U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1996.
-------------
| | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ______________ to ______________.
Commission file number 0-19827
HYMEDIX, INC.
(Exact name of registrant, as specified in its charter)
Delaware 22-3279252
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2235 Route 130, Dayton, New Jersey 08810
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (908) 274-2288
--------------
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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
-- --
State the number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date.
Class Outstanding as of June 30, 1996
-----------------------------------------------------------------------------
Common 5,713,500
Transitional Small Business Disclosure Format (Check one): Yes No X
--
Page 1 of 13
Exhibit Index begins on Page 12
<PAGE>
HYMEDIX, INC.
INDEX
-----
Page No.
- ---------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995 3
Consolidated Statements of Operations for the
Three Months and Six Months Ended June 30, 1996
and June 30, 1995 4
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1996 and June 30, 1995 5
Notes to Consolidated Interim Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
SIGNATURES 11
Page 2 of 13
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Balance Sheets (Note 1)
ASSETS
------
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------------------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 6,503 $ 31,295
Short-term investments 136,913 151,731
Accounts receivable 52,760 31,258
Inventories 478,900 477,938
Prepaid expenses and other current assets 44,909 57,227
------------------------------
Total current assets 719,985 749,449
PROPERTY AND EQUIPMENT, NET 160,472 206,174
PATENTS, NET 140,677 156,397
------------------------------
Total assets $ 1,021,134 $ 1,112,020
==============================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Current maturities of long-term debt $ 3,768,943 $ 3,031,843
Accounts payable and accrued expenses 1,989,504 1,844,935
Accrued legal judgment 805,964 0
Deferred revenue 87,500 100,000
Liabilities related to discontinued operation 59,222 59,222
------------------------------
Total current liabilities 6,711,133 5,036,000
------------------------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
8% Senior Convertible Preferred Stock, $3.00 par value,
800,000 shares authorized, 10,190 shares issued and
outstanding 30,570 30,570
Preferred Stock, $.01 par value, 150 shares authorized,
issued and outstanding 2 2
Common Stock, $.001 par value, 20,000,000 shares
authorized, 5,713,500 shares issued and outstanding 5,713 5,713
Additional paid-in capital 15,642,174 15,635,301
Accumulated deficit (19,868,458) (18,095,566)
Subscription receivable (1,500,000) (1,500,000)
-------------------------------
Total stockholders' deficit (5,689,999) (3,923,980)
-------------------------------
Total liabilities and stockholders' deficit $ 1,021,134 $ 1,112,020
==============================
</TABLE>
The accompanying notes to interim consolidated financial statements
are an integral part of these financial statements.
Page 3 of 13
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------------------
1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUES:
Net product sales $ 57,972 $ 232,188 $ 503,707 $ 553,032
Royalty income 25,000 0 25,000 0
License fees 0 0 150,000 0
Research and development contracts 43,750 52,273 147,500 239,621
---------------------------------------------------
Total revenues 126,722 284,461 826,207 792,653
---------------------------------------------------
COSTS AND EXPENSES:
Cost of sales 36,824 149,860 261,536 226,114
Selling, general and administrative 557,733 477,835 1,083,063 934,688
Research and development 163,833 158,116 335,060 300,450
Legal judgment 805,964 0 805,964 0
---------------------------------------------------
Total costs and expenses 1,564,354 785,811 2,485,623 1,461,252
---------------------------------------------------
Loss from operations (1,437,632) (501,350) (1,659,416) (668,599)
----------- ----------- ----------- -----------
INTEREST (EXPENSE) INCOME:
Interest expense (66,342) (49,824) (116,166) (105,090)
Interest income 2,176 64 2,690 1,411
---------------------------------------------------
Total interest expense, net (64,166) (49,760) (113,476) (103,679)
----------- ----------- ----------- -----------
Net loss $(1,501,798) $ (551,110) $(1,772,892) $ (772,278)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE: $ (0.26) $ (0.10) $ (0.31) $ (0.14)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 5,713,500 5,713,500 5,713,500 5,713,500
===================================================
</TABLE>
The accompanying notes to interim consolidated financial statements
are an integral part of these financial statements.
