<PAGE> 1
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, 1996
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 0-24752
Wave Systems Corp.
(Exact name of registrant as specified in its charter)
Delaware 13-3477246
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
540 Madison Avenue
New York, New York 10022
(Address of principal executive offices)
(Zip code)
(212) 755-3282
(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___
The number of shares outstanding of each of the issuer's classes of
common stock as of June 30, 1996: 8,099,221 shares of Class A Common Stock and
6,258,176 shares of Class B Common Stock.
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
WAVE SYSTEMS CORP. AND SUBSIDIARIES
(a development stage corporation)
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
ASSETS 1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,196,700 $ 2,511,928
Marketable securities, held-to-maturity 2,950,560 3,946,200
Inventories 327,808 76,391
Prepaid expenses and other receivables, including notes from
affiliates, less allowance of $1,438,086 in 1996 and $668,000 in 1995 27,174 134,771
------------ ------------
Total current assets 5,502,242 6,669,290
Property, equipment, and leasehold improvements, less accumulated depreciation
and amortization of $476,917 in 1996 and $350,185 in 1995 899,958 954,530
Other assets 131,736 130,222
------------ ------------
$ 6,533,936 $ 7,754,042
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 686,242 $ 1,210,778
------------ ------------
Total current liabilities 686,242 1,210,778
------------ ------------
Preferred Stock:
Series A Cumulative Redeemable Preferred Stock, $.01 par value; 360 shares
issued and outstanding in 1996 and 1995; involuntary liquidation value $439,200 411,434 390,534
Series B Cumulative Convertible Preferred Stock, $.01 par value; 350 shares
issued and outstanding in 1996; involuntary liquidation value $3,519,250 3,233,276 --
------------ ------------
Total Preferred Stock 3,644,710 390,534
------------ ------------
Stockholders' equity:
Preferred stock, $.01 par value, Authorized 2,000,000 shares:
360 shares issued and outstanding as Series A Cumulative Redeemable Preferred Stock -- --
350 shares issued and outstanding as Series B Cumulative Convertible Preferred Stock -- --
Common stock, $.01 par value, Authorized 25,000,000 shares as Class A;
8,099,221 issued and outstanding at June 30, 1996; 6,615,618 at December 31, 1995 80,992 66,156
Common stock, $.01 par value, authorized 13,000,000 shares as Class B;
6,258,176 issued and outstanding at June 30, 1996; 7,583,138 at December 31, 1995 62,581 75,831
Capital in excess of par value 29,275,008 28,980,987
Deficit accumulated during the development stage (26,979,549) (22,742,854)
Less: Note receivable from stockholder, including accrued interest of $62,873
in 1996 and $54,215 in 1995 (236,048) (227,390)
------------ ------------
2,202,984 6,152,730
------------ ------------
$ 6,533,936 $ 7,754,042
============ ============
</TABLE>
See accompanying notes to unaudited condensed financial statements.
-2-
<PAGE> 3
WAVE SYSTEMS CORP. AND SUBSIDIARIES
(a development stage corporation)
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Period From
February 12,
Three Months Six Months 1988 (Inception)
Ended Ended Through
June 30, June 30, June 30,
---------------------------- ----------------------------
1996 1995 1996 1995 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 310 $ -- $ 1,458 $ -- $ 1,458
------------ ------------ ------------ ------------ ------------
Operating expenses:
Selling, general, and administrative 1,646,654 1,017,569 2,632,104 1,794,755 16,524,839
Research and development 810,994 654,059 1,721,291 1,300,871 11,011,955
------------ ------------ ------------ ------------ ------------
2,457,648 1,671,628 4,353,395 3,095,626 27,536,794
------------ ------------ ------------ ------------ ------------
Interest income 49,906 145,878 115,689 310,534 923,973
Interest expense (447) -- (447) -- (380,906)
Other income -- -- -- -- 12,720
------------ ------------ ------------ ------------ ------------
49,459 145,878 115,242 310,534 555,787
------------ ------------ ------------ ------------ ------------
Net loss (2,407,879) (1,525,750) (4,236,695) (2,785,092) (26,979,549)
Accrued dividends on preferred stock 29,702 10,150 40,150 20,300 165,084
------------ ------------ ------------ ------------ ------------
Net loss to common stockholders $ (2,437,581) $ (1,535,900) $ (4,276,845) $ (2,805,392) $(27,144,633)
============ ============ ============ ============ ============
Weighted average number of common shares
outstanding during the period 14,332,435 13,596,266 14,295,594 13,541,188 8,099,979
Loss per common share $ (0.17) $ (0.11) $ (0.30) $ (0.21) $ (3.35)
============ ============ ============ ============ ============
</TABLE>
See accompanying notes to unaudited condensed financial statements.
