,259 65,113
Sales and marketing equipment 60,183 59,927
Leasehold improvements 31,613 31,613
--------------------------------------
514,904 505,534
Accumulated depreciation (383,802) (421,626)
--------------------------------------
131,102 83,908
Patents, net 53,418 34,369
======================================
Total Assets $ 6,739,162 $6,748,251
======================================
Liabilities and shareholders' equity Current liabilities:
Accounts payable $ 109,585 $ 127,176
Accrued payroll 57,531 67,338
Deferred revenue -- 1,500,000
--------------------------------------
Total current liabilities 167,116 1,694,514
Shareholders' equity:
Common Stock, no par value:
Authorized shares--50,000,000
Issues and outstanding shares -- 5,384,396 at 16,240,970 16,278,720
April 30, 1998 and 5,415,396 at Jan 31, 1999
Unrealized gain/(loss) on investments (14,999) (8,053)
Deficit accumulated during the development stage (9,653,925) (11,216,930)
--------------------------------------
Total shareholders' equity 6,572,046 5,053,737
--------------------------------------
Total liabilities and shareholders' equity $ 6,739,162 $6,748,251
======================================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Medwave, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Period from
June 27, 1984
Three months ended January 31 Nine months ended January 31 (Inception)
----------------------------------- ------------------------------ to
1999 1998 1999 1998 January 31, 1999
----------------------------------- ------------------------------ ----------------
<S> <C> <C> <C> <C> <C>
Revenue:
Net Sales $94,999 $166,013 $457,455 $458,809 $1,123,419
Operating expenses:
Cost of sales and product development 92,148 129,582 396,415 435,348 1,062,239
Research and development 302,099 230,686 902,263 812,041 6,523,141
Sales and marketing 229,571 284,372 658,931 844,444 2,398,987
General and administrative 128,145 126,828 355,187 333,542 3,060,905
------------------------------ ----------------------------- -----------------
Operating loss (656,964) (605,455) (1,855,341) (1,966,566) (11,921,853)
Other income:
Interest income 104,079 48,816 292,335 172,358 1,331,689
============================== ============================= =================
Net Loss ($552,885) ($556,639) ($1,563,006) ($1,794,208) ($10,590,164)
============================== ============================= =================
Net loss per share - basic and diluted $ (0.10) $ (0.12) $ (0.29) $ (0.37) $ (4.15)
============================== ============================= =================
Weighted average number of common and
common equivalent shares outstanding 5,400,350 4,828,528 5,390,572 4,822,831 2,551,977
============================== ============================= =================
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Medwave, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Period from
June 27, 1984
Three months ended Jan 31 Nine months ended Jan 31 (Inception)
----------------------------------------------------------- to
1999 1998 1999 1998 January 31, 1999
----------------------------------------------------------- ----------------
<S> <C> <C> <C> <C> <C>
Operating activities
Net loss $ (552,885) $ (556,639) $(1,563,006) $(1,794,208) $ (10,590,164)
Adjustments to reconcile net loss to
net cash provided (used) in operating activities:
Depreciation 15,089 21,039 50,621 58,472 607,240
Amortization 6,350 6,350 19,050 19,049 101,648
Loss on sale of equipment --- --- --- --- 7,375
Issuance of Common Stock for consulting services --- --- --- --- 3,413
Changes in operating assets and liabilities:
Accounts receivable 93,274 (92,726) (23,487) (115,633) (83,105)
Inventories 35,959 (123,621) 41,188 (168,191) (207,891)
Prepaid expenses (73,931) (97,225) (31,168) (24,412) (106,143)
Accounts payable and accrued expenses 38,614 (65,315) 17,591 5,528 127,176
Accrued payroll and related taxes (12,869) 93,388 9,807 96,476 67,338
Deferred income --- --- 1,500,000 --- 1,500,000
----------------------------------------------------------- -----------
Net cash used in operating activities (450,399) (814,749) 20,596 (1,922,919) (8,573,113)
Investing activities
Patent expenditures --- --- --- --- (136,017)
Purchase of investments (873,954) (297,144) (3,106,751) (1,785,193) (36,719,807)
Sales and maturity of investments 1,763,874 --- 2,645,797 4,050,460 32,001,417
Purchase of property and equipment 3,576 (3,666) (6,882) (49,823) (719,375)
Proceeds from sale of equipment --- --- 3,463 --- 21,663
----------------------------------------------------------- -----------
Net cash provided (used) in investing activities 893,496 (300,810) (464,373) 2,215,444 (5,552,119)
Financing activities
Net proceeds from issuance of Convertible Preferred Stock --- --- --- --- 4,848,258
Net proceeds from issuance of Common Stock 26,250 469,683 37,750 472,683 10,797,644
----------------------------------------------------------- -----------
Net cash provided by financing activities 26,250 469,683 37,750 472,683 15,645,902
----------------------------------------------------------- -----------
(Decrease) increase in cash and cash equivalents 469,347 (645,876) (406,027) 765,208 1,520,670
Cash and cash equivalents at beginning of period 1,051,323 2,651,184 1,926,697 1,240,100 ---
=========================================================== ===========
Cash and cash equivalents at end of period $1,520,670 $2,005,308 $1,520,670 $2,005,308 $ 1,520,670
=========================================================== ===========
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
Medwave, Inc.