Page 4 of 13
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Consolidated Statements Of Cash Flows (Note 1)
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------------
1996 1995
- --------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,772,892) $ (772,278)
------------ -------------
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization 61,422 62,105
(Increase) decrease in:
Accounts receivable (21,502) 15,510
Inventories (962) (47,157)
Other current assets 12,318 28,554
Increase (decrease) in:
Accounts payable and accrued expenses 151,442 138,339
Accrued legal judgment 805,964 0
Deferred revenue (12,500) 27,879
------------------------------
Total adjustments 996,182 225,230
------------------------------
Net cash used by operating activities (776,710) (547,048)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures 0 2,385
------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable 737,100 457,480
------------------------------
Net increase (decrease) in cash and cash equivalents (39,610) (87,183)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 183,026 393,330
------------------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 143,416 $ 306,147
==============================
</TABLE>
The accompanying notes to interim consolidated financial statements
are an integral part of these financial statements.
Page 5 of 13
<PAGE>
HYMEDIX, INC. AND SUBSIDIARY
Notes to Interim Consolidated Financial Statements
1. MERGER AND REINCORPORATION
HYMEDIX, Inc. (the "Company") was incorporated in Delaware on
December 20, 1993, as a wholly-owned subsidiary of Servtex International
Inc. (the "Predecessor"). On February 23, 1994, the Predecessor merged
with and into HYMEDIX, Inc., and, concurrently, a wholly-owned
subsidiary of the Predecessor was merged with and into HYMEDIX
International, Inc. ("HYMEDIX International"), a privately-held Delaware
corporation, which resulted in HYMEDIX International becoming a
wholly-owned subsidiary of HYMEDIX, Inc. HYMEDIX International was
incorporated in October, 1985 under the name Kingston Technologies, Inc.
The unaudited consolidated financial statements have been
prepared based upon financial statements of HYMEDIX, Inc. and its wholly
owned subsidiary, HYMEDIX, International, Inc.
2. LONG-TERM DEBT
During the first quarter of 1996, the Company issued a
convertible bond in the principal amount of $150,000 (the "September
Bond") pursuant to a Convertible Bond Purchase Agreement effective March
5, 1996, by and among the Company, HYMEDIX International and Su Chen
Huang. The September Bond bears interest at a rate of 7% per annum and
matures on September 5, 1997. The September Bond is convertible in whole
at any time prior to payment or prepayment into one hundred fifty
thousand (150,000) shares of common stock of the Company. Interest on
the September Bond is payable at maturity or upon prepayment or
conversion thereof.
In April of 1996, the Company issued convertible bonds in the
aggregate principal amount of $1,000,000 (the "June Bonds") pursuant to
a Convertible Bond Purchase Agreement effective February 27, 1996, by
and among the Company, HYMEDIX International, First Taiwan Investment
and Development, Inc. and the Purchasers (as defined therein). The June
Bonds bear interest at a rate of 7% per annum and mature on June 1,
1997. The June Bonds are convertible in whole or in part at any time
prior to payment or prepayment into one thousand (1,000) shares of
common stock of the Company for each one thousand dollars ($1,000) of
principal amount outstanding. Interest on the June Bonds is payable at
maturity or upon prepayment or conversion thereof. The June Bonds may be
subject to mandatory prepayment by the Company under certain
circumstances.
3. LEGAL PROCEEDINGS
In July of 1996, a judgment was rendered against the Company in
the amount of $805,964 in connection with a legal proceeding to which
the Company was a party. Although the Company currently plans to appeal
this judgment, an accrual to the Company's financial statements was made
to account for this potential liability. See "PART II - OTHER
INFORMATION; Item 1 - Legal Proceedings" of this Form 10-QSB for a more
detailed description of this matter.
4. INTERIM FINANCIAL STATEMENTS
In the opinion of management, the accompanying financial
statements of the Company reflect all adjustments, consisting of normal
recurring accruals, necessary to present fairly, in all material
respects, the Company's financial position as of June 30, 1996 and
December 31, 1995 and the results of operations for the three months
ended June 30, 1996 and 1995. The results of operations for interim
periods are not necessarily indicative of the results to be expected for
an entire fiscal year. The interim financial statements and related
notes should be read in conjunction the Company's annual report filed on
Form 10-KSB.
Page 6 of 13
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of the risk factors
set forth below. The industry in which the Company competes is characterized
by rapid changes in technology and frequent new product introductions. The
Company believes that its long-term growth depends largely on its ability to
continue to enhance existing products and to introduce new products and
technologies that meet the continually changing requirements of customers.