-3-
<PAGE> 4
WAVE SYSTEMS CORP. AND SUBSIDIARIES
(a development stage corporation)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Period From
February 12,
Six Months 1988 (Inception)
Ended Through
June 30, June 30,
------------------------------
1996 1995 1996
------------ ------------ ------------
Cash flows from operating activities:
<S> <C> <C> <C>
Net loss $ (4,236,695) $ (2,785,092) $(26,979,549)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 126,732 81,504 510,577
Reserve for short-term loans to affiliate 568,601 -- 568,601
Accrued interest on marketable securities (5,102) (109,637) (160,681)
Noncash expenses:
Common stock issued in connection with
License and Cross-License Agreement -- -- 1,124,960
Common stock issued for services rendered
and additional interest on borrowings 63,072 -- 2,393,696
Preferred stock issued for services rendered -- -- 265,600
Compensation associated with issuance of
stock options -- -- 399,740
Amortization of deferred compensation -- -- 398,660
Amortization of discount on notes payable -- -- 166,253
Common stock issued by principal stockholder for
services rendered -- -- 565,250
Changes in assets and liabilities:
Increase in accrued interest on note receivable (8,658) (8,624) (62,873)
Increase in inventories (251,417) -- (327,808)
(Increase) decrease in prepaid expenses and
other receivables 107,597 102 (27,174)
(Increase) in other assets (1,514) (7,123) (141,680)
(Decrease) increase in accounts payable and
accrued expenses (524,537) (203,996) 741,241
------------ ------------ ------------
Net cash used in operating activities (4,161,921) (3,032,866) (20,565,187)
------------ ------------ ------------
Cash flows from investing activities:
Acquisition of property, equipment & leasehold improvements (72,160) (331,969) (1,370,533)
Short-term loans to affiliate (568,601) -- (568,601)
Organizational costs -- -- (14,966)
Redemption of marketable securities 4,000,000 11,063,330 24,810,690
Purchase of marketable securities (2,999,257) (11,708,678) (27,600,568)
------------ ------------ ------------
Net cash (used in) provided by investing activities 359,982 (977,317) (4,743,978)
------------ ------------ ------------
Cash flows from financing activities:
Net proceeds from issuance of common stock 272,685 1,600 22,421,760
Net proceeds from issuance of Series B Preferred Stock 3,214,026 -- 3,214,026
Sale of warrants -- -- 4
Note receivable from stockholder -- -- (173,175)
Proceeds from notes payable and warrants to stockholders -- -- 2,083,972
Repayments of notes payable to stockholders -- -- (1,069,972)
Proceeds from notes payable and warrants -- -- 1,284,250
Repayment of notes payable -- -- (255,000)
Advances from stockholder -- -- 227,598
Repayments of advances from stockholders -- -- (227,598)
Decrease in deferred offering costs -- -- --
------------ ------------ ------------
Net cash provided by financing activities 3,486,711 1,600 27,505,865
------------ ------------ ------------
Net (decrease) increase in cash and cash equivalents (315,228) (4,008,583) 2,196,700
Cash and cash equivalents at beginning of period 2,511,928 5,159,440 --
------------ ------------ ------------
Cash and cash equivalents at end of period $ 2,196,700 $ 1,150,857 $ 2,196,700
============ ============ ============
</TABLE>
No cash was paid for interest during the six months ended June 30, 1996 or 1995.
See accompanying notes to unaudited condensed financial statements.
