<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
TO
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE
REQUIRED)
For fiscal year ended December 31, 1997
OR
____ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from ________ to _______.
Commission File Number: 0-22743
VISTA MEDICAL TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 94-3184035
(State or other jurisdiction (I.R.S. Employer
or incorporation or organization) Identification No.)
5451 Avenida Encinas, Suite A, Carlsbad, California 92008
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (760) 603-9120
Securities registered pursuant to Section 12(b) of
the Act: None
Securities registered pursuant to Section 12(g)
of the Act: Common Stock, par value $.01 per share
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes X No___
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [ X ]
The aggregate market value of the voting stock held by nonaffiliates
of the registrant as of January 31, 1998 was approximately $53,507,000. For
the purposes of this calculation, shares owned by officers, directors and 10%
stockholders known to the registrant have been deemed to be owned by
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.
The number of shares outstanding of the registrant's Common Stock as
of January 31, 1998 was 13,422,875.
<PAGE>
THREE-DIMENSIONAL IMAGE ACQUISITION
Vista Medical believes that 3-D visualization capability is critical in
MIM procedures such as cardiothoracic and neurosurgical procedures. The
Company's technology for stereo visualization consists of the following
proprietary elements: the optical system, the stereo camera and the stereo
processor. The 3-D endoscopic optical system employed by Vista Medical was
originally developed and patented by a noted optical designer, Mr. H. McKinley,
and is licensed exclusively to the Company for medical applications. The system
is designed to replicate the exact view that the surgeon would have if the
procedures were being performed open and he or she had direct sight of the
anatomy. The Company believes that the McKinley optical system will provide it
with a significant and enduring competitive advantage because it provides
natural depth perception, and it can be packaged with twin cameras in a very
compact design. The twin cameras acquire the image in a manner analogous to a
human's two eyes.
Vista Medical's technology packages the twin cameras in two ways. In
the first method, a micro-camera is attached to the end of a flexible or rigid
guide which can then be inserted directly into the body cavity and organs. The
image is directly captured by the camera chips without being transmitted through
multiple rod lenses as in a conventional optical endoscope design. The
elimination of optical surfaces produces several important advantages, including
increased image quality, improved contrast, better reliability and improved
ability to sterilize by autoclaving. Alternatively, for applications where a
standard optical endoscope configuration remains preferable, a stereo
micro-camera can be mounted externally on a stereo endoscope. The image
acquired by either approach is then processed for display by control electronics
developed exclusively by the Company. The controller will also include image
management features which will contribute significantly to procedure
performance, such as zoom control, dual image presentation and
picture-in-picture.
INFORMATION MANAGEMENT
Medicine is an information rich discipline, but the provision of
relevant information in real-time to surgeons has not been developed to the
levels attained, for example, in military aviation. The HMD is designed to give
the surgeon real-time access on demand to critical information, integrated with
the anatomical images generated by the Company's camera systems. Therefore, the
surgeon will be able to command the diagnostic and monitoring information
relevant to the specific procedure while it is taking place. In addition to
real-time display, the information can be managed (stored or transmitted) within
the hospital or to remote locations for training, advisory or administrative
purposes. The applications software to control this flow of information is a
key element in Vista Medical's long-term product strategy, which positions
visualization within the context of a total information service to the surgeon.
The Company's data integration capability has been enhanced through a
perpetual, exclusive license from GDE which has added high speed image-based
information processing and networking software to the Company's technology
platform. The Company believes that its technology will demonstrate that
real-time access to relevant information, along with enhanced visualization,
is a critical requirement of performing MIM and other surgical procedures.
The Company anticipates incorporating appropriate elements of this software
package into future products.
-7-
<PAGE>
RISKS AND UNCERTAINTIES
IN ADDITION TO THE OTHER INFORMATION IN THIS ANNUAL REPORT, THE
FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT IN
THE COMPANY. PROSPECTIVE INVESTORS ARE CAUTIONED THAT THE STATEMENTS IN THIS
ANNUAL REPORT THAT ARE NOT DESCRIPTIONS OF HISTORICAL FACTS MAY BE
FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE CURRENTLY ANTICIPATED DUE TO A NUMBER
OF FACTORS, INCLUDING THOSE IDENTIFIED UNDER "RISKS AND UNCERTAINTIES" AND
ELSEWHERE IN THIS ANNUAL REPORT.
