<PAGE>
UNITED STATES
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 Quarter Ended March 31, 1999
or
[ ] Transition report pursuant to Section 13 or 15(d) of Securities
Exchange Act of 1934
Commission file number 1-14430
-------
MAXIM PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 87-0279983
-----------------------------------------------------------------------
(State of incorporation) (I.R.S. Employer Identification No.)
8899 University Center Lane, Suite 400, San Diego, CA 92122
-----------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(619) 453-4040
----------------------------------------------------
(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
----- -----
As of May 7, 1999, the registrant had 10,199,544 shares of Common Stock,
$.001 par value, outstanding.
<PAGE>
MAXIM PHARMACEUTICALS, INC.
(A Development Stage Company)
<TABLE>
<CAPTION>
INDEX
Part I - Financial Information Page
- ------------------------------ ----
<S> <C> <C>
Item 1. Financial Statements
Balance Sheets -
March 31, 1999 (unaudited) and September 30, 1998. . . . . . 1
Statements of Operations (unaudited) -
Three Months and Six Months Ended March 31, 1999 and 1998
and from Inception (October 23, 1989) to
March 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . 2
Statements of Cash Flows (unaudited) -
Six Months Ended March 31, 1999 and 1998
and from Inception (October 23, 1989) to
March 31, 1999 . . . . . . . . . . . . . . . . . . . . . . . 3
Notes to Financial Statements. . . . . . . . . . . . . . . . 4
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . 5
Item 3. Quantitative and Qualitative Disclosures About
Market Risk. . . . . . . . . . . . . . . . . . . . . . . . . 7
Part II - Other Information
- ---------------------------
Item 2. Changes in Securities and Use of Proceeds. . . . . . . . . . 8
Item 4. Submission of Matters to a Vote of Security Holders. . . . . 8
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 8
SIGNATURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
<PAGE>
PART I:
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEETS
MAXIM PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
MARCH 31, 1999 September 30, 1998
-------------- ------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 4,570,258 $ 11,217,429
Short-term investments in marketable securities 12,825,955 21,031,568
Accrued interest and other current assets 2,684,390 2,491,308
------------ ------------
Total current assets 20,080,603 34,740,305
Investments in marketable securities 2,507,001 3,519,554
Patents and licenses, net 2,177,496 1,839,167
Property and equipment, net 1,661,173 1,693,402
Deposits and other assets 396,489 229,157
------------ ------------
Total assets $ 26,822,762 $ 42,021,585
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 10,836,770 $ 9,014,831
Accrued expenses 1,008,580 374,652
Note payable 129,037 176,784
Current portion of long-term debt 479,299 361,675
------------ ------------
Total current liabilities 12,453,686 9,927,942
Long-term debt, less current portion 1,149,042 977,213
STOCKHOLDERS' EQUITY:
Preferred stock, $.001 par value, 5,000,000 shares authorized; - -
none issued or outstanding.
Common stock, $.001 par value, 20,000,000 shares authorized;
10,199,544 and 9,885,576 shares issued and outstanding at
March 31, 1999 and September 30, 1998, respectively 10,200 9,886
Additional paid-in capital 75,036,640 73,807,327
Deficit accumulated during the development stage (61,820,305) (42,686,624)
Deferred compensation (6,501) (14,159)
------------ ------------
Total stockholders' equity 13,220,034 31,116,430
------------ ------------
Total liabilities and stockholders' equity $ 26,822,762 $ 42,021,585
------------ ------------
------------ ------------
</TABLE>
See Notes to Financial Statements
1
<PAGE>
STATEMENTS OF OPERATIONS (UNAUDITED)
MAXIM PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended October 23, 1989
March 31 March 31 (inception) to
1999 1998 1999 1998 March 31, 1999
--------------- ------------- ------------------ --------------- ----------------
<S> <C> <C> <C> <C> <C>
Research revenue $ 95,000 $ - $ 183,000 $ - $ 3,309,751
Operating expenses:
Research and development 8,649,746 3,493,278 17,428,759 6,402,861 52,929,831
Business development
and marketing 439,164 192,775 892,495 314,620 2,818,604
General and administrative 925,101 720,608 1,619,075 1,349,239 13,630,018
------------ ----------- ------------ ----------- ------------
Total operating expenses 10,014,011 4,406,661 19,940,329 8,066,720 69,378,453
Other income (expense):
