<PAGE>
==========================================
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
Commission File Number 0-20945
MEDI-JECT CORPORATION
1840 Berkshire Lane
Minneapolis, Minnesota 55441
(612) 553-1102
A Minnesota Corporation IRS Employer ID No. 41-1350192
--------------------
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 No X
----- -----
The number of shares outstanding of the Registrant's Common Stock, $.01 par
value, as of November 4, 1996 was 6,925,636.
====================
<PAGE>
MEDI-JECT CORPORATION
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Balance Sheets, As of September 30, 1996 and
December 31, 1995 and proforma shareholder's
equity as of September 30, 1996............................. 3
Statements of Operations for three
months and nine months ended September 30, 1996 and 1995.... 4
Statements of Cash Flows for the
nine months ended September 30, 1996 and 1995............... 5
Notes to Financial Statements............................... 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 7
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K............................ 10
SIGNATURES............................................................ 13
2
<PAGE>
MEDI-JECT CORPORATION
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
Proforma
------------------
December 31, 1995 September 30, 1996 September 30, 1996
----------------- ------------------- ------------------
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents............................... $ 35,817 $ 1,344,671
Accounts receivable (less allowances for doubtful
accounts of $2,954 and $4,125, respectively)........... 176,240 194,916
Inventories:
Parts................................................. 145,603 194,366
Work-in-progress...................................... 80,663 95,126
Finished goods........................................ 53,963 110,979
Prepaid expenses and other assets....................... 35,508 545,148
----------- ------------
Total current assets.............................. 527,794 2,485,206
----------- ------------
Property:
Leasehold improvements................................ 8,000 27,232
Machinery and equipment............................... 1,019,462 1,188,316
----------- ------------
Total property.................................... 1,027,462 1,215,548
Less accumulated depreciation.......................... (550,436) (617,387)
----------- ------------
Property - net.................................... 477,026 598,161
----------- ------------
Other assets:
Patent rights......................................... 235,288 332,756
Total assets............................................ $ 1,240,108 $ 3,416,123
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable...................................... $ 243,281 $ 409,779
Accrued expenses...................................... 29,787 26,397
Current portion of long-term liabilities.............. 387,991 165,087
Deferred revenue...................................... 148,563 218,728
Other liabilities..................................... 368,445 589,475
----------- ------------
Total current liabilities......................... 1,178,067 1,409,466
Long-term liabilities................................... 136,206 14,008
Shareholders' equity (deficit):
Series C convertible preferred stock: $.01
par; authorized 761,615 shares: 0; and
761,615 issued and outstanding at December
31, 1995 and September 30, 1996,
respectively........................................ -- 7,616 --
Series B convertible preferred stock: $.01 par;
authorized 3,046,459 shares: 2,090,633; and
2,471,484 issued and outstanding at
December 31, 1995 and September 30, 1996,
respectively........................................ 20,906 24,714 --
Series A convertible preferred stock: $.01
par; authorized 1,218,584 shares: 1,103,867;
and 0 issued and outstanding at December 31,
1995 and September 30, 1996, respectively........... 11,039 -- --
Common Stock: $0.1 par; authorized 7,616,147
shares: 218,864; 1,353,785; and 4,725,633
issued and outstanding at December 31,
1995, September 30, 1996, and September 30,
1996 pro forma, respectively........................ 2,189 13,538 47,256
Additional paid-in capital............................ 9,193,600 12,984,474 12,983,086
Accumulated deficit................................... (9,301,899) (11,037,693) (11,037,693)
----------- ------------ ------------
Total shareholders' equity (deficit).................. (74,165) 1,992,649 1,992,649
----------- ------------ ------------
Total liabilities and shareholders' equity
(deficit)............................................. $ 1,240,108 $ 3,416,123 $ 3,416,123
=========== ============ ============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
MEDI-JECT CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For Nine Months Ended For Three Months Ended
---------------------------------------- ----------------------------------------
September 30, 1995 September 30, 1996 September 30, 1995 September 30, 1996
---------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Sales................................. $ 1,233,407 $1,217,666 $ 402,277 $ 403,422
Licensing & product
development......................... 574,000 1,231,835 164,000 545,797
