<PAGE> 1
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
Commission File Number: 0000-23721
LIFEPOINT, INC.
(Exact name of registrant as specified in its charter)
DELAWARE #33-0539168
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
10400 Trademark Street, Rancho Cucamonga, CA 91730
(Address of Principal Executive Offices) (Zip Code)
(909) 466-8047
Registrant's Telephone Number, Including Area Code
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.
[x] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the last practicable date.
As of August 8, 1998 - Common Stock, $.001 Par Value, 11,797,206 shares
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30
1998 MARCH 31
(UNAUDITED) 1998
------------ ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 158,584 $ 597,254
Prepaid expenses and other current assets 117,223 150,150
------------ ------------
Total current assets 275,807 747,404
Property and equipment, net 235,254 286,188
Patents and other assets, net 48,888 39,692
------------ ------------
$ 559,949 $ 1,073,284
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 78,682 $ 119,577
Accrued expenses 89,913 217,876
------------ ------------
Total current liabilities 168,595 337,453
Commitments and contingencies (Note 4)
Stockholders' equity:
Common stock, $.001 par value; 50,000,000 shares
authorized, 10,797,206 and 10,497,206 issued and
outstanding at June 30, 1998 and March 31, 1998,
respectively 10,797 10,497
Additional paid-in capital 12,548,633 12,398,933
Deficit accumulated in the development stage (12,168,076) (11,673,599)
------------ ------------
Total stockholders' equity 391,354 735,831
------------ ------------
$ 559,949 $ 1,073,284
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE> 3
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
CUMULATIVE
FROM
FOR THE OCTOBER 8, 1992
THREE MONTHS ENDED (INCEPTION)
JUNE 30 JUNE 30
1998 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
Costs and expenses:
Selling, general and administrative expenses 183,409 137,278 2,767,957
Research and development 263,702 529,842 5,982,803
Depreciation and amortization 52,029 16,730 828,721
Interest expense - parent -- -- 95,790
Management fees - parent -- 409,838 2,089,838
Interest expense -- -- 119,300
------------ ------------ ------------
Total costs and expenses from operations 499,140 1,093,688 11,884,409
------------ ------------ ------------
Loss from operations (499,140) (1,093,688) (11,884,409)
Other income/(expense): 4,663 (34,530) (283,667)
------------ ------------ ------------
Net loss $ (494,477) $ (1,128,218) $(12,168,076)
============ ============ ============
Earnings per common share:
Weighted average common shares outstanding 10,744,459 5,221,900
============ ============
Net loss per common share $ (0.05) $ (0.22)
============ ============
Earnings per common share, assuming
dilution:
Weighted average common shares
outstanding 13,363,825 5,221,900
============ ============
Net loss per common share,
assuming dilution $ (0.04) $ (0.22)
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE> 4
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
CUMULATIVE
FROM
OCTOBER 8, 1992
FOR THE THREE MONTHS ENDED (INCEPTION) TO
JUNE 30 JUNE 30
1998 1997 1998
------------ ------------ ------------
<S> <C> <C> <C>
Cash flow from operating activities:
Net loss $ (494,477) $ (1,128,218) $(12,168,076)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 52,029 16,730 828,721
Loss on disposal of property and equipment -- -- 237,976
Loss on marketable securities -- -- 627,512
Amortization of bond discount -- -- (4,855)
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses and
other current assets 32,927 (29) (82,822)
(Increase) decrease in other assets 201 (1,204) (4,135)
Increase (decrease) in accounts payable (40,895) 159,214 133,041
Increase in accrued expenses 22,037 33,660 104,913
------------ ------------ ------------
Net cash used by operating activities (428,178) (919,847) (10,327,725)
------------ ------------ ------------
Cash flow from investing activities:
Sale of marketable securities -- -- 3,285,625
Purchases of marketable securities -- -- (3,908,281)
Purchases of property and equipment (500) (42,490) (597,277)
Proceeds from sale of property and equipment -- -- 80,828
Patent costs (9,992) -- (49,231)
------------ ------------ ------------
Cash used by investing activities (10,492) (42,490) (1,188,336)
------------ ------------ ------------
Cash flow from financing activities:
Sales of common stock -- -- 10,221,226
Increase in bank overdraft -- 46,564 --
Expenses of stock offering -- -- (1,675,850)
Advances on note receivable - Parent -- -- (1,917,057)
Collection on note receivable - Parent -- -- 1,634,762
Proceeds of loan payable - Parent -- 926,017 4,715,067
