<PAGE> 1
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 September 30, 1996
/ / 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 33-94826-NY
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
(Name of small business issuer as specified in its charter)
New Jersey 22-3273637
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Princeton Pike Corporate Center, 1009 Lenox Drive, Lawrenceville, NJ 08648
(Address of principal executive offices) (Zip Code)
Issuer's telephone number : (609)-896-1233
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
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 : As of November 1, 1996, there were
4,646 shares of Common Stock outstanding.
Transitional Small Business Disclosure Format (Check one) : Yes No X
----- ------
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PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
INDEX TO FORM 10-QSB
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C>
ITEM 1. Financial Statements
Balance Sheets as of September 30, 1996 and December 31, 1995 3
Statements of Operations for the Three and Nine Months Ended
September 30, 1996 and 1995 4
Statements of Changes in Shareholders' Equity for the Nine Months Ended
September 30, 1996 and the Year Ended December 31, 1995 5
Statements of Cash Flows for the Nine Months Ended
September 30, 1996 and 1995 6
Notes to Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II - OTHER INFORMATION
ITEM 6. Reports on Form 8-K 10
Exhibits 11
Signatures 12
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
- -------------------------------------------------------------------------------------
(UNAUDITED)
ASSETS
CURRENT ASSETS
<S> <C> <C>
Cash and cash equivalents $ 4,443,769 $ 5,308,465
Short-term investments 4,903,274 3,980,627
Working capital advance 641,057 23,723
Prepaid and other assets 411,892 228,627
------------ ------------
TOTAL CURRENT ASSETS 10,399,992 9,541,442
Investments 576,143 565,723
Furniture and equipment, net 1,510,063 1,757,018
Deferred offering costs 450,000
Other assets 50,000 50,000
------------ ------------
TOTAL ASSETS $ 12,536,198 $ 12,364,183
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 366,171 $ 255,159
Accrued expenses 688,768 576,696
Medical costs payable 342,996 1,862
Third party payables 184,525
Other liabilities 320,573 15,433
------------ ------------
TOTAL LIABILITIES 1,903,033 849,150
------------ ------------
SHAREHOLDERS' EQUITY
Common Stock, subject to redemption
(no par; 20,000 authorized; 4,646
and 3,515 issued and outstanding ) 23,798,000 17,575,000
Paid in capital 43,214 24,838
Net unrealized gains on investments 1,375 21,645
Retained deficit (13,209,424) (6,106,450)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY 10,633,165 11,515,033
------------ ------------
TOTAL LIABILITIES AND $ 12,536,198 $ 12,364,183
SHAREHOLDERS' EQUITY
============ ============
</TABLE>
See accompanying notes.
3
<PAGE> 4
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE FOR THE NINE FOR THE NINE
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------
REVENUE
<S> <C> <C> <C> <C>
Premiums earned $ 541,005 $ -- $ 869,554 $ --
Interest income, net 172,968 139,037 426,329 528,000
Other revenue 22,836 -- 35,974 --
----------- ----------- ----------- -----------
TOTAL REVENUE 736,809 139,037 1,331,857 528,000
----------- ----------- ----------- -----------
EXPENSES
Medical costs 589,091 -- 858,500 --
Professional services 848,555 897,574 2,937,619 1,892,338
Compensation and benefits 525,918 540,911 2,269,440 1,076,017
General and administrative 439,583 188,634 1,539,726 550,880
Insurance 31,890 41,345 129,546 47,349
----------- ----------- ----------- -----------
TOTAL EXPENSES INCURRED 2,435,037 1,668,464 7,734,831 3,566,584
----------- ----------- ----------- -----------
NET LOSS $(1,698,228) $(1,529,427) $(6,402,974) $(3,038,584)
=========== =========== =========== ===========
Net loss per common share $ (340) $ (439) $ (1,528) $ (864)
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
4
<PAGE> 5
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
NET
UNREALIZED TOTAL
COMMON PAID IN GAINS ON ACCUMULATED SHAREHOLDERS'
STOCK CAPITAL INVESTMENTS DEFICIT EQUITY
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1994 $17,750,000 $ -- $ -- $(1,440,338) $ 16,309,662
Common stock redeemed
(35 shares) (175,000) 24,838 (150,162)
Change in net unrealized
gains 21,645 21,645
Net loss (4,666,112) (4,666,112)
----------- ------- -------- ----------- ------------
BALANCE AT DECEMBER 31, 1995 17,575,000 24,838 21,645 (6,106,450) 11,515,033
Common stock issued 6,248,000 (700,000) 5,548,000
net (1136 shares)
Common stock redeemed 18,376 (6,624)
(5 shares) (25,000)
Change in net unrealized gains (20,270) (20,270)
Net loss (6,402,974) (6,402,974)
----------- ------- -------- ------------ ------------
BALANCE AT SEPT. 30, 1996
(UNAUDITED) $23,798,000 $43,214 $ 1,375 $(13,209,424) $ 10,633,165
=========== ======= ======== ============ ============
</TABLE>
See accompanying notes.
