<PAGE>
- --------------------------------------------------------------------------------
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 March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___ to ___
Commission File Number 0-22229
___________________________________________________
VITAL IMAGES, INC.
(Exact name of registrant as specified in its charter)
Minnesota 42-1321776
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3300 Fernbrook Lane N., Suite 200 55447
Plymouth, Minnesota (Zip Code)
(Address of principal
executive offices)
(612) 915-8000
(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. Yes __X___ No _____
___________________________________________________
On May 3, 2000, there were 6,747,637 shares of the Registrant's common stock,
par value $.01 per share, outstanding.
1
<PAGE>
VITAL IMAGES, INC.
------------------
Form 10-Q
March 31, 2000
Table of Contents
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of March 31, 2000 and December 31, 1999.. 3
Statements of Operations for the Three Months Ended
March 31, 2000 and 1999................................. 4
Statements of Cash Flows for the Three Months Ended
March 31, 2000 and 1999................................. 5
Notes to Financial Statements.............................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations..................... 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K........................... 13
SIGNATURES............................................................... 14
INDEX TO EXHIBITS........................................................ 15
</TABLE>
2
<PAGE>
- --------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
VITAL IMAGES, INC.
BALANCE SHEETS
AS OF MARCH 31, 2000 AND DECEMBER 31, 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ------------
(Unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 4,112,085 $ 5,332,885
Accounts receivable, net of allowance for doubtful accounts of
$93,000 as of March 31, 2000 and December 31, 1999 2,638,961 2,005,114
Prepaid expenses and other current assets 444,429 463,309
--------------- --------------
Total current assets 7,195,475 7,801,308
Property and equipment, net 1,441,352 864,479
--------------- --------------
TOTAL ASSETS $ 8,636,827 $ 8,665,787
=============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,094,111 $ 831,741
Accrued payroll 554,393 539,977
Deferred revenue 874,751 758,110
Other current liabilities 408,271 262,183
--------------- --------------
Total current liabilities 2,931,526 2,392,011
Deferred revenue 157,102 175,360
--------------- --------------
Total liabilities 3,088,628 2,567,371
Shareholders' equity:
Preferred stock: $.01 par value; 5,000,000 shares authorized; none
issued or outstanding as of March 31, 2000 and December 31, 1999 - -
Common stock: $.01 par value; 20,000,000 shares authorized;
6,742,597 and 6,695,867 shares issued and outstanding as of
March 31, 2000 and December 31, 1999, respectively 67,426 66,959
Additional paid-in capital 23,375,081 23,260,227
Accumulated deficit (17,894,308) (17,228,770)
--------------- --------------
Total shareholders' equity 5,548,199 6,098,416
--------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 8,636,827 $ 8,665,787
=============== ==============
(The accompanying notes are an integral part of the interim financial statements.)
</TABLE>
3
<PAGE>
VITAL IMAGES, INC.
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
2000 1999
----- ----
(Unaudited)
<S> <C> <C>
Revenue:
License fees $1,506,605 $1,076,874
Maintenance and services 304,079 204,632
Hardware 459,515 458,270
--------------------- ----------------------
Total revenue 2,270,199 1,739,776
Cost of revenue:
License fees 51,974 33,370
Maintenance and services 69,266 49,581
Hardware 404,547 364,344
--------------------- ----------------------
Total cost of revenue 525,787 447,295
Gross margin 1,744,412 1,292,481
Operating expenses:
Sales and marketing 1,087,647 869,739
Research and development 718,818 618,581
General and administrative 647,911 600,312
--------------------- ----------------------
Total operating expenses 2,454,376 2,088,632
Operating loss (709,964) (796,151)
Other income, net 45,926 32,978
--------------------- ----------------------
Loss before income taxes (664,038) (763,173)
Income taxes 1,500 1,500
--------------------- ----------------------
Net loss $ (665,538) $ (764,673)
===================== ======================
Net loss per share - basic and diluted $ (0.10) $ (0.16)
===================== ======================
Weighted average common shares outstanding - basic and diluted 6,712,539 4,880,759
===================== ======================
</TABLE>
(The accompanying notes are an integral part of the interim financial
statements.)