Payment of loan payable - Parent -- -- (1,299,782)
Proceeds of capital leases -- -- 101,572
Payments of capital leases -- (10,244) (105,293)
Proceeds of brokerage loan payable -- -- 2,674,683
Payments of brokerage loan payable -- -- (2,674,683)
------------ ------------ ------------
Net cash provided by financing activities -- 962,337 11,674,645
------------ ------------ ------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE> 5
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(CONTINUED)
<TABLE>
<CAPTION>
CUMULATIVE
FROM
OCTOBER 8, 1992
FOR THE THREE MONTHS ENDED (INCEPTION) TO
JUNE 30 JUNE 30
1998 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Increase (decrease) in cash and cash equivalents (438,670) $ -- 158,584
Cash and cash equivalents - beginning of period 597,254 -- --
---------- ---------- ----------
Cash and cash equivalents - end of period $ 158,584 $ -- $ 158,584
========== ========== ==========
Supplemental disclosure of cash information:
Cash paid for interest $ -- $ -- $ 192,046
========== ========== ==========
Non-cash operating activities:
Value of common stock issued and additional
paid-in capital for consulting services $ -- $ -- $ 150,000
========== ========== ==========
Non-cash investing activities:
Value of assets transferred to lessor in lieu of
payment on capital leases $ -- $ -- $ 71,405
========== ========== ==========
Non-cash financing activities:
Value of common stock issued and additional
paid-in capital for the transfer of assets from
Parent $ -- $ -- $ 781,060
========== ========== ==========
Value of common stock issued to Parent and
additional paid-in capital for the forgiveness
of debt $ -- $2,594,200 $3,160,502
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
NOTE 1 - Basis of Presentation
In the opinion of LifePoint, Inc. (the "Company"), the accompanying
unaudited financial statements reflect all adjustments (which include only
normal recurring adjustments except as disclosed below) necessary to present
fairly the financial position, results of operations and cash flows for the
periods presented. Results of operations for interim periods are not necessarily
indicative of the results of operations for a full year due to external factors
which are beyond the control of the Company. This Report should be read in
conjunction with the Company's Annual Report on Form 10-K for the fiscal year
ended March 31, 1998 (the "Annual Report").
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share (FASB No. 128), which is effective for
annual and interim periods ending after December 15, 1997. FASB No. 128 replaced
the previously required primary and fully diluted earnings per share (EPS) with
basic and diluted EPS. Unlike primary earnings per share, basic earnings per
share excludes any dilutive effects of options, warrants and convertible
securities. Diluted earnings per share is very similar to the previously
required fully diluted earnings per share. All earnings per share amounts for
all periods have been presented and, where necessary, restated to conform to
FASB No. 128. There were no adjustments necessary to net loss in calculating the
income available to common stockholders after assumed conversions of stock
options and warrants that are considered to be dilutive. The adjusted weighted
average shares to give effect for the assumed conversion of dilutive stock
options and warrants is presented on the Statements of Operations.
NOTE 2. - Continuing Operations and Liquidity
The Company has historically incurred recurring operating losses due
to the fact that it is still a development stage enterprise incurring research
and development expenses and deriving no revenues and has experienced an ongoing
deficiency in working capital. The Company financed its operations during the
quarter ended June 30, 1998 from the remainder of the net proceeds of $1,434,000
realized from a private placement in November and December 1997 pursuant to
Regulation D under the Securities Act of 1993, as amended (the "Securities
Act"), which sold 3,200,000 shares of the Company's Common Stock, $.001 par
value (the "Common Stock"), at $0.50 per share or an aggregate purchase price of
$1,600,000. Recognizing that such financing would only furnish sufficient
working capital through July 1998, the Company recently initiated a second
private placement pursuant to Regulation D under the Securities Act, with a
minimum of 1,000,000 shares and a maximum of 5,000,000 shares of the Common
Stock at $1.00 per share. The Company closed on the minimum of 1,000,000 shares
on July 17, 1998, and anticipates completion of the private placement by the end
of August 1998, unless the
6
<PAGE> 7
public market price for the stock exceeds $2.00 per share at which time the
private placement will close and be repriced to a higher price per share.