DEVELOPMENT STAGE COMPANY; SUBSTANTIAL FUTURE LOSSES AND FUTURE CAPITAL
REQUIREMENTS
Since its formation in July 1993, the Company has been engaged in the
development of visualization and information systems and related surgical
instruments and accessories that enable minimally invasive microsurgery ("MIM")
solutions for applications in cardiothoracic and other selected microsurgical
procedures and in manufacturing and marketing limited quantities of camera
systems to customers as an OEM. As of December 31, 1997, the Company had
incurred cumulative net losses of $30.5 million since its formation. The
Company expects to incur substantial and increasing operating losses before it
will reach profitability, if at all. Furthermore, the Company expects its
expenses in all categories to increase as its marketing and other business
activities expand. There can be no assurance that the Company will achieve or
sustain profitability in the future. Failure to achieve significant commercial
revenues or profitability would have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company's future liquidity and capital requirements will depend
upon numerous factors, including the following: the extent to which the
Company's products gain market acceptance; the progress and scope of product
evaluations; the timing and costs of filing future regulatory submissions;
the timing and costs required to receive both domestic and international
governmental approvals; the timing and costs of product introductions; the
extent of the Company's ongoing research and development programs; the costs
of training physicians to become proficient in the use of the Company's
products and procedures; and the costs of developing marketing and
distribution capabilities. The Company anticipates that the net proceeds from
the Initial Public Offering completed in July 1997 and the interest income
thereon, together with borrowings available under the $10.0 million Loan and
Security Agreement entered into in October 1997, existing cash, cash
equivalents and short-term investments, and product revenues, will be
sufficient to fund its operations through 1998. If, at or prior to such
time, the net proceeds of the Initial Public Offering, together with
available funds and cash generated from operations, are insufficient to
satisfy the Company's cash needs, the Company may require additional
financing. There can be no assurance that such additional financing will be
available on terms acceptable to the Company, if at all. The Company's
inability to fund its capital and operational requirements would have a
material adverse effect on the Company's business, financial condition and
results of operations.
DEPENDENCE UPON AND UNCERTAINTY REGARDING COMMERCIALIZATION OF SERIES 8000
The Series 8000 for minimally invasive cardiac surgery is the Company's
primary near-term product focus and is expected to account for the majority of
the Company's revenues over the next several years. In international markets
regulatory clearance or approval is also required before the system can be
widely marketed. There can be no assurance that demand for the Series 8000 will
be sufficient to achieve profitable operations.
Development of certain additional peripheral components of the Series
8000 has not yet been finalized, and final prototypes have not yet been
completed. There can be no assurance that the Company's development efforts for
these components will be successful, or that the Company's products under
development will be shown to be safe or effective, capable of being manufactured
in commercial quantities at acceptable costs, or successfully marketed.
Evaluations of the Series 8000 conducted to date have shown that there
is a learning process involved for surgeons and other members of the surgery
team to become proficient with the use of the system. Based on the clinical and
laboratory procedures performed to date, there can be no assurance that
visualization and information system enhancements incorporated, or to be
incorporated, in the Series 8000 will prove suitable for use by a substantial
number of cardiothoracic surgeons. If the Series 8000 proves unsuitable for a
number of surgeons to use, the potential markets and applications for the
Company's products would be significantly limited. Widespread use
-21-
<PAGE>
primarily attributable to the continued development of corporate management
and related support functions, the addition of new facilities and expansion
of current facilities, expansion of the Company's information systems and the
amortization of deferred compensation in the amount of $447,000.
OTHER INCOME
LICENSE INCOME. License income of $1,493,000 in 1996 represents the net
amount received by the Company from a perpetual license to certain of its
technology and patents unrelated to the Company's main products and markets. The
license to Imagyn, formerly Urohealth Systems, Inc., was a unique, non-recurring
transaction that involved a license of only that component of the Company's
technology that it did not want to pursue. For this reason, the license fees
were treated as non-operating income. Prior to 1996, the Company had no license
income. No other technology is being developed with the purpose of being
licensed and the Company does not anticipate any future licensing arrangements
of any of its core technology for medical applications.