Investment income 271,847 656,585 700,667 1,185,001 4,163,024
Interest expense (38,312) (18,371) (77,019) (37,033) (2,147,491)
Other expense - - - - (191,164)
Gain on sale of subsidiary - - - - 2,288,474
------------ ----------- ------------ ----------- ------------
Total other income (expense) 233,535 638,214 623,648 1,147,968 4,112,843
------------ ----------- ------------ ----------- ------------
Discontinued operations:
Loss from operation of discontinued
diagnostic division - - - - (347,608)
Gain on sale of diagnostic division - - - - 483,162
------------ ----------- ------------ ----------- ------------
Net loss $ (9,685,476) $(3,768,447) $(19,133,681) $(6,918,752) $(61,820,305)
------------ ----------- ------------ ----------- ------------
------------ ----------- ------------ ----------- ------------
Net loss per share of common stock $ (0.97) $ (0.41) $ (1.92) $ (0.78)
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
Weighted average shares outstanding 10,007,096 9,248,908 9,954,425 8,912,557
------------ ----------- ------------ -----------
------------ ----------- ------------ -----------
</TABLE>
See Notes to Financial Statements
2
<PAGE>
STATEMENTS OF CASH FLOWS
MAXIM PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY)
<TABLE>
<CAPTION>
Six Months Ended
March 31 October 23, 1989
-------------------------------- (inception) to
1999 1998 March 31, 1999
------------ ------------ --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $(19,133,681) $ (6,918,752) $(61,820,305)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 326,905 168,497 1,778,358
Amortization of premium on investments 137,255 61,367 423,200
Stock options issued as compensation 128,345 21,658 656,527
Stock contributions to 401(k) plan 32,309 - 58,916
Net book value of disposed assets 2,922 481 210,286
Loss on write-off of patents - - 262,262
Gain on sale of subsidiary - - (2,288,474)
Loss on write-off of receivable from related party - - 147,803
Other - - 51,701
Gain on sale of diagnostic division - - (483,162)
Loss on write-off of purchased research
and development - - 2,646,166
Cumulative effect of reorganization - - 1,152,667
Changes in operating assets and liabilities:
Accrued interest and other current assets (193,082) (1,566,604) (2,491,903)
Deposits and other assets (167,332) 329,200 (544,292)
Accounts payable 1,821,939 1,768,143 10,836,769
Accrued expenses 633,928 162,551 1,029,790
------------ ------------ -------------
Net cash used in operating activities (16,410,492) (5,973,459) (48,373,691)
INVESTING ACTIVITIES:
Purchases of marketable securities (6,978,089) (25,662,576) (68,460,206)
Maturities of marketable securities 16,059,000 9,733,500 52,704,050
Additions to patents and licenses (437,697) (89,418) (3,145,484)
Purchases of property and equipment (198,231) (304,766) (2,909,512)
Cash acquired in acquisition of business - - 985,356
Proceeds from sale of diagnostic division - - 496,555
------------ ------------ -------------
Net cash provided (used) by investing activities 8,444,983 (16,323,260) (20,329,241)
FINANCING ACTIVITIES:
Net proceeds from issuance of common stock
and warrants 1,076,632 35,022,235 66,198,472
Proceeds from issuance of notes payable and
long-term debt 444,434 72,180 6,432,077
Payments on notes payable and long-term debt (202,728) (119,340) (3,497,143)
Proceeds from issuance of notes payable to
related parties - - 4,982,169
Payments on notes payable to related parties - - (1,329,885)
Net proceeds from issuance of preferred stock - - 487,500
------------ ------------ -------------
Net cash provided by financing activities 1,318,338 34,975,075 73,273,190
------------ ------------ -------------
Net increase (decrease) in cash and cash equivalents (6,647,171) 12,678,356 4,570,258
Cash and cash equivalents at beginning of period 11,217,429 447,523 -
------------ ------------ -------------
Cash and cash equivalents at end of period $ 4,570,258 $ 13,125,879 $ 4,570,258
------------ ------------ -------------
------------ ------------ -------------
</TABLE>
See Notes to Financial Statements.
3
<PAGE>
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MAXIM PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY)
1. PRINCIPLES OF INTERIM PERIOD REPORTING
Maxim Pharmaceuticals, Inc. (the "Company") has not earned significant
revenues from planned principal operations. Accordingly, the Company's
activities have been accounted for as those of a "Development Stage
Enterprise" as set forth in Financial Accounting Standards Board Statement
No. 7 ("SFAS 7").
