<PAGE> 1
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 quarterly period ended June 30, 1997
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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 0-22373
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VAXCEL, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 58-2027283
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
154 Technology Parkway, Norcross, Georgia 30092
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(Address of principal executive offices) (Zip Code)
(770) 453-0195
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(Registrant's telephone number)
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
----- -----
Number of shares of Vaxcel, Inc. Common Stock, $.001 par value, issued and
outstanding as of August 11, 1997: 11,000,000.
<PAGE> 2
VAXCEL, INC.
Form 10-Q
Table of Contents
<TABLE>
<CAPTION>
Page
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements:
Condensed Consolidated Balance Sheets as of June 30, 1997 (unaudited)
and December 31, 1996 3
Condensed Consolidated Statements of Operations (unaudited) for the
Three Month and Six Month Periods Ended June 30, 1997 and 1996 4
Condensed Consolidated Statements of Cash Flows (unaudited) for the
Six Month Periods Ended June 30, 1997 and 1996 5
Notes to Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders 12
Item 6 Exhibits and Reports on Form 8-K 12
SIGNATURES 13
</TABLE>
2
<PAGE> 3
Part I - FINANCIAL INFORMATION
Item 1. - Financial Statements
VAXCEL, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1997 December 31, 1996
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ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 624,298 $ 84,481
Short-term investments 894,246 --
Accounts receivable 217,670 49,222
Amounts due from affiliates 2,753 --
------------ -----------
Total current assets 1,738,967 133,703
Property and equipment, net 103,747 95,176
Other assets:
Acquired developed technology, net 3,574,356 --
Notes receivable 632,786 --
Deferred transaction costs -- 113,439
Deposits 55,951 35,674
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Total other assets 4,263,093 149,113
------------ -----------
Total assets $ 6,105,807 $ 377,992
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 17,143 $ 32,039
Accrued liabilities 203,183 155,540
Amounts due to affiliates, net -- 30,427
------------ -----------
Total current liabilities 220,326 218,006
Commitments
Stockholders' equity:
Preferred stock, $.001 par value, 2,000,000 shares authorized;
no shares issued and outstanding -- --
Common stock, $.001 par value, 30,000,000 shares authorized;
11,000,000 and 8,250,004 shares issued and outstanding at
June 30, 1997 and December 31, 1996, respectively 11,000 8,250
Additional paid-in capital 12,082,176 4,697,750
Accumulated deficit (6,207,695) (4,546,014)
------------ -----------
Total stockholders' equity 5,885,481 159,986
------------ -----------
Total liabilities and stockholders' equity $ 6,105,807 $ 377,992
============ ===========
</TABLE>
See accompanying notes.
3
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VAXCEL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Month Period Ended June 30, Six Month Period Ended June 30,
--------------------------------- -------------------------------
1997 1996 1997 1996
------------ ------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenues:
Collaborative and grant income $ 4,088 $ -- $ 57,785 $ --
License fees -- 50,000 -- 50,000
Investment income, net 7,971 1,168 8,467 5,534
----------- ----------- ----------- -----------
12,059 51,168 66,252 55,534
Expenses:
Research and development
Transactions with affiliates 34,068 31,998 93,503 48,873
Other 236,190 147,487 413,029 331,292
Acquired research and development 951,017 -- 951,017 --
Selling, general and administrative
Transactions with affiliates 23,921 17,491 46,421 34,982
Other 85,571 74,146 223,963 153,134
----------- ----------- ----------- -----------
1,330,767 271,122 1,727,933 568,281
----------- ----------- ----------- -----------
Net loss $(1,318,708) $ (219,954) $(1,661,681) $ (512,747)
=========== =========== =========== ===========
Net loss per share (see Exhibit 11) $ (0.14) $ (0.03) $ (0.19) $ (0.06)
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
4
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VAXCEL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Month Period Ended June 30,
-------------------------------
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,661,681) $ (512,747)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 51,444 25,800
Charge for acquired research and development 951,017 --
Net change in assets and liabilities 144,242 (63,997)
----------- -----------
Total adjustments 1,146,703 (38,197)
----------- -----------
Net cash used by operating activities (514,978) (550,944)
Cash flows from investing activities:
Increase in short-term investments (894,246) --
Capital expenditures (3,371) (1,211)
----------- -----------
Net cash used by financing activities (897,617) (1,211)
----------- -----------
Cash flows from financing activities:
Pre-merger equity contributions by CytRx 163,396 --
Net proceeds from issuance of common stock
in connection with acquisition of Zynaxis, Inc. 1,789,016 150,000
----------- -----------
Net cash provided by financing activities 1,952,412 150,000
----------- -----------
Net increase (decrease) in cash and cash equivalents 539,817 (402,155)
Cash and cash equivalents at beginning of period 84,481 515,522
----------- -----------
Cash and cash equivalents at end of period $ 624,298 $ 113,367
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 1,421 $ --
=========== ===========
</TABLE>
See accompanying notes.
5
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VAXCEL, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
(Unaudited)
1. DESCRIPTION OF COMPANY AND BASIS OF PRESENTATION
Vaxcel, Inc. ("Vaxcel" or the "Company") is engaged in the development
and commercialization of proprietary vaccine delivery system technologies to
improve the effectiveness and convenience of existing vaccines and contribute to
the development of new vaccines. The Company's core technology is based upon
novel vaccine formulations containing certain biologically active copolymers
licensed exclusively for this purpose by the Company from CytRx Corporation
("CytRx"). In May 1997 the Company acquired certain additional vaccine delivery
technologies pursuant to its merger with Zynaxis, Inc. (see Note 3).
