<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________________________
FORM 10-QSB
(MARK ONE)
(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 0-26548
Legal Research Center, Inc.
______________________________________________________________________________
(Exact Name of Registrant as Specified in its Charter)
Minnesota 41-1680384
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
700 Midland Square Building, 331 Second Avenue So., Minneapolis, MN 55401
______________________________________________________________________________
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: 612/332-4950
------------
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
------ --------
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date.
2,257,633 shares of Common Stock as of August 14, 1996
<PAGE>
LEGAL RESEARCH CENTER, INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets
December 31, 1995 and June 30, 1996 ........................... 2
Consolidated Statements of Operations
Three and Six Months Ended June 30, 1995 and 1996 ............. 3
Consolidated Statements of Stockholders' Equity (Deficit) ....... 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1995 and 1996 ....................... 5
Notes to Consolidated 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 ............................... 11
<PAGE>
- --------------------------------------------------------------------------------
PART I. FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
ITEM 1. FINANCIAL STATEMENTS
LEGAL RESEARCH CENTER, INC.
CONSOLIDATED BALANCE SHEETS
June 30, 1996 December 31,
ASSETS (unaudited) 1995
- --------------------------------------------------------------------------------
Current Assets
Cash and cash equivalents $ 2,409,773 $ 3,510,752
Accounts receivable:
Trade accounts, less allowance for doubtful
accounts of $ 43,389 and 41,341, respectively 300,530 205,604
Unbilled services 401,321 289,989
Related-party accounts and notes receivable 62,604 56,816
Other 32,808 -
------------ ------------
Total current assets 3,207,036 4,063,161
------------ ------------
Other Assets
Intangible assets, net of accumulated
amortization of $29,472 969,784 -
Investment in and notes receivable from The
Law Office, Inc. - 193,539
Investment in American Research Corporation 100,000 100,000
Capitalized development costs 76,990 14,000
------------ ------------
Total other assets 1,146,774 307,539
------------ ------------
Furniture and equipment, at cost 318,646 197,018
Less accumulated depreciation (81,226) (44,598)
------------ ------------
237,420 152,420
------------ ------------
$ 4,591,230 $ 4,523,120
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- --------------------------------------------------------------------------------
Current Liabilities
Accounts payable $ 202,606 $ 172,393
Notes payable 155,000 -
Client advances 48,794 39,969
Accrued expenses
Compensation 92,956 59,544
Royalties 4,900 10,510
------------ ------------
Total current liabilities 504,256 282,416
------------ ------------
Long-Term Liabilities
Non compete agreement 97,489 -
Deferred income taxes 17,700 -
Stockholders' Equity
Common stock, $0.01 par value; authorized
20,000,000 shares; issued 2,257,633 and
2,135,833 shares, respectively 22,576 21,358
Additional paid-in capital 4,823,566 4,551,634
Accumulated deficit (874,357) (332,288)
------------ ------------
3,971,785 4,240,704
------------ ------------
$ 4,591,230 $ 4,523,120
------------ ------------
------------ ------------
See Notes to Consolidated Financial Statements (unaudited)
-2-
<PAGE>
LEGAL RESEARCH CENTER, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
--------------------------- --------------------------
1996 1995 1996 1995
--------------------------- --------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $ 488,255 $ 356,920 $ 930,037 $ 719,112
Direct Operating Costs
Compensation and benefits 201,464 115,187 373,298 239,089
Other 68,844 41,726 113,135 82,884
------------ ---------- ----------- ---------
Total direct operating costs 270,308 156,913 486,433 321,973
------------ ---------- ----------- ---------
Gross profit 217,947 200,007 443,604 397,139
------------ ---------- ----------- ---------
Other Operating Costs
Sales and marketing 214,341 97,986 417,532 170,871
General and administrative 335,186 140,190 585,249 222,383
------------ ---------- ----------- ---------
Total other operating costs 549,527 238,176 1,002,781 393,254
------------ ---------- ----------- ---------
Operating income (loss) (331,580) (38,169) (559,177) 3,885
Interest Income 31,755 1,883 81,584 2,117
Interest Expense - (1,949) - (7,157)
Equity in pre-acquisition losses of
The Law Office, Inc. (12,976) - (64,476) -