5
<PAGE> 6
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE FOR THE NINE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
- -------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES :
<S> <C> <C>
Net Loss $(6,402,974) $ (3,038,584)
Adjustment to reconcile net loss to net cash used for
operating activities :
Depreciation and amortization 341,746 44,398
Decrease (increase) in advances to management
company (617,334) 396,622
Increase in prepaid and other assets (183,265) (485,904)
Increase (decrease) in accounts payable 111,012 (308,125)
Increase in accrued expenses 112,072 --
Increase in medical costs payable 341,134 --
Increase in third party payables 184,525 --
Increase in other liabilities 305,140 --
----------- ------------
NET CASH USED IN OPERATING ACTIVITIES (5,807,944) (3,391,593)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES :
Purchase of investments -- (4,825,197)
Proceeds from investments matured -- 12,515,000
Purchase of equipment (125,481) (1,147,250)
Purchase of short term investments (922,647) --
----------- ------------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES (1,048,128) 6,542,553
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES :
Common stock issued 5,998,000 --
Redemption of common stock (6,624) (100,000)
----------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,991,376 (100,000)
----------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (864,696) 3,050,960
Cash and cash equivalents, beginning of period 5,308,465 3,824,277
----------- ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 4,443,769 $ 6,875,237
=========== ============
</TABLE>
See accompanying notes.
6
<PAGE> 7
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
NOTES TO FINANCIAL STATEMENTS
1. UNAUDITED FINANCIAL STATEMENTS
The financial information for the nine and three months ended September 30, 1996
and 1995 included herein is unaudited. Such information includes all
adjustments, consisting of a normal and recurring nature, which in the opinion
of management, are necessary for a fair presentation of the Company's Balance
Sheets, Statements of Operations, Statements of Changes in Shareholders' Equity
and Cash Flows in accordance with generally accepted accounting principles. Such
information should be read in conjunction with Management's Discussion and
Analysis and the Notes to Financial Statements incorporated by reference to the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1995.
2. SECOND OFFERING
During 1996, the Company sold 1,136 shares under a second offering. The proceeds
of this offering, net of the costs incurred, have been reflected as Common Stock
issued. For the nine and three months ended September 30, 1996, the calculation
for "Net Loss per Common Share" includes the weighted average number of shares
issued through the second offering.
3. ADMINISTRATIVE SERVICE ONLY (ASO") CONTRACTS
Self-insured contract activity represents contracts for which the various
employers retain all health care service risks, while the Plan assumes
administrative risk. The Plan does not reflect payment of ASO claims in its
Statement of Operations. Administrative service fees relating to this business
are recognized in Other Income in the period in which services are rendered.
7
<PAGE> 8
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
GENERAL
The Company is a Health Maintenance Organization ("HMO") which received approval
to operate in all 21 counties of New Jersey in January, 1996. The Company's
products provide for comprehensive medical coverage in exchange for a prepaid
fixed monthly premium in the small (less than 50 employees) and large employer
market in New Jersey.
Enrollment at the end of the third quarter, 1996 has grown to 2,278 members.