Vaxcel was formed on January 6, 1993 as a wholly-owned subsidiary of
CytRx and has been economically dependent upon CytRx to provide the funding
necessary to conduct its operations since its inception. In May 1997 Vaxcel
completed a merger with Zynaxis, Inc. ("Zynaxis"), resulting in the issuance of
an aggregate of 12.5% of its outstanding (post-merger) shares of common stock to
the former shareholders of Zynaxis. The acquisition also resulted in a
significant cash contribution to the Company from CytRx (see Note 3).
The accompanying condensed consolidated financial statements at June
30, 1997 and for the three month and six month periods ended June 30, 1997 and
1996 are unaudited, but include all adjustments, consisting of normal recurring
entries, which the Company's management believes to be necessary for a fair
presentation of the periods presented. Interim results are not necessarily
indicative of results for a full year. The financial statements should be read
in conjunction with the Company's audited financial statements for the year
ended December 31, 1996 contained in its registration statement filed on Form
S-4 under the Securities Act of 1933, as amended.
2. NET LOSS PER COMMON SHARE
Net loss per common share is calculated in accordance with Accounting
Principles Board Opinion No. 15, Earnings per Share, and is based on the
weighted average number of common shares and common share equivalents
outstanding during each period. Stock options and warrants outstanding are
excluded from the computation of net loss per share since the effect is
antidilutive.
6
<PAGE> 7
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per share,
the dilutive effect of stock options will be excluded. The adoption of Statement
No. 128 will not impact the Company's calculation of net loss per share for the
three month or six month periods ended June 30, 1997 and 1996.
3. ACQUISITION OF ZYNAXIS, INC.
In December 1996 Vaxcel, CytRx and Zynaxis signed an agreement whereby
Zynaxis would be merged with a wholly-owned subsidiary of Vaxcel. At that time
Zynaxis was a publicly-held biotechnology company engaged in the development of
certain vaccine technologies. The transaction was approved by the Zynaxis
stockholders at a meeting held on May 21, 1997 and was consummated as of that
date.
Under the terms of the agreement all of the outstanding shares of
Zynaxis were converted into shares of Vaxcel based upon certain exchange ratios
defined in the agreement resulting in the issuance of an aggregate of 12.5% of
the outstanding (post-merger) shares of Vaxcel common stock at the date of
closing. The merger was treated as a purchase and constitutes a tax-free
reorganization for Zynaxis stockholders. In accordance with the provisions of
APB Nos. 16 and 17, all identifiable assets acquired, including identifiable
intangible assets, were assigned a portion of the purchase price on the basis
of their fair values. A summary of the allocation of the purchase price is as
follows:
<TABLE>
<S> <C>
Net tangible assets, less outstanding liabilities $ (551,017)
Acquired developed technology 3,600,000
Charge for acquired research and development 951,017
----------
Total purchase price $4,000,000
==========
</TABLE>
Pursuant to the agreement, CytRx was to provide up to $2 million to
Zynaxis under a secured credit facility during the period prior to the closing
of the merger, at which time the outstanding principal and interest was to be
contributed to the capital of Vaxcel, together with additional cash in the
amount of $4 million less the outstanding principal and interest of the secured
note. At the time of closing the outstanding principal and interest of the
secured note to Zynaxis was approximately $1.7 million, resulting in a net cash
contribution to Vaxcel from CytRx of approximately $2.3 million.
The following table presents unaudited pro forma operating results for
the six months ended June 30, 1997 and 1996, as if the acquisition of Zynaxis
had occurred on January 1 of each period.
7
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<TABLE>
<CAPTION>
1997 1996
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<S> <C> <C>
Revenues $ 894,000 $ 875,000
Net loss $(1,032,000) $(3,205,000)
Net loss per share $ (.09) $ (.27)
</TABLE>
4. LOAN FROM CYTRX
Effective March 15, 1997, in order to provide necessary funding for
certain expenses and operations of Vaxcel pending its merger with Zynaxis, CytRx
and Vaxcel entered into a Loan Agreement (the "Loan") pursuant to which CytRx
agreed to lend up to $400,000 to Vaxcel with interest accruing from May 1, 1997
at prime plus 2%. As of March 31, 1997, Vaxcel had outstanding borrowings of
approximately $140,000 pursuant to the Loan. The outstanding principal and
interest of approximately $287,000 was repaid by Vaxcel to CytRx concurrent with
the closing of the acquisition of Zynaxis.
8
<PAGE> 9
Item 2. -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
General
Vaxcel is engaged in the development and commercialization of
Optivax(R), the tradename for a family of proprietary nonionic block copolymers
which may augment or modulate the immune response to vaccines when administered
injectably. Vaxcel derives its rights to Optivax from an exclusive, worldwide
license agreement with CytRx. Vaxcel believes Optivax may improve the
effectiveness and/or convenience of existing vaccines and may contribute to the
development of new vaccines. Vaxcel and its institutional/corporate
collaborators have conducted preclinical studies in which Optivax appears to act
both as a delivery system and as a vaccine adjuvant. In addition, a Phase I
human clinical trial initiated by Vaxcel in early 1996 and completed during the
first quarter of 1997 demonstrated both the safety and vaccine adjuvant activity
of Optivax in humans.
Vaxcel's business strategy is to license Optivax on a
vaccine-by-vaccine basis to pharmaceutical and biotechnology companies engaged
in vaccine research and development. Under such arrangements, these companies
would combine Optivax with their vaccines and assume responsibility for product
development, regulatory approval, and marketing at their expense. In return,
Vaxcel would receive licensing fees, milestone payments, and royalties on sales.
At present, Vaxcel has entered into option agreements for the development of
Optivax with Medeva PLC and Connaught Laboratories, Inc. and a license agreement
with Corixa Corporation.
