<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, 1999
Commission File Number 0-20945
MEDI-JECT CORPORATION
161 Cheshire Lane, Suite 100
Minneapolis, Minnesota 55441
(612) 475-7700
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 X No
------ -----
The number of shares outstanding of the Registrant's Common Stock, $.01 par
value, as of October 29, 1999, was 1,424,729.
-------------------
=============================================================
1
<PAGE>
MEDI-JECT CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
----
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
<S> <C>
Balance Sheets as of December 31, 1998 and
September 30, 1999............................................ 3
Statements of Operations for the three and nine months ended
September 30, 1998 and 1999................................... 4
Statements of Cash Flows for the nine months ended
September 30, 1998 and 1999................................... 5
Notes to Financial Statements................................. 6
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations .................................... 7
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.... 10
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings........................................... 10
ITEM 2. Changes in Securities and Use of Proceeds .................. 10
ITEM 6. Exhibits and Reports on Form 8-K............................ 11
SIGNATURES............................................................. 14
</TABLE>
2
<PAGE>
MEDI-JECT CORPORATION
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents..................................... $ 2,852,285 $ 633,187
Accounts receivable, less allowance for doubtful accounts of
$25,000 and $25,000, respectively......................... 275,694 208,230
Inventories................................................... 592,185 417,716
Prepaid expenses and other assets............................. 52,006 33,315
------------- -------------
3,772,170 1,292,448
------------ -------------
Equipment, furniture and fixtures, net................................. 1,278,456 1,196,914
------------ -------------
Patent rights, net..................................................... 283,805 279,382
------------- -------------
$ 5,334,431 $ 2,768,744
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.............................................. $ 250,512 $ 387,260
Accrued expenses and other liabilities........................ 236,191 285,198
Deferred Revenue.............................................. 216,000 --
Capital lease obligations - current maturities................ 1,721
------------- -------------
704,424 672,458
------------- -------------
Shareholders' equity:
Series A Convertible Preferred Stock: $0.01 par; authorized
10,000 shares; 1,000 issued and outstanding at
December 31,1998, and September 30, 1999, respectively;
aggregate liquidation preference of $1 million.............. 10 10
Common Stock: $0.01 par; authorized 3,400,000 shares;
1,424,752 and 1,424,729 issued and outstanding at
December 31, 1998 and September 30, 1999, respectively ... 14,247 14,247
Additional paid-in capital ................................... 24,911,694 24,883,151
Accumulated deficit........................................... (20,295,944) (22,801,122)
------------- --------------
4,630,007 2,096,286
------------- -------------
$ 5,334,431 $ 2,768,744
============= =============
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
MEDI-JECT CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
----------------------------------------------- ----------------------------------------
SEPTEMBER 30, SEPTEMBER 30,
----------------------------------------------- ----------------------------------------
1998 1999 1998 1999
----------------------- ----------------------- ----------------------- ----------------
<S> <C> <C> <C>
Revenues:
Product sales...................... $ 594,809 $ 481,914 $ 1,828,675 $ 1,441,189
Licensing & product development.... 92,739 27,144 527,364 1,236,752
--------------- -------------- ------------- ------------
687,548 509,058 2,356,039 2,677,941
--------------- -------------- ------------- ------------
Operating Expenses:
Cost of sales...................... 500,249 412,854 1,504,851 1,233,693
Research and development........... 680,026 559,552 1,873,682 1,745,137
General and administrative......... 615,355 367,725 1,726,982 1,341,934
Sales and marketing................ 220,763 312,046 666,475 800,281
--------------- -------------- ------------- ------------
2,016,393 1,652,177 5,771,990 5,121,045
--------------- -------------- ------------- ------------
Net operating loss....................... (1,328,845) (1,143,119) (3,415,951) (2,443,104)
---------------- --------------- -------------- -------------
Other income (expense):
Interest and other income.......... 67,004 13,881 244,757 63,197
Interest and other expense......... (201) (13) (11,292) (12,472)
---------------- --------------- -------------- -------------
66,803 13,868 233,465 50,725
--------------- -------------- ------------- ------------
Net loss................................. $ (1,262,042) $ (1,129,251) $ (3,182,486) $ (2,392,379)
=============== =============== ============= =============
Preferred stock dividends................ -- (62,797) -- (112,797)
--------------- --------------- ------------- --------------
Net loss applicable to common shares..... $ (1,262,042) $ (1,192,048) $ (3,182,486) $ (2,505,176)
================ =============== ============== ==============
Basic and diluted net loss
per common share................ $ (.89) $ (.84) $ (2.24) $ (1.76)
=============== ============== ============= ==============
Basic and diluted weighted average
common shares outstanding.......... 1,424,752 1,424,729 1,419,824 1,424,731
</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, 1998 SEPTEMBER 30, 1999