While membership has been increasing steadily on a month to month basis,
enrollment results have not met expectations. Several factors have been
identified which contributed to the slower than expected start. To address these
factors and their impact on the Company, a three part plan has been adopted.
Part One: Capital Preservation
In response to a continuing need for capital and low premium levels, the Company
has implemented a capital preservation strategy. As a result, administrative
expenditures have been reduced and are in line with reforecasted revenue and
budget projections. This reforecast is based on the Company's experience to date
and anticipated future progress. Implementation of this strategy should result
in continued viability and compliance with reserve requirements.
Part Two: Marketing and Sales Strategy
Pricing, network access and product were identified as obstacles inhibiting
enrollment growth. The Company has responded to these market conditions by
holding the line on premium rates through July 1997; recruiting additional
primary care physicians; adding a Point of Service (POS) option, and targeting
marketing and sales in selected geographic areas. This response repositions the
Company to offer a more competitive product with an expanded network.
Part Three: New Initiatives
In August, 1996, the Company began plans to offer "private label" products,
scheduled to be available in early 1997. These products are offered under the
Company's license but are identified with local providers. The Company believes
that growth in the small group market will be enhanced by the private label
plans with their local appeal. The Company also initiated phase one of its
unique "Care Model" program in August, 1996, designed to create 24 hour access
to referrals, counseling, self-help and health education. It maintains managed
care's focus on cost effective quality care while removing artificial barriers
to appropriate access and providing around the clock access to health
professionals.
OPERATIONS
Premiums and investment income were the major sources of revenue for the three
and nine months ended September 30, 1996. Premium income is generated largely
through commercial HMO and Point-of-Service ("POS") business sold in the small
employer (less than 50 employees) market. The adoption, earlier this year, of
the proposed regulations allowing HMOs to offer a POS product has contributed to
increased sales. POS business represents approximately 75% of the Company's
total membership.
Investment income for the three months ended September 30, 1996 increased over
the third quarter 1995 due to the favorable impact of the funds from the second
offering. Investment income for the nine months ended September 30,1996 was
lower due to lower invested net assets.
8
<PAGE> 9
Other income represents administrative service fees relating to the self-funded
organizations which access the Company's Preferred Provider Organization
network.
The increase in medical claims cost is commensurate with the increase in
premiums. Due to the lack of historical experience, the Company maintains a
reserve equivalent to a targeted loss ratio. Based upon the review of the claims
to date, management believes the reserve to be appropriate.
Operating expenses for the three and nine months ended September 30, 1996
increased as compared to the same periods for the previous year. In 1995,
expenditures and personnel acquisitions were delayed until receipt of the
original Certificate of Authority in August 1995. At September 30, 1996,
operating expenses were consistent with reforecasted budgeted amounts.
No tax benefit for operating losses has been recognized in the financial
statements because the realization of such benefits would be dependent upon
achieving future operating profits, which cannot be reasonably assured.
FINANCIAL CONDITION
At September 30, 1996, total assets were $12,536,198, representing an increase
of $172,015 from December 31, 1995. This is largely attributable to the proceeds
received from the second offering, offset by the net loss from operations. The
$641,057 working capital advance at September 30, 1996 represents funds
transferred to the management company to fund future operations.
The increase in prepaid and other assets is mainly due to the renewal of
insurance coverage in the third quarter. Deferred offering costs were held as an
asset until the expiration of the second offering. These costs are reflected as
a reduction to the proceeds received from the second offering at September 30,
1996.
Accrued expenses represent the estimates for services provided to the
organization for which no bill has been received. The largest components of the
accrued expenses relate to vendor fees and rent expense recognized for GAAP
reporting purposes but not yet paid.
The increase in medical costs payable has increased in proportion to the
increase in premium.
Third party payables represent the payments due to providers in the PPO network
which have been funded by the self-funded employer groups.
The increase in other liabilities is largely due to an increase in a funds held
liability for the reinsurance program associated with the POS product. In New
Jersey, an HMO cannot retain any risk for the self-referred out-of-network
claims of the POS product. The Company must cede a percentage of premium to the
reinsurer for this program. As the Company incurs opt-out claims, this liability
will be reduced. Because the Company did not offer the POS product until April,
the Company has not experienced significant utilization of the product. Based on
industry statistics, utilization in the beginning months of the new plan are
lower than mature plans.