(A Development Stage Company)
Notes To Financial Statements
January 31, 1999
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 and in the development of related technology and
products.
2. Basis of Presentation
The financial information presented as of January 31, 1999 has been
prepared from the books and records without audit. Financial information
as of April 30, 1998 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-K for the
fiscal year ended April 30, 1998.
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
proprietary technology, the Company's Vasotrac(R) system monitors blood
pressure, providing new readings approximately every fifteen heartbeats. The
Company believes that continual blood pressure readings and non-invasive
features of the Vasotrac system make it the most advanced approach to blood
pressure monitoring. In 1997, the Company began development of a hand-held blood
pressure measurement device. This hand-held unit is based on the technology used
in the Vasotrac system.
The Company has incurred an accumulated deficit of $(11,216,930) from its
inception through January 31, 1999. 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 system and/or related technology. However, there can be no
assurance that the Vasotrac system or related products will be successfully
marketed or sold in sufficient quantities and at margins necessary to achieve or
maintain profitability.
In December 1997, the Company began developing a dealer sales network for
selling the Vasotrac system. The Company has been focused on building a dealer
network, so the Company could seek nationwide sales coverage without the
commensurate increase in sales staff and cost that would occur if the same
coverage were sought by building the Company's own employee sales force. To
date, the Company has entered into agreements with twelve dealers whose
territories cover most of the United States. The success of the Company's
<PAGE>
Vasotrac system sales will depend upon the ability of dealers to sell the
Vasotrac system to the hospitals in their area. At this time, dealers have not
demonstrated that they will be successful. It appears that product changes
designed to make the product easier for clinicians to use will be required
before the Vasotrac system will be accepted in the market.
Feedback from the dealers and from clinicians indicates that many clinicians
find the Vasotrac system difficult to use and, therefore, requires significant
training. Sales time is increased because of the training required; therefore,
many of the dealer's sales employees and representatives do not dedicate the
time required to promote and sell the system. To alleviate this problem, the
Company is working on an enhanced Vasotrac system with "ease of use" as the
primary objective. The Company anticipates completing the engineering for the
enhanced product by the end of March and hopes to begin beta testing in April.
If the beta test is successful, the Company hopes to begin selling the enhanced
product by the end of June 1999. There can be no assurance that the Company will
be able to enhance the product on the time table discussed above, or that the
product enhancements will resolve the ease of use issues the clinicians and
dealers have encountered.
The Company's research into a hand-held blood pressure measurement device may
result in a product that has sales potential both in the professional market
(doctors, nurses, and medical technicians) and in the consumer market. The
Company does not have suitable distribution channels for these potential markets
and there can be no assurance that the Company will be able to implement or
effectuate suitable arrangements for such markets.
As previously announced in late September 1998, the Company entered into a
technical evaluation agreement with an interested party, related to its blood
pressure technology, specifically its hand-held blood pressure device. The
agreement called for the Company to receive $1,500,000 in exchange for a "stand
still" period of six (6) months, during which the Company will not have any
discussions or negotiations with other parties including, among other things,
the licensing or selling of the technology of its hand-held blood pressure
device. The amount received will be recognized as revenue if the agreement
terminates with no additional agreement with the interested party. If the
Company should enter into a license or royalty agreement with the interested
party, the amount received will be recognized as income under the terms of the
new agreement. If the Company should be purchased, the amount received will be
recognized as part of the purchase price.