As a result of Vaxcel's business combination with Zynaxis (see Note 3
to Financial Statements), Vaxcel has acquired the PLG microencapsulation and
mucoadhesive vaccine technologies of Zynaxis. These technologies appear to be
complementary to Vaxcel's current technology, as Optivax is primarily focused on
enhancing the effectiveness of injectible vaccines, while the Zynaxis
technologies are primarily targeted toward development of vaccines for oral and
mucosal delivery. Vaxcel believes the Zynaxis oral delivery technologies may
have commercial application for many marketed vaccines currently administered by
injection, as well as certain new vaccines under development. In addition, the
Zynaxis technologies can be administered alone or in combination with other
vaccine carriers, delivery systems, and adjuvants. Similar to Optivax, Vaxcel's
business strategy for the PLG microencapsulation and mucoadhesive vaccine
technologies will be to license these technologies to companies engaged in
vaccine research and development. In September 1995, ALK A/S ("ALK"), a Danish
company, executed a development and licensing agreement which granted ALK
exclusive, worldwide rights to evaluate and develop the Zynaxis technologies for
oral delivery of bioactive substances for the treatment of allergy. ALK is a
world leader in the preparation and standardization of allergen extracts for
allergy immunotherapy. ALK is currently conducting a Phase II human clinical
trial.
9
<PAGE> 10
Financial Condition and Liquidity
At June 30, 1997 Vaxcel had cash and investments of $1,519,000 and net
assets of $5,885,000 compared to $84,000 and $160,000, respectively, at December
31, 1996. The increase in cash and investments is due to CytRx's contribution of
approximately $2.3 million in cash to Vaxcel in connection with the acquisition
of Zynaxis in May 1997. To date, Vaxcel's research and development, general and
administrative and other expenses have exceeded its revenues from licenses,
grants and other sources. Since its inception Vaxcel has been economically
dependent upon CytRx to provide the funding necessary to conduct its operations.
Vaxcel's primary requirement for capital will be to continue its
development activities for Optivax and the Zynaxis technologies and for general
corporate purposes. Vaxcel anticipates substantial losses over the next several
years resulting primarily from research and development expenses. Definitive
statements as to the time required and costs involved in reaching certain
development objectives are difficult to project due to the uncertainties of the
medical research field. It is generally recognized that the FDA approval process
for a new vaccine from Phase I to commercialization can take seven or more
years. For certain improved versions of existing vaccines, the amount of time
may be significantly reduced if the company only needs to prove safety and
increased antibody levels compared to the original version of the vaccine. It
should be noted that companies which license Optivax for use with their vaccines
will assume responsibility for product development, regulatory approval and
marketing, thereby allowing Vaxcel to maintain a lower level of expenses.
Management believes that cash on hand subsequent to the acquisition of
Zynaxis will be sufficient to support Vaxcel's operations for the next two
years. Management further expects that proceeds from corporate partnering
arrangements may further supplement Vaxcel's liquidity and capital resources.
The Company will consider additional sources of funding as appropriate and
available. These statements regarding the Company's plans for future financings
are forward-looking statements that are subject to a number of risks and
uncertainties. The Company's ability to obtain future financings through
corporate partnering arrangements or otherwise is subject to market conditions
and the Company's ability to identify parties that are willing and able to enter
into such arrangements on terms that are satisfactory to the Company. There can
be no assurance that the Company will be able to obtain future financing from
these sources.
At December 31, 1996, the Company had net operating loss carryforwards
for income tax purposes of approximately $4.6 million, which will expire at
various dates through 2011, if not utilized. The Company also has research and
development credits available to reduce income taxes, if any, of approximately
$63,000. Based on an assessment of all available evidence including, but not
limited to, the Company's limited operating history and lack of profitability,
uncertainties of the commercial viability of the Company's technology, the
impact of government regulation and healthcare reform initiatives, and other
risks normally associated with biotechnology companies, the Company has
concluded that it is more likely than not that these net operating loss
carryforwards and credits will not be realized and, as a result, a 100% deferred
tax valuation allowance has been recorded against these assets. Such valuation
allowance had no impact on reported net losses.
10
<PAGE> 11
Results of Operations
The Company recorded net losses of $1,319,000 and $1,662,000 during the
three month and six month periods ended June 30, 1997, as compared to $220,000
and $513,000 during the same periods in 1996.
The higher net loss in the 1997 periods versus 1996 is primarily due to
a $951,000 non-cash charge for acquired research and development incurred during
the second quarter of 1997 as a result of the Company's acquisition of Zynaxis.
Excluding this one-time charge, the net losses for the three month and six month
periods of 1997 were $368,000 and $711,000, versus $220,000 and $513,000 in
1996.
Research and development expenditures for the three month period ended
June 30, 1997 were $270,000, as compared to $179,000 during 1996. For the six
month period research and development expenditures were $507,000 versus $380,000
in 1996. From 1996 to 1997 there has been no significant change in the level of
research and development activity, nor in the Company's focus of developing
Optivax. Fluctuations in expenditures from year to year are primarily due to the
timing and nature of external studies being performed.
General and administrative expenses for the three month period ended
June 30, 1997 were $109,000, as compared to $92,000 during 1996. For the six
month period general and administrative expenses were $270,000 versus $188,000
in 1996. The increase is primarily due to non-transaction expenses associated
with the Company's acquisition of Zynaxis and activities in preparation for
administration of the combined companies.
11
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Part II -- OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
CytRx, which at the time was the sole stockholder of Vaxcel, held an
annual meeting of stockholders as of May 20,1997. The sole item of business
conducted at the meeting was the election of Jack L. Bowman, Raymond C.
Carnahan, Jr., Jack J. Luchese, Herbert H. McDade and Paul J. Wilson as
directors. CytRx voted all outstanding shares of Vaxcel in favor of the election
of the directors.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
10.1 * Vaxcel, Inc. 1993 Stock Option Plan Amended and
Restated as of April 17, 1997
11 Statement re: computation of net loss per share
27 Financial Data Schedule (for SEC use only)
</TABLE>
* Indicates a management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K:
On June 3, 1997, the Registrant filed a Current Report on Form 8-K
reporting its acquisition of Zynaxis, Inc. On July 21, 1997 the
Registrant filed Amendment No. 1 to the Form 8-K filed on June 3, 1997
in order to provide the historical financial statements of Zynaxis,
Inc. required under Rule 3-05 of Regulation S-X and the pro forma
financial information required under Article 11 of Regulation S-X.