LIQUIDITY AND CAPITAL RESOURCES
The Company's initial offering was conducted for the purpose of raising the
capital necessary to fund its operations until the Company received its
Certificate of Authority and to fund operating deficits until such time as the
Company begins to operate at a profit. The Company's secondary offering was
intended to
9
<PAGE> 10
expand the network of physicians, expand the Company's programs and
infrastructure and to enhance the Company's equity position. If operational
deficits are greater than estimated, the net proceeds from the second offering
will be used to fund such deficits.
Due to lower than anticipated membership levels, the Company has implemented a
strategy to more appropriately align operating expenses with the membership
level. This results in a preservation of the Company's existing capital base.
The Company will focus its resources on targeted membership growth opportunities
and value added processes.
If the proceeds from the initial and second offerings are inadequate to fund the
Company's operations, the Company may need to seek additional financing from
alternative sources. The Company has retained an outside firm to assist in the
evaluation of alternative sources of funds.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
The Company is not involved in any substantive legal proceedings.
Items 2 through 4 are not applicable
Item 5 - Other Information
The Company's By Laws provide that the officers of the Company are elected by
the Board of Directors, while the Board is elected by all shareholders. On May
2, 1996, Dr. Raymond Kenny resigned from his position as Treasurer. At that
time, Dr. Bessie Sullivan was elected as the Treasurer.
Subsequently, on July 8, 1996, Dr. Joseph Billotti was elected by the Board of
Directors as the Chairman of the Board. This position was previously held by Dr.
Henry D. Rosin. Dr. Rosin remains a member of the Board of Directors of the
Company. Other officer changes are as follows:
Title Previous Officer Newly Elected Officer
----- ---------------- ---------------------
Vice Chairman Joseph Billotti, M.D. Rajendra Prasad Gupta, M.D.
Secretary Rajendra Prasad Gupta, M.D. Raymond Kenny, M.D.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Reference is made to the Index of Exhibits hereinafter contained on
PAGE 11.
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter for which this
report on Form 10-QSB is being filed.
10
<PAGE> 11
INDEX TO EXHIBITS
EXHIBIT NO. EXHIBIT
- --------------------------------------------------------------------------------
3.1 Articles of Incorporation (incorporated by reference to
Exhibit 3.1 to the Registrant's Registration Statement on Form
SB-2)
3.2 By-Laws (incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form SB-2)
4.1 Secondary Offering Prospectus, as approved by the Securities
Exchange Commission on November 9, 1995, detailing rights of
security holders (incorporated by reference to the
Registrant's Registration Statement on Form SB-2)
10.1 Physician Participation Agreement with Registrant, and
amendment thereto (incorporated by reference to the
Registrant's Annual Report on Form 10-KSB for the year ended
December 31, 1995)
10.2 Hospital Letter of Agreement with Registrant (incorporated by
reference to Exhibit 10.2 to the Registrant's Registration
Statement on Form SB-2)
10.3 Hospital Participation Agreement with Registrant (incorporated
by reference to Exhibit 10.3 to the Registrant's Quarterly
Report on Form 10-QSB for the quarter ended June 30, 1996)
10.4 Revised Management Agreement by and between Medical Group
Management, Inc. and the Registrant (incorporated by reference
to Exhibit 10.8 to the Registrant's Registration Statement on
Form SB-2)
10.5 Capital Management Agreement between New England Asset
Management and Registrant (incorporated by reference to
Exhibit 10.9 to the Registrant's Registration Statement on
Form SB-2)
10.6 Letter of Intent between Acordia of Southern California and
Medical Group Management, Inc. (incorporated by reference to
Exhibit 10.10 to the Registrant's Registration Statement on
Form SB-2)
10.7 Lease for Registrant's facility (incorporated by reference to
Exhibit 10.11 to the Registrant's Registration Statement on
Form SB-2)
27 Financial Data Schedule
11
<PAGE> 12
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
/s/ Joseph Billotti, M.D.