In the opinion of the Company, the unaudited financial statements contain all
of the adjustments, consisting only of normal recurring adjustments and
accruals, necessary to present fairly the financial position of the Company
as of March 31, 1999 and September 30, 1998, and the results of operations
for the three months and six months ended March 31, 1999 and 1998 and from
inception (October 23, 1989) to March 31, 1999. The results of operations
for the three months and six months ended March 31, 1999 are not necessarily
indicative of the results to be expected in subsequent periods or for the
year as a whole. For further information, refer to the financial statements
and footnotes thereto in our Annual Report on Form 10-K/A for the year ended
September 30, 1998.
2. NET LOSS PER SHARE OF COMMON STOCK
In accordance with Financial Accounting Standards Board Statement No. 128,
"Earnings per Share" ("SFAS 128"), net loss per share of common stock is
computed by dividing the net loss by the weighted average number of shares of
common stock outstanding during the period. Dilutive loss per share,
calculated by including the additional common stock issuable upon exercise
of outstanding options and warrants in the weighed average share calculation,
is not presented as these securities are antidilutive.
3. LINE OF CREDIT AGREEMENT
In March 1997 the Company entered into a line of credit agreement with a
bank. Under the agreement, the Company was permitted to borrow up to $900,000
during 1997 to fund qualified equipment purchases. At January 1, 1998,
$718,620 in outstanding advances under the line of credit converted to a term
loan payable in equal installments over 48 months, including interest at
prime plus 0.5%. In 1998 the line of credit agreement was amended to permit
the Company to borrow up to an additional $1,000,000 during calendar 1998. At
January 1, 1999, $983,619 in outstanding advances under the amended line of
credit converted to a term loan payable in 48 equal installments, including
interest at prime plus 0.25%. Both term loans are secured by all assets of
the Company.
4. STOCKHOLDERS' EQUITY
SHARES ISSUED UPON EXERCISE OF COMMON STOCK OPTIONS AND WARRANTS - During
the six months ended March 31, 1999 the Company issued 83,461 and 228,127
shares of common stock upon the exercise of warrants and options,
respectively.
4
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MAXIM PHARMACEUTICALS, INC. (A DEVELOPMENT STAGE COMPANY)
THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS
AND UNCERTAINTIES. SUCH FORWARD-LOOKING STATEMENTS INCLUDE STATEMENTS
REGARDING CASH REQUIREMENTS. SUCH STATEMENTS ARE ONLY PREDICTIONS, AND THE
COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED OR
PROJECTED IN SUCH FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO DIFFERENCES INCLUDE RISKS ASSOCIATED WITH CLINICAL TRIALS AND
PRODUCT DEVELOPMENT, REGULATORY APPROVAL AND GOVERNMENT REGULATION OF THE
COMPANY'S PRODUCTS, THE NEED FOR ADDITIONAL FUNDS AND THE UNCERTAINTY OF
ADDITIONAL FUNDING AND DEPENDENCE ON COLLABORATIVE PARTNERS. THESE FACTORS
AND OTHERS ARE MORE FULLY DESCRIBED IN THE COMPANY'S ANNUAL REPORT ON FORM
10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998.
RESULTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31,
1999 AND 1998
RESEARCH REVENUE - Research revenue consisting of collaborative support
related to the Company's MAXAMINE clinical trials totaled $95,000 for the
quarter ended March 31, 1999. Research revenue for the six month period ended
March 31, 1999 totaled $183,000. There were no such revenues earned in the
prior year.
RESEARCH AND DEVELOPMENT EXPENSES - For the quarter ended March 31, 1999,
research and development expenses were $8,650,000, an increase of $5,156,000,
or 148%, over the same period in the prior year. This increase was primarily
attributable to increased activity related to late-stage cancer clinical
trials of MAXAMINE, including clinical trial site and contract research
organization costs, hiring additional clinical and development personnel, and
other clinical costs. These clinical trials include a Phase III clinical
trial in malignant melanoma commenced in the United States in July 1997, an
international Phase III malignant melanoma clinical trial commenced in
November 1997, and a global Phase III clinical trial in acute myelogenous
leukemia commenced in February 1998.
For the six months ended March 31, 1999, research and development costs were
$17,429,000, an increase of $11,026,000, or 172%, over the same period of the
prior year. The increase resulted from the Phase III clinical trial efforts
described above.
BUSINESS DEVELOPMENT AND MARKETING AND GENERAL AND ADMINISTRATIVE EXPENSES
- -Business development and marketing expenses for the quarter ended March 31,
1999 were $439,000, an increase of $246,000, or 128%, over the same quarter
of the prior year. This increase was due to additional personnel and other
resources devoted to preparation for the potential market launch of MAXAMINE,
including corporate partnering efforts, market evaluations and third-party
reimbursement evaluations. For the quarter ended March 31, 1999, general and
administrative expenses were $925,000, an increase of $204,000, or 28%, over
the same period in the prior year due to general expenses associated with the
Company's expanded operations.