12
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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.
VAXCEL, INC.
(Registrant)
Date: August 14, 1997 By: /s/ Mark W. Reynolds
--------------- --------------------------------
Mark W. Reynolds
Chief Financial Officer
(Chief Accounting Officer and a
duly authorized officer)
13
<PAGE> 1
EXHIBIT 10.1
VAXCEL, INC. 1993 STOCK OPTION PLAN
(amended and restated as of April 17, 1997)
<PAGE> 2
VAXCEL, INC.
1993 STOCK OPTION PLAN
AMENDED AND RESTATED AS OF APRIL 17, 1997
The purpose of the 1993 Stock Option Plan (the "Plan") of Vaxcel, Inc.
(the "Company") is to promote the interests of the Company by providing
incentives to (i) designated officers and other employees of the Company, a
Parent Corporation or a Subsidiary Corporation (as defined herein), (ii) members
of the Board of Directors (the "Board") and (iii) independent contractors and
consultants (who may be individuals or entities) who perform services for the
Company, to encourage them to acquire a proprietary interest, or to increase
their proprietary interest, in the Company. The Company believes that the Plan
will cause participants to contribute materially to the growth of the Company,
thereby benefiting the Company's stockholders. For purposes of the Plan, the
terms "Parent Corporation" and "Subsidiary Corporation" shall have the meanings
set forth in subsections (e) and (f) of Section 424 of the Internal Revenue Code
of 1986, as amended (the "Code").
SECTION 1. Administration
The Plan shall be administered and interpreted by a committee of the
Board (the "Committee") consisting of not less than two persons, all of whom
shall be (i) "outside directors" as that term is used in Section 162(m) of the
Code and the regulations promulgated thereunder or any successor provisions, to
the extent that Section 162(m) is applicable to the Company as described in
Section 16(d) hereof, and (ii) "non-employee directors" as such term is defined
in Rule 16b-3 promulgated under Section 16 of the Securities Exchange Act of
1934 (the "Exchange Act") or any successor provisions, to the extent that
Section 16 of the Exchange Act is applicable to the Company as described in
Section 16(e) hereof. The Committee shall have the sole authority to determine
(i) who is eligible to receive Grants (as defined in Section 2 below) under the
Plan, (ii) the type, size and terms of each Grant under the Plan (subject to
Section 4 below), (iii) the time when each Grant will be made and the duration
of any exercise or restriction period; (iv) any restrictions on resale
applicable to the shares to be issued or transferred pursuant to the Grant; and
(v) any other matters arising under the Plan. Non-Employee Directors of the
Board, as defined below, may receive Grants only pursuant to the provisions of
Section 5(j). The Committee may, if it so desires, base any of the foregoing
determinations upon the recommendations of management of the Company. The
Committee shall have full power and authority to administer and to interpret the
Plan and to adopt or amend such rules, regulations, agreements and instruments
as it may deem appropriate for the proper administration of the Plan. The
Committee's interpretations of the Plan and all determinations made by the
Committee pursuant to the powers vested in it hereunder shall be conclusive and
binding on all persons having any interests in the Plan or in any Grants under
the Plan. No person acting under this Section shall be held liable for any
action or determination made in good faith with respect to the Plan or any Grant
under the Plan. Notwithstanding the above, until such time as the Compensation
Committee of the Board consists of at least two disinterested, outside
directors, the Plan shall be administered by the full Board, which shall have
the same authority designated to the Committee as set forth herein. Any Awards
granted by the full Board during such time may be later ratified by the
Committee.
SECTION 2. Grants
<PAGE> 3
Grants under the Plan shall consist of Incentive Stock Options (as
defined in Section 5(b) below) and Nonqualified Stock Options (as defined in
Section 5(b) below) (hereinafter collectively referred to as "Grants" or "Stock
Options"). All Grants shall be subject to the terms and conditions set forth
herein and to such other terms and conditions of any nature as long as they are
not inconsistent with the Plan as the Committee deems appropriate and specifies
in writing to the participant in the document designating the Grant (the "Grant
Letter"). The Committee shall approve the form and provisions of each Grant
Letter. Grants under any section of the Plan need not be uniform as among the
participants receiving the same type of Grant, and Grants under two or more
sections of the Plan may be combined in one Grant Letter; provided, however,
that Grants to Non-Employee Directors, as defined below, shall be made only in
accordance with the provisions of Section 5(j).
SECTION 3. Shares Subject to the Plan
(a) The aggregate number of shares of the Common Stock, par value $.001
per share ("Common Stock"), of the Company that may be issued or transferred
under the Plan is 1,000,000, subject to adjustment pursuant to Section 3(b)
below. The maximum number of shares of Common Stock for which any Grantee may be
granted Stock Options under the Plan is 500,000, subject to adjustment pursuant
to Section 3(b) below. The shares may be authorized but unissued shares or
reacquired shares. If and to the extent that Stock Options granted under the
Plan terminate, expire or are canceled without having been exercised (including
shares canceled as part of an exchange of Grants), the shares subject to such
Grant shall again be available for subsequent Grants under the Plan.
(b) If any change is made to the Common Stock (whether by reason of
merger, consolidation, reorganization, recapitalization, stock dividend, stock
split, combination of shares, or exchange of shares or any other change in
capital structure made without receipt of consideration), then unless such event
or change results in the termination of all outstanding Grants under the Plan,
the Committee shall preserve the value of the outstanding Grants by adjusting
the maximum number and class of shares issuable under the Plan to reflect the
effect of such event or change in the Company's capital structure, and by making
appropriate adjustments to the number and class of shares, the exercise price of
each outstanding Stock Option and otherwise, except that any fractional shares
resulting from such adjustments shall be eliminated by rounding any portion of a
share equal to .500 or greater up, and any portion of a share equal to less than
.500 down, in each case to the nearest whole number.
