<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended MARCH 31, 1997
[ ] 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 O-4136
Lifecore Biomedical, Inc.
---------------------------------------------------
(Exact name of Registrant as specified in its charter)
Minnesota 41-0948334
------------------------------- -----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3515 Lyman Boulevard
Chaska, Minnesota 55318
------------------------------- -----------------------
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code: 612-368-4300
Indicate by checkmark 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 per
value, as of April 16, 1997 was 12,220,722 shares.
1
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
FORM 10-Q
INDEX
Page
PART I. Financial Information
Item 1. Financial Statements
Consolidated Condensed Balance Sheets at
March 31, 1997 and June 30, 1996 3
Consolidated Condensed Statements of Operations for Three
Months and Nine Months Ended March 31, 1997 and 1996 4
Consolidated Condensed Statements of Cash Flows for
Nine Months Ended March 31, 1997 and 1996 5
Notes to Consolidated Condensed Financial Statements 6-10
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 11-13
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
2
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
------------ ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 1,378,000 $ 3,264,000
Short-term investments 17,343,000 14,947,000
Accounts receivable 3,124,000 2,326,000
Inventories 7,315,000 5,954,000
Prepaid expenses 1,225,000 800,000
------------ ------------
30,385,000 27,291,000
Property, plant and equipment
Land, building and equipment 20,562,000 13,670,000
Less accumulated depreciation (5,224,000) (5,009,000)
------------ ------------
15,338,000 8,661,000
Other assets
Intangibles 3,995,000 4,268,000
Long-term investments 7,945,000 20,137,000
Security deposits 774,000 788,000
Inventory 2,057,000 2,014,000
Other 923,000 1,270,000
------------ ------------
15,694,000 28,477,000
------------ ------------
$ 61,417,000 $ 64,429,000
------------ ------------
------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term obligations $ 118,000 $ 698,000
Accounts payable 1,163,000 1,156,000
Accrued compensation 439,000 548,000
Accrued expenses 560,000 730,000
Customers' deposits 356,000 1,952,000
------------ ------------
2,636,000 5,084,000
Long-term obligations 6,835,000 7,193,000
Shareholders' equity 51,946,000 52,152,000
------------ ------------
$ 61,417,000 $ 64,429,000
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31, Nine months ended March 31,
------------------------------- --------------------------------
1997 1996 1997 1996
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net sales $ 4,611,000 $ 3,673,000 $ 12,863,000 $ 9,676,000
Cost of goods sold 1,753,000 2,240,000 6,362,000 6,345,000
------------ ------------ ------------- ------------
Gross profit 2,858,000 1,433,000 6,501,000 3,331,000
Operating expenses
Research and development 972,000 658,000 2,508,000 1,679,000
Marketing and sales 1,440,000 1,112,000 4,017,000 3,229,000
General and administrative 668,000 670,000 2,152,000 2,007,000
------------ ------------ ------------- ------------
3,080,000 2,440,000 8,677,000 6,915,000
------------ ------------ ------------- ------------
Loss from operations (222,000) (1,007,000) (2,176,000) (3,584,000)
Other income (expense)
Interest income 436,000 262,000 1,528,000 576,000
Interest expense (187,000) (201,000) (522,000) (622,000)
------------ ------------ ------------- ------------
249,000 61,000 1,006,000 (46,000)
------------ ------------ ------------- ------------
Net income (loss) $ 27,000 $ (946,000) $ (1,170,000) $ (3,630,000)
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
Net income (loss)
per common share $ -- $ (.09) $ (.10) $ (.38)
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
Weighted average
shares outstanding 12,180,648 9,991,045 12,165,035 9,507,989
------------ ------------ ------------- ------------
------------ ------------ ------------- ------------
</TABLE>
See accompanying notes to consolidated condensed financial statements
4
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months ended
March 31,
-----------------------------------
1997 1996
--------------- ---------------
<S> <C> <C>
Net cash used in operating activities $ (4,641,000) $ (7,371,000)
Cash flows from investing activities:
Purchases of property, plant and equipment (7,407,000) (828,000)
Purchases of investments (9,220,000) (21,437,000)
Maturities of investments 18,941,000 5,456,000