Business development costs for the six month period ended March 31, 1999
totaled $892,000, an increase of $578,000, or 184%, over the same period of
the prior year. General and administrative expenses for the six month period
ended March 31, 1999 were $1,619,000, an increase of $270,000, or 20% over
the same period of the prior year. Both of these increases resulted from the
expanded activities described above.
OTHER INCOME (EXPENSE) - Investment income was $272,000 for the quarter
ended March 31, 1999, a decrease of $385,000, or 59%, from the same period
in the prior year. This decrease is a result of a reduction in the principal
balance of interest-bearing investments used to finance the operations of the
Company. Interest expense for the quarter ended March 31, 1999 was $38,000,
approximately double the $18,000 in interest expense recorded in the same
quarter in the prior year. This increase was primarily attributable to
interest incurred on additional advances made under the Company's line of
credit agreement used to finance qualified equipment purchases.
5
<PAGE>
Investment income totaled $701,000 for the six month period ended March 31,
1999, compared to $1,185,000 for the same period of the prior year. The
decrease of $484,000, or 41%, resulted from the reduction in principal
balance on interest-bearing securities described above. Interest expense for
the six month period ended March 31, 1999 totaled $77,000, an increase of
$40,000, or 108%, over the same period of the prior year as a result of the
interest incurred on the additional advances also described above.
NET LOSS - Net loss for the quarter ended March 31, 1999 totaled $9,685,000,
an increase of $5,917,000, or 157%, over the prior year. The increase was
due to the expansion of research and development and general corporate
activities described above. Net loss per share of common stock for the three
month period ended March 31, 1999 was $0.97, an increase of $0.56 per share
over the same period of the prior year, due to the increase in net loss for
the year offset partially by an increase in the number of shares of common
stock outstanding.
Net loss for the six months ended March 31, 1999 totaled $19,134,000, an
increase of $12,215,000, or $177%, over the same period of the prior year.
Net loss per share of common stock for the six month period was $1.92, a 146%
increase over the loss of $0.78 per share for the same period of the prior
year.
LIQUIDITY AND CAPITAL RESOURCES
The Company, as a development stage enterprise, anticipates incurring
substantial additional losses over at least the next several years due to,
among other factors, the need to expend substantial amounts on its ongoing
and planned clinical trials, other research and development activities, and
business development and general corporate expenses associated with these
activities. The Company has financed its operations primarily through the
sale of its equity securities, including an initial public offering in July
1996 and an international follow-on public offering in October 1997 which
provided net proceeds to the Company of approximately $22.3 million
(including amounts received on the exercise of warrants) and $34.7 million,
respectively.
As of March 31, 1999, the Company had cash, cash equivalents and investments
totaling approximately $19.9 million. For the six months ended March 31,
1999, net cash used in the Company's operating activities was approximately
$16.4 million. The Company expects that its cash requirements may increase in
future periods as it conducts additional research and development activities
including clinical trials, other research and development activities, and
efforts associated with the commercial launch of any products that are
approved for sale by government regulatory bodies. Among the activities that
may result in an increase in cash requirements are three Phase III cancer
clinical trials of MAXAMINE currently underway. The Company plans to pursue
the issuance of additional equity securities, and to pursue corporate
marketing alliances and collaborative agreements to meet its cash
requirements.
The Company's cash requirements may vary materially from those now planned
because of the results and scope of clinical trials and other research and
development activities, the time required to obtain regulatory approvals, the
cost of filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, the ability of the Company to establish
marketing alliances and collaborative arrangements and the cost of the
Company's internal marketing activities. As a result of these factors, it is
difficult to predict accurately the timing and amount of the Company's cash
requirements. In order to successfully commercialize any of its products, the
Company expects that it will ultimately be required to seek additional funds
through public or private financings or collaborative arrangements with
corporate partners. The issuance of additional equity securities could
result in substantial dilution to the Company's stockholders. There can be
no assurance that additional funding will be available on terms acceptable to
the Company, if at all. The failure to fund its capital requirements would
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company has never paid a cash dividend and
does not contemplate the payment of cash dividends in the foreseeable future.