SECTION 4. Eligibility for Participation
Officers and other employees of the Company, a Parent Corporation or a
Subsidiary Corporation, members of the Board, and independent contractors and
consultants who perform services for the Company shall be eligible to
participate in the Plan (hereinafter referred to individually as an "Eligible
Participant" and collectively as "Eligible Participants"). Only Eligible
Participants who are officers or other employees of the Company, a Parent
Corporation or a Subsidiary Corporation shall be eligible to receive Incentive
Stock Options. All Eligible Participants shall be eligible to receive
Nonqualified Stock Options. The Committee shall select from among the Eligible
Participants those who will receive Grants (the "Grantees") and shall determine
the number of shares of Common Stock subject to each Grant; provided, however,
that members of the Board who are not employed in any capacity by the Company
(hereinafter referred to as "Non-Employee Directors") may only receive grants of
Stock Options pursuant to
-3-
<PAGE> 4
Section 5(j). The Committee may, if it so desires, base any such selections or
determinations upon the recommendations of management of the Company. Nothing
contained in the Plan shall be construed to limit in any manner whatsoever the
right of the Company to grant rights or options to acquire Common Stock or
awards of Common Stock otherwise than pursuant to the Plan.
SECTION 5. Stock Options
(a) Number of Shares. The Committee, in its sole discretion, shall
determine the number of shares of Common Stock that will be subject to each
Stock Option.
(b) Type of Stock Option and Exercise Price.
(1) The Committee may grant options qualifying as incentive
stock options within the meaning of Section 422 of the Code ("Incentive
Stock Options") and other stock options ("Nonqualified Stock Options"),
in accordance with the terms and conditions set forth herein, or may
grant any combination of Incentive Stock Options and Nonqualified Stock
Options (hereinafter referred to collectively as "Stock Options"). The
exercise price per share of an Incentive Stock Option shall be the fair
market value (as defined herein) of a share of Common Stock on the date
of grant. If the Grantee of an Incentive Stock Option is the owner (as
determined under Section 424(d) of the Code) of stock possessing more
than 10% of the total combined voting power of all classes of stock of
the Company or a Parent Corporation or Subsidiary Corporation, the
exercise price per share in the case of an Incentive Stock Option shall
not be less than 110% of the fair market value of a share of Common
Stock on the date of grant.
(2) For all valuation purposes under the Plan, the fair market
value of a share of Common Stock shall be determined in accordance with
the following provisions:
(A) If the Common Stock is not at the time listed or
admitted to trading on any stock exchange but is traded either on the
over-the-counter market or listed on the Nasdaq National Market, the
fair market value shall be the closing selling price of one share of
Common Stock on the date in question as such price is reported by the
Nasdaq system or any successor system. If there is no reported closing
selling price for the Common Stock on the date in question, then the
closing selling price on the next preceding date for which such
quotation exists shall be determinative of fair market value.
(B) If the Common Stock is at the time listed or
admitted to trading on any stock exchange, then the fair market value
shall be the closing selling price of one share of Common Stock on the
date in question on the stock exchange determined by the Committee to
be the primary market for the Common Stock, as such prices are
officially quoted on such exchange. If there is no reported closing
selling price of Common Stock on such exchange on the date in question,
then the fair market value shall be the closing selling price on the
next preceding date for which such quotation exists.
-4-
<PAGE> 5
(C) If the Common Stock is at the time neither listed
nor admitted to trading on any stock exchange nor traded in the
over-the-counter market (or, if the Committee determines that the value
as determined pursuant to Section 5(b)(2)(A) or (B) above does not
reflect fair market value), then the Committee shall determine fair
market value after taking into account such factors as it deems
appropriate.
(c) Exercise Period. The Committee shall determine the exercise
period of each Stock Option. The exercise period shall not exceed ten years from
the date of grant. However, if the Grantee of an Incentive Stock Option is the
owner (as determined under Section 424(d) of the Code) of stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or a Parent Corporation or Subsidiary Corporation, the exercise period
shall not exceed five years from the date of grant. Notwithstanding any
determinations by the Committee regarding the exercise period of any Stock
Option, a Change in Control (as defined in Section 7) shall have the effect set
forth in Section 7.
(d) Vesting of Stock Options and Restrictions on Shares. The
vesting period for Stock Options shall commence on the date of grant and shall
end on the date or dates, determined by the Committee, that shall be specified
in the Grant Letter. The Committee may impose upon the shares of Common Stock
issuable upon the exercise of a Stock Option such restrictions as it deems
appropriate and specifies in the Grant Letter. During any period in which such
restrictions apply, the Committee, in such circumstances as it deems equitable,
may determine that all such restrictions shall lapse. Notwithstanding any other
provision of the Plan, all outstanding Stock Options shall become immediately
and fully vested and immediately exercisable upon a Change in Control of the
Company (as defined in Section 7 below).
(e) Manner of Exercise. A Grantee may exercise a Stock Option by
delivering a duly completed notice of exercise to the Corporate Secretary of the
Company, together with payment of the exercise price and any applicable tax
withholdings. Such notice may include instructions authorizing the Company to
deliver the certificates representing the shares of Common Stock issuable upon
the exercise of such Stock Option to any designated registered broker or dealer
("Designated Broker"). Such instructions shall designate the account into which
the shares are to be deposited. The Grantee may tender such notice of exercise,
which has been properly executed by the Grantee, and the aforementioned delivery
instructions to any Designated Broker.
(f) Termination of Eligible Status, Disability or Death.
