<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1999
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 0-28194
DIGENE CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 52-1536128
------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1201 CLOPPER ROAD
GAITHERSBURG, MARYLAND 20878
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (301) 944-7000
---------------
9000 VIRGINIA MANOR ROAD, BELTSVILLE, MD 20705
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(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Shares outstanding as of
Class February 9, 2000
-------------------------------------- ----------------
Common Stock, par value $.01 per share 15,855,205
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<PAGE> 2
DIGENE CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. CONSOLIDATED FINANCIAL INFORMATION:
Item 1. Consolidated Financial Statements -
Consolidated Balance Sheets -
December 31, 1999 and June 30, 1999 1
Consolidated Statements of Operations -
Three months ended December 31, 1999 and 1998;
Six months ended December 31, 1999 and 1998; 2
Consolidated Statements of Cash Flows -
Six months ended December 31, 1999 and 1998 3
Notes to Consolidated Financial Statements 4
Item 2. Management's Discussion and Analysis of Financial Condition and 5
Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risk 9
PART II. OTHER INFORMATION:
Item 2. Changes in Securities and Use of Proceeds 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
EXHIBIT INDEX 13
</TABLE>
<PAGE> 3
PART I. CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
DIGENE CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 9,147,810 $ 13,934,415
Short-term investments 16,292,106 4,347,084
Accounts receivable, less allowance of approximately $209,000 and $170,000
at December 31, 1999 and June 30, 1999, respectively 3,040,251 2,356,537
Inventories 3,461,067 2,894,210
Prepaid expenses and other current assets 1,560,172 1,388,224
------------ ------------
Total current assets 33,501,406 24,920,470
Property and equipment, net 1,736,704 1,737,078
Intangible assets, net 1,275,730 1,350,774
Deposits 919,142 100,157
------------ ------------
Total assets $ 37,432,982 $ 28,108,479
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,748,188 $ 2,503,387
Accrued expenses 951,960 809,811
Accrued payroll 736,102 1,108,236
------------ ------------
Total current liabilities 5,436,250 4,421,434
Stockholders' equity:
Common stock, $.01 par value, 50,000,000 shares authorized, 15,825,014
and 14,565,937 shares issued and outstanding at December 31, 1999
and June 30, 1999, respectively 158,250 145,659
Additional paid-in capital 83,484,320 72,514,583
Deferred stock compensation (221,550) (253,200)
Accumulated deficit (51,424,288) (48,719,997)
------------ ------------
Total stockholders' equity 31,996,732 23,687,045
------------ ------------
Total liabilities and stockholders' equity $ 37,432,982 $ 28,108,479
============ ============
</TABLE>
1
<PAGE> 4
DIGENE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------------------------- -------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 5,089,414 $ 3,852,769 $ 10,179,779 $ 7,456,976
Research and development contracts 162,314 153,861 289,645 153,861
------------ ------------ ------------ ------------
Total revenues 5,251,728 4,006,630 10,469,424 7,610,837
Costs and expenses:
Cost of product sales 1,633,273 1,428,566 3,309,967 2,404,555
Research and development 1,227,932 1,185,133 2,377,700 2,216,546
Selling and marketing 2,445,326 2,653,593 4,750,152 5,606,220
General and administrative 1,640,594 1,281,895 2,928,321 2,647,196
Amortization of intangible assets 37,522 37,522 75,043 75,043
------------ ------------ ------------ ------------
Loss from operations (1,732,919) (2,580,079) (2,971,759) (5,338,723)
Other income (expense):
Other income (expense) (9,456) (1,956) (39,350) 58,306
Interest income 220,859 271,763 425,530 607,177
Interest expense - (7,141) (98) (21,087)
------------ ------------ ------------ ------------
Loss from operations before income taxes (1,521,516) (2,317,413) (2,585,677) (4,694,327)
Provision for income taxes 55,147 69,604 118,614 133,963
------------ ------------ ------------ ------------
Net loss $ (1,576,663) $ (2,387,017) $ (2,704,291) $ (4,828,290)
============ ============ ============ ============
Basic and diluted net loss per share $ (0.11) $ (0.17) $ (0.18) $ (0.34)
============ ============ ============ ============
Weighted average shares outstanding 14,715,576 14,325,153 14,647,494 14,313,335
============ ============ ============ ============
</TABLE>
2
<PAGE> 5
DIGENE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
--------------------------------
1999 1998
------------ ------------
(UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (2,704,291) $ (4,828,290)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization of property and equipment 496,933 778,285