4
<PAGE>
VITAL IMAGES, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
2000 1999
---- ----
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (665,538) $ (764,673)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 159,914 138,504
Provision for uncollectible accounts receivable - 15,000
Changes in operating assets and liabilities:
Accounts receivable (633,847) (388,409)
Prepaid expenses and other current assets 18,880 (107,842)
Accounts payable 262,370 158,954
Deferred revenue 98,383 119,240
Accrued payroll and other liabilities 160,504 (86,437)
--------------- ---------------
Net cash used in operating activities (599,334) (915,663)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (736,787) (104,443)
Investments in marketable securities - (1,009,934)
Maturities of marketable securities - 2,000,000
--------------- ---------------
Net cash (used in) provided by investing activities (736,787) 885,623
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchases of common stock under stock option plans 115,321 78,514
--------------- ---------------
Net cash provided by financing activities 115,321 78,514
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (1,220,800) 48,474
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 5,332,885 1,751,615
--------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,112,085 $ 1,800,089
=============== ===============
</TABLE>
(The accompanying notes are an integral part of the interim financial
statements.)
5
<PAGE>
VITAL IMAGES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) BASIS OF PRESENTATION:
The accompanying unaudited financial statements of Vital Images, Inc. ("Vital
Images" or the "Company") have been prepared in accordance with generally
accepted accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments considered necessary, including items of
a normal recurring nature, for a fair presentation have been included.
Operating results for the three months ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2000. These financial statements should be read in conjunction with the
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.
(2) MAJOR CUSTOMERS AND GEOGRAPHIC DATA:
The following customer accounted for more than 10% of the Company's total
revenue for the periods indicated:
<TABLE>
<CAPTION>
Significant Percentage of
Customer Revenue Total Revenue
-------- ------- -------------
<S> <C> <C> <C>
Three months ended Toshiba America Medical Systems, $781,000 34%
March 31, 2000 Inc.
Three months ended Toshiba America Medical Systems, $709,000 41%
March 31, 1999 Inc.
</TABLE>
The Company's accounts receivable are generally concentrated with a small base
of customers. As of March 31, 2000, two customers, each accounting for more
than 10% of accounts receivable, accounted for 43% of accounts receivable, while
as of December 31, 1999, one customer accounted for 42% of accounts receivable.
Export revenue amounted to 3% and 8% of total revenue for the three months ended
March 31, 2000 and 1999, respectively. Substantially all of the Company's
export revenue is negotiated, invoiced and paid in U.S. dollars. Gross export
revenue by geographic area is summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------
2000 1999
---- ----
<S> <C> <C>
Europe............................................................. $49,000 $68,000
Asia and Pacific Region............................................ 15,000 56,000
Canada, Mexico and others.......................................... 4,000 19,000
</TABLE>
6
<PAGE>
(3) NET LOSS PER SHARE:
For the three months ended March 31, 2000 and 1999, net loss per share is
computed using the weighted average common shares outstanding during the period.
Common share equivalents are not included in the net loss per share
calculations, since they are anti-dilutive. Warrants and options to purchase
3,561,294 shares of the Company's common stock were outstanding as of March 31,
2000 and could potentially dilute basic earnings per share in future periods if
the Company generates net income.
(4) COMPREHENSIVE INCOME:
During the first quarters of 2000 and 1999, total comprehensive loss was
$666,000 and $765,000, respectively. There was no accumulated other
comprehensive income or loss as of March 31, 2000 and December 31, 1999.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
Vital Images develops, markets and supports medical visualization and analysis
software for use primarily in clinical diagnosis, surgical planning and medical
screening. The Company's software applies proprietary computer graphics and
image processing technologies to a wide variety of data supplied by computed
tomography ("CT") scanners, magnetic resonance ("MR") imaging devices and
ultrasound scanning equipment. Vital Images' products allow clinicians to
create both two- and three-dimensional views of human anatomy and to non-
invasively navigate within these images to better visualize and understand
internal structures and pathologies. The Company believes that its high-speed
visualization technology and customized protocols cost-effectively bring 3D
visualization and analysis into the routine, day-to-day practice of medicine.