While the Company has devoted significant resources to the development of
new products and technologies, there can be no assurance that it can
continue to introduce new products and technologies on a timely basis or
that certain of its products and technologies will not be rendered
noncompetitive or obsolete by its competitors.
Overview
HYMEDIX, Inc. ("HYMEDIX") was incorporated in Delaware on December 20,
1993 as a wholly-owned subsidiary of Servtex International Inc. (the
"Predecessor"). On February 23, 1994, the Predecessor merged with and into
HYMEDIX, Inc. and, concurrently, a wholly-owned subsidiary of the Predecessor
was merged with and into HYMEDIX International, Inc. ("HYMEDIX International")
which resulted in HYMEDIX International becoming a wholly-owned subsidiary of
HYMEDIX. As used in this Form 10-QSB, unless the context otherwise requires, the
term "Company" collectively means HYMEDIX, HYMEDIX International and their
respective predecessors. HYMEDIX International was incorporated in October, 1985
under the name Kingston Technologies, Inc.
Results of Operations
Revenues
The Company's total revenues for the three months and six months ended
June 30, 1996 were $126,722 and $826,207, respectively, versus $284,461 and
$792,653 for the same periods in 1995, a decrease of 55.5% and an increase of
4.2%, respectively. The revenue decrease resulted from a $173,509 decrease in
net sales of hydrogels to LIPO Chemicals, Inc. during the three months ended
June 30, 1996 compared to the same period of 1995. The decrease in net product
sales of $49,325 for the six months ended June 30, 1996 compared to the same
period of the previous year was due to $193,000 in reduced sales of wound gels
to the medical market and $197,996 less sales of hydrogels to LIPO Chemicals,
Inc., offset by an increase of $162,064 in sales of skin care products to
overseas customers and increased domestic sales of $180,653 in BIONIQ products.
Income from royalty and research and development contracts increased
approximately $16,000 during the three months ended June 30, 1996 from the prior
year period, resulting from a $25,000 royalty received. Due to the $92,121
decrease in research and development revenues offset by the receipts of a
royalty of $25,000 and a fee of $150,000 relating to two separate licensing
agreements, there is a net increase of $82,879 in royalty, option fee and
research and development revenues for the six months ended June 30, 1996 from
the same period of 1995.
Costs and Expenses
Cost of sales for the three months and six months ended June 30, 1996
were $36,824 and $261,536, respectively, versus $149,860 and $226,114 for the
same periods in 1995, a decrease of approximately $113,036 and an increase of
$35,422, respectively. The decrease for the three months
Page 7 of 13
<PAGE>
ended June 30, 1996 was in direct proportion of the decrease in net
product sales; whereas the increase for the six months ended June 30, 1996 from
the same period of the prior year resulted from a change in product mix with
reduced sales in high margin hydrogel chemicals. Selling, general and
administrative expenses increased 16.7% and 15.9% to $557,733 and $1,083,063
respectively, for the three months and six months ended June 30, 1996 from the
same periods of 1995. The increases were principally due to higher legal
expenses incurred for the defense of two lawsuits previously filed against the
Company. The research and development costs for the three months and six months
ended June 30, 1996 were $163,833 and $335,060, respectively, as compared to
$158,116 and $300,450 for the same periods in 1995, an increase of 3.6% and
11.5%, respectively, resulting from increased work days and costs of the
research and development staff. Additionally, to account for the Company's
potential liability with respect to the recent legal judgment rendered against
it and described in detail elsewhere herein, an accrual of $805,964 has been
added as a separate line item under costs and expenses for the three months and
six months ended June 30, 1996, which was not present during the same periods in
1995.
Interest Expense, Net
Total net interest expense for the three months and six months ended
June 30, 1996 was $64,166 and $113,476, respectively, versus $49,760 and
$103,679 for the same periods in 1995, increases of $14,406 and $9,797,
respectively. The increases are attributable to the issuance of convertible
bonds in the aggregate principal amount of up to $1,150,000 during the first
half of 1996.