INTEREST INCOME. Interest income represents the net amount of interest
earned by the Company on its cash and short-term investments and interest
expense on debt. Interest income increased from approximately $51,000 for the
year ended December 31, 1995 to approximately $117,000 for the year ended
December 31, 1996 due primarily to increasing average investment balances. The
Company had immaterial amounts of interest income prior to 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company completed its Initial Public Offering in July 1997, raising
approximately $32,700,000 net of offering costs. Prior to the Initial Public
Offering, the Company satisfied its liquidity requirements from the private sale
of common and preferred stock, through advances from a related party, and from
the proceeds from licensing certain of the Company's technology.
In October 1997, the Company completed a $10,000,000 Loan and Security
Agreement ("Loan Agreement") to finance the placement with customers of its
Series 8000 product on a pay per procedure basis rather than through an upfront
capital payment. As of December 31, 1997 there were no outstanding balances
under the Agreement. If the Company were to borrow funds pursuant to the Loan
Agreement, it could borrow up to $10,000,000 at one time with an interest
rate of prime plus one and one half percent.
Net cash used in operating activities was approximately $3,567,000,
$6,937,000 and $15,494,000 in 1995, 1996 and 1997. The increase in net cash
used in operating activities was primarily attributable to increasing net losses
during the such periods and investment in inventories associated with expansion
of the Company's product line.
Net cash used in investing activities was approximately $298,000,
$1,239,000 and $20,025,000 in 1995, 1996 and 1997, respectively. The increase
was primarily attributable to the purchase of short-term investments and the
purchase of property and equipment related to increased staffing, expansion of
manufacturing capabilities, and marketing demonstrations.
Cash flows from financing activities were $7,090,000, $15,061,000 and
$32,728,000 in 1995, 1996 and 1997, respectively. The cash flows from
financing activities in 1995 and 1996 were primarily attributable to the
private sale of preferred stock while cash flows from financing activities in
1997 were primarily attributable to proceeds from the Company's Initial
Public Offering.
The Company intends to undertake approximately $1,500,000 in capital
expenditures in 1998 and has future lease payments relating to its facilities
and certain equipment under operating leases of $1,624,000, of which $387,000
is payable in 1998.
The Company anticipates that the net proceeds from the Initial Public
Offering completed in July 1997 and the interest income thereon, together with
borrowings available under a $10,000,000 Loan Agreement, existing cash, cash
equivalents and short-term investments, and product revenues, will be sufficient
to fund its operations through 1998.
The Company recognizes the need to ensure its operations will not be
adversely impacted by the inability of the Company's systems to process data
having dates on or after January 1, 2000 (the "Year 2000" issues). Processing
errors due to software failure arising from calculations using the Year 2000
date are a recognized risk. The Company is currently addressing the risk, with
respect to the availability and integrity of its financial systems and the
reliability of its operating systems, and is in the process of communicating
with suppliers, customers, financial institutions and others with whom it
conducts business transactions to assess whether they are Year 2000 compliant.
-37-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
VISTA MEDICAL TECHNOLOGIES, INC.
Date: August 21, 1998 By: /s/ John R. Lyon
-------------------------------------
John R. Lyon
President and Chief Executive Officer
POWER OF ATTORNEY
Know all men by these presents, that each person whose signature appears
below constitutes and appoints John R. Lyon or Robert J. De Vaere, his or her
attorney-in-fact, with power of substitution in any and all capacities, to sign
any amendments to this Annual Report on Form 10-K, and to file the same with
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that the
attorney-in-fact or his or her substitute or substitutes may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John R. Lyon President, Chief Executive August 21, 1998
- -------------------------- Officer and Director (Principal
(John R. Lyon) Executive Officer)
/s/ Robert J. De Vaere Vice President of Finance and August 21, 1998
- -------------------------- Administration and Chief
(Robert J. De Vaere) Financial Officer (Principal
Financial and Accounting Officer)
* Chairman of the Board and Director August 21, 1998
- --------------------------
(James C. Blair)
* Director August 21, 1998
- --------------------------
(Olav B. Bergheim)
* Director August 21, 1998
- --------------------------
(Nicholas B. Binkley)
* Director August 21, 1998
- --------------------------
(Daniel J. Holland)
* Director August 21, 1998
- --------------------------
(Larry M. Osterink)
</TABLE>
*By: /s/ Robert J. De Vaere
---------------------------------------
Robert J. De Vaere, Attorney-in-fact
-43-
<PAGE>
Report of Ernst & Young LLP, Independent Auditors
The Board of Directors and Stockholders
Vista Medical Technologies, Inc.