Purchases of intangibles (5,000) (5,000)
(Increase) decrease in security deposits 14,000 166,000
Other 406,000 (38,000)
------------- -------------
Net cash (used in) provided from investing activities 2,729,000 (16,686,000)
Cash flows from financing activities:
Payment of deposit to bond trustee (56,000) (52,000)
Payments of long-term obligations (431,000) (1,012,000)
Proceeds from stock issuance 513,000 23,444,000
------------- -------------
Net cash provided from financing activities 26,000 22,380,000
------------- -------------
Net decrease in cash and cash equivalents (1,886,000) (1,677,000)
Cash and cash equivalents at beginning of period 3,264,000 2,726,000
------------- -------------
Cash and cash equivalents at end of period $ 1,378,000 $ 1,049,000
------------- -------------
------------- -------------
Supplemental disclosure of cash flow information:
Cash paid during the period:
Interest $ 517,000 $ 613,000
Income taxes 9,000 6,000
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
March 31,1997
NOTE A - FINANCIAL INFORMATION
Lifecore Biomedical, Inc. ("the Company"), develops, manufactures, and markets
surgically implantable materials and devices through its two divisions, the
Hyaluronate Division and the Oral Restorative Division. The Hyaluronate
Division's manufacturing facility is located in Chaska, Minnesota and markets
its products through OEM and contract manufacturing alliances in the fields of
ophthalmology, veterinary and wound care management. The Oral Restorative
Division markets its products through direct sales in the United States and
Italy and through distributors in other foreign countries. In April 1995, the
Company began direct sales operations in Italy through a newly formed
subsidiary, Lifecore Biomedical SpA, in Verona, Italy.
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with Regulation S-X pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, although management believes that the
disclosures are adequate.
In the opinion of management, the unaudited consolidated condensed financial
statements contain all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the financial position as of March 31, 1997, and the
results of operations for the three month and nine month periods ended March 31,
1997 and 1996, and cash flows for the nine month periods ended March 31, 1997
and 1996. The results of operations for the nine months ended March 31, 1997
are not necessarily indicative of the results for the full year or of the
results for any future periods.
In preparation of the Company's consolidated financial statements, management is
required to make estimates and assumptions that affect reported amounts of
assets and liabilities and related revenues and expenses. Actual results could
differ from the estimates used by management.
6
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONT.)
March 31, 1997
NOTE B - INVESTMENTS
The Company has invested its excess cash from the public offering completed in
the second quarter of fiscal 1996 and the offshore stock offering completed in
the fourth quarter of fiscal 1996 in commercial paper, government agencies and
medium term corporate notes. These investments are classified as
held-to-maturity given the Company's intent and ability to hold the securities
to maturity and are carried at amortized cost. Investments that have maturities
of less than one year have been classified as short-term investments.
March 31, June 30,
1997 1996
------------- -------------
(Unaudited)
Short-term investments:
Commercial paper (maturing April
1997 through November 1997) $ 16,143,000 $ 12,447,000
U.S. Government Agencies (maturing
July 1997) 1,200,000 2,500,000
------------- -------------
17,343,000 14,947,000
Long-term investments:
U.S. Government Agencies
(maturing July 1997) -- 1,242,000
Medium term corporate notes (maturing
April 1998 through October 1998) 7,945,000 18,895,000
------------- -------------
7,945,000 20,137,000
------------- -------------
$ 25,288,000 $ 35,084,000
------------- -------------
------------- -------------
NOTE C - INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market. Inventory not expected to be consumed within one year is classified as
a long-term asset. Inventories consist of the following:
March 31, June 30,
1997 1996
------------- -------------
(Unaudited)
Raw materials $ 2,599,000 $ 2,632,000
Work in progress 114,000 82,000
Finished goods 6,659,000 5,254,000
------------- -------------
$ 9,372,000 $ 7,968,000
------------- -------------
------------- -------------
7
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONT.)