Amortization of intangible assets 75,044 75,042
Compensation expense related to stock options 31,650 -
Changes in operating assets and liabilities:
Accounts receivable (683,714) 216,197
Inventories (566,857) (349,257)
Prepaid expenses and other current assets (171,948) (1,326,813)
Deposits (818,985) (33,946)
Accounts payable 1,244,801 124,889
Accrued expenses 142,149 141,951
Accrued payroll (372,134) (139,316)
Accrued rent - (23,982)
Deferred rent - (11,980)
------------ ------------
Net cash used in operating activities (3,327,352) (5,377,220)
INVESTING ACTIVITIES
Purchases of short-term investments (16,877,397) (6,186,202)
Maturities of short-term investments 4,932,375 1,450,000
Capital expenditures (496,559) (497,387)
Additions to intangible assets - (862)
------------ ------------
Net cash used in investing activities (12,441,581) (5,234,451)
FINANCING ACTIVITIES
Net proceeds from issuance of Common Stock 10,403,904 -
Exercise of Common Stock options 578,424 72,432
Principal repayments on long-term debt - (552,717)
------------ ------------
Net cash provided by (used in) financing activities 10,982,328 (480,285)
------------ ------------
Net decrease in cash and cash equivalents (4,786,605) (11,091,956)
Cash and cash equivalents at beginning of period 13,934,415 18,330,803
------------ ------------
Cash and cash equivalents at end of period $ 9,147,810 $ 7,238,847
============ ============
</TABLE>
3
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DIGENE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The consolidated financial statements for the three and six month periods ended
December 31, 1999 and 1998 are unaudited and include all adjustments which, in
the opinion of management, are necessary to present fairly the results of
operations for the periods then ended. All such adjustments are of a normal
recurring nature. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in Digene's Annual Report on Form 10-K for the year ended June 30, 1999
filed with the Securities and Exchange Commission.
The results of our operations for any interim period are not necessarily
indicative of the results of our operations for any other interim period or for
a full fiscal year.
2. PRIVATE OFFERING
On December 23, 1999, we and certain of our stockholders completed a private
placement of 1,500,000 shares of common stock to selected institutional and
other accredited investors. Of these shares, 900,000 were sold by us and 600,000
were sold by the selling stockholders. The net proceeds to us, after
underwriters' commissions and expenses, were $10,404,000.
4
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
The following discussion of our financial condition and results of operations
should be read in conjunction with our Consolidated Financial Statements and the
related Notes thereto included elsewhere in this report and in our Annual Report
on Form 10-K for the year ended June 30, 1999. Some of the information that
follows are not statements of historical fact, and reflect our intent, belief or
expectations regarding the anticipated effect of events, circumstances and
trends. Such statements should be considered as forward looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
Although we believe that our expectations are based on reasonable assumptions
within the bounds of our knowledge of our business and operations, there can be
no assurance that actual results will not differ materially from our
expectations. Factors that might cause or contribute to such differences
include: uncertainty of future profitability and cash generation from
operations; manufacturing delays while awaiting regulatory approval for our new
manufacturing facility and other disruptions relating to our relocation to our
new facility in Gaithersburg, Maryland; uncertainty of clinical trial results
for our products under development; delay in or failure to obtain regulatory
approvals for our products in development; uncertainty of market acceptance of
our products by the worldwide medical community; dependence on third-party
reimbursement from government entities, managed care organizations, and private
insurance plans; risks inherent in international transactions, including those
relating to our expansion in Europe, Brazil and elsewhere; dependence on Abbott
Laboratories as our principal European distributor; our limited sales and
marketing experience with a direct sales force; the extent of future
expenditures for sales and marketing programs; uncertainty regarding patents and
proprietary rights in connection with our products; our ability to obtain
requisite additional financing to fund our operations beyond fiscal 2001; and
other factors as set forth under the caption "Additional Considerations" in our
Annual Report on Form 10-K for the year ended June 30, 1999.