(1) If a Grantee terminates employment or otherwise ceases to
be an Eligible Participant for any reason (other than, in the case of
an individual, the death of such individual) any Stock Option which is
otherwise exercisable by the Grantee shall terminate unless exercised
within three months after the date on which the Grantee ceases to be an
Eligible Participant (or within such other period of time, which may be
longer or shorter than three months, as may be specified in the Grant
Letter), but in any event no later than the date of expiration of the
exercise period, except that in the case of an individual Grantee who
is disabled within the meaning of Section 22(e)(3) of the Code, such
period shall be one year rather than three months (except as otherwise
provided in the Grant Letter).
-5-
<PAGE> 6
(2) In the event of the death of an individual Grantee while
he or she is an Eligible Participant or within not more than three
months after the date on which the Grantee ceases to be an Eligible
Participant (or within such other period of time, which may be longer
or shorter than three months, as may be specified in the Grant Letter),
any Stock Option which was otherwise exercisable by the Grantee at the
date of death may be exercised by the Grantee's personal representative
at any time prior to the expiration of one year from the date of death,
but in any event no later than the date of expiration of the exercise
period.
(g) Satisfaction of Exercise Price. The Grantee shall pay the
exercise price in cash, or, with the consent of the Committee in its sole
discretion, by delivering (or attesting his or her ownership of) shares of
Common Stock already owned by the Grantee and having a fair market value on the
date of exercise equal to the exercise price, or a combination of cash and
shares of Common Stock; provided however, that if shares of Common Stock are
used to pay the exercise price of a Stock Option, such shares must have been
held by the Grantee for at least six months. The Committee shall determine any
other methods by which the exercise price of a Stock Option may be paid, the
form of payment, including, without limitation, "cashless exercise"
arrangements, and the methods by which shares of Common Stock shall be delivered
or deemed to be delivered to Grantees. Without limiting the power and discretion
conferred on the Committee pursuant to the preceding sentence, the Committee
may, in the exercise of its discretion, but need not, allow a Grantee to pay the
exercise price of a Stock Option by directing the Company to withhold from the
shares of Common Stock that would otherwise be issued upon exercise of the Stock
Option that number of shares having a fair market value on the exercise date
equal to the exercise price, all as determined pursuant to rules and procedures
established by the Committee. The Grantee shall pay the exercise price and the
amount of withholding tax due, if any, at the time of exercise. Shares of Common
Stock shall not be issued or transferred upon any purported exercise of a Stock
Option until the option price and the withholding obligation are fully paid.
(h) Limits on Incentive Stock Options. Each Grant of an
Incentive Stock Option shall provide that:
(1) the Stock Option is not transferable by the
Grantee, except, in the case of an individual Grantee, by will or the
laws of descent and distribution;
(2) the Stock Option is exercisable only by the Grantee,
except as otherwise provided herein or in the Grant Letter in the
event of the death of an individual Grantee; and
(3) the aggregate fair market value of the Common Stock
on the date of the Grant with respect to which Incentive Stock Options
are exercisable for the first time by a Grantee during any calendar
year under the Plan and under any other stock option plan of the
Company shall not exceed $100,000.
(i) Replacement Stock Options. If a Stock Option granted pursuant
to the Plan may be exercised by a Grantee by means of a stock-for-stock swap
method of exercise as provided in Section 5(g) above, then the Committee may, in
its sole discretion and at the time of the original Grant, authorize the Grantee
to automatically receive a replacement Stock Option pursuant to this Section of
the Plan. This replacement Stock Option shall cover a number of shares of
-6-
<PAGE> 7
Common Stock determined by the Committee, but in no event more than the number
of shares equal to the difference between the number of shares of the original
Stock Option exercised and the net shares received by the Grantee from such
exercise. The per share exercise price of the replacement Stock Option shall
equal the then current fair market value of a share of Common Stock, and shall
have a term extending to the expiration date of the original Stock Option. The
Committee shall have the right, in its sole discretion and at any time, to
discontinue the automatic grant of replacement Stock Options if it determines
the continuance of such grants to no longer be in the best interest of the
Company.
(j) Stock Option Grants to Non-Employee Directors. Each Non-
Employee Director will receive a grant of a Nonqualified Stock Option to
purchase 5,000 shares of Common Stock upon the date he or she first becomes a
member of the Board, and thereafter will receive a grant of a Nonqualified Stock
Option to purchase 1,500 shares of Common Stock (subject to adjustment as
provided in this Plan) as of the date of the Company's Annual Meeting of
Stockholders each year.
(1) Option Exercise Price. Stock Options granted under this
Section 5(j) shall have a per share exercise price equal to the fair
market value of a share of Common Stock on the date of grant, and such
Stock Option shall become exercisable, with respect to 33% of the
shares of Common Stock underlying the option, on each anniversary
following the date of grant.
(2) Administration. The provisions of this Section 5(j) are
intended to operate automatically and not require administration.
However, to the extent that administrative determinations are required,
the provisions of this Section 5(j) shall be made by the members of the
Board who are not eligible to receive Grants under this Section 5(j),
but in no event shall such determinations affect the eligibility of
Grantees, the determination of the exercise price, the timing of the
Grants or the number of shares subject to Stock Options hereunder.
(3) Applicability of Plan Provisions. Except as otherwise
provided in this Section 5(j), the Nonqualified Stock Options to
Non-Employee Directors shall be subject to the provisions of this Plan
applicable to Nonqualified Stock Options to other persons.