----------- ---------- ---------- ----------
Total Revenues.......................... 1,807,407 2,449,501 566,277 949,219
Operating Expenses:
Cost of sales......................... 720,193 724,908 254,916 223,190
Research and development.............. 887,277 1,823,395 280,664 730,308
General and administrative............ 928,616 965,457 300,570 293,378
Sales and marketing................... 676,211 739,323 226,038 272,443
----------- ---------- ---------- ----------
Total costs & expenses.............. 3,212,297 4,253,083 1,062,188 1,519,319
----------- ----------- ---------- ----------
Net Operating loss...................... (1,404,890) (1,803,582) (495,911) (570,100)
Other income (expense):
Interest and other income............. 12,516 94,754 1,692 25,269
Interest and other expense............ (48,523) (26,966) (17,017) (6,785)
----------- ---------- ---------- ----------
Net loss................................ $(1,440,897) $(1,735,794) $ (511,236) $ (551,616)
=========== =========== ========== ==========
Proforma weighted average number
of common shares outstanding.......... 5,260,880 5,260,880
========= =========
Proforma per share data (unaudited)
Net loss per common share
(footnote 3)........................ $(.33) $(.10)
===== =====
</TABLE>
See accompanying Notes to Financial Statements
4
<PAGE>
MEDI-JECT CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For Nine Months Ended
------------------------------------------
September 30, 1995 September 30, 1996
------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss........................... $(1,440,897) $(1,735,794)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation....................... 62,142 109,417
Changes in operating assets
and liabilities:
Accounts receivable.............. (110,431) (18,676)
Inventories...................... (197,023) (120,242)
Other assets..................... (38,211) (35,493)
Accounts payable................. 48,577 166,498
Deferred revenue................. (90,500) 70,164
Accrued expenses................. 63,478 233,911
----------- -----------
Net cash used in operating activities....... (1,702,865) (1,330,215)
----------- -----------
Cash flows from investing activities:
Purchases of equipment,
furniture and fixtures............ (87,670) (246,822)
Purchase of patent rights.......... (125,853) (97,468)
----------- -----------
Net cash used in investing
activities........................ (213,523) (344,290)
----------- -----------
Cash flows from financing activities:
Principal payments on capital
lease obligations................. (30,433) (33,939)
Proceeds from issuance of
common stock...................... 1,560 101,130
Proceeds from issuance of
convertible preferred stock....... 1,575,000 3,812,500
Warrants issued.................... 0 125,000
Proceeds from issuance of
notes payable..................... 0 187,500
Principal payments on notes
payable........................... (78,976) (498,663)
Offering costs..................... (46,135) (710,169)
----------- -----------
Net cash provided by financing
activities................................. 1,421,016 2,983,359
----------- -----------
Increase (decrease) in cash and cash........ (495,372) 1,308,854
equivalents
Cash and cash equivalents at beginning...... 645,667 35,817
of period.................................. ----------- -----------
Cash and cash equivalents at end of......... $ 150,295 $ 1,344,671
period..................................... =========== ===========
Supplemental cash flow disclosure:
Interest paid............................... $ 48,523 $ 26,965
</TABLE>
See accompanying Notes to Financial Statements.
5
<PAGE>
MEDI-JECT CORPORATION
NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary
for a fair presentation have been included. The accompanying financial
statements and notes should be read in conjunction with the Company's 1995
audited financial statements and notes thereto.
2. INTERIM FINANCIAL STATEMENTS
Operating results for the three and nine month periods ended September
30,1996 are not necessarily indicative of the results that may be expected
for the year ending December 31, 1996.
3. PRO FORMA NET LOSS PER SHARE
Pro forma net loss per share is computed by dividing the net loss
attributable to common shareholders by the weighted average number of
shares of common stock and common stock equivalents outstanding, after
applying the treasury stock method and after giving effect to the reverse
stock split and the automatic conversion of all outstanding shares of
convertible preferred stock in accordance with the Company's initial public
offering.
Pursuant to certain requirements of the Securities and Exchange Commission,
common stock equivalents include the impact of the issuance of stock,
options and warrants within one year prior to the date of the initial
filing of the Company's initial public offering ("IPO") at exercise prices
less than the initial public offering price per share, whether or not the
effects are antidilutive.
4. SUBSEQUENT EVENT
Effective October 2, 1996, the Company completed an initial public offering
of 2,200,000 shares of its Common Stock at $5.50 per share. The net
proceeds of the offering to the Company after deduction of the underwriters
discount and offering expenses, were approximately $10,700,000.