March 31, 1997
NOTE D - CUSTOMERS' DEPOSITS
In November 1994, Lifecore renewed its current supply contract with Alcon
Laboratories, Inc., an indirect subsidiary of Nestle S.A. ("Alcon"), through
December 1998. The agreement contains minimum annual purchase requirements
totaling $10,400,000 for calendar years 1995 through 1998. Lifecore received a
$6,300,000 cash advance from Alcon against future contract purchases. Product
has been delivered in quantities sufficient to realize the cash advance as of
March 31, 1997.
NOTE E - OPERATING LEASES
The Company leased equipment under an operating lease with Johnson & Johnson
Finance Corporation ("JJFC"), an affiliate of the Company's customers, Ethicon,
Inc. and Johnson & Johnson Medical, Inc. JJFC is also an affiliate of Johnson &
Johnson Development Corporation, a shareholder of the Company. In February
1997, the Company satisfied this lease commitment by purchasing the equipment
subject to the lease. The negotiated fair value purchase price of the equipment
was $5.4 million. The purchase of this equipment will help facilitate the
expansion of the Company's manufacturing operations.
NOTE F - OFFERINGS OF COMMON STOCK
In October 1995, the Company received net proceeds of approximately $19,852,000
from the sale of 2,200,000 shares of its common stock through a public offering.
In November 1995, the Company received net proceeds of approximately $3,010,000
when the underwriters purchased an additional 330,000 shares of common stock
related to the over-allotment option.
In April 1996, the Company completed the sale of 1,500,000 shares of its common
stock and received net proceeds of approximately $22,443,000 through a
Regulation S offering to qualified investors outside the United States.
8
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONT.)
March 31, 1997
NOTE G - AGREEMENTS
In 1994, Lifecore and Ethicon, Inc. ("Ethicon"), a subsidiary of Johnson &
Johnson, entered into a Conveyance, License, Development and Supply Agreement
(the "Ethicon Agreement"). Under the terms of the Ethicon Agreement, Ethicon
transferred to Lifecore its ownership in certain technology related to research
and development previously conducted on the Company's sodium hyaluronate
material. The technology transferred to Lifecore includes written technical
documents related to Ethicon's research and development of a product to inhibit
the formation of surgical adhesions.
These documents include product specifications, methods and techniques,
technology, know-how and certain patent applications. Lifecore has assumed
responsibility for continuing the anti-adhesion development project including
conducting human clinical trials on LUBRICOAT-Registered Trademark- Gel, a
second generation hyaluronate-based product. Lifecore has granted Ethicon
exclusive worldwide marketing rights through 2008 to the products developed by
Lifecore within defined fields of use.
The Company has made and continues to make a significant investment in the
development and testing of LUBRICOAT Gel, a product designed to reduce the
incidence of postsurgical adhesions. The product is currently undergoing human
clinical trials to develop the data necessary to apply to the United States Food
and Drug Administration ("FDA") for clearance to market the product for
commercial application. However, even if the product is successfully developed
and the Company receives clearance from the FDA, there can be no assurance that
it will receive market acceptance. Failure to achieve significant sales of the
product could have a material adverse effect on future prospects for the
Company's operations.
NOTE H - NOTE PAYABLE
The Company exercised its option under the ISS note payable to make the final
principal payment due December 15, 1996 in the form of the Company's common
stock. To satisfy the $450,000 amount due, 29,108 shares of common stock were
issued under the formula contained in the note payable agreement.
9
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONT.)