SECTION 6. Transferability of Stock Options
No Stock Option shall be assignable or transferable by a Grantee other
than by will or the laws of descent and distribution or, except in the case of
an Incentive Stock Option, pursuant to a domestic relations order that would
satisfy Section 414(p)(1)(A) of the Code if such section applied to a Stock
Option issued under the Plan; provided, however, that the Committee may (but
need not) permit other transfers where the Committee concludes that such
transferability (i) does not result in accelerated taxation, (ii) does not cause
any Stock Option intended to be an Incentive Stock Option to fail to be
described in Code Section 422(b), and (iii) is otherwise appropriate and
desirable, taking into account any state or federal tax or securities laws
applicable to transferable stock options.
Only a Grantee or his or her permitted transferee (or, in the case of
an individual Grantee, his or her authorized legal representative) may exercise
rights under a Grant. Upon the death of an individual Grantee, the personal
representative or other person entitled to succeed to
-7-
<PAGE> 8
the rights of the Grantee ("Successor Grantee") may exercise such rights. A
Successor Grantee shall furnish proof satisfactory to the Company of such
person's right to receive the Grant under the Grantee's will or under the
applicable laws of descent and distribution.
SECTION 7. Change of Control
For purposes of the Plan, "Change in Control" means and includes each
of the following:
(1) The acquisition by any individual, entity or group (within
the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a
"Person") of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of 25% or more of the combined
voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the
"Outstanding Company Voting Securities"); provided, however, that for
purposes of this subsection (1), the following acquisitions shall not
constitute a Change of Control: (i) any acquisition by a Person who is
on April 1, 1997 the beneficial owner of 25% or more of the Outstanding
Company Voting Securities, (ii) any acquisition directly from the
Company, including a public offering of Outstanding Company Voting
Securities, (iii) any acquisition by the Company, (iv) any acquisition
by any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company, or (v) any
acquisition by any corporation pursuant to a transaction which complies
with clauses (i), (ii) and (iii) of subsection (3) of this definition;
or
(2) Individuals who, as of April 1, 1997, constitute the Board
(the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming
a director subsequent to April 1, 1997 whose election, or nomination
for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent
Board shall be considered as though such individual were a member of
the Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of an
actual or threatened election contest with respect to the election or
removal of directors or other actual or threatened solicitation of
proxies or consents by or on behalf of a Person other than the Board;
or
(3) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets
of the Company (a "Business Combination"), in each case, unless,
following such Business Combination, (i) all or substantially all of
the individuals and entities who were the beneficial owners of the
Outstanding Company Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 60% of the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors of
the corporation resulting from such Business Combination (including,
without limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's assets
either directly or through one or more subsidiaries) in substantially
the same proportions as their ownership, immediately prior to such
Business Combination of the Outstanding Company Voting Securities, and
(ii) no Person (excluding any corporation resulting from such Business
Combination or any employee benefit plan (or related trust) of the
Company or such corporation resulting from such Business Combination)
beneficially owns, directly or
-8-
<PAGE> 9
indirectly, 25% or more of the combined voting power of the then
outstanding voting securities of such corporation except to the extent
that such ownership existed prior to the Business Combination, and
(iii) at least a majority of the members of the board of directors of
the corporation resulting from such Business Combination were members
of the Incumbent Board at the time of the execution of the initial
agreement, or of the action of the Board, providing for such Business
Combination; or
(4) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
If a Change in Control occurs, then each Stock Option shall become
immediately and fully vested and immediately exercisable. Before or after the
occurrence of an anticipated Change in Control, the Committee, in its
discretion, may provide that outstanding Stock Options may be canceled
unilaterally by the Company in exchange for an amount equal to (x) the same
consideration each Employee and Non-Employee Director otherwise would receive
with respect to Common Stock subject to the Stock Option if such Common Stock
has been sold, surrendered, exchanged or otherwise in the transaction
constituting the Change in Control, less (y) the aggregate exercise price with
respect to the Common Stock subject to such Stock Option.
SECTION 8. Stockholder Approval; Effective Date
The Plan was approved by the Board of Directors of the Company and
became effective on June 1, 1993. The Plan, as amended and restated, was
approved by the Board of Directors and the sole stockholder of the Company on
April 17, 1997, effective as of such date.
SECTION 9. Amendment and Termination of the Plan
(a) Amendment. The Board or the Committee may, at any time and
from time to time, amend, modify or terminate the Plan without stockholder
approval; provided, however, that the Board or Committee may condition any
amendment or modification on the approval of stockholders of the Company if such
approval is necessary or deemed advisable with respect to tax, securities or
other applicable laws, policies or regulations.
(b) Termination of Plan. The Plan shall terminate on June 1,
2003 unless earlier terminated by the Board or unless extended by the Board with
the approval of the stockholders.
(c) Termination and Amendment of Outstanding Grants. A
termination or amendment of the Plan that occurs after a Grant is made shall not
result in the termination or amendment of the Grant unless the Grantee consents
or unless the Committee acts under Section 16(b) below. The termination of the
Plan shall not impair the power and authority of the Committee with respect to
an outstanding Grant. Whether or not the Plan has terminated, an outstanding
Grant may be terminated or amended under Section 16(b) below or may be amended
by agreement of the Company and the Grantee which is consistent with the Plan.
SECTION 10. Funding of the Plan
The Plan shall be unfunded and shall not create (or be construed to
create) a trust or separate fund or funds. The Plan shall not establish any
fiduciary relationship between the Company and any participant or beneficiary of
a participant. To the extent any person holds any
-9-
<PAGE> 10
obligation of the Company by virtue of an award granted under the Plan, such
obligation shall merely constitute a general unsecured liability of the Company
and accordingly shall not confer upon such person any right, title or interest
in any assets of the Company.
SECTION 11. Rights of Eligible Participants
Nothing in the Plan shall entitle any Eligible Participant or other
person to any claim or right to any Grant under the Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving any Eligible Participant
or Grantee any rights to be retained by the Company in any capacity, whether as
an employee, non-employee member of the Board, independent contractor,
consultant or otherwise.