Simultaneously with the effective or closing date of the offering on
October 2, 1996, all outstanding shares of preferred stock (consisting of
2,471,484 shares Series B, and 761,615 shares Series C) were automatically
converted into an aggregate of 3,371,848 shares of common stock. The
conversion of the Company's preferred stock to common stock, as described
herein, has been reflected in the pro forma shareholders' equity column of
the balance sheet at September 30, 1996.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Three and Nine Months Ended September 30, 1996 and 1995
Total revenues for the three and nine months ended September 30, 1996 were
$949,219 and $2,449,501, respectively. These figures reflect increases of
$382,942 and $642,094 over the same periods in 1995. Sales of injector products
and services increased by $1,145 in the three months ended September 30, 1996,
compared to the three months ended September 30, 1995. This increase resulted
from higher sales of supplies and services which were partially offset by a
decrease in the number of injectors sold (720 and 623 in the third quarters of
1995 and 1996, respectively). Sales of medical products decreased by $15,741 in
the nine months ended September 30, 1996 as compared to the same period in the
prior year. As in the quarterly periods, sales of supplies and services
increased, offset by a decrease in the sales of injectors in the nine months
ended September 30, 1996 (2,232 and 1,986, in the first nine months of 1995 and
1996, respectively). Licensing and product development fee income increased by
$381,797 in the three months ended September 30, 1996 and $657,835 in the nine
months ended September 30, 1996, as compared to the same periods in 1995. These
increases each related to fee income received from Becton Dickinson and Company
pursuant to the development and license agreement with Becton Dickinson executed
in January 1996. The Company expects that licensing and product development fee
income will fluctuate on a quarter to quarter basis, depending on a number of
factors, including the timing of the execution of new development and licensing
agreements and the timing, nature and size of fee payments to be made under
existing and new agreements. In addition, since the Company does not, in
general, recognize project-based fee income until related development work has
been performed, quarterly results will fluctuate with the timing of the
Company's research and development efforts.
Cost of sales in the three and nine months ended September 30, 1996 were
$223,190 and $724,908, respectively. These figures reflect a decrease of
$31,726 and an increase of $4,715 in the three and nine month periods of the
prior year, respectively. The decrease in cost of sales for the three months
ended September 30, 1996 compared to the same period in 1995 is attributable to
start-up costs related to the introduction of a new model Medi-Jector in July
1995.
Research and development expenses increased 160% to $730,308 in the three months
ended September 30, 1996, from $280,664 in the same period in 1995. Research
and development expenses increased to $1,823,395 in the first nine months of
1996 from $887,277 in the first nine months of 1995, an increase of
approximately 106%. These increases are primarily attributable to research and
development expenditures related to the Company's collaboration with Becton
Dickinson, which is being funded in large part by Becton Dickinson under the
Becton Dickinson Agreement.
General and administrative expenses totaled $293,378 and $965,457 in the three
and nine months ended September 30, 1996. In comparison to the prior year,
these figures reflect a decrease of $7,192, and an increase of $36,841, the
three and nine months ended September 30, 1996, respectively. The increase over
the prior year period in the nine months ended September 30, 1996,
7
<PAGE>
primarily reflects increased legal fees related to the Becton Agreement and
public relations expenditures in connection with the Company's initial public
offering.
Sales and marketing expenses totaled $272,443 and $739,323 in the three and nine
months ended September 30, 1996, respectively. These figures reflect year to
year increases of $46,405 or 21%, and $63,112 or 9% in the three and nine
months ended September 30, 1996, respectively. These increases are attributable
to general increases in spending on domestic sales and marketing activities in
addition to increased expenditures related to media creation.
Interest expense decreased by $10,232 and $21,557 relative to the prior year in
both the three and nine month periods ended September 30, 1996. These decreases
are attributable to reduced debt levels in 1996. Interest income increased,
relative to the prior year for these same periods as a result of increased cash
on hand following the sale of equity securities to Becton Dickinson in January
1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $1,344,671 on September 30,1996 compared to
$35,817 on December 31, 1995. This increase results primarily from a private
equity financing with Becton Dickinson and Company completed in January 1996.
The Company's long term capital requirements will depend on numerous factors,
including the status of the Company's collaborative arrangements, the progress
of the Company's research and development programs and the receipt of revenues
from the sales of the Company's products. Subsequent to September 30, 1996, the
Company completed an initial public offering of its common stock (see notes
accompanying the financial statements). This financing generated net proceeds
to the Company of approximately $10,700,000. The Company believes that the net
proceeds to the Company from this offering, combined with cash on hand, interest
expected to be earned thereon and anticipated revenues, will meet its needs
through 1997. In order to meet its capital needs beyond this period, the
Company may be required to raise additional capital through public or private
offerings, including equity offerings.