RESULTS OF OPERATIONS
Product sales increased to $5,089,000 and $10,180,000 for the three and six
month periods ended December 31, 1999, respectively, from $3,853,000 and
$7,457,000 for the corresponding periods in 1998. The increase was due to
increased sales of our Hybrid Capture tests, primarily HBV, and related
equipment, partially offset by lower sales of our non-core products.
Research and development contract revenues increased to $162,000 and $290,000
for the three and six month periods ended December 31, 1999, respectively, from
$154,000 for each of the corresponding periods in 1998. The increase was due to
our performance of contract research activities, primarily under a research
contract with the National Institutes of Health for the development of tests for
herpes simplex virus.
5
<PAGE> 8
Cost of product sales increased to $1,633,000 and $3,310,000 for the three and
six month periods ended December 31, 1999, respectively, from $1,429,000 and
$2,405,000 for the corresponding periods in 1998. Gross margin on product sales
increased to 68% for the three month period ended December 31, 1999 from 63% for
the corresponding period in 1998. Gross margin on product sales remained
relatively unchanged at 67% for the six month period ended December 31, 1999 as
compared to 68% for the corresponding period in 1998. The percentage increase
was due, primarily, to increased sales of higher-margin Hybrid Capture tests.
Research and development expenses remained relatively unchanged at $1,228,000
and $2,378,000 for the three and six month periods ended December 31, 1999,
respectively, from $1,185,000 and $2,217,000 for the corresponding periods in
1998.
Selling and marketing expenses decreased to $2,445,000 and $4,750,000 for the
three and six month periods ended December 31, 1999, respectively, from
$2,654,000 and $5,606,000 for the corresponding periods in 1998. The decrease
was due, primarily, to lower external marketing expenditures as a result of our
Marketing and Distribution Agreement with Abbott, partially offset by increased
spending on marketing tradeshows and conferences.
General and administrative expenses increased from $1,641,000 and $2,928,000 for
the three and six month periods ended December 31, 1999, respectively, compared
to $1,282,000 and $2,647,000 for the corresponding periods in 1998. The increase
was due, primarily, to costs associated with the move to our new facility in
Gaithersburg, Maryland and increased professional service expenses.
Interest income decreased to $221,000 and $426,000 for the three and six month
periods ended December 31, 1999, respectively, from $272,000 and $607,000 for
the corresponding periods in 1998. The decrease was due to lower average cash
and cash equivalent balances primarily as a result of negative cash flows from
operations.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, our expenses have significantly exceeded our revenues,
resulting in an accumulated deficit of $51,424,000 at December 31, 1999. We have
funded our operations primarily through the sale of equity securities. We have
experienced negative cash flows from operations of $3,327,000 and $5,377,000 for
the six months ended December 31, 1999 and 1998, respectively.
Capital expenditures remained relatively unchanged at $497,000 for the six
months ended December 31, 1999 and December 31, 1998.
In December 1999, we established an equipment leasing facility with Mellon US
Leasing with a total commitment of $750,000. We intend to use such facility to
fund the lease of furniture and equipment, including telecommunications
equipment, for our new facility in Gaithersburg, Maryland. As of December 31,
1999, we have used approximately $500,000 of such commitment.
6
<PAGE> 9
On December 23, 1999, we completed a private offering of 900,000 shares of our
common stock, the net proceeds of which, after underwriters' commissions and
expenses, were $10,404,000.
We have incurred negative cash flows from operations since our inception, and
have expended, and expect to continue to expend in the future, substantial funds
to complete our planned product development efforts, expand our sales and
marketing activities and expand our manufacturing capabilities. We expect that
our existing capital resources will be adequate to fund our operations through
fiscal year 2001. We cannot give assurances that there will be no changes that
would consume a significant amount of our available resources before that time.