-------------------------- -------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss...................................................... $ (3,182,486) $ (2,392,379)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization............................ 332,119 328,286
Loss from disposal of assets............................. 9,445 35,444
Interest on marketable debt securities................... (140,548) --
Non-cash compensation.................................... -- 21,457
Other.................................................... 5,724 --
Changes in operating assets and liabilities:
Accounts receivable...................................... 453,073 67,464
Inventories.............................................. (225,736) 174,469
Prepaid expenses and other assets........................ (11,552) 18,691
Accounts payable......................................... (122,955) 136,748
Accrued expenses and other liabilities................... (38,247) (63,790)
Deferred revenue......................................... -- (216,000)
------------- --------------
Net cash used in operating activities.................................. (2,921,163) (1,889,610)
-------------- --------------
Cash flows from investing activities:
Purchases of marketable securities............................ (2,729,831) --
Proceeds from sales of mature marketable securities........... 3,130,779 --
Purchases of equipment, furniture and fixtures................ (574,287) (245,108)
Proceeds from sale of equipment, furniture and fixtures....... 2,200 --
Purchases of patent rights.................................... (50,341) (32,658)
-------------- --------------
Net cash used in investing activities.................................. (221,480) (277,766)
-------------- --------------
Cash flows from financing activities:
Principal payments on capital lease obligations............... (6,547) (1,722)
Proceeds from issuance of common stock ....................... 64,580 --
Offering costs................................................ -- (50,000)
------------- --------------
Net cash provided by (used in) financing activities.................... 58,033 (51,722)
------------- --------------
Net decrease in cash and cash equivalents.............................. (3,084,610) (2,219,098)
Cash and cash equivalents:
Beginning of period........................................... 3,745,851 2,852,285
------------- -------------
End of period................................................. $ 661,241 $ 633,187
============= =============
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
MEDI-JECT CORPORATION
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
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 1998 audited financial statements and
notes thereto.
2. INTERIM FINANCIAL STATEMENTS
Operating results for the three month and nine month periods ended
September 30, 1999, are not necessarily indicative of the results that
may be expected for the year ending December 31, 1999.
3. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31, 1998 SEPTEMBER 30, 1999
----------------- ------------------
<S> <C> <C>
Raw Material $ 132,884 $ 196,908
Work in-process 95,157 75,251
Finished goods 364,144 145,557
------------- -------------
$ 592,185 $ 417,716
============= =============
</TABLE>
4. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest during the nine month periods ended September
30, 1998 and 1999 was $1,328 and $96, respectively.
Cash paid for taxes during the nine month periods ended September 30,
1998 and 1999 was $2,063 and $250, respectively.
5. REVERSE STOCK SPLIT
On January 28, 1999, the Company declared a one-for-five reverse stock
split. All common shares and per share amounts in the financial
statements have been retroactively restated to give effect to this
reverse split. As a result of the reverse split, all fractional shares
were repurchased by the Company.
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, 1999 AND 1998
Total revenues for the three and nine months ended September 30, 1999 were
$509,058 and $2,677,941, respectively. These figures reflect a decrease of
$178,490, or 26% for the same three month period in 1998 and an increase of
$321,902, or 14% compared to the same nine month period in 1998. Product sales
decreased $112,895 or 19% in the three month period and $387,486 or 21% in the
nine month period ended September 30, 1999, compared to the same periods in the
prior year. The decrease is primarily attributable to a 49% decrease in revenue
from product sales used with human growth hormone in international markets that
had strong sales in 1998 due to initial market entry. These strong 1998 sales
leveled off after initial demand for product was met.
Licensing and product development fee income decreased by $65,595 or 71% in the
three month period and increased by $709,388 or 135% in the nine month period
ended September 30, 1999, as compared to the prior year periods. The large
increase in the nine-month period reflects the funds received from
Schering-Plough Corporation in satisfaction of mutual contractual obligations of
the parties. The Company received a one-time payment of $783,317 from
Schering-Plough in exchange for cancellation of a product purchase order and as
reimbursement for certain non-cancelable manufacturing expenses. The Company
expects that licensing and product development fee income will fluctuate on a
quarterly basis, depending on a variety of factors; including the timing of
execution of potential 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 months and nine months ended September 30, 1999
reflect decreases of $87,395 or 17% and $271,158 or 18% respectively when
compared to prior year periods. The decreases are the result of lower product
sales, primarily attributable to products used in human growth hormone
applications.