During the term of the agreement, the interested party can further evaluate the
Company's hand-held blood pressure measurement device and, at the interested
party's sole discretion, can offer to license the product or to acquire the
Company. In such event, both parties agree to enter into negotiations during the
term of the agreement on a good faith basis. The agreement does not obligate the
interested party to make any offer and there is no assurance that any
transaction with the interested party will be proposed or consummated.
For the Company to emerge from the development stage, its success will also
depend on its ability to hire additional employees for key operating 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
preliminarily estimates that these employees will increase employee-related
expenses in excess of $300,000 during the next twelve months. However, such
requirements are subject to change and are highly dependent on the development
process for the products, 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 finance continued clinical testing of the Vasotrac system, for
manufacturing and marketing, to conduct 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 $1,300,000 for
research and development. Specifically, the funds are expected to be used to
develop an improved sensor and wrist holder as part of the Company's enhanced
Vasotrac system, to sustain engineering support for manufacturing, and for
continued development of a hand-held unit. No significant amount of equipment is
expected to be required. Even assuming limited sales, the Company believes that
its cash, cash equivalents, and short and long-term investments will allow the
Company to meet its cash requirements for approximately one and one-half years
from January 31, 1999. 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
<PAGE>
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 nine months ended
January 31, 1999 and 1998, respectively. The analysis of liquidity and capital
resources compares January 31, 1999 to April 30, 1998.
Operating revenue was $95,000 and $166,000 for the quarter ended January 31,
1999 and 1998, respectively. Operating revenue was $457,500 and $458,800 for the
nine months ended January 31, 1999 and 1998, respectively. Operating revenue
decreased due to a decrease in per unit revenue as the Company switched from an
employee sales force to a dealer network. The dealer sales have been lower than
that which the Company previously achieved with the Company's sales employees
and the Company believes that this is due to the "ease of use" difficulties
discussed above.
Cost of sales and product development was $92,100 and $129,600 for the quarter
ended January 31, 1999 and 1998, respectively. Cost of sales and product
development was $396,400 and $435,300 for the nine months ended January 31, 1999
and 1998, respectively. The cost of sales and product development decrease was
attributable to a decrease in cost of product development, as the Company's
current product and production process has matured. Costs associated with the
Company's hand held unit and enhanced Vasotrac system are reflected in the
Company's research and development expense.
The Company incurred $302,100 and $230,700 for research and development expenses
for the quarter ended January 31, 1999 and 1998, respectively. The Company
incurred $902,300 and $812,000 for research and development expenses for the
nine months ended January 31, 1999 and 1998, respectively. The research and
development expense increase was primarily attributed to continuing research on
the hand-held unit and the development costs of the product enhancements for the
Vasotrac system.
The Company incurred $229,600 and $284,400 for sales and marketing expenses for
the quarter ended January 31, 1999 and 1998, respectively. The Company incurred
$658,900 and $844,400 for sales and marketing expenses for the nine months ended
January 31, 1999 and 1998, respectively. The sales and marketing expense
decrease was attributable to the decrease in the number of sales representatives
employed by the Company as the Company converted over to a dealer network.
The Company incurred $128,100 and $126,800 for general and administrative
expenses for the quarter ended January 31, 1999 and 1998, respectively. The
Company incurred $355,200 and $333,500 for the nine months ended January 31,
1999 and 1998, respectively. The general and administrative expense increase was
attributable to a general increase in expenses.
Interest income was $104,100 and $48,800 for the quarter ended January 31, 1999
and January 31, 1998, respectively. Interest income was $292,300 and $172,400
for the nine months ended January 31, 1999 and 1998, respectively. The increase
reflects higher cash, cash equivalents, and short and long-term investments as
the result of the Company's private placement in March 1998 and payment received
in October 1998 for the technical evaluation agreement.
<PAGE>
Liquidity and Capital Resources
The Company's cash, cash equivalents, and short- and long-term investments were
$6,232,800 and $4,154,500 at January 31, 1999 and April 30, 1998, respectively.
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 one and one-half years from January 31, 1999.
The Company has no significant capital expenditure commitments.