The Company, which operates in a single business segment, markets its products
to healthcare providers and to manufacturers of diagnostic imaging systems
through a direct sales force in the United States and independent distributors
in international markets.
Revenue
Revenue was $2,270,000 for the three months ended March 31, 2000, compared with
$1,740,000 for the three months ended March 31, 1999, a 30% increase. This
increase was primarily the result of volume and pricing increases in sales of
Vitrea(R), the Company's flagship medical visualization and analysis software.
Software and hardware revenue from the Vitrea platform totaled $1,864,000, or
82% of total revenue, for the quarter ended March 31, 2000 compared with
$1,352,000, or 77% of total revenue, for the quarter ended March 31, 1999.
There was also an increase in maintenance and service revenue related to Vitrea
sales. These increases were partially offset by a decrease in revenue from
Advanced 3DI, the Company's medical visualization and analysis product for the
ultrasound market, exclusively marketed and sold by ATL Ultrasound, Inc.
Gross Margin
The gross margin percentage increased from 74% for the three months ended March
31, 1999 to 77% for the three months ended March 31, 2000, primarily as a result
of increasing the price of the Company's Vitrea system. The Vitrea system,
consisting of Vitrea software and third-party hardware and peripherals, is
designed to offer end users an integrated visualization and analysis system.
The Company receives only a nominal discount in purchasing the third-party
hardware and peripheral components of the Vitrea system, and the Company's gross
margin on the resale of these system components approximates its discount. The
Company anticipates that as hardware revenue related to the sale of Vitrea
software continues to account for a significant proportion of the Company's
total revenue, the overall gross margin percentage in future periods will
approximate the results of this quarter.
8
<PAGE>
Sales and Marketing
Sales and marketing expenses increased to $1,088,000, or 48% of total revenue,
for the three months ended March 31, 2000, from $870,000, or 50% of total
revenue, for the three months ended March 31, 1999, a 25% increase. The increase
was primarily due to increased compensation costs as a result of additional
personnel and increased sales commissions. There was also an increase in
expenses related to selling and promoting the Vitrea product as well as an
increase in travel expenses. The Company expects sales and marketing costs to
increase in future periods as a result of the cost of additional sales and
customer support personnel.
Research and Development
Research and development expenses increased 16% to $719,000, or 32% of total
revenue, for the three months ended March 31, 2000, compared with $619,000, or
36% of total revenue, for the same period last year. The increase was primarily
due to increased compensation costs resulting from additional personnel for the
three months ended March 31, 2000, compared with the three months ended March
31, 1999. The Company anticipates that research and development costs will
increase in future periods as future releases of Vitrea software are developed.
General and Administrative
General and administrative expenses increased to $648,000, or 29% of total
revenue, for the three months ended March 31, 2000, from $600,000, or 35% of
total revenue, for the three months ended March 31, 1999, an 8% increase.
General and administrative expenses increased primarily due to compensation
costs increasing, primarily as a result of staffing additions, as well as an
increase in professional service fees. The Company believes that in the future
general and administrative costs will approximate the results of this quarter in
dollars and will continue to decrease as a percentage of revenue.
Results of Operations
The increasing revenues from Vitrea shipments, net of the increased expenses
attributable to the development of the Company's infrastructure and the
development and promotion of the Vitrea product, resulted in an operating loss
of $710,000 for the three months ended March 31, 2000, compared with an
operating loss of $796,000 for the three months ended March 31, 1999.
Other Income
Interest income was $64,000 for the three months ended March 31, 2000 compared
with $33,000 for the comparable period in 1999. The increase in interest income
was due to a higher balance of cash and cash equivalents as a result of the
private placement of the Company's common stock completed in December 1999.
There was $18,000 of loss on disposition of assets, related to the Company's
move to its new facility, netted against interest income for the three months
ended March 31, 2000.
9
<PAGE>
Income Taxes
The income tax provisions for the three months ended March 31, 2000 and 1999
consist solely of certain state minimum fees. A valuation allowance has been
established to completely reserve for the deferred tax assets of the Company.
Liquidity and Capital Resources
As of March 31, 2000, the Company had $4,112,000 in cash and cash equivalents.