March 31, 1997
NOTE I - 1996 STOCK PLAN
On November 14, 1996, the shareholders adopted the 1996 Stock Plan (the "1996
Plan") to provide for options to be granted to certain eligible employees,
non-employee members of the Board of Directors and other non-employee persons as
defined in the 1996 Plan. A total of 3,000,000 shares of common stock are
reserved for issuance under the 1996 Plan. Options will be granted under the
1996 Plan at exercise prices which are determined by a committee appointed by
the Board of Directors. Each grant awarded specifies the period for which the
options are exercisable and provides that the options shall expire at the end of
such period. The Company filed a registration statement on Form S-8. A total
of 756,668 options are outstanding under the 1996 Plan, with 124,000 options
exercisable at $16.88 at March 31, 1997.
NOTE J - NEW ACCOUNTING PRONOUNCEMENTS
The FASB has issued Statement No.123 "Accounting for Stock-Based Compensation",
which is effective for fiscal 1997. Under this Statement, the Company must
either adopt the fair value-based method of accounting for employee stock
options or continue to account for employee stock options using the intrinsic
value-based method. Management intends to continue with the intrinsic
value-based method which, under the new standard, will require additional
disclosure.
The FASB has also issued Statement No. 128, "Earnings Per Share", which is
effective for financial statements issued after December 15, 1997. Early
adoption of the new standard is not permitted. The new standard eliminates
primary and fully diluted earnings per share and requires presentation of basic
and diluted earnings per share together with disclosure of how the per share
amounts were computed.
The adoption of these standards is not expected to have a material effect of the
consolidated financial statements of the Company.
10
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
THREE MONTHS AND NINE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS AND
NINE MONTHS ENDED MARCH 31, 1996
Net sales for the three and nine months ended March 31, 1997 increased $938,000
and $3,187,000, respectively, an increase of 26% and 33%, respectively, compared
with the same periods of last fiscal year. Hyaluronate product sales for the
three-month and nine-month periods ended March 31, 1997 increased 11% and 13%,
respectively, compared with the same periods of last fiscal year. The increase
in hyaluronate product sales for the three-month and the nine-month periods
ended March 31, 1997 was primarily attributable to increased sales of ophthalmic
and veterinary products, and the net effect of lower product development related
revenues as compared to the same period of last fiscal year. Oral restorative
product sales for the three-month and nine-month periods ended March 31, 1997
increased 34% and 47%, respectively, compared with the same periods of last
fiscal year. The increase in oral restorative product sales is a result of
increased marketing and sales activities in the domestic market and expanded
distribution networks in international markets, including Italy, where the
Company's subsidiary, Lifecore Biomedical SpA, is located.
Cost of goods sold, as a percentage of net sales, decreased to 38% and 49%,
respectively, for the three-month and nine-month periods ended March 31, 1997
from 61% and 66%, respectively, for the same periods of last fiscal year. The
decrease resulted from spreading fixed expenses over increased product sales and
lower direct charges for idle capacity related to hyaluronate products resulting
from higher utilization of the Company's manufacturing facility. Further, the
three month period ended December 31, 1995 included period costs incurred for
the scale-up of an aseptic ophthalmic syringe product.
Research and development expenses increased $314,000, or 48%, for the current
quarter as compared to the same quarter last fiscal year and $829,000, or 49%,
for the nine months ended March 31, 1997 as compared with the same period of
last fiscal year. The increase principally resulted from the costs associated
with human clinical trials on LUBRICOAT Gel and increased personnel costs from
the same period of last fiscal year.
11
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (CONT.)
Marketing and sales expenses increased $328,000, or 29%, for the current quarter
as compared to the same quarter of last fiscal year and $788,000, or 24%, for
the nine months ended March 31, 1997 as compared with the same period of last
fiscal year. The increase for both periods reflected compensation costs from
additional sales personnel, increased marketing and sales literature costs, and
expenses from the expanded direct sales force at Lifecore Biomedical SpA.
General and administrative expenses decreased $2,000 for the current quarter as
compared to the same quarter of last fiscal year and increased $145,000, or 7%,
for the nine months ended March 31, 1997 as compared with the same period of
last fiscal year. The increase for the nine months ended March 31, 1997
resulted mainly from additional personnel and related costs.