--------------------------------
JOSEPH D. BILLOTTI, M.D.
PRESIDENT
/s/ Ernest Monfiletto /s/ Hugo Kostilni
- ----------------------------------- -----------------------------------
ERNEST MONFILETTO HUGO KOSTELNI
PRESIDENT AND CEO CHIEF FINANCIAL OFFICER
MEDICAL GROUP MANAGEMENT, INC. MEDICAL GROUP MANAGEMENT, INC.
DATED : November 20, 1996
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
JOSEPH D. BILLOTT I, M.D. Chairman of the Board and November 20, 1996
Joseph D. Billotti, M.D. President
RAJ PRASAD GUPTA, M.D. Vice Chairman and Director November 20, 1996
Raj Prasad Gupta, M.D.
RAYMOND P. KENNY, M.D. Secretary and Director November 20, 1996
Raymond P. Kenny, M.D.
BESSIE M. SULLIVAN, M.D. Treasurer and Director November 20, 1996
Bessie M. Sullivan, M.D.
STANLEY BLOOM, M.D. Director November 20, 1996
Stanley Bloom, M.D.
WILLIAM F. BRENNAN, D.O. Director November 20, 1996
William F. Brennan, D.O.
LEE HINDIN, M.D. Director November 20, 1996
Lee Hindin, M.D.
ALEXANDER R. HOROWITZ, M.D. Director November 20, 1996
Alexander R. Horowitz, M.D.
LOUIS KEELER, M.D. Director November 20, 1996
Louis Keeler, M.D.
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
LINDA KORMAN, M.D. Director November 20, 1996
Linda Korman, M.D.
STEPHEN P. LANDAUER, M.D. Director November 20, 1996
Stephen P. Landauer, M.D.
MARK LEVEY, M.D. Director November 20, 1996
Mark Levey, M.D.
MARTIN S. LEVINE, D.O. Director November 20, 1996
Martin S. LEVINE, D.O.
NANCY L. MUELLER, M.D. Director November 20, 1996
Nancy L. Mueller, M.D.
MARK T. OLESNICKY, M.D. Director November 20, 1996
Mark T. Olesnicky, M.D.
EMMONS G. PAINE, M.D. Director November 20, 1996
Emmons G. Paine, M.D.
FRED M. PALACE, M.D. Director November 20, 1996
Fred M. Palace, M.D.
BARRY PRYSTOWSKY, M.D. Director November 20, 1996
Barry Prystowsky, M.D.
THOMAS R.C. REUTTER, JR. D.O. Director November 20, 1996
Thomas R.C. Reutter, Jr., D.O.
HENRY D. ROSIN, M.D. Director November 20, 1996
Henry D. Rosin, M.D.
IAN SAMSON, M.D. Director November 20, 1996
Ian Samson, M.D.
DAVID L. SIROTA, D.O. Director November 20, 1996
David L. Sirota, D.O.
VINCENT J. VIVONA, D.O., J.D. Director November 20, 1996
Vincent J. Vivona, D.O., J.D.
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) BALANCE
SHEET AT SEPTEMBER 30, 1996 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE
9 MONTHS ENDED SEPTEMBER 30, 1996 (UNAUDITED)
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0000948547
<NAME> PHYSICAL HEALTHCARE PLAN OF NEW JERSEY, INC.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 4,443,769
<SECURITIES> 4,903,274
<RECEIVABLES> 641,057
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,399,992
<PP&E> 1,510,063
<DEPRECIATION> 439,327
<TOTAL-ASSETS> 12,536,198
<CURRENT-LIABILITIES> 1,903,033
<BONDS> 0
0
0
<COMMON> 23,798,000
<OTHER-SE> 13,164,835
<TOTAL-LIABILITY-AND-EQUITY> 12,536,198
<SALES> 869,554
<TOTAL-REVENUES> 1,331,857
<CGS> 0
<TOTAL-COSTS> 858,500
<OTHER-EXPENSES> 6,876,331
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (6,402,974)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,402,974)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (6,402,974)
<EPS-PRIMARY> (1,528)
<EPS-DILUTED> (1,528)
</TABLE>