6
<PAGE>
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 issue is related to computer software utilizing two digits
rather than four to define the appropriate year. As a result, any of the
Company's computer programs or any of the Company's suppliers or vendors that
have date sensitive software may incur system failures or generate incorrect
data if "00" is recognized as 1900 rather than 2000.
The Company has determined that the computer systems utilized internally in
its daily operations are Year 2000 compliant. The Company is in the process
of verifying whether its major suppliers, service providers and financial
institutions are Year 2000 compliant and expects to complete this review by
June 30, 1999. The total cost of this process is expected to be less than
$50,000. Although the Company has no material systems that interface directly
with third party systems, there can be no assurance that the systems and
networks of its key suppliers and service providers will not be affected by
the Year 2000 issues, which could have an adverse effect on the Company's
business, operating results and financial condition. In particular, the
Company has engaged several third parties to retain and maintain all of the
clinical, statistical and other information related to the Company's clinical
trials. These third parties have indicated that they are aggressively
working to identify and remediate any Year 2000 issues they may have, and
that they expect to have any necessary remediation completed by December
1999. However, in the event these third parties' Year 2000 compliance
efforts are unsuccessful, data relating to the Company's clinical trials
could be destroyed or corrupted, which could have a material adverse effect
on the Company's business, operating results and financial condition. In an
effort to minimize the potential risks of the failure of such third parties'
Year 2000 efforts, the Company intends to archive data, both in electronic
and paper formats, through December 1999, after which paper backup will be
used. The Company's archival records will be updated on a monthly basis
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company invests its excess cash in interest-bearing investment-grade
securities that are held for the duration of the term of the respective
instrument. The Company does not utilize derivative financial instruments,
derivative commodity instruments or other market risk sensitive instruments,
positions or transactions in any material fashion. Accordingly, management
believes that, while the investment-grade securities the Company holds are
subject to changes in the financial standing of the issuer of such
securities, it is not subject to any material risks arising from changes in
interest rates, foreign currency exchange rates, commodity prices, equity
prices or other market changes that affect market risk sensitive instruments.
7
<PAGE>
PART II-OTHER INFORMATION
- -------------------------
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(c) During the quarter ended March 31, 1999, the Company issued 62,131 shares of
Common Stock upon exercise of warrants at a price per share of $3.00. The
Company issued such shares in reliance on the exemption provided by Section 4(2)
of the Securities Act of 1933, as amended.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders of the Company held on February 19, 1999,
the following matters were voted on and approved:
1. One Director was elected to the Board of Directors to hold office for a
three-year term or until his successor is elected and qualified. The
following person was elected: Colin B. Bier, Ph.D. 8,364,010 shares of
Common Stock, or 99.95% of the shares voting, voted in favor of the
foregoing individual. There were no votes against the foregoing individual
and 3,886, or 0.05% of the shares voting, abstained. The term of office of
the remaining four Directors, Theodor H. Heinrichs, Per-Olof Martensson, F.
Duwaine Townsen and Mr. Larry G. Stambaugh continued after the meeting.
2. The Board of Directors' selection of KPMG LLP as the Company's
independent public accountants for the fiscal year ended September 30,
1999 was ratified. 8,365,050 shares of Common Stock, or 99.97% of the
shares voting, voted in favor of the proposal. 766 shares, or 0.01% of
the voting shares, voted against the proposal, and 2,080 shares, or
0.02% of the voting shares, abstained.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
b) EXHIBITS
Exhibit Number Description of Exhibit
- -------------- ----------------------
27.1 Financial Data Schedule
b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the quarter ended March 31, 1999.
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.
Maxim Pharmaceuticals, Inc.
Date: May 7, 1999 /s/ Dale A. Sander
-------------------------
Dale A. Sander
Chief Financial Officer
(Principal Accounting Officer and Officer
duly authorized to sign this report on
behalf of the registrant)
8
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 4,570,258
<SECURITIES> 12,825,955
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 20,080,603
<PP&E> 2,209,266
<DEPRECIATION> 548,093
<TOTAL-ASSETS> 26,822,762
<CURRENT-LIABILITIES> 12,453,686
<BONDS> 1,149,042
0
0
<COMMON> 10,200
<OTHER-SE> 13,209,834
<TOTAL-LIABILITY-AND-EQUITY> 26,822,762
<SALES> 0
<TOTAL-REVENUES> 183,000
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 17,428,759
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 77,019
<INCOME-PRETAX> (19,133,681)
<INCOME-TAX> 0
<INCOME-CONTINUING> (19,133,681)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (19,133,681)
<EPS-PRIMARY> (1.92)
<EPS-DILUTED> (1.92)
</TABLE>