Even if the foregoing financing is closed for the maximum amount, as
to which there can be no assurance, the Company will require additional capital
to continue the research, development and ultimate manufacture and marketing of
its product. As previously reported, the Company estimates it will cost
approximately $7,000,000 to complete the prototype of its first product and an
additional $9,000,000 to bring the product to market. As a result of its
continuing operational losses and its continuing capital requirements at March
31, 1998, there was raised substantial doubt about the Company's ability to
continue as a going concern. The financial statements in this Report do not
include any adjustments to reflect the possible future effects, if any, on the
recoverability and classification of assets on the amounts and classification of
liabilities that may result from the outcome of this uncertainty.
The Company continues to pursue parallel paths in addition to the
private placement to secure funding; strategic partnering, venture capital
investors and a possible public offering. There can be no assurance that any of
these additional sources of financing will be available and, in such event, the
Company will not be able to complete its research and development on a timely
basis.
NOTE 3 - Property and Equipment
Property and equipment is summarized as follows:
<TABLE>
<CAPTION>
June 30, March 31,
1998 1998
-------- --------
<S> <C> <C>
Furniture and Fixtures $288,002 $287,502
Test Equipment 425,768 425,768
Leasehold Improvements 209,155 209,155
-------- --------
922,925 922,425
Less: Accumulated Depreciation 687,671 636,237
-------- --------
$235,254 $286,188
======== ========
</TABLE>
NOTE 4 - Commitments and Contingencies
In June 1995, the License Agreement with the Department of the Navy
then held by SAT was renegotiated and amended to provide for minimum annual
royalties of $100,000 per year commencing October 1, 1995 and terminating
September 30, 2005. Additional royalties will be paid pursuant to a schedule
based upon sales of products. Through March 31, 1997, the Company sub-licensed
this Agreement from its parent and, accordingly, had obligations to its parent
for the royalty payments required by the License Agreement. This license was
transferred from SAT to the Company effective with the sale of SAT's majority
ownership of the Common Stock . The Navy settled all past liabilities for the
transferred license for $10,000.
On March 3, 1998, the license from the Navy was expanded to an
exclusive, worldwide license for all saliva diagnostics. The terms of the
license expansion are currently being negotiated.
7
<PAGE> 8
LIFEPOINT, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(UNAUDITED)
(CONTINUED)
NOTE 5 - Stockholders' Equity
During the quarter ended June 30, 1998, the Company issued 300,000
shares of stock to a consultant in exchange for services to be rendered through
January 2000. The excess of the value of the services of $149,700 over the stock
value was recorded as an increase to additional paid-in capital. The obligation
to issue these shares was provided for at March 31, 1998.
The LifePoint, Inc. 1997 Stock Option Plan (the "Plan"), as adopted by
the Board of Directors of the Company on August 14, 1997 and amended on June 5,
1998, now provides for the granting of options to purchase an aggregate of
2,000,000 shares (originally 1,000,000 shares) of the Common Stock.
Stockholders' approval of the Plan is being sought at the Annual Meeting of
Stockholders on August 13, 1998. Options granted under the Plan may either be
incentive stock options designed to meet the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended, or non-statutory or non-qualified
stock options not intended to satisfy such requirements. The exercise price per
share for incentive stock options will not be less than 100% of the fair market
value per share of the Common Stock on the grant date. For non-statutory or
non-qualified stock options, the exercise price per share may not be less than
85% of such fair market value. No option may have a term in excess of ten years.
During the quarter ended June 30, 1998, an incentive stock option to
purchase 15,000 shares of the Common Stock at $0.50 per share was granted to an
employee and non-qualified stock options were granted to four employees
(including three officers) to purchase an aggregate of 135,000 shares of the
Common Stock at $0.50 per share. As of June 30, 1998, there were outstanding
under the Plan incentive stock options to purchase an aggregate of 965,000
shares held by a total of 11 employees, in addition to the non-qualified stock
options described in the preceding sentence.
Also outstanding as of June 30, 1998 were non-statutory options to
purchase 250,000 shares of the Common Stock at exercise prices ranging from
$1.50 to $4.00 per share granted to a consultant not pursuant to the Plan.
During the quarter ended June 30, 1998, the Company issued warrants to
two outside parties to purchase an aggregate of 200,000 shares of the Common
Stock at prices ranging from $0.50 to $1.00 per share as payment for consulting
services. As of June 30, 1998, there were warrants outstanding to purchase
2,121,289 shares of the Company's stock.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
GENERAL.