-4-
<PAGE> 5
WAVE SYSTEMS CORP. AND SUBSIDIARIES
(a development stage corporation)
Condensed Consolidated Statements of Stockholders' Equity
Six Months Ended June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Capital Accumulated
Class A Class B in Excess During the
Common Stock Common Stock of Development
----------------------------- ------------------------------
Shares Amount Shares Amount Par Value Stage
------------ ------------ ------------ ------------ ------------ ------------
Balance at
December 31,
<S> <C> <C> <C> <C> <C> <C>
1995 6,615,618 $ 66,156 7,583,138 $ 75,831 $ 28,980,987 $(22,742,854)
Exercise of options
to purchase
Class A stock 134,641 1,346 -- -- 271,339 --
Shares issued for
services 24,000 240 -- -- 62,832 --
Accrual of interest
on note receivable -- -- -- -- -- --
Accrued dividend on
preferred stock -- -- -- -- (40,150) --
Exchange of Class A
stock for Class B
stock 1,324,962 13,250 (1,324,962) (13,250) -- --
Net (loss) for six
months ended
June 30, 1996 -- -- -- -- -- (4,236,695)
------------ ------------ ------------ ------------ ------------ ------------
Balance at June 30,
1996 8,099,221 $ 80,992 6,258,176 $ 62,581 $ 29,275,008 $(26,979,549)
============ ============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Note
Receivable
from
Stock-
holder Total
------------ ------------
Balance at
December 31,
<S> <C> <C>
1995 $ (227,390) $ 6,152,730
Exercise of options
to purchase
Class A stock -- 272,685
Shares issued for
services -- 63,072
Accrual of interest
on note receivable (8,658) (8,658)
Accrued dividend on
preferred stock -- (40,150)
Exchange of Class A
stock for Class B
stock -- --
Net (loss) for six
months ended
June 30, 1996 -- (4,236,695)
------------ ------------
Balance at June 30,
1996 $ (236,048) $ 2,202,984
============ ============
</TABLE>
-5-
<PAGE> 6
WAVE SYSTEMS CORP. AND SUBSIDIARIES
(a development stage corporation)
Notes To Condensed Consolidated Financial Statements
June 30, 1996 and 1995
In the opinion of management, the accompanying unaudited condensed consolidated
financial statements contain all adjustments (consisting only of normal
recurring adjustments) necessary to present fairly the financial position of the
Company as of June 30, 1996, and the results of its operations and cash flows
for the six months ended June 30, 1996 and 1995, and for the period from
February 12, 1988 (inception) through June 30, 1996. Such financial statements
have been condensed in accordance with the applicable regulations of the
Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these condensed consolidated financial
statements be read in conjunction with the Company's audited consolidated
financial statements and notes thereto for the year ended December 31, 1995,
included in its Form 10-K filed in April 1996. The results of operations for the
three and six months ended June 30, 1996 are not necessarily indicative of the
operating results for the full year.
The Company has reclassified certain expenses incurred for research and
development for the quarter ended June 30, 1995, which were originally charged
to selling, general and administrative. Such changes have been reflected in
the totals for the three and six months ended June 30, 1995, and the cumulative
totals.
1. (Loss) per Share:
(Loss) per share is computed based on the weighted average number of common
shares outstanding. The inclusion of common stock equivalents (warrants,
options, and convertible preferred stock) in this computation would be
antidilutive.
2. Stock Options and Grants:
During the quarter ended June 30, 1996, the Company granted various employees,
the Chairman of the Executive Committee, and one consultant options to purchase
a total of 277,000 shares of Class A Common Stock at $3.09 per share. These
options were granted at the market price on the date next preceding the date of
grant.
In May 1996, the Company's shareholders approved an amendment to the 1994 Wave
Employee Stock Option Plan. The total number of shares of common stock available
under the plan was increased by 1,000,000 shares.
3. Related Party Transaction:
In May of 1996 the Company re-directed its operations to capitalize on the
consumer marketplace and the rapid growth of the Internet. To this end the
Company entered into negotiations and reached an agreement in principle with
Wave Interactive Network ("WIN") whereby the Company will subsequently acquire
all of the outstanding common stock of WIN not currently owned by the Company.
The details of the agreement are currently being finalized. The Company has
financed the activities of WIN since May of 1996 by extending short-term loans
to WIN. These notes have been fully reserved.
-6-
<PAGE> 7
4. Capital Stock:
In May of 1996 the Company raised $3,214,026, net of expenses, through the
private placement of 350 shares of Series B Preferred Stock ("Series B Stock").
The Series B Stock has a stated value of $10,000 per share, which accrues
dividends for liquidation and conversion purposes at 6% per annum, and ranks
senior to the Company's common stock and junior to the Series A Preferred Stock.
Series B Stock is convertible by the holder, in increments, into the Company's
Class A common stock based on the market price of the Company's Class A common
stock at the time of conversion. The Series B Stock is subject to automatic
conversion two years from the issue date. In the event of any conversion,
whether automatic or voluntary, by a holder or holders, the Company is required
to redeem the number of Series B Stock that, when converted into Class A common
stock, would exceed 20% of the total number of shares of Class A common stock
then outstanding.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Wave Systems Corp. ("Wave" or the "Company") is in transition from a company
focused principally on research and development of new technology to a company
focused on the commercialization of its technology through licensing fees,
royalties and product sales. Since its inception in February of 1988, the
Company has devoted substantially all of its efforts and resources to research,
feasibility studies, design, development, and market testing of the Wave System.
During this period, the Company designed and successfully developed its
proprietary application specific integrated circuit ("ASIC") as well as WaveNet
and other necessary components of the WaveMeter and the Wave System. Concurrent
with its research and development activities, the Company has devoted increased
resources to market research, market development and other related activities.