FORWARD-LOOKING STATEMENTS
This Management's Discussion and Analysis of Financial Condition and Results of
Operations contains certain "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. Such statements relating to
future events and financial performance, including the level of market
acceptance of the Company's products, the timing of development of new products,
the Company's ability to enter into development and licensing agreements,
expense levels and future capital requirements, are forward-looking statements
that involve risks and uncertainties, including the level of market acceptance
of the Company's products, the timing of the development of new products, the
Company's ability to enter into development and licensing agreements, changes in
the Company's marketing strategies, changes in manufacturing methods, the levels
of sales of the Company's products that can be achieved, and other risks
detailed from time to time in the Company's various Securities and Exchange
Commission filings.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Securities Holders.
An Annual Meeting of Shareholders of Medi-Ject Corporation was held on July 25,
1996. Shareholders holding 3,916,221 shares, or 85% of the outstanding shares,
were represented at the meeting in person or by proxy. Matters submitted at the
meeting and the vote by the shareholders were as follows:
(i) The adoption of the Second Amended and Restated Articles of Incorporation
of the Company was approved by a vote of 3,900,990 shares for, 0 shares
against and 0 shares abstaining.
(ii) The adoption of the Second Amended and Restated Bylaws of the Company was
approved by a vote of 3,887,425 shares for, 13,565 shares against and 0
shares abstaining.
(iii) The Company's 1996 Stock Option Plan was approved by a vote of 3,893,373
shares for, 7,617 shares against and 0 shares abstaining.
(iv) A 1-for-1.313 reverse stock split was approved by a vote of 3,877,760
shares for, 23,230 shares against and 0 shares abstaining.
(v) The election of each of the following Directors to the Board of Directors
for the terms indicated below was approved by a vote of 3,900,990 shares
for and 0 shares withholding authority to vote:
For Term Expiring at For Term Expiring at For Term Expiring at
1997 Annual Meeting 1998 Annual Meeting 1999 Annual Meeting
-------------------- -------------------- --------------------
Louis Cosentino, Ph.D. Fred Shapiro, M.D. Franklin Pass, M.D.
Kenneth Evenstad Geoffrey Guy, M.D. Norman Jacobs
Peter Sjostrand
9
<PAGE>
(vi) An amendment to the Certificates of Designations for $1.00 Convertible
Preferred Stock, Series B and Junior Convertible Preferred Stock, Series
C, Series D and Series E, to provide that any fractional share resulting
from the conversion of preferred shares, including reverse stock splits,
be rounded up to the nearest whole share was approved by a vote of
3,900,990 shares for, 0 shares against and 0 shares abstaining.
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
3.1(a) Amended and Restated Articles of Incorporation of the
Company.
3.2(a) Amended Bylaws of the Company
3.3(a) Second Amended and Restated Articles of Incorporation
of the Company (as proposed to be effective upon
completion of the offering).
3.4(a) Second Amended and Restated Bylaws of the Company (as
proposed to be effective upon completion of the
offering).
4.1(a) Form of Certificate for Common Stock.
4.2(a) Stock Warrant, dated January 25, 1996, issued to
Becton Dickinson and Company.
4.3(a) Stock Option, dated January 25, 1996, issued to Becton
Dickinson and Company.
4.4(a) Warrant, dated March 24, 1995, issued to Robert
Fullerton.
4.5(a) Warrant, dated March 24, 1995, issued to Michael
Trautner.
4.6(a) Preferred Stock, Option and Warrant Purchase
Agreement, dated January 25, 1996, between the Company
and Becton Dickinson and Company (filed herewith as
Exhibit 10.7).
4.7(a) Form of Representative's Warrant.
10.1(a) Office/Warehouse/Showroom Lease, dated January 2,
1995, including amendments thereto.
10
<PAGE>
10.2(a) Promissory Note, dated August 29, 1994, issued to Fred
Shapiro.
10.3(a) Security Agreement, dated September 30, 1994, by and
between the Company and Kelsey Lake Limited
Partnership and Kerry Lake Company, a Limited
Partnership.
10.4(a) Promissory Note, dated September 30, 1994, issued to
Kelsey Lake Limited Partnership.
10.5(a) Promissory Note, dated September 30, 1994, issued to
Kerry Lake Company, a Limited Partnership.
10.6(a) Loan Agreement, dated as of December 22, 1995, by and
between Ethical Holdings plc and the Company,
including the related Promissory Note, dated December
22, 1995, issued to Ethical Holdings plc.
10.7(a) Preferred Stock, Option and Warrant Purchase
Agreement, dated January 25, 1996, between the Company
and Becton Dickinson and Company.
10.8(a) Employment Agreement, dated as of January 3, 1995,
between the Company and Franklin Pass, MD.
10.9(a) Employment Agreement, dated as of January 3, 1995,
between the Company and Mark Derus.
10.10(a) Employment Agreement, dated as of January 3, 1995,
between the Company and Todd Leonard.