The Company was incorporated on October 8, 1992 under the laws of the
State of Delaware as a wholly-owned subsidiary of Substance Abuse Technologies,
Inc. ("SAT"). Effective January 1, 1993, SAT sublicensed or transferred to the
Company certain rights or assets to develop drug testing products in exchange
for 3,500,000 shares of the Common Stock. In October 1993, the Company had a
public offering of the Common Stock in which an aggregate of 1,721,900 shares
was sold. As of September 30, 1997, SAT owned 5,575,306 shares of the Common
Stock or 76.4% of the 7,297,206 shares of the Common Stock then outstanding.
From its inception until October 31, 1997, the Company was a subsidiary of SAT
or otherwise under its control. SAT ceased providing advances to the Company in
August 1997 as a result of its inability to secure financing for its own
programs. On September 10, 1997, SAT filed a petition under Chapter 11 of the
Federal Bankruptcy Code. The Company temporarily suspended its product
development activities on September 19, 1997, but did not file for bankruptcy.
The Company was able to resume such activities on October 27, 1997 as a result
of a loan by an unaffiliated party. On October 29, 1997, the majority ownership
of the Company was transferred from SAT to Meadow Lane Partners, LLC. The
Company is now completely independent from SAT.
The Company is a development stage company focused on the
commercialization of the flow immunosensor technology licensed from the Naval
Research Laboratories. The flow immunosensor technology, in combination with the
focus on the use of saliva as a non-invasive test medium, will allow the Company
to develop a broadly applicable non-invasive, rapid, on-site diagnostic test
system. The first product under development is for the detection of drugs of
abuse and alcohol. However, other major market opportunities include rapid
diagnostic testing (substances of abuse, drug overdose, and heart attack),
long-term therapeutic drug monitoring to determine efficacy and compliance
(cardiovascular disease, osteoporosis), and wellness/health screening
(cardiovascular disease, osteoporosis, cancer).
LIQUIDITY AND CAPITAL RESOURCES.
Until August 1997 when SAT's inability to secure its own financing
caused SAT to cease advances to the Company, SAT had been the sole source of
financing to the Company since the Company's public offering of 1,721,900 shares
of the Common Stock in October and November 1993, which netted the Company
approximately $7,099,000. During the fiscal year ended March 31, 1997 and
through July 1997, SAT advanced $3,426,994 to the Company to fund its
operations, all of which was subsequently reflected as additional capital
contributions from SAT.
As a result of two loans made to the Company in September and October
1997 totaling $310,000 ($10,000 from an officer and $300,000 from an
unaffiliated source), both loans secured by a lien on the assets of the Company,
the Company recommenced its product development on October 27, 1997. During the
third quarter of 1997, the Company repaid the loans from the net proceeds
($1,434,000) of a private placement pursuant to Regulation D under the
Securities Act, which sold 3,200,000 shares of the Common Stock at $0.50 per
share or an aggregate purchase price of $1,600,000.
The Company's management at the time of the private placement estimated
that the net proceeds from the private placement would enable the Company to
continue its operations, at the reduced level, through July 1998. Management has
been actively pursuing during 1998, on a parallel basis, venture capital,
strategic partnering, and/or a private placement for all or part of the required
funding.
However, because management recognized that it may have taken beyond
July to implement one of these long term financing possibilities, in July 1998,
management initiated a private placement of $1,000,000 to $5,000,000 in an
effort to enable the Company to continue its operations, including research and
development of its product, until one of these long term financing programs
could be successfully implemented. The Company received the minimum funding of
$1,000,000 on July 16, 1998. There can, of course, be no assurance that the
9
<PAGE> 10
Company will complete the private placement beyond the minimum level or, as
indicated below, the major funding to complete its research and development
program.
The latest estimate of the Company's management is that, to complete
the development of a saliva-based drugs of abuse and alcohol testing product,
it will require additional funding of $16,000,000 (including the $5,000,000
described in the preceding paragraph) and that the product is not expected to be
launched until late in the first quarter of 2000. Such estimates as to amount
and date are based on the assumption that at least $3,000,000 in financing will
be obtained in the next few months.
The Company has engaged the services of The Kriegsman Group, founded by
Steven Kriegsman, a Los Angeles-based investment banker focused on obtaining
private financing for young medical, biotech, and pharmaceutical companies. The
Kriegsman Group has been focusing on implementing a private placement for
$7,000,000 to $10,000,00 in equity from individuals or institutions for the
Company. Ambient Capital Group, Inc., also a Los Angeles-based investment
banker, will act as co-agent with The Kriegsman Group in such an offering.