In May of 1996 the Company re-directed its operations to capitalize on the
consumer marketplace and the rapid growth of the Internet. To this end the
Company entered into negotiations and reached an agreement in principle with
Wave Interactive Network ("WIN") whereby the Company will subsequently acquire
all of the outstanding common stock of WIN not currently owned by the Company.
The details of the agreement are currently being finalized. The Company has
financed the activities of WIN since May of 1996 by extending short-term loans
to WIN. These notes have been fully reserved.
In May of 1996 the Company raised $3,500,000 through the private placement of
350 shares of Series B Preferred Stock. Series B Preferred Stock accrues
dividends at a rate of 6% per annum and is convertible into the Company's Class
A common stock based on the market price of the Company's Class A common stock
at the time of conversion.
-7-
<PAGE> 8
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 AND 1995
Research and development expenses for the three months ended June 30, 1996 were
$810,994, as compared to $654,059 for the comparable period of 1995. The
increase in research and development expenses was primarily attributable to an
increase in personnel and other related costs associated with the continued
design and development of the Company's ASIC, including, but not limited to,
non-recurring engineering costs and prototype purchases; transaction processing
system (WaveNet); real time news services; and related enabling technologies.
Current research and development activities are focused on the final development
of an Internet-based commerce/publishing solution, integration of the Company's
technology with emerging cable modem technologies and other broadband
technologies, as well as additional ASIC development for future products and
adaptation of the Company's products to additional software operating
environments and computer platforms.
Selling, general and administrative expenses for the three months ended June 30,
1996 were $1,646,654, as compared to $1,017,569 for the comparable period of
1995. The increase in selling, general and administrative expenses was primarily
attributable to the pending acquisition of WIN and the associated financing of
WIN's activities.
Interest income for the three months ended June 30, 1996 was $49,906, as
compared to $145,878 for the comparable period of 1995. The decrease in interest
income is primarily attributable to a decrease in interest-bearing assets.
Due to the reasons set forth above, the Company's net loss for the three months
ended June 30, 1996 was $2,407,879 as compared to $1,525,750 for the comparable
period of 1995.
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Research and development expenses for the six months ended June 30, 1996 were
$1,721,291, as compared to $1,300,871 for the comparable period of 1995. The
increase in research and development expenses was primarily attributable to an
increase in personnel and other related costs associated with the continued
design and development of the Company's ASIC, including, but not limited to,
non-recurring engineering costs and prototype purchases; transaction processing
system (WaveNet); real time news services; and related enabling technologies.
Current research and development activities are focused on the final development
of an Internet based commerce/publishing solution, integration of the Company's
technology with emerging cable modem technologies and other broadband
technologies, as well as additional ASIC development for future products and
adaptation of the Company's products to additional software operating
environments and computer platforms.
Selling, general and administrative expenses for the six months ended June 30,
1996 were $2,632,104, as compared to $1,794,755 for the comparable period of
1995. The increase in selling, general and administrative expenses was primarily
attributable to an increase in personnel and other related costs associated with
the development and marketing of new applications of the Company's technology as
well as the pending acquisition of WIN and the associated financing of WIN's
activities.
Interest income for the six months ended June 30, 1996 was $115,689, as compared
to $310,534 for the comparable period of 1995. The decrease in interest income
is primarily attributable to a decrease in interest-bearing assets.
-8-
<PAGE> 9
Due to the reasons set forth above, the Company's net loss for the six months
ended June 30, 1996 was $4,236,695 as compared to $2,785,092 for the comparable
period of 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company has experienced net losses and negative cash flow from operations
since its inception and, as of June 30, 1996, had a deficit accumulated during
the development stage of $26,979,549. The Company has financed its operations
through June 30, 1996 principally through the private placement of Class B
Common Stock for an aggregate amount of $6,201,931 (before deduction of expenses
incurred in connection therewith), the issuance of $2,873,250 in aggregate
principal amount of its 10% Convertible Notes and 15% Notes (of which $2,098,250
was converted into Class B Common Stock), the sale of 3,728,200 shares of its
Class A Common Stock in an initial public offering raising approximately
$15,711,000 after all expenses, and the private placement of 350 shares of
Series B Preferred Stock for an aggregate amount of $3,500,000 (before deduction
of expenses incurred in connection therewith). In addition, the Company has
attempted to contain costs and reduce cash flow requirements by using
consultants and compensating key employees, consultants, suppliers and other
vendors with Common Stock and options to purchase Common Stock.