The Company's working capital was $4,264,000 and the Company had no material
borrowings. The Company has entered into a collateralized line of credit
agreement with a bank for $950,000. Borrowings under the agreement are limited
to the lower of $950,000 or the Company's borrowing base, which consists of a
specified percentage of certain accounts receivable. The Company is also
required to maintain a cash and cash equivalents balance of at least $1,000,000
at the lending bank. As of March 31, 2000, the Company has an outstanding letter
of credit, totaling $150,000, collateralized by the line of credit and its
available borrowings under the agreement were $800,000.
Cash flows used in operations decreased to $599,000 in the first quarter of 2000
from $916,000 in the first quarter of 1999. In both quarters cash flows were
used primarily to fund operating losses, which were partially offset by non-cash
expenses for depreciation and amortization. An increase in accounts receivable
decreased cash flows for the three months ended March 31, 2000, while increases
in accounts receivable and prepaid expenses and other current assets decreased
cash flows for the three months ended March 31, 1999. Increases in current
liabilities, primarily due to increases in accounts payable, deferred revenue
and accrued payroll and other liabilities, increased cash flows in the quarter
ended March 31, 2000 and increases in current liabilities, primarily due to
increases in accounts payable and deferred revenue, increased cash flows in the
quarter ended March 31, 1999.
The increases in accounts receivable and deferred revenue for the three months
ended March 31, 2000 were primarily due to volume increases in Vitrea sales and
the increase in accounts payable was due primarily to property and equipment
purchases related to the Company's new facility.
Net investing activities used $737,000 of cash in the quarter ended March 31,
2000 for property and equipment additions, primarily furniture for the Company's
new facility, and provided $886,000 in the quarter ended March 31, 1999,
primarily due to the conversion of marketable securities into cash. The Company
added property and equipment of $104,000 in the quarter ended March 31, 1999,
primarily for computer equipment to accommodate an increase in the number of
employees.
Cash provided by financing activities totaled $115,000 and $79,000 for the three
months ended March 31, 2000 and 1999, respectively, as a result of proceeds from
the sales of common stock under stock option plans.
The Company has never paid or declared any cash dividend and does not intend to
pay dividends in the near future. The Company has no current commitments for
material capital expenditures. The Company expects to use cash in the near term
as it continues to develop the infrastructure to support its business and
develop the market for its products.
10
<PAGE>
If the Company's operations progress as anticipated, of which there can be no
assurance, management believes that its cash and cash equivalents and borrowings
available under the credit agreement should be sufficient to satisfy its cash
requirements for at least the next twelve months. The timing of the Company's
future capital requirements, however, will depend on a number of factors,
including the ability and willingness of physicians to use three-dimensional
visualization and analysis software in clinical diagnosis, surgical planning,
patient screening and other diagnosis and treatment protocols; the ability of
the Company to successfully market its products; the ability of the Company to
differentiate its volume rendering software from competing products employing
surface rendering or other technologies; the ability of the Company to build an
effective sales and distribution channel; the impact of competition in the
medical visualization business; the ability of the Company to receive any
necessary regulatory approvals and the ability of the Company to enhance
existing products and develop new products on a timely basis. To the extent that
the Company's operations do not progress as anticipated, additional capital may
be required sooner. There can be no assurance that any required additional
capital will be available on acceptable terms or at all, and the failure to
obtain any such capital would have a material adverse effect on the Company's
business.
Foreign Currency Transactions
Substantially all of the Company's foreign transactions are negotiated, invoiced
and paid in U.S. dollars.
Year 2000 Readiness
Many computer programs and embedded computer chips were unable to distinguish
between the year 1900 and the year 2000. Therefore, some computer hardware and
software needed to be modified prior to the year 2000 in order to remain
functional. This is commonly known as the year 2000 ("Y2K") issue.
The Company has a formal program in place with an assigned year 2000 project
team to ensure that its critical areas will operate normally at the turn of the
century and beyond. Throughout 1999, the year 2000 project team determined areas
where contingency planning was needed. The planning efforts included, but were
not limited to, identification and mitigation of potential serious business
interruptions and establishing crisis response processes to address unexpected
problems.