As a result of the increased costs and expenses described above for the
three months ended June 30, 1996 as compared to the same period of the prior
year and the decreased revenues described above for the same period of 1996
versus the prior year, the Company incurred higher net losses of $1,501,798 for
the three months ended June 30, 1996 than the net losses of $551,110 for the
same period in 1995. For the six months ended June 30, 1996, the Company
incurred higher net losses of $1,772,892 than the net losses of $772,278 of the
prior year period, which resulted from the increased costs and expenses.
Liquidity, Capital Resources and Changes in Financial Condition
The Company had $143,416 in cash and cash equivalents on hand as of June
30, 1996 versus $183,026 as of December 31, 1995. The working capital deficit
$(5,991,148) on June 30, 1996 represents an increase of $1,704,597 from the
previous year-end level of $(4,286,551). The increase in working capital deficit
was primarily attributable to the net loss incurred in the six-month period
ended June 30, 1996.
In April of 1996, the Company issued convertible bonds in the aggregate
principal amount of $1,000,000 (the "June Bonds") pursuant to a Convertible Bond
Purchase Agreement effective February 27, 1996, by and among the Company,
HYMEDIX International, First Taiwan Investment and Development, Inc. and the
Purchasers (as defined therein). The June Bonds bear interest at a rate of 7%
per annum and mature on June 1, 1997. The June Bonds are convertible in whole or
in part at any time prior to payment or prepayment into one thousand (1,000)
shares of common stock of the Company for each one thousand dollars ($1,000) of
principal amount outstanding. Interest on the June Bonds is payable at maturity
or upon prepayment or conversion thereof. The June Bonds may be subject to
mandatory prepayment by the Company under certain circumstances. An additional
$150,000 of convertible bonds with similar terms had been issued in the first
quarter of 1996.
During the third quarter of 1994 the Company's total stockholders'
equity fell below the minimum $1,000,000 of capital and surplus necessary to
maintain its listing on the NASDAQ SmallCap Market. Consequently, NASDAQ
delisted the Company's common stock from the NASDAQ SmallCap Market on October
27, 1994. The Company is in compliance with all other NASDAQ requirements and is
in the process of seeking alternatives to increase its capital to above the
required level. However,
Page 8 of 13
<PAGE>
there can be no assurance that these efforts will be successful. In the
meantime, HYMEDIX shares continue being traded on the Over The Counter
Electronic Bulletin Board under the symbol HYMX.
While management believes the Company will have adequate resources to
finance its operations in 1996, it continues to seek and evaluate financing
alternatives. In the event that cash flow from operations and the anticipated
proceeds from the issuance of the convertible bonds are not sufficient to
finance the Company's operations in 1996, there is no assurance that other
sources of funds will be available to the Company.
Risk Factors and Cautionary Statements
When used in this Form 10-QSB and in future filings by the Company with
the Securities and Exchange Commission, in the Company's press releases and in
oral statements made with the approval of an authorized executive officer, the
words or phrases "will likely result", "are expected to", "will continue", is
anticipated", "estimate", "project", or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain
risks and uncertainties, including those discussed under this caption "Risk
Factors and Cautionary Statements," that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made, and
wishes to advise readers that the factors listed below could cause the Company's
actual results for future periods to differ materially from any opinions or
statements expressed with respect to future periods in any current statements.
The Company will NOT undertake and specifically declines any obligation
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
[bullet] The Company's revenues and income are derived primarily from
the development and commercialization of medical and skin care products. The
medical and skin care products industry is highly competitive. Such competition
could negatively impact the Company's market share and therefore reduce the
Company's revenues and income.
[bullet] Competition may also result in a reduction of average unit
prices paid for the Company's products. This, in turn, could reduce the
percentage of profit margin available to the Company for its product sales.
[bullet] The Company's future operating results are dependent on its
ability to develop, produce and market new and innovative products and
technologies, and to successfully enter into favorable licensing and
distribution relationships. There are numerous risks inherent in this complex
process, including rapid technological change and the requirement that the
Company develop procedures to bring to market in a timely fashion new products
and services that meet customers' needs.
[bullet] Historically, the Company's operating results have varied from
fiscal period to fiscal period; accordingly, the Company's financial results in
any particular fiscal period are not necessarily indicative of results for
future periods.
[bullet] The Company may offer a broad variety of products and
technologies to customers around the world. Changes in the mix of products and
technologies comprising revenues could cause actual operating results to vary
from those expected.