Research and development expenses totaled $559,552 and $1,745,137 in the three
and nine month periods ended September 30, 1999, respectively. Theses figures
reflect decreases from the prior year periods of $120,474 or 18% and $128,545 or
7%, respectively, due primarily to managed reductions in employee headcount and
overhead spending.
General and administrative expenses totaled $367,725 and $1,341,934 in the three
and nine month periods ended September 30, 1999, respectively. These figures
represent a decrease of $247,630 or 40% and $385,048 or 22% when compared to the
same periods in 1998. The largest component of the decrease is attributable to
staffing reductions which were completed in October 1998, primarily in the
product development and general & administrative segments.
7
<PAGE>
Sales and marketing expenses totaled $312,046 and $800,281 in the three and nine
month periods ended September 30, 1999, respectively. These figures reflect an
increase in the three month period of $91,283 or 41% and an increase in the six
month period of $133,806 or 20%. The main components of these increases are
expenses related to a new web site and new sales literature related to the
change to "over-the-counter" sales status for our domestic insulin product and
to the preparation for the launch of new products.
Net other income for the three and nine months ended September 30, 1999
decreased by $52,935 or 79% and $182,740 or 78% relative to the prior year
three-month and nine-month periods ending September 30. This decrease primarily
reflects a decrease in interest income attributable to lower average cash
balances.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $633,187 on September 30, 1999, compared to
$2,852,285 on December 31, 1998. This decrease of $2,219,098 results primarily
from net cash used by operating activities. Significant components of the cash
flow deficiency from operations were a net loss of $2,392,379 adjusted for a
management-planned reduction in inventory of $174,469 and an increase in
accounts payable of $136,748, and a decline in deferred revenue of $216,000 due
to income recognition as related product development was completed. Purchases of
fixed assets in the amount of $245,108 and deferred financing costs of $50,000
further reduced cash on hand.
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 sales of the Company's products. The Company believes that cash on hand,
interest expected to be earned thereon, anticipated revenues and cash management
strategies will allow the Company to meet its obligations through December 1999.
In order to meet its capital needs beyond this year, the Company has engaged a
financial advisor in an effort to secure additional working capital. The terms
of this additional working capital, if any, will be determined and negotiated
directly with the investors. The terms of the agreement with the financial
advisor require a retainer of $50,000 and a warrant for 10,000 shares of Common
Stock. Additional fees will be payable upon closing of a successful financing
transaction.
The Company can provide no assurance, however, that cash available will be
sufficient to meet the Company's needs during the next three months or beyond
due to fluctuations in product development expenses and receipt of estimated
license fees, that the Company will ever become profitable, or that the Company
will be able to raise additional capital on terms acceptable to the Company, or
at all.
IMPACT OF THE YEAR 2000
The Company had all internal systems analyzed, reprogrammed and tested by
September 30, 1999. To date, confirmations have been received from virtually all
of the Company's vendors indicating that plans are being developed to address
processing of transactions in the Year 2000. There can be no assurance that the
Company will not experience serious unanticipated negative
8
<PAGE>
consequences and/or material costs caused by undetected errors or defects in the
technology used in its internal operating systems, which are composed
predominantly of third party software and hardware technology, or by the failure
of vendors to correct their Year 2000 issues. The majority of the Company's
current standard product lines and manufacturing equipment are not date
sensitive and therefore are not affected by the Year 2000 issues.
The Company has incurred less than $10,000 in expenses to address the Year 2000
problem to date and expects that it will incur less than $20,000 in expenses in
total. The volume of transactions and operations, processed by the Company's
automated systems, that could potentially be affected can be handled manually or
by outside vendors, if need be, to prevent any interruptions in Company
operations. To mitigate any risk associated with receiving materials from sole
source suppliers, the Company will be purchasing additional reserve inventory
related to selected critical items. Currently, management does not foresee any
negative impact from Year 2000 issues upon the Company's operations.
REVERSE STOCK SPLIT
On January 28, 1999, the Company declared a one-for-five reverse stock split of
its outstanding common stock, applicable to shareholders of record at close of
trading on January 28, 1999. The reverse split was affected in response to the
Nasdaq National Market listing requirements which require that the Company
maintain a minimum value of public float of $5,000,000 and a minimum bid price
of $1.00 per share. After the reverse split, the Company met the requirements
for continued listing on the Nasdaq Small Cap Market, which require the Company
to maintain a minimum bid price of $1.00 per share and to maintain a minimum
value of public float of $1,000,000. After the reverse split, the Company had
1,424,729 shares of common stock outstanding as fractional shares were paid out
in cash to respective shareholders. All common share and per share amounts in
this report have been retroactively restated to give effect to this reverse
stock split.