------------ ---------- ----------- ---------
Net loss $ (312,801) $ (38,235) $ (542,069) $ (1,155)
------------ ---------- ----------- ---------
------------ ---------- ----------- ---------
Pro Forma Data (unaudited)
Net loss as reported $ (312,801) $ (38,235) $ (542,069) $ (1,155)
Pro forma provision for income taxes - - - -
------------ ---------- ----------- ---------
Pro forma net loss $ (312,801) $ (38,235) $ (542,069) $ (1,155)
------------ ---------- ----------- ---------
------------ ---------- ----------- ---------
Pro forma net loss per share $ (0.14) $ (0.04) $ (0.25) $ (0.00)
------------ ---------- ----------- ---------
------------ ---------- ----------- ---------
Weighted Average Common and Common
Equivalent Shares Outstanding 2,200,079 957,533 2,168,134 957,533
------------ ---------- ----------- ---------
------------ ---------- ----------- ---------
</TABLE>
See Notes to Consolidated Financial Statements (unaudited)
-3-
<PAGE>
LEGAL RESEARCH CENTER, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
Common Stock Additional
--------------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1993 500,000 $ 5,000 $ 104,417 $ (200,260) $ (90,843)
Net income - - 72,420 72,420
------------------------------------------------------------------------
Balance, December 31, 1994 500,000 5,000 104,417 (127,840) (18,423)
Sale of common stock 26,296 263 70,737 - 71,000
Conversion of note payable to common stock 57,037 570 153,430 - 154,000
Distribution to stockholders - - - (36,000) (36,000)
Net loss through date of S Corporation
termination - - - (60,465) (60,465)
Sale of common stock, net of issuance costs
of $970,870 1,552,500 15,525 4,447,355 - 4,462,880
Constructive dividend to S Corporation
stockholders - - (224,305) 224,305 -
Net loss subsequent to S Corporation
termination - - - (332,288) (332,288)
------------------------------------------------------------------------
Balance, December 31, 1995 2,135,833 $ 21,358 $4,551,634 $ (332,288) $4,240,704
Issuance of stock to purchase The Law
Office, Inc. 121,800 1,218 242,382 - 243,600
Issuance of stock options to purchase
The Law Office, Inc. - - 29,550 - 29,550
Net loss - - - (542,069) (542,069)
------------------------------------------------------------------------
Balance, June 30, 1996 2,257,633 $ 22,576 $4,823,566 $ (874,357) $3,971,785
------------------------------------------------------------------------
------------------------------------------------------------------------
</TABLE>
See Notes to Consolidated Financial Statements (unaudited)
-4-
<PAGE>
LEGAL RESEARCH CENTER, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
June 30
1996 1995
------------- -----------
(Unaudited)
Cash Flows From Operating Activities
Net loss) $ (542,069) $ (1,155)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities
net of the effects of the purchase of
The Law Office, Inc.:
Depreciation and amortization 62,452 5,294
Provision for uncollectible accounts
receivable 2,048 4,605
Equity in preacquisition
losses of The Law Office, Inc. 64,476 -
Changes in assets and liabilities:
Accounts receivable (208,306) (48,983)
Other assets (6,241) -
Related-party accounts and notes receivable 4,212 -
Accounts payable (12,446) 85,443
Client advances (3,675) 15,258
Accrued expenses 25,850 (30,534)
------------- -----------
Net cash (used in) provided by operating
activities (613,699) 29,928
------------- -----------
Cash Flows From Investing Activities
Cash paid for the purchase of
The Law Office, Inc. (50,750) -
Advances to The Law Office,
Inc. through the date of acquisition (386,618) (29,500)
Purchases of furniture and equipment (74,550) (17,865)
Capitalized development costs 24,638 -
------------- -----------
Net cash used in investing activities (487,280) (47,365)
------------- -----------
Cash Flows From Financing Activities
Net proceeds on notes payable - 538,000
Deferred stock offering costs - (99,825)
Sale of common stock - 71,000
Principal payments on long-term debt - (46,803)
Distribution to stockholders - (36,000)
------------- -----------
Net cash provided by financing activities - 426,372
------------- -----------
(Decrease) increase in cash and cash
equivalents (1,100,979) 408,935
------------- -----------
Cash and cash equivalents
Beginning 3,510,752 1,249
------------- -----------
Ending $ 2,409,773 $ 410,184
------------- -----------
------------- -----------
Supplemental Disclosures of Cash Flow
Information
Cash payments for interest $ - $ 7,157
------------- -----------
------------- -----------
Supplemental Schedule of Noncash Investing
and Financing Activities
Conversion of note payable to common stock $ - $ 154,000
------------- -----------
------------- -----------
Acquisition of The Law Office, Inc.