We have audited the accompanying consolidated balance sheets of Vista Medical
Technologies, Inc. as of December 31, 1996 and 1997 and the related
consolidated statements of operations, stockholders' equity, and cash flows
for each of the three years in the period ended December 31, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Vista Medical Technologies, Inc. at December 31, 1996 and 1997 and the
results of its consolidated operations and its cash flows for each of the
three years in the period ended December 31, 1997 in conformity with
generally accepted accounting principles.
/s/ Ernst & Young LLP
- ----------------------------
San Diego, California
January 16, 1998
F-2
<PAGE>
Vista Medical Technologies, Inc.
Notes to Consolidated Financial Statements (continued)
2. BALANCE SHEET COMPONENTS
Inventories consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1996 1997
-----------------------------------
<S> <C> <C>
Parts and materials $ 567,707 $ 1,977,878
Work in process 286,099 662,237
Finished goods 359,019 704,852
-----------------------------------
$ 1,212,825 $ 3,344,967
-----------------------------------
-----------------------------------
</TABLE>
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1996 1997
-----------------------------------
<S> <C> <C>
Machinery and equipment $ 271,747 $ 1,400,892
Office computers, furniture and equipment 352,911 839,533
Marketing demonstration equipment 776,420 2,199,736
Investment in leased assets - 206,011
Leasehold improvements 68,704 239,067
-----------------------------------
1,469,782 4,885,239
Less: accumulated depreciation (387,679) (1,557,956)
-----------------------------------
$ 1,082,103 3,327,283
-----------------------------------
-----------------------------------
</TABLE>
Patents and other assets consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-----------------------------------
1996 1997
-----------------------------------
<S> <C> <C>
Investment in common stock $ 693,000 $ 271,562
Patents and other intangible assets, net 323,241 232,811
Prepaid royalties 57,500 57,500
-----------------------------------
$1,073,741 $ 561,873
-----------------------------------
-----------------------------------
</TABLE>
3. MAJOR CUSTOMERS
Sales to individual customers exceeding 10% or more of revenues in the years
ended December 31, were as follows: during 1995 Linvatec Corporation
accounted for 85% of revenues; during 1996 Pilling Weck, Amco, Inc. and
Linvatec Corporation accounted for 30%, 27% and 25% of revenues,
respectively; during 1997, Linvatec Corporation, Medtronic, Inc. and Aesculap
AG accounted for 25%, 19% and 10% of revenues, respectively.
F-13
<PAGE>
Vista Medical Technologies, Inc.
Notes to Consolidated Financial Statements (continued)
7. STOCKHOLDERS' EQUITY (CONTINUED)
The Company recorded $947,000 of deferred compensation for options granted
during the year ended December 31, 1997, representing the difference between
the option exercise price and the deemed value for financial statement
presentation purposes for stock options granted to employees in 1997. The
Company is amortizing the deferred compensation recorded in 1996 and 1997
over the vesting period of the options and the Company recorded $1,066,000 of
compensation expense during the year ended December 31, 1997.
1997 STOCK OPTION PLAN/ STOCK ISSUANCE PLAN
In February 1997, the Company adopted the 1997 Stock Option Plan/Stock
Issuance Plan (the "1997 Plan") and reserved 2,820,000 shares for issuance
thereunder. The 1997 Plan incorporates the outstanding options under the 1995
Plan and no further options will be granted under the 1995 Plan.
At December 31, 1997, 1,227,824 options were available for future grant.
The following tables summarizes stock option activity under the Plan:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER OF PRICE PER PRICE PER
SHARES SHARE SHARE
------------------------------------------------
<S> <C> <C> <C>
Balance at December 31, 1994 - $ - $ -
Granted 655,322 $.20 $ .20
Exercised (148,125) $.20 $ .20
Canceled - - $ -
------------------------------------------------------
Balance at December 31, 1995 507,197 $.20 $ .20
Granted 1,173,888 $.20 - $.80 $ .33
Exercised (389,349) $.20 $ .20
Canceled (45,935) $.20 $ .20
------------------------------------------------------
Balance at December 31, 1996 1,245,801 $.20 - $.80 $ .32
Granted 447,500 $.80 -$14.38 $ 8.94
Exercised (150,273) $.20 - $.80 $ .42
Canceled (25,500) $.60 $ .60
------------------------------------------------------
Balance at December 31, 1997 1,517,528 $.20 -$14.38 $ 2.85
------------------------------------------------------
------------------------------------------------------
</TABLE>
F-16
<PAGE>
Vista Medical Technologies, Inc.