Our future capital requirements and the adequacy of available funds will depend
on numerous factors, including the successful commercialization of our products,
progress in our product development efforts and the magnitude and scope of such
efforts, progress with pre-clinical studies and clinical trials, progress in our
regulatory affairs activities, the cost and timing of expansion of our
manufacturing capabilities, the development and maintenance of effective sales
and marketing activities, the cost of filing, prosecuting, defending and
enforcing patent claims and other intellectual property rights, competing
technological and market developments, and the development of additional
strategic alliances for the marketing of our products. To the extent that our
existing capital resources and funds generated from operations are insufficient
to meet current or planned operating requirements, we will be required to obtain
additional funds through equity or debt financing, strategic alliances with
corporate partners and others, or through other sources. Other than our
equipment leasing facility with Mellon US Leasing, we do not have any committed
sources of additional financing, and there can be no assurance that additional
funding, if necessary, will be available on acceptable terms, if at all. If
adequate funds are not available, we may be required to delay, scale back or
eliminate certain aspects of our operations or attempt to obtain funds through
arrangements with collaborative partners or others that may require us to
relinquish rights to certain of our technologies, product candidates, products
or potential markets. If adequate funds are not available, our business,
financial condition and results of operations will be materially adversely
affected.
7
<PAGE> 10
YEAR 2000 COMPLIANCE
During 1999, we completed the process of preparing for the potential impact of
the Year 2000 date change on the ability of our computerized information
programs and systems and certain manufacturing and other equipment to accurately
process information that may be date-sensitive. This process involved
identifying and remediating date recognition problems in computer systems,
software and other operating equipment, working with third parties to address
their Year 2000 issues, and developing contingency plans to address potential
risks in the event of Year 2000 failures.
We did not experience any difficulties related to the Year 2000 date change on
December 31, 1999, and we have not experienced any such difficulties to date.
Although considered unlikely, unanticipated problems in our core business
processes, including problems associated with non-compliant third parties and
disruptions to the economy in general, could still occur despite our efforts to
date to remediate affected systems and develop contingency plans. We will
continue to monitor all business processes, including interaction with our
customers, vendors and other third parties, throughout 2000, and we will address
any issues that arise.
During 1999, the cost of our Year 2000 project was not material because we
coordinated our routine hardware and software system upgrades, as well as our
acquisition of new equipment related to our relocation to a new facility in
Gaithersburg, Maryland as of January 3, 2000, with the purchase of Year
2000-compliant systems and equipment.
8
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are subject to market risk associated with changes in foreign currency
exchange rates and interest rates. Our exchange rate risk comes from our
operations in Europe, South America and Asia. We do not believe that the impact
from foreign currency exchange rate fluctuations will have a material impact on
our financial statements. The net impact of foreign exchange activities on
earnings was immaterial for the six month periods ended December 31, 1999 and
1998, respectively. Interest rate exposure is primarily limited to the $23.1
million of cash equivalents and short-term investments owned by us. None of
these funds are invested in foreign currencies and we do not intend to alter our
investment profiles to permit such investments. Such securities are debt
instruments that generate interest income for us on excess cash balances. We do
not actively manage the risk of interest rate fluctuations; however, such risk
is mitigated by the relatively short term, less than 12 months, nature of these
investments. We do not consider the present rate of inflation to have a
significant impact on our business.
9
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PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On December 23, 1999, we and certain of our stockholders completed a private
placement of 1,500,000 shares of common stock to selected institutional and
other accredited investors. Of these shares, 900,000 were sold by us and 600,000
were sold by the selling stockholders. The purchase price was $13.00 per share,
resulting in net proceeds to us of $10,404,000. Prudential Vector Healthcare
Group, a division of Prudential Securities, acted as placement agent in the
private placement offering and received a fee equal to 7% of the gross proceeds
of the offering, plus reimbursement of certain expenses of the offering. The
shares were issued in reliance upon the exemption from the registration
requirements of the Securities Act set forth in Section 4(2) of the Securities
Act and under Rule 506 promulgated by the SEC under the Securities Act. We
registered the shares of common stock issued in the private placement for resale
by the purchasers.
ITEM 5. OTHER INFORMATION
With respect to our products for the detection of human papillomavirus (HPV), we
continue to negotiate with a third party regarding a license to an issued United
States patent covering one of the HPV types utilized in our Hybrid Capture II
HPV Test. We are currently negotiating a definitive license agreement. If we
cannot negotiate the license on commercially reasonable terms, or at all, we may
be required to redesign our Hybrid Capture II HPV Test to exclude this HPV type.
Such exclusion could result in delays in approval for marketing of the
redesigned Hybrid Capture II HPV Test in the United States and could have a
material adverse effect on our business, financial condition and results of
operations.