SECTION 12. Withholding of Taxes
The Company shall have the right to require the Grantee to pay to the
Company the amount of any taxes which the Company is required to withhold in
respect of such Grants or to take whatever action it deems necessary to protect
the interests of the Company in respect of such tax liabilities, including,
without limitation, withholding a portion of the shares of Common Stock
otherwise deliverable pursuant to the Plan. The Company's obligation to issue or
transfer shares of Common Stock upon the exercise of a Stock Option shall be
conditioned upon the Grantee's compliance with the requirements of this Section
to the satisfaction of the Committee.
SECTION 13. Agreements with Grantees
Each Grant made under the Plan shall be evidenced by a Grant Letter
containing such terms and conditions as the Committee shall approve.
SECTION 14. Requirements for Issuance of Shares
No Common Stock shall be issued or transferred under the Plan unless
and until all applicable legal requirements have been complied with to the
satisfaction of the Committee. The Committee shall have the right to condition
any Stock Option on the Grantee's undertaking in writing to comply with such
restrictions on any subsequent disposition of the shares of Common Stock issued
or transferred thereunder as the Committee shall deem necessary or advisable as
a result of any applicable law, regulation or official interpretation thereof,
and certificates representing such shares may be legended to reflect any such
restrictions.
SECTION 15. Headings
The section headings of the Plan are for reference only. In the event
of a conflict between a section heading and the content of a section of the
Plan, the content of the section shall control.
SECTION 16. Miscellaneous
(a) Substitute Grants. The Committee may make a Grant to an
employee, a non-employee director, or an independent contractor or consultant of
another corporation, if such person shall become an Eligible Participant by
reason of a corporate merger, consolidation, acquisition of stock or property,
reorganization or liquidation involving the Company, a Parent
-10-
<PAGE> 11
Corporation or a Subsidiary Corporation and such other corporation. Any such
Grant shall be made in substitution for a stock option granted by the other
corporation ("Substituted Stock Incentives"), but the terms and conditions of
the substitute Grant may vary from the terms and conditions required by the Plan
and from those of the Substituted Stock Incentives. The Committee shall
prescribe the provisions of the substitute Grants.
(b) Compliance with Law. The Plan, the exercise of Grants and the
obligations of the Company to issue or transfer shares of Common Stock under
Grants shall be subject to all applicable laws and required approvals by any
governmental or regulatory agencies. The Committee may revoke any Grant if it is
contrary to law or modify any Grant to bring it into compliance with any valid
and mandatory government regulations. The Committee may also adopt rules
regarding the withholding of taxes on payments to Grantees. The Committee may,
in its sole discretion, agree to limit its authority under this Section.
(c) Ownership of Stock. A Grantee, transferee or Successor Grantee
shall have no rights as a stockholder with respect to any shares of Common Stock
covered by a Grant until the shares are issued or transferred to the Grantee,
transferee or Successor Grantee on the stock transfer records of the Company.
(d) Code Section 162(m). The deduction limits of Code Section
162(m) and the regulation thereunder do not apply to the Company until such
time, if any, as any class of the Company's equity securities is registered
under Section 12 of the Exchange Act or the Company otherwise meets the
definition of a "publicly held corporation" under Treasury Regulation
1.162-27(c) or any successor provision. Upon becoming a publicly held
corporation, the deduction limits of Code Section 162(m) and the regulations
thereunder shall not apply to compensation payable under this Plan until the
expiration of the reliance period described in Treasury Regulation 1.162-27(f)
or any successor regulation.
(e) Section 16 of the Exchange Act. The provisions of Section 16
of the Exchange Act and the regulation thereunder do not apply to the Company
until such time, if any, as any class of the Company's equity securities is
registered under Section 12 of the Exchange Act.
-11-
<PAGE> 1
EXHIBIT 11
VAXCEL, INC.
COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
COMPUTATION OF LOSS PER SHARE - PRIMARY
Three Month Period Ended June 30, Six Month Period Ended June 30,
--------------------------------- -------------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss $(1,318,708) $ (219,954) $(1,661,681) $ (512,747)
----------- ----------- ----------- -----------
Average number of common shares outstanding 9,458,793 8,013,187 8,857,738 8,006,593
Common shares issuable assuming exercise of
stock options and warrants(1) -- -- -- --
----------- ----------- ----------- -----------
Total 9,458,793 8,013,187 8,857,738 8,006,593
----------- ----------- ----------- -----------
Net loss per share $ (0.14) $ (0.03) $ (0.19) $ (0.06)
=========== =========== =========== ===========
COMPUTATION OF LOSS PER SHARE - FULLY DILUTED
Net loss $(1,318,708) $ (219,954) $(1,661,681) $ (512,747)
----------- ----------- ----------- -----------
Average number of common shares outstanding 9,458,793 8,013,187 8,857,738 8,006,593
Common shares issuable assuming exercise of
stock options and warrants(1) -- -- -- --
----------- ----------- ----------- -----------
Total 9,458,793 8,013,187 8,857,738 8,006,593
----------- ----------- ----------- -----------
Net loss per share $ (0.14) $ (0.03) $ (0.19) $ (0.06)
=========== =========== =========== ===========
</TABLE>
(1) Stock options and warrants outstanding are excluded from the computation of
net loss per share since their effect would be antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE PERIOD ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 624,298
<SECURITIES> 894,246
<RECEIVABLES> 220,423
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,738,967
<PP&E> 299,172
<DEPRECIATION> 195,425
<TOTAL-ASSETS> 6,105,807
<CURRENT-LIABILITIES> 220,326
<BONDS> 0
0
0
<COMMON> 11,000
<OTHER-SE> 5,874,481
<TOTAL-LIABILITY-AND-EQUITY> 6,105,807
<SALES> 0
<TOTAL-REVENUES> 66,252
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,727,933
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,421
<INCOME-PRETAX> (1,661,681)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,661,681)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,661,681)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