Index to Consolidated Financial Statements (continued)
7. STOCKHOLDERS' EQUITY (CONTINUED)
<TABLE>
<CAPTION>
EXERCISABLE STOCK
OUTSTANDING STOCK OPTIONS OPTIONS
------------------------------------------------------ ----------------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
RANGE OF CONTRACTUAL EXERCISE EXERCISE
EXERCISE PRICE SHARES LIFE PRICE SHARES PRICE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
$.20 - $.80 1,107,528 101 $ .32 336,352 $ .29
$4.00 75,000 109 $ 4.00 12,500 $ 4.00
$9.88 170,000 116 $ 9.88 16,103 $ 9.88
$11.31 - 14.38 165,000 119 $ 12.07 667 $ 13.61
</TABLE>
The weighted average fair value of stock options granted during 1996 and 1997
was $0.09 and $4.66, respectively. The weighted average remaining life of the
options at December 31, 1996 and 1997 was 111 and 102 months, respectively.
1997 EMPLOYEE STOCK PURCHASE PLAN
In February 1997, the Company adopted the 1997 Employee Stock Purchase Plan
(the "Purchase Plan") and reserved 200,000 shares for issuance, thereunder.
The Purchase Plan permits eligible employees of the Company to purchase
shares of Common Stock, at semi-annual intervals, through periodic payroll
deductions. Payroll deductions may not exceed 10% of the participant's base
salary, and the purchase price per share will not be less than 85% of the
lower of the fair market value of the common stock at either the beginning or
the end of the semi-annual intervals.
Adjusted pro forma information regarding net income is required by SFAS 123,
and has been determined as if the Company had accounted for its employee
stock options under the fair value method of that Statement. The fair value
for these options was estimated at the date of grant using the minimum value
method for option pricing for options granted prior to the initial public
offering and the "Black-Scholes" method for option pricing for options
granted subsequent to the initial public offering with the following
weighted-average assumptions: risk-free interest rate range of 5.5% to 6.0%;
dividend yield of 0%; volatility of 55% and a weighted average expected life
of the option of 2.5 to 5 years.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------------------------------
1995 1996 1997
------------------------------------------------------
<S> <C> <C> <C>
Adjusted pro forma net loss $3,279,659 $7,451,220 $17,047,180
------------------------------------------------------
------------------------------------------------------
<S> <C> <C> <C>
Adjusted pro forma net loss per share $ (88.64) $ (37.07) $ (2.53)
------------------------------------------------------
------------------------------------------------------
</TABLE>
F-17
<PAGE>
Vista Medical Technologies, Inc.
Index to Consolidated Financial Statements (continued)
8. LOSS PER SHARE
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
1995 1996 1997
-------------------------------------------------------
<S> <C> <C> <C>
Numerator:
Net loss $(3,273,950) $(7,439,139) $(16,877,038)
Denominator:
Weighted-average common shares 37,000 201,000 6,731,000
-------------------------------------------------------
Denominator for basic and diluted loss per share 37,000 201,000 6,731,000
-------------------------------------------------------
-------------------------------------------------------
Basic and diluted loss per share $ (88.49) $ (37.01) $ (2.51)
-------------------------------------------------------
-------------------------------------------------------
</TABLE>
All other potential common shares have been excluded from the diluted EPS
computation as they are antidilutive. The Company has not issued any common
shares or potential common shares that are considered nominal issuances under
the requirements of Staff Accounting Bulletin No. 98.
The Company believes that the preferred stock, which is excluded from the FAS
128 basic and diluted computation as an antidilutive security, is an
important component of the capital structure. Including the preferred stock
as weighted average shares outstanding would result in the following pro
forma net loss per share: ($1.22) in 1995, ($1.06) in 1996, and ($1.52) in
1997.
F-18
<PAGE>
EXHIBIT 11.1
VISTA MEDICAL TECHNOLOGIES, INC.