Cash purchase price $ 50,750 $ -
------------- -----------
------------- -----------
Tangible assets acquired $ 79,997 $ -
Intangible assets acquired 999,256 -
Liabilities assumed (625,353) -
Stock options issued (29,550) -
Non compete agreement (130,000) -
Stock issued (243,600) -
------------- -----------
$ 50,750 $ -
------------- -----------
------------- -----------
See Notes to Consolidated Financial Statements (unaudited)
-5-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 (UNAUDITED)
BASIS OF PRESENTATION: The interim financial statements are unaudited, but in
the opinion of management reflect all adjustments necessary for a fair
presentation of results of such periods. All such adjustments are of a normal
recurring nature.
The results of operations for any interim period are not necessarily indicative
of results for the full year. These financial statements should be read in
conjunction with the audited financial statements and notes thereto, for the
year ended December 31, 1995.
Pro forma income (loss) per common share: Pro forma income (loss) per common
share is computed on the basis of the weighted average number of common shares
and common equivalent shares outstanding during the respective periods.
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No. 83,
common stock issued and to be issued for consideration below the initial public
offering price during the 12 month period preceding the date of the initial
filing of the registration statement have been included in the calculation of
weighted average common shares outstanding, as if they were outstanding for all
periods presented.
Income taxes and S Corporation Distributions: Prior to the completion of an
initial public offering (IPO) on August 8, 1995, the profits and losses of the
Company were reported in the individual income tax returns of the stockholders
under SubChapter S Corporation of the Internal Revenue Code. Periodic
distributions were made to the Company's stockholders for the estimated income
tax liability on the S Corporation earnings. Upon the completion of the IPO,
the Company became a C Corporation, and is required to pay income taxes on its
subsequent earnings.
The income tax benefit computed at the statutory rate for the six month period
ended June 30, 1996 is approximately $192,000 which is offset by a valuation
allowance of the same amount. The deferred tax assets consist primarily of a
net loss carryforward, allowance for doubtful trade receivables, and equity in
the losses of The Law Office, Inc.
Major Customer: Two customers accounted for 25.8% and 15.2% of the Company's
total revenues in the quarter ended June 30, 1996. These same two customers
accounted for 30.4% and 12.8% respectively, of the Company's total revenues for
six month period ended June 30, 1996. No single customer accounted for more
than 10% of the Company's total revenues for the quarter ended June 30, 1995.
One customer accounted for 14.8% of the Company's total revenues for the six
month period ended June 30, 1995.
ACQUISITION OF THE LAW OFFICE, INC.: In May 1995 the Company required 25% of
the stock of The Law Office, Inc. (TLO), a development stage Company. The
investment in TLO was accounted for under the equity method of accounting. In
May 1996, the Company acquired all the outstanding shares of TLO for $50,750
in cash, 121,800 shares of the Company and options to buy 101,500 shares of
the Company at $3.50 per share. The acquisition was accounted for as a
purchase and, accordingly, the purchase price has been allocated to the
assets acquired and liabilities assumed based on fair market values. The
purchase price and allocation to assets acquired and liabilities assumed is
as follows:
-6-
<PAGE>
Purchase Price
Stock issued and cash paid $ 294,350
Stock options issued 29,550
Liabilities assumed 755,353
-----------
$ 1,079,253
-----------
-----------
Allocated to:
Tangible assets $ 79,997
Microsoft contract 70,800
Non compete agreement 130,000
Goodwill 798,456
-----------
$ 1,079,253
-----------
-----------
The excess of the purchase price above the fair value of the assets has been
assigned to intangible assets which are being amortized over periods ranging
from 18 to 54 months.
PRO FORMA RESULTS OF OPERATIONS: The following pro forma information is
based on the historical financial statements of the Company and TLO. This
information gives effect to the acquisition of TLO by the Company as if it
occurred on May 3, 1995, the date operations commenced for TLO. The pro
forma financial information does not purport to represent what the Company's
results of operations would actually had been if the acquisition has occurred
on the dates indicated or to project the Company's results at any future
period or date. The pro forma information is presented for comparative
purposes only.
Three Months Ending June 30,
1996 1995
------------ ------------
Pro forma revenues $ 488,255 $ 356,920
------------ ------------
------------ ------------
Pro forma loss income $ (459,087) $ (38,235)
------------ ------------
------------ ------------
Pro forma net loss per share $ (.21) $ (.04)
------------ ------------
------------ ------------
Weighted avarage common shares
and common equivalent shares
outstanding 2,200,079 1,033,320
------------ ------------
------------ ------------
Six Months Ending June 30,
1996 1995
------------ ------------
Pro forma revenues $ 930,037 $ 719,112
------------ ------------
------------ ------------
Pro forma loss $ (796,252) $ (1,115)
------------ ------------
------------ ------------
Pro forma net loss per share $ (.37) $ (0.0)
------------ ------------
------------ ------------
Weighted avarage common shares
and common equivalent shares
outstanding 2,168,134 995,217
------------ ------------
------------ ------------
The Company continues to use the proceeds from the initial public offering to
fund operating costs as it positions itself for future growth and to fund
operating costs as it positions itself for future growth and to fund the
operations of TLO. In addition, the Company continues to look for other
marketing and development opportunities and alliances. The Company believes
that cash requirements of TLO and other marketing and development activities
will be significant in 1996 and into the first half of 1997. The Company
intends to initially fund such investments and development activities and
raise additional funding, if possible, in the future.