Year 2000 Update
The Company has instituted a Year 2000 compliance project to address the issue
of computer programs and embedded computer chips being unable to distinguish
between the year 1900 and the year 2000. In the spring of 1998, the Company
conducted a review of its Information Technology ("IT") systems and non-IT
systems to identify the impact of the Year 2000 issue. The review concluded that
the Company's software and internal operations will not require Year 2000
modifications. The total cost associated with testing for Year 2000 compliance
is not expected to be material to the Company's financial position.
In connection with this review, the Company also asked critically important
vendors, suppliers, and financial institutions whose incomplete or untimely
resolution of the Year 2000 problem could potentially have a significant impact
on the Company's operations to assess their Year 2000 readiness. The Company has
been informed that these vendors, suppliers, and financial institutions will be
substantially Year 2000 compliant by mid-1999.
In the reasonable worst case scenario, the Company's suppliers and customers
would experience delays in filling orders, making payments or other Year 2000
problems that may adversely affect the Company. Contingency plans are being
prepared, where necessary, to minimize any significant exposures from the
failure of third parties to be Year 2000 compliant. These plans will be
substantially completed by mid-year 1999 and include development of backup
procedures, identification of alternate suppliers, and an assessment of the need
for increases in inventory levels.
The Company does not expect the Year 2000 problem or the cost of the compliance
program to have a material impact on the results of operations, financial
condition, or cash flows. However, there can be no absolute assurance that third
parties will convert their systems in a timely manner and in a way that is
compatible with the Company's systems.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) On November 17, 1998, 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 4,624,185 11,050
Norman Dann 4,622,485 12,750
Jeffrey W. Green 4,622,457 12,778
Jerry E. Robertson 4,623,757 11,478
b) A proposal to set the number of directors at four was adopted
by a vote of 4,497,995 shares in favor, with 126,055
shares against, 11,184 shares abstaining and no broker non-votes.
c) The shareholders approved an amendment to the Stock Option Plan
which clarifies certain administrative provisions, permits certain
transfers of non-qualified stock options, and provides for additional
automatic option grants to outside directors of the Company by a vote
of 4,489,243 shares in favor, with 121,707 shares against, 24,285
shares abstaining, and zero shares represented by broker non-votes.
ITEM 5. OTHER INFORMATION
Statements made in this report that are stated as expectations, plans,
anticipations, prospects or future estimates or which otherwise look forward in
time are considered "forward-looking statements" and involve a variety of risks
and uncertainties, known and unknown, which are likely to affect the actual
results. The following factors, among others, as well as factors discussed in
the Company's other filings with the SEC, have affected, and in the future,
could affect the Company's actual results: resistance to the acceptance of new
medical products, the market acceptance of the Vasotrac system or other products
of the Company, hospital budgeting cycles, the possibility of adverse or
negative commentary from clinical researchers or other users of the Company's
products, the Company's success in creating effective distribution channels for
its products, the Company's ability to scale up its manufacturing process, and
delays in product development or enhancement or regulatory approval.
Consequently, no forward-looking statement can be guaranteed and actual results
may vary materially.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
See Exhibit Index on Page Following Signatures
(B) REPORTS ON FORM 8K:
No reports on Form 8-K were filed by the Company during
the quarter ended January 31, 1999
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: March 15, 1999 Medwave, Inc.
/s/ G. Kent Archibald
By: 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
JANUARY 31, 1999
Exhibit No. Description
27 Financial Data Schedule (filed in electronic format only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS CONTAINED IN THE FORM 10-Q FOR THE NINE MONTHS
ENDED JANUARY 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> MAY-01-1998
<PERIOD-END> JAN-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,520,670
<SECURITIES> 3,476,391
<RECEIVABLES> 83,105
<ALLOWANCES> 0
<INVENTORY> 207,891
<CURRENT-ASSETS> 5,394,200
<PP&E> 505,534
<DEPRECIATION> 421,626
<TOTAL-ASSETS> 6,748,251
<CURRENT-LIABILITIES> 1,694,514
<BONDS> 0
0
0
<COMMON> 16,278,720
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,748,251
<SALES> 457,455
<TOTAL-REVENUES> 457,455
<CGS> 0
<TOTAL-COSTS> 396,415
<OTHER-EXPENSES> 1,916,381
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,855,341)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,855,341)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,855,341)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