In June 1999, Enzo Biochem, Inc. ("Enzo") filed an action in the U.S. District
Court for the State of New York against Chugui Pharmaceutical Co., Ltd and its
subsidiaries Chugui Pharma U.S.A., Inc. and Gen-Probe Incorporated, bioMerieux,
Inc. and Becton Dickenson and Company for infringement of Enzo's United States
patent covering genetic probes for detecting Neisseria gonorrhoeae. In October
1999, Enzo contacted Digene to determine whether Digene's Hybrid Capture II
Gonorrhea Test might infringe such patent. We have evaluated this matter and its
potential impact on our gonorrhea test. After consultation with our patent
counsel, we believe that the Enzo United States patent is invalid. Our
discussions with Enzo are continuing. We cannot assure you that we will not
become involved in litigation with Enzo.
10
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amended and Restated Certificate of Incorporation (Incorporated by
reference to Exhibit 3.1 to Digene's Registration Statement on Form S-1
(File No. 333-2968))
3.2 Amended and Restated Bylaws (Incorporated by reference to Exhibit 3.2 to
Digene's Annual Report on Form 10-K for the year ended June 30, 1999)
4.1 Form of Common Stock Certificate (Incorporated by reference to Exhibit
4.1 to Digene's Registration Statement on Form S-1 (File No. 333-2968))
4.2 Form of Purchase Agreement among Digene Corporation, the Selling
Stockholders identified therein and certain investors related to Digene's
private placement of common stock (incorporated by reference to Exhibit
4.4 to Digene's Registration Statement on Form S-3 filed November 22,
1999 (File No. 333-91461))
27 Financial Data Schedule
(b) Reports on Form 8-K
Digene filed the following current Reports on Form 8-K during the quarter ended
December 31, 1999:
<TABLE>
<CAPTION>
Date of Report Items Reported
-------------- --------------
<S> <C>
November 18, 1999 5,7
December 23, 1999 5,7
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DIGENE CORPORATION
Date: February 11, 2000 By: /s/ Charles M. Fleischman
----------------------- ----------------------------
Charles M. Fleischman
President,
Chief Operating Officer and
Chief Financial Officer
(Principal Financial Officer)
Date: February 11, 2000 By: /s/ Joseph P. Slattery
----------------------- -------------------------
Joseph P. Slattery
Vice President, Finance
(Principal Accounting Officer)
12
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page
- ----------- ----------- ----
<S> <C> <C>
3.1 Amended and Restated Certificate of Incorporation
(Incorporated by reference to Exhibit 3.1 to Digene's
Registration Statement on Form S-1 (File No. 333-2968))
3.2 Amended and Restated Bylaws (Incorporated by reference
to Exhibit 3.2 to Digene's Annual Report on Form 10-K
for the year ended June 30, 1999)
4.1 Form of Common Stock Certificate (Incorporated by reference
to Exhibit 4.1 to Digene's Registration Statement on Form
S-1 (File No. 333-2968))
4.2 Form of Purchase Agreement among Digene Corporation, the
Selling Stockholders identified therein and certain
investors related to Digene's private placement of common
stock (incorporated by reference to Exhibit 4.4 to Digene's
Registration Statement on Form S-3 filed November 22, 1999
(File No. 333-91461))
27 Financial Data Schedule
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 9,147,810
<SECURITIES> 16,292,106
<RECEIVABLES> 3,248,828
<ALLOWANCES> 208,577
<INVENTORY> 3,461,067
<CURRENT-ASSETS> 33,501,406
<PP&E> 6,122,302
<DEPRECIATION> 4,385,598
<TOTAL-ASSETS> 37,432,982
<CURRENT-LIABILITIES> 5,436,250
<BONDS> 0
0
0
<COMMON> 158,250
<OTHER-SE> 31,838,482
<TOTAL-LIABILITY-AND-EQUITY> 37,432,982
<SALES> 10,179,779
<TOTAL-REVENUES> 10,469,424
<CGS> 3,309,967
<TOTAL-COSTS> 5,687,667
<OTHER-EXPENSES> 39,350
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 98
<INCOME-PRETAX> (2,585,677)
<INCOME-TAX> 118,614
<INCOME-CONTINUING> (2,704,291)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,704,291)
<EPS-BASIC> (0.18)
<EPS-DILUTED> (0.18)
</TABLE>