RECLASSIFICATIONS: Certain reclassifications have been made to the 1995
financial statements to conform to the classifications in the 1996 financial
statements. These reclassifications did not have any impact on the net
income or pro forma earnings per share of the Company for 1995.
-7-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion and analysis provides information that the Company's
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. This discussion should
be read in conjunction with the financial statements and footnotes which appear
elsewhere in the Report and the Company's annual report for 1995 on Form 10-KSB.
This report contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from
the results discussed in the forward-looking statements.
The Company's revenues have historically been derived from conducting analytical
research and writing on a non-recurring basis for its customers.
Historically, the Company has experienced a seasonal fluctuation in revenues
with second and third quarters being the slowest quarters of the year and the
last quarter being the strongest. The Company has recently developed
programs designed to attract customers to enter into long term relationships
to provide greater consistency in quarterly revenues.
In May 1995 the Company acquired 25% of the stock of The Law Office,
Inc. (TLO). TLO is a development stage entity which will provide Microsoft
and Internet content by the way of a web site. TLO plans to be a
full-service, online commercial center offering a variety of goods and
services to legal professionals and a variety of legal related goods and
services to the general public. Revenues will be derived from the leasing
of space on TLO's web site and from the sale of services and advertising. To
date, TLO has not generated any significant revenues. The Company has been
funding development of TLO since May 1995. The Company purchased all of the
outstanding shares of TLO on May 13, 1996.
The Company issued shares in its public offering and received $ 4,462,880 in net
proceeds from this offering in August 1995. The Company used a portion of the
proceeds to hire additional sales, management and support personnel to
substantially increase its sales and marketing activities. The Company believes
that these activities will result in increased revenues in 1996. In addition to
increased spending in the sales and marketing area, the Company has made certain
development expenditures and other investments to position the Company for long
term growth in emerging areas in the research and alternative dispute resolution
niches of the legal services market.
RESULTS OF OPERATIONS:
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THE THREE MONTHS ENDED JUNE 30,
1995
REVENUES: Revenues increased by $131,335 or 36.6%, to $488,255 for the three
month period ended June 30, 1996 over the same period of 1995. For the six
month period, revenues increased $210,925 or 29.3%. The increase in revenues
for the second quarter and the six months ended June 30, 1996 is primarily
attributable to an increase in large multi-jurisdictional projects that the
Company has been able to secure through sales and marketing activities. The
Company expects to continue its sales and marketing efforts to seek and
expand upon similar projects during the balance of 1996.
DIRECT OPERATING COSTS: Direct operating costs for compensation and other
benefits include hourly contract fees for independent research attorneys and
hourly compensation of staff research
-8-
<PAGE>
attorneys and secretarial support personnel. Other direct operating costs
include royalty fees for association referrals, computer database charges and
document retrieval expenses. Total direct operating costs increased $113,394
or 72.3% for the three months ended June 30, 1996 from the same period in
1995. The increase in direct operating costs is primarily due to the higher
personnel costs and the hiring of independent attorneys in anticipation of
additional research projects. For the six month period, direct operating
costs increased $164,460 or 5.1.1 % for the comparable period of 1995. The
increase is principally attributable to the hiring of additional personnel
and the hiring of independent attorneys during the first six months of 1996.
GROSS PROFIT: Gross profit increased by $17,940 or 9.0% to $217,947 for the
three months ended June 30, 1996, primarily as a result of the revenue
increases. Due to the increase in direct operating costs discussed above,
gross profit as a percentage of revenues declined from 56.O% to 44.6% during
the second quarter of 1996. For the six month period, gross profit declined
$46,465 or 11.7% for the comparable period of 1995. The decline is
principally attributable to the increase in direct operating costs discussed
above.