Through the date of this filing, the Company has not experienced any significant
Y2K issues. The Company will continue to monitor its Y2K status during the
coming year and will devote the necessary resources to resolve all significant
Y2K issues in a timely manner.
The costs incurred by the Company in addressing its Y2K readiness issues were
primarily non-incremental compensation costs and were not material to the
Company's operating results. The Company currently estimates that the total
additional costs for addressing any Y2K readiness will not be material to the
Company's operating results. These costs are being expensed as they are
incurred.
11
<PAGE>
The Company's statements regarding its year 2000 readiness are forward-looking
statements and are, therefore, subject to change as a result of known and
unknown factors. The Company's cost estimates could be influenced by the
Company's ability to successfully identify all year 2000 issues, the nature and
amount of remediation required, the availability and cost of trained personnel
in this area and the year 2000 success that key third parties and customers
attain. While these and other unforeseen factors could have a material adverse
impact on the Company's financial position, results of operations or liquidity
in future periods due to possible business disruptions caused by a lack of third
party year 2000 readiness, management believes that it has implemented an
effective year 2000 compliance program that will minimize the possible negative
consequences to the Company.
The Year 2000 readiness disclosure statement set forth above is a "Year 2000
Readiness Disclosure" under the federal Year 2000 Information and Readiness
Disclosure Act.
Certain Important Factors
This Form 10-Q contains certain forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995 and information that are
based on management's beliefs, as well as on assumptions made by, and upon
information currently available to, management. When used in this Form 10-Q, the
words "expect," "anticipate," "intend," "plan," "believe," "seek," and
"estimate" or similar expressions are intended to identify such forward-looking
statements. However, this Form 10-Q also contains other forward-looking
statements. Forward-looking statements are not guarantees of future performance
and are subject to certain risks, uncertainties and assumptions, including, but
not limited to, the following factors, which could cause the Company's future
results and shareholder values to differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company: the dependence
on growth of the industry in which the Company operates, the extent to which the
Company's products gain market acceptance, the need for and availability of
additional capital, regulatory approvals, the potential for litigation regarding
patent and other intellectual property rights, the introduction of competitive
products by others, dependence on major customers, fluctuations in quarterly
results, the progress of product development, the availability of third-party
reimbursement, and the receipt and timing of regulatory approvals and other
factors detailed from time to time in the Company's filings with the Securities
and Exchange Commission, including those set forth under the heading "Important
Factors" in the Company's Annual Report on Form 10-K for the year ended December
31, 1999.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
12
<PAGE>
- -------------------------------------------------------------------------------
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. The exhibits to this quarterly report on Form 10-Q are listed in
--------
the exhibit index beginning on page 15.
(b) Form 8-K. The Company filed no reports on Form 8-K during the three months
--------
ended March 31, 2000.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VITAL IMAGES, INC.
May 10, 2000 /s/ Gregory S. Furness
-----------------------------------
Gregory S. Furness
Chief Financial Officer and
Vice President-Finance
(Chief Accounting Officer)
14
<PAGE>
VITAL IMAGES, INC.
INDEX TO EXHIBITS
- --------------------------------------------------------------------------------
27.1 Financial Data Schedule for the Three Months Ended March 31, 2000 (filed
herewith electronically).
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS AND RELATED NOTES FOR THE THREE MONTHS ENDED MARCH 31, 2000
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 4,112,085
<SECURITIES> 0
<RECEIVABLES> 2,731,961
<ALLOWANCES> 93,000
<INVENTORY> 64,950
<CURRENT-ASSETS> 7,195,475
<PP&E> 3,348,174
<DEPRECIATION> 1,906,822
<TOTAL-ASSETS> 8,636,827
<CURRENT-LIABILITIES> 2,931,526
<BONDS> 0
0
0
<COMMON> 67,426
<OTHER-SE> 5,480,773
<TOTAL-LIABILITY-AND-EQUITY> 8,636,827
<SALES> 1,966,120
<TOTAL-REVENUES> 2,270,199
<CGS> 456,521
<TOTAL-COSTS> 525,787
<OTHER-EXPENSES> 2,454,376
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (664,038)
<INCOME-TAX> 1,500
<INCOME-CONTINUING> (665,538)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (665,538)
<EPS-BASIC> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