10.11(a) Employment Agreement, dated as of January 3, 1995,
between the Company and Peter Sadowski.
10.12(a) 1993 Stock Option Plan.
10.13(a) Form of incentive stock option agreement for use with
1993 Stock Option Plan.
10.14(a) Form of nonqualified stock option agreement for use
with 1993 Stock Option Plan.
10.15(a) 1996 Stock Option Plan, with form of stock option
agreement.
11
<PAGE>
10.16(a) Preferred Stock Purchase Agreement between Enskilda
Kapitalforvaltning and the Company, dated February 1,
1994, relating to the Company's Non-Voting Series B
Convertible Preferred Stock.
10.17(a) Preferred Stock Purchase Agreement between Enskilda
Kapitalforvaltning and the Company, dated December 28,
1993, relating to the Company's Series B Convertible
Preferred Stock.
10.18(a) Preferred Stock Purchase Agreement between Calvert
Social Venture Partners, L.P. and the Company, dated
November 29, 1993, relating to the Company's Series B
Convertible Preferred Stock.
10.19(a) Form of Preferred Stock Purchase Agreement relating to
the Company's Series B Convertible Preferred Stock.
+10.20(a) Development and License Agreement between Becton
Dickinson and Company and the Company, effective
January 1, 1996.
10.21(a) Underwriting Agreement.
11.1 Statement Regarding Computation of Earnings Per Share.
27.1 Financial Data Schedule.
Footnotes:
+ Pursuant to Rule 406 of the Securities Act of 1933, as amended,
confidential portions of Exhibit 10.20 have been deleted and filed
separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment.
(a) Incorporated by reference to Company's S-1 Registration Statement, as
amended, filed June 24, 1996, (file number 33-06661).
Subpart B:
No reports on form 8-k were filed by the Company during the quarter ended
September 30, 1996.
12
<PAGE>
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.
MEDI-JECT CORPORATION
November 14, 1996 /s/ Franklin Pass
- ---------------------------- ---------------------------------------
Date Franklin Pass, MD, Chairman/CEO
November 14, 1996 /s/ Mark Derus
- ---------------------------- ---------------------------------------
Date Mark Derus, Vice President Finance, CFO
(Principal Financial & Accounting Officer)
13
<PAGE>
EXHIBIT 11.1
MEDI-JECT CORPORATION
Computation of Earnings per Share
<TABLE>
<CAPTION>
9 months ended 3 months ended
September 30, 1996 September 30, 1996
-------------------------------------
<S> <C> <C>
Net Loss (1,735,794) (551,616)
Pro Forma Per Share Data:
Shares of common stock and
common stock equivalents:
Number of common shares outstanding 4,725,633 4,725,633
Effect of outstanding stock options 96,450 96,450
Effect of incremental shares 438,797 438,797
--------- --------
5,260,880 5,260,880
========= =========
Pro Forma Net loss per Common Share (.33) (.10)
</TABLE>
Note: Shares outstanding and the effect of stock options and warrants and the
incremental effect of shares issued below the IPO price within the past 12
months were calculated pursuant to the rules of Staff Accounting Bulletin 4:D.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
audited and unaudited internal financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0001016169
<NAME> Medi-Ject Corporation
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-START> JAN-01-1995 JAN-01-1996
<PERIOD-END> DEC-31-1995 SEP-30-1996
<CASH> 35817 1344671
<SECURITIES> 0 0
<RECEIVABLES> 180365 197870
<ALLOWANCES> 4125 2954
<INVENTORY> 280229 400471
<CURRENT-ASSETS> 527794 2485206
<PP&E> 1027462 1215548
<DEPRECIATION> 550436 617387
<TOTAL-ASSETS> 1240108 3416123
<CURRENT-LIABILITIES> 1178067 1409466
<BONDS> 136206 14008
<COMMON> 2189 13538
0 0
31945 32330
<OTHER-SE> (108299) 1946781
<TOTAL-LIABILITY-AND-EQUITY> 1240108 3416123
<SALES> 1653869 1217666
<TOTAL-REVENUES> 2591292 2544255<F1>
<CGS> 1048937 724908
<TOTAL-COSTS> 3318908 3528175
<OTHER-EXPENSES> 45090 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 60816 26966
<INCOME-PRETAX> (1882459) (1735794)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (1882459) (1735794)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1882459) (1735794)
<EPS-PRIMARY> (.36) (.33)
<EPS-DILUTED> (.36) (.33)
<FN>
<F1> Includes interest income of $16,486 for PE 12-31-95 and $94,754 for PE 9-30-96.
</FN>
</TABLE>