At June 30, 1996, the Company had approximately $2,197,000 in cash and cash
equivalents and approximately $2,951,000 in marketable securities. At December
31, 1995, the Company had approximately $2,512,000 in cash and cash equivalents
and approximately $3,946,000 in marketable securities. The decrease in cash and
cash equivalents reflects cash expenditures of approximately $4,234,000 to
finance operations and acquire property and equipment. At June 30, 1996, the
Company had working capital of approximately $4,816,000. The Company expects to
incur substantial additional expenses resulting in significant losses at least
through the period ending December 31, 1996 due to minimal revenues associated
with initial market entry, continued research and development costs as well as
increased sales and marketing expenses associated with market testing and
roll-out.
Significant uncertainty currently exists with respect to the adequacy of current
funds to support the Company's activities until positive cash flow from
operations can be achieved. Additionally, despite the successful placement of
the Company's Series B Preferred Stock in May of this quarter, the Company is
uncertain as to the availability of financing from other sources to fund any
cash deficiencies. These uncertainties raise doubt about the Company's ability
to continue as a going concern.
In order to reduce these uncertainties, the Company continues to evaluate
additional financing options and may therefore elect to raise capital, from time
to time, through equity or debt financing in order to capitalize on business
opportunities, market conditions and insure the continued development of the
Company's technology, products and services. Additionally, the Company monitors
its performance on a monthly basis and, if necessary, will reduce its operating
expenditures accordingly. The Company believes that these activities provide a
viable plan for the continuation of the Company's business into 1997.
The Company presently has no material commitments for capital expenditures.
However, in order to bring the Wave System to market, the Company anticipates
spending additional amounts on inventory items such as computer chips and
boards, additional hardware, and related materials. Such spending will vary
based on the Company's requirements.
-9-
<PAGE> 10
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting of Stockholders held on May 23, 1996,
the Company's stockholders elected the following six persons to one-year terms.
No director received less than 99% of the total votes cast (11,778,216 of
14,321,955 shares): Peter J. Sprague ("For" -- 11,699,115, "Withheld" --
79,101); John E. Bagalay, Jr., Ph.D. ("For" -- 11,722,916, "Withheld" --
55,300); Philippe Bertin ("For" -- 11,720,816, "Withheld" -- 57,400); George
Gilder ("For" -- 11,719,266, "Withheld" -- 58,950); John E. McConnaughy, Jr.
("For" -- 11,708,116, "Withheld" -- 70,100,); and Gene W. Ray, Ph.D. ("For" --
11,712,416, "Withheld" -- 65,850,).
The stockholders also approved an amendment to the Company's 1994 Stock
Option Plan to increase the number shares of Class A Common Stock reserved for
issuance thereunder by 1,000,000 shares. Total votes "For" were 10,323,677;
total votes "Against" were 173,703; total abstentions were 106,408; and broker
non-votes were 1,174,428.
Lastly, the stockholders ratified the appointment of KPMG Peat Marwick
LLP as the Company's independent auditors for the current fiscal year. Total
votes "For" were 11,676,181; total votes "Against" were 25,060; and total
abstentions were 73,525.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed:
None
(b) Reports on Form 8-K:
The Company filed a Current Report on Form 8-K with the
Securities and Exchange Commission during the quarter ended June 30, 1996. The
following item was reported in the Form 8-K dated May 30, 1996:
Item 5. Other Events -- The Company reported that, on May 29,
1996, it completed the sale of $3.5 million of its 6% Series B Convertible
Preferred Shares through a private placement pursuant to Regulation S under the
Securities Act of 1933.
-10-
<PAGE> 11
SIGNATURE
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.
WAVE SYSTEMS CORP.
(Registrant)
Date: August 15, 1996 By: /s/ Peter Sprague
------------------------------
Name: Peter Sprague
Title: Chairman, Chief Executive
Officer
(Principal Financial Officer and Duly
Authorized Officer of the Registrant)
-11-
<PAGE> 12
EXHIBIT INDEX
-------------
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,196,200
<SECURITIES> 2,950,560
<RECEIVABLES> 1,438,086
<ALLOWANCES> 1,438,086
<INVENTORY> 327,808
<CURRENT-ASSETS> 5,502,242
<PP&E> 1,376,875
<DEPRECIATION> 476,917
<TOTAL-ASSETS> 6,533,936
<CURRENT-LIABILITIES> 686,242
<BONDS> 0
3,644,710
0
<COMMON> 143,573
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,533,936
<SALES> 0
<TOTAL-REVENUES> 1,458
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,353,395
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,236,695)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,236,695)
<EPS-PRIMARY> $(0.30)
<EPS-DILUTED> 0
</TABLE>