FORWARD LOOKING STATEMENTS
Certain statements included in this Form 10-Q are "forward looking statements"
as defined in the Private Securities Litigation Reform Act of 1995 and are
subject to risks and uncertainties. The words "may," "should," "expect," "plan,"
"anticipate," "believe," "estimate," predict," "intend," "potential," or
"continue" and similar expressions are generally intended to identify forward
looking statements. Factors that may affect future results and performance are
set forth on Exhibit 99, "Cautionary Statements," which was filed with the
United States Securities and Exchange Commission as an Exhibit to Form 10-K,
December 31, 1996.
9
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
MARKET RISK DISCLOSURE
There have been no material changes in reported market risks faced by the
Company since December 31, 1998.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is a party to a license and supply agreement with
Bio-Technology General ("BTG") pursuant to which the Company agreed to
exclusively design, develop and provide to BTG certain needleless
injectors for use in connection with human growth hormone in the United
States. To date, no sales of devices by the Company to BTG have
occurred because BTG has been preliminarily enjoined from importing or
selling human growth hormone in the United States pursuant to a court
proceeding. In June of 1999, the Company notified BTG that it was in
breach of contractual obligations to use best reasonable efforts to
create a demand for the licensed products and to diligently market and
sell the licensed products in the relevant territory. The Company also
notified BTG that the license and supply agreement would terminate 90
days from the date of the letter unless BTG cured its breach of
contract. BTG subsequently demanded arbitration on August 25, 1999,
pursuant to the rules of the American Arbitration Association seeking a
determination that it is not in breach of the license and supply
agreement and seeking to maintain in force the agreement and its
exclusive rights thereunder. Both parties have requested mediation. An
initial mediation conference has not yet occurred, and while the
Company believes the actions it took were valid, the Company cannot
predict the outcome of the action at this time.
Item 2. Changes in Securities and Use of Proceeds.
On September 23, 1999, the Company issued Warrants to purchase 10,000
shares of its Common Stock to a financial advisor as a retainer
pursuant to an agreement whereby financial advisor will assist the
Company in its efforts to secure additional working capital. The
Warrants are exercisable for a period of five years at an exercise
price of $2.40 per share. The Company claims an exemption under Section
4(2) of the Securities Act because the transaction was a privately
negotiated transaction with only one offeree who is highly
sophisticated and experienced in the industry.
10
<PAGE>
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Securities Holders.
None.
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
<TABLE>
<CAPTION>
<S> <C>
3.1 Second Amended and Restated Articles of Incorporation of the Company.(a)
3.2 Second Amended and Restated Bylaws of the Company.(a)
3.3 Certificates of Designations for Series A Preferred Stock.(e)
3.4 Amendment to Second Amended and Related Articles of Incorporation. (f)
4.1 Form of Certificate for Common Stock.(a)
4.2 Stock Warrant, dated January 25, 1996, issued to Becton Dickinson and Company.(a)
4.3 Stock Option, dated January 25, 1996, issued to Becton Dickinson and Company.(a)
4.4 Warrant, dated March 24,1995, issued to Robert Fullerton.(a)
4.5 Warrant, dated March 24,1995, issued to Phil Trautner.(a)
4.6 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).(a)
4.7 Warrant issued to Elan International Services, Ltd. on November 10, 1998,
transferred to Elan Pharmaceutical Investments, Ltd., June 29, 1999. (e)
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.1 Reserved.
10.3 Security Agreement, dated September 30, 1994, by and between the Company and Kelsey
Lake Limited Partnership and Kerry Lake Company, a Limited Partnership.(a)
10.4 Reserved.
10.5 Reserved.
10.6 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.(a)
10.7 Preferred Stock, Option and Warrant Purchase Agreement, dated January 25, 1996,
between the Company and Becton Dickinson and Company.(a)
10.8 * Employment Agreement, dated as of January 1, 1997, between the Company and
Franklin Pass, MD.(c)
10.9 * Reserved
10.10 * Reserved.