OTHER OPERATING COSTS: Other operating costs include compensation of officers
and corporate staff, advertising expenditures and general corporate overhead,
including depreciation and amortization. Other operating costs increased by
$311,351 or 130.7% for the three months ended June 30, 1996 for the
comparable period of 1995. Sales and marketing costs represented $166,355 or
118.7 percent of this increase. Of the increase of sales and marketing
costs, $94,568 was due to increased staffing in the Company's sales group
and increases marketing and advertising expenditures. The remaining increase
is due to expenditures by TLO as it attempts to develop a sales staff and
market its services. General and administrative costs increased $194,996 or
139.1 percent for the three months ended June 30, 1996 for the comparable
period of 1995. Of the increase of general and administrative costs,
$123,462 was principally due to increased staffing and overhead expenditures
associated with a larger corporate staff. The remaining increase is due to
general corporate overhead expenditures for TLO.
For the six month period, such costs increased $609,527 or 155.0%. Of this
increase, $246,661 was attributable increased staffing in the sales group and
increases in marketing and advertising expenditures by the Company and TLO.
General and administrative costs increased by $362,866 from the comparable
period in 1995 primarily attributable to increased staffing and related
expenditures associated with a growth strategy in a publicly held company.
OTHER INCOME AND EXPENSES: Interest income increased $29,872 for the three
months ended June 30, 1996 and $79,467 for the six months ended June 30, 1996
for the comparable periods in 1995. The increases reflects the earnings on
invested cash proceeds received in the public offering along with interest on
notes receivable. Interest expense decreased $1,949 for the three months
ended June 30, 1996 and $7,157 for the six months ended June 30, 1996 for the
comparable periods in 1995, due to the retirement of all interest bearing
obligations in 1995. The Company recorded $12,976 for the three months ended
June 30, 1996 as its 25 % share of the losses from TLO from April 1
through the date of acquisition on May 13, 1996. For the six month period,
the Company recorded $64,476 as it share in TLO losses. TLO was
incorporated and commenced operations in May 1995 and had insignificant
results from operations during the second quarter of 1995.
LIQUIDITY AND CAPITAL RESOURCES Cash used in operating activities was
$613,699 in the first six months of 1996. This was the result of $413,093 of
net loss before depreciation and amortization and other non-cash charges
offset by $200,606 investing activities for the first months of 1996 was
$487,280 principally as a result of advances to and investment in TLO and
purchases of furniture and equipment. No cash was provided from financing
activities during the first six months of 1996.
Cash provided by operating activities was $29,928 in the first six months of
1995. This was the result of $8,744 of net income before depreciation and
other non-cash charges and $21,184 of changes in assets and liabilities.
Cash used in investing activities for the first six months of 1995 was
$47,365, representing advances to and investment in TLO and purchases of
furniture and equipment. Cash provided by financing activities for the first
six months of 1995 was $426,372, representing the proceeds from the Company's
private placement of notes and warrants, and the sale of common stock, during
the period offset by the expenses of such offerings, repayment of debt and a
stockholder distribution.
-9-
<PAGE>
The Company continues to use the proceeds from the its initial public
offering to fund operating costs as it positions itself for future growth and
to fund the operations of TLO. In addition, the Company continues to look
for other marketing and development opportunities and alliances. The Company
believes that cash requirements of TLO and other marketing and development
activities will be significant in 1996 and into the first half of 1997. The
Company intends to initially fund such investments and development activities
and raise additional funding, if possible, in the future.
-10-
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
i. None
(b) Report on Form 8-K
i. Form 8 -K/A Amendment No. 1 to Current Report dated July 29, 1996,
to amend the 8-K/A filing dated May 13, 1996. Includes Item 7,
Financial Statements and exhibits, related to the Company's
acquisition of The Law Office, Inc.
-11-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LEGAL RESEARCH CENTER, INC.
Dated: August 14, 1996 By: /s/ Frank G. Hallowell
----------------------------------
Frank G. Hallowell
Chief Financial Officer
-12-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM QUARTER
ENDED AND SIX MONTHS ENDED JUNE 30, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,409,773
<SECURITIES> 0
<RECEIVABLES> 343,919
<ALLOWANCES> 43,389
<INVENTORY> 0
<CURRENT-ASSETS> 3,207,036
<PP&E> 318,646
<DEPRECIATION> 81,226
<TOTAL-ASSETS> 4,591,230
<CURRENT-LIABILITIES> 504,256
<BONDS> 0
0
0
<COMMON> 22,576
<OTHER-SE> 3,944,209
<TOTAL-LIABILITY-AND-EQUITY> 3,971,785
<SALES> 0
<TOTAL-REVENUES> 930,037
<CGS> 0
<TOTAL-COSTS> 486,433
<OTHER-EXPENSES> 1,002,781
<LOSS-PROVISION> 2,048
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (542,069)
<INCOME-TAX> 0
<INCOME-CONTINUING> (542,069)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (542,069)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