Page 9 of 13
<PAGE>
[bullet] The Company's success is partly dependent on its ability to
successfully predict and adjust production capacity to meet demand, which is
partly dependent upon the ability of external suppliers to deliver components
and materials at reasonable prices and in a timely matter; capacity or supply
constraints, as well as purchase commitments, could adversely affect future
operating results.
[bullet] The Company offers its products and technologies directly and
through indirect distribution channels. Changes in the financial condition of,
or the Company's relationship with, distributors, licensees and other indirect
channel partners, could cause actual operating results to vary from those
expected.
[bullet] The Company does business and continues to seek to develop
business on a worldwide basis. Global and/or regional economic factors and
potential changes in laws and regulations affecting the Company's business,
including without limitation, currency exchange rate fluctuations, changes in
monetary policy and tariffs, and federal, state and international laws
regulating its products, could impact the Company's financial condition or
future results of operations.
[bullet] The market price of the Company's securities could be subject
to fluctuations in response to quarter to quarter variations in operating
results, market conditions in the medical and skin care products industry, as
well as general economic conditions and other factors external to the Company.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In September, 1993, HYMEDIX International's former President filed a
Complaint against HYMEDIX International in the Superior Court of New Jersey, Law
Division, Middlesex County. The Complaint named HYMEDIX International, each
member of HYMEDIX International's Board of Directors, and Kingston Technologies
Limited Partnership as defendants. The Complaint alleged (i) that HYMEDIX
International wrongfully terminated the former President's employment, (ii) that
he is owed $367,500 in reduced compensation and $74,500 in back salary, (iii)
that $323,138 is owed him based on his claim that an agreement between him and
KTLP to consolidate and extend the maturity date on three promissory notes that
KTLP had executed in his favor was signed by him under duress and, therefore,
void, and (iv) that KTLP's General Partners failed to disclose to the former
President at the time he signed the promissory note extension that HYMEDIX
International planned to terminate his employment. The former President sought
compensatory damages in excess of $6,000,000 plus punitive damages in an
unstated amount.
The parties settled the former President's claim for back salary. A
trial was held with respect to the remaining eight (8) counts of the Complaint
from June 24, 1996 until July 3, 1996. A judgment was rendered on July 31, 1996
in favor of five (5) of the individual defendants with respect to all counts; in
favor of the remaining individual defendants and HYMEDIX International and KTLP
with respect to six (6) counts; and against the remaining individual defendants
and HYMEDIX International and KTLP with respect to two (2) counts in an
aggregate amount of $805,964.28 ($367,500 with respect to the plaintiff's claim
for reduced compensation and $438,464.28 with respect to the plaintiff's claim
of fraud in the inducement against the defendants for failing to disclose their
plan to terminate the plaintiff at the time plaintiff signed the promissory note
extension). The Company currently plans to appeal the judgment against it in
connection with this matter.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K.
None.
Page 10 of 13
<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.
HYMEDIX, INC.
(Registrant)
Date: August 12, 1996 By: /s/ Joseph Y. Peng
------------------------------------
Joseph Y. Peng
President (Principal Executive
Officer), Treasurer
Date: August 12, 1996 By: /s/ William G. Gridley, jr.
------------------------------------
William G. Gridley, jr.
Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer), Secretary,
Director
Page 11 of 13
<PAGE>
TABLE OF CONTENTS
Exhibit No. Page Number
- ----------- -----------
27 Financial Data Schedule 13
Page 12 of 13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-1-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 6,503
<SECURITIES> 0
<RECEIVABLES> 52,760
<ALLOWANCES> 0
<INVENTORY> 478,900
<CURRENT-ASSETS> 719,985
<PP&E> 839,218
<DEPRECIATION> 678,746
<TOTAL-ASSETS> 1,021,124
<CURRENT-LIABILITIES> 6,711,133
<BONDS> 737,100
0
30,572
<COMMON> 5,713
<OTHER-SE> (5,726,284)
<TOTAL-LIABILITY-AND-EQUITY> 1,021,134
<SALES> 57,972
<TOTAL-REVENUES> 126,722
<CGS> 36,824
<TOTAL-COSTS> 1,564,354
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 66,342
<INCOME-PRETAX> (1,501,798)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,501,798)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,501,798)
<EPS-PRIMARY> (.26)
<EPS-DILUTED> (.26)
</TABLE>