10.11 * Employment Agreement, dated as of January 3, 1995, between the Company and Peter
Sadowski.(a)
10.12 * 1993 Stock Option Plan.(a)
10.13 * Form of incentive stock option agreement for use with 1993 Stock Option Plan.(a)
10.14 * Form of non-qualified stock option agreement for use with 1993 Stock Option Plan.(a)
10.15 * 1996 Stock Option Plan, with form of stock option agreement.(a)
10.20+ Development and License Agreement between Becton Dickinson and Company and the Company,
effective January 1, 1996 (terminated January 1, 1999). See Exhibit 10.24 (a)
10.21 Office-Warehouse lease with Carlson Real Estate Company, dated February 11,
1997.(b)
10.22* 1998 Stock Option Plan for Non-Employee Directors.(d)
10.23* Letter consulting agreement dated February 20, 1998 between the Company and
Geoffrey W. Guy.(d)
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
10.24# Agreement with Becton Dickinson and Company dated January 1, 1999.(e)
10.25 Securities Purchase Agreement with Elan International Services, Ltd. dated
November 10, 1998, transferred to Elan Pharmaceutical Investments, Ltd., June 29,
1999.(e)
10.26# License & Development Agreement with Elan Corporation, plc, dated November 10, 1998.(e)
27 Financial Data Schedule
99 Cautionary Statement.(b)
</TABLE>
* Indicates management contract or compensatory plan or arrangement.
+ Pursuant to Rule 406 of the Securities Act of 1933, as amended,
confidential portions of Exhibit 10.20 were deleted and filed
separately with the Securities and Exchange Commission pursuant to a
request for confidential treatment, which was subsequently granted by
the Securities and Exchange Commission.
# Pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as
amended, confidential portions of Exhibits 10.24 and 10.26 were deleted
and filed separately with the Securities and Exchange Commission
pursuant to a request for confidential treatment, which was
subsequently granted by the Securities and Exchange Commission.
(a) Incorporated by reference to the Company's Registration Statement on
Form S-1 (File No. 333-6661), filed with the Securities and Exchange
Commission on October 1, 1996.
(b) Incorporated by reference to the Company's Form 10-K for the year ended
December 31, 1996.
(c) Incorporated by reference to the Company's Form 10-Q for the quarter
ended March 31, 1997.
(d) Incorporated by reference to the Company's Form 10-K for the year ended
December 31, 1997.
(e) Incorporated by reference to the Company's Form 10-K for the year ended
December 31,1998.
(f) Filed herewith.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
September 30, 1999.
13
<PAGE>
SIGNATURES
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
<TABLE>
<CAPTION>
<S> <C>
October 29, 1999 /s/ Franklin Pass
- ----------------------------------------- ---------------------------------------------------
Date Franklin Pass, MD, Chairman/CEO
October 29, 1999 /s/ Lawrence M. Christian
- ----------------------------------------- ---------------------------------------------------
Date Lawrence M. Christian, Vice President- Finance &
Administration/CFO
(principal financial & accounting officer)
</TABLE>
14
<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>
<S> <C> <C>
<PERIOD-TYPE> 12-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1999
<PERIOD-START> JAN-01-1998 JAN-01-1999
<PERIOD-END> DEC-31-1998 SEP-30-1999
<CASH> 2,852,285 633,187
<SECURITIES> 0 0
<RECEIVABLES> 300,694 233,230
<ALLOWANCES> 25,000 25,000
<INVENTORY> 592,185 417,716
<CURRENT-ASSETS> 3,772,170 1,292,448
<PP&E> 2,451,971 2,655,340
<DEPRECIATION> 1,173,515 1,458,426
<TOTAL-ASSETS> 5,334,431 2,768,744
<CURRENT-LIABILITIES> 704,424 672,458
<BONDS> 0 0
0 0
10 10
<COMMON> 14,247 14,247
<OTHER-SE> 4,615,750 2,082,029
<TOTAL-LIABILITY-AND-EQUITY> 5,334,431 2,768,744
<SALES> 2,223,504 1,441,189
<TOTAL-REVENUES> 3,042,389<F1> 2,741,138
<CGS> 1,852,026 1,233,693
<TOTAL-COSTS> 6,944,673 3,887,352
<OTHER-EXPENSES> 13,756 12,376
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,398 96
<INCOME-PRETAX> (5,769,464) (2,392,379)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (5,769,464) (2,392,379)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (5,769,464) (2,392,379)
<EPS-BASIC> (4.07) (1.76)
<EPS-DILUTED> (4.07) (1.76)
<FN>
<F1>INCLUDES INTEREST INCOME OF $291,521 FOR PERIOD ENDED 12-31-98 AND $63,197 FOR
THE PERIOD ENDED 9-30-99.
</FN>
</TABLE>