STATEMENT RE-COMPUTATION OF PER SHARE DATA
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEARS ENDING DECEMBER 31
-------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net income (loss) $ (3,274) $ (7,439) $ (16,877)
---------- ---------- ----------
---------- ---------- ----------
Average common shares outstanding 37 201 6,731
---------- ---------- ----------
Shares used in Basic per share
computations 37 201 6,731
---------- ---------- ----------
---------- ---------- ----------
Net income (loss) per share - Basic $ (88.49) $ (37.01) $ (2.51)
---------- ---------- ----------
---------- ---------- ----------
Net effect of dilutive common share
equivalents based on the treasury
stock method -- -- --
Shares used in Diluted per share
computations 37 201 6,731
---------- ---------- ----------
---------- ---------- ----------
Net income (loss) per
share - Diluted $ (88.49) $ (37.01) $ (2.51)
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED
DECEMBER 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 7,328,502
<SECURITIES> 16,784,345
<RECEIVABLES> 521,616
<ALLOWANCES> 0
<INVENTORY> 3,344,967
<CURRENT-ASSETS> 28,241,294
<PP&E> 4,885,239
<DEPRECIATION> 1,557,956
<TOTAL-ASSETS> 32,130,450
<CURRENT-LIABILITIES> 2,264,305
<BONDS> 0
0
0
<COMMON> 134,071
<OTHER-SE> 29,732,074
<TOTAL-LIABILITY-AND-EQUITY> 32,130,450
<SALES> 3,891,082
<TOTAL-REVENUES> 5,067,324
<CGS> 4,559,521
<TOTAL-COSTS> 4,559,521
<OTHER-EXPENSES> 17,384,842
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (16,877,039)
<INCOME-TAX> 0
<INCOME-CONTINUING> (16,877,039)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (16,877,039)
<EPS-PRIMARY> (2.51)
<EPS-DILUTED> (2.51)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 1997, JUNE 30,
1997, SEPTEMBER 30, 1997 AND FOR THE YEAR ENDED DECEMBER 31, 1996, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1997 DEC-31-1997 DEC-31-1997
<PERIOD-START> JAN-01-1996 JAN-01-1997 JAN-01-1997 JAN-01-1997
<PERIOD-END> DEC-31-1996 MAR-31-1997 JUN-30-1997 SEP-30-1997
<CASH> 10,284,529 5,844,477 1,524,045 6,690,458
<SECURITIES> 0 0 0 22,040,577
<RECEIVABLES> 526,119 770,344 259,991 1,114,718
<ALLOWANCES> 0 0 0 0
<INVENTORY> 1,212,825 1,729,892 2,335,479 3,832,790
<CURRENT-ASSETS> 12,159,873 8,824,476 4,983,498 34,008,587
<PP&E> 1,469,782 1,822,933 3,217,639 3,771,967
<DEPRECIATION> 387,679 481,797 619,320 1,002,334
<TOTAL-ASSETS> 14,315,717 11,225,724 8,625,906 37,777,555
<CURRENT-LIABILITIES> 1,354,766 1,270,925 2,314,201 3,121,309
<BONDS> 0 0 0 0
0 0 0 0
115,742 115,742 115,742 0
<COMMON> 5,382 6,168 6,236 133,396
<OTHER-SE> 12,839,827 9,832,889 6,189,727 34,522,850
<TOTAL-LIABILITY-AND-EQUITY> 14,315,717 11,225,724 8,625,906 37,777,555
<SALES> 2,243,756 829,218 1,334,662 2,563,328
<TOTAL-REVENUES> 3,853,462 930,706 1,478,421 3,123,703
<CGS> 2,252,509 826,027 1,590,927 3,138,103
<TOTAL-COSTS> 2,252,509 826,027 1,590,927 3,138,103
<OTHER-EXPENSES> 9,040,092 3,422,750 7,114,322 11,978,400
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 0 0 0 0
<INCOME-PRETAX> (7,439,139) (3,318,071) (7,226,828) (11,992,800)
<INCOME-TAX> 0 0 0 0
<INCOME-CONTINUING> (7,439,139) (3,318,071) (7,226,828) (11,992,800)
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> (7,439,139) (3,318,071) (7,226,828) (11,992,800)
<EPS-PRIMARY> (1.06) (9.88) (21.61) (2.63)
<EPS-DILUTED> (1.06) (9.88) (21.61) (2.63)
</TABLE>