The Company's management has also been exploring the possibility of
obtaining a strategic partner for the Company. To this end, the Company has an
agreement with Burrill & Company ("Burrill"), a San Francisco-based merchant
bank focused exclusively on servicing life science companies. Burrill assists
its portfolio companies in maximizing their value through various strategic
partnering relationships. Burrill & Company was founded by G. Steven Burrill, an
internationally recognized financial, business, and management advisor to the
life science industry. Mr. Burrill is founder of The Biotech Meeting and the
International Life Sciences Partnering Conference, both held annually. A team of
twelve professionals is augmented by a world class Business Advisory Board. The
Board is comprised of eight members including: Jack Bowman, former Company Group
chairman of Johnson & Johnson; Irwin Lerner, retired Chairman of the Board of
Hoffmann-La Roche Inc.; Herbert Conrad, former President of the Pharmaceutical
Division and senior Vice President of Hoffmann-La Roche Inc.; Paul Freiman,
former Chairman and Chief Executive Officer of Syntex Corporation; Martin
Gerstel, former chairman and Chief Executive Officer of ALZA Corporation; Leigh
Thompson, former Scientific Officer of Eli Lilly and Company. Burrill had been
engaged to introduce LifePoint to potential partners with an on-going interest
in saliva-based diagnostics or point-of-care diagnostics and which might be
otherwise interested in partnering with or acquiring LifePoint at an early
stage.
Management is also pursuing the possibility of a venture capital
investment; however, most venture capital investors prefer a private company for
their investment, and look to an Initial Public Offering ("IPO") as their
preferred exit strategy. Although management continues to work with several
interested venture capital firms, this potential route of funding is currently
not the most likely to occur.
Management has also pursued the possibility of an underwritten public
offering and has received expressions of interest from several well-known small
national and large regional firms. This option has been put on hold by
management due to the length of time required to close such transaction;
however, it remains an alternative to be pursued following a private financing
for capital requirements.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 VS. JUNE 30, 1997
During the quarter ended June 30, 1998, the Company spent $263,702 on
research and development and an additional $183,409 on general and
administrative expenses, as compared with $529,842 and $137,278, respectively,
during the three months ended June 30, 1997. The lower research and development
expenditures in the 1998 period were due to the fact that subsequent to the
cessation of product development in September 1997, the Company has been
operating at a capital constrained pace and, therefore, all expenditures have
been at a reduced level. Additionally, there was no management fee paid to SAT
in the quarter ended June 30, 1998, while the Company paid SAT $409,838 in
management fees during the quarter ended June 30, 1997. As a result of the sale
by SAT of the shares as discussed above, no management fees will be paid to SAT
in the future. However, because
10
<PAGE> 11
these services are now performed internally, the Company incurred higher general
and administrative charges in 1998 than in 1997, and will continue to do so on a
go forward basis.
From inception on October 8, 1992 to June 30, 1998, the Company has
spent $5,982,803 on research and development and $2,767,957 on general and
administrative expenses. Management fees paid to SAT aggregated $2,089,838
during such period.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements which involve risk and
uncertainties. Such forward-looking statements reflect management's current
views that the necessary financing will be available, when needed, to complete
the research and development program, that the product will be developed at the
contemplated cost and within the projected timetable, that, during the interim
period before the Company begins marketing, competitors will not begin to market
a competitive saliva-based testing product and that the other risks described in
the Annual Report and other filings by the Company with the Securities and
Exchange Commission will not materially adversely affect the Company's
operations. Because there can be no assurance that management's expectations
will be realized, actual results may differ.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
11
<PAGE> 12
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
None
(B) REPORTS ON FORM 8-K
None
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned therein to be duly authorized.
LIFEPOINT, INC.
(Registrant)
Date: August 13, 1998 By /s/ Linda H. Masterson
-------------------------------------
Linda H. Masterson
President and Chief Executive Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 158,584
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 275,807
<PP&E> 922,925
<DEPRECIATION> 687,671
<TOTAL-ASSETS> 559,949
<CURRENT-LIABILITIES> 168,595
<BONDS> 0
0
0
<COMMON> 10,797
<OTHER-SE> 12,548,633
<TOTAL-LIABILITY-AND-EQUITY> 559,949
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 499,140
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (494,477)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.04)
</TABLE>