Other income (expense) for the three-month and nine-month periods ended March
31, 1997 increased $188,000 and $1,052,000, respectively, compared with the same
periods of last fiscal year. The increase in interest income reflected the
effect of having additional cash available to invest as a result of the proceeds
received from the public stock offering completed in the second quarter of
fiscal 1996 and the offshore stock offering completed in the fourth quarter of
fiscal 1996. Interest expense decreased due to the lower average debt
outstanding as a result of scheduled debt payments.
LIQUIDITY AND CAPITAL RESOURCES
The Company's Annual Report on Form 10-K for the year ended June 30, 1996
contains a detailed discussion of Lifecore's liquidity and capital resources.
In conjunction with this Quarterly Report on Form 10-Q, investors should read
the 1996 Form 10-K.
The Company has had significant operating cash flow deficits for the last three
fiscal years. As the Hyaluronate Division's production increases, the Company's
direct charges associated with excess plant capacity will decrease; however,
research and development costs for LUBRICOAT Gel, marketing and sales expenses
for the oral restorative products, and personnel costs are increasing. During
the current quarter, the $6.3 million advance on product purchases from Alcon
was fully realized. Future product shipments to Alcon will generate cash.
During the quarter ended March 31, 1997, the Company satisfied its lease
commitment with Johnson & Johnson Finance Corporation by purchasing the
equipment subject to the lease. The company paid approximately $5.4 million in
exchange for the specialized production equipment which Lifecore was utilizing
12
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION (CONT.)
under the operating lease. The lease termination is expected to favorably
impact ongoing financial operating costs.
During the fourth quarter of fiscal year 1997 and throughout fiscal year 1998,
the Company anticipates spending approximately $15-$20 million in conjunction
with the expansion of its manufacturing and distribution capabilities. This
expansion includes building and equipment expenditures for warehouse and
distribution capabilities and to scale-up aseptic-packaging facilities for
finished products.
In the second quarter of fiscal 1996, the Company completed a public offering of
its Common Stock, providing net proceeds of approximately $23 million. In the
fourth quarter of fiscal 1996, the Company completed a Regulation S offering to
qualified investors outside the United States providing net proceeds of
approximately $22 million. In addition to the upcoming facility expansion, the
Company intends to use the net proceeds of these offerings for working capital
and for possible future redemption of all or a portion of the outstanding
industrial development revenue bonds. The Company believes these capital
resources are sufficient to meet the Company's needs through fiscal 1998,
including its facility expansion plans and possible operating cash flow
deficits.
The Company exercised its option under the ISS note payable to make the final
principal payment due December 15, 1996 in the form of the Company's common
stock. To satisfy the $450,000 amount due, 29,108 shares of common stock were
issued under the formula described in the note payable.
Please refer to the Management's Discussion and Analysis section of the Annual
Report on Form 10-K for the year ended June 30, 1996 for a cautionary statement
on important factors to consider in evaluating the forward-looking statements
included in this Form 10-Q.
13
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits and Exhibit Index
27 Financial Data Schedule
b. REPORTS ON FORM 8-K
On February 5, 1997, the Company filed a report on Form 8-K disclosing
the purchase of equipment subject to its lease with Johnson & Johnson
Finance Corporation.
14
<PAGE>
LIFECORE BIOMEDICAL, INC. AND SUBSIDIARIES
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.
LIFECORE BIOMEDICAL, INC.
Dated: April 24, 1997 /s/ James W. Bracke
----------------------------------
James W. Bracke
President & Chief Executive Officer
Dated: April 24, 1997 /s/ Dennis J. Allingham
----------------------------------
Dennis J. Allingham
Vice President & Chief
Financial Officer
(Principal Financial Officer)
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE LIFECORE
BIOMEDICAL, INC. AND SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE
MONTHS ENDED MARCH 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,378,000
<SECURITIES> 25,288,000
<RECEIVABLES> 3,452,000
<ALLOWANCES> 328,000
<INVENTORY> 9,372,000
<CURRENT-ASSETS> 30,385,000
<PP&E> 20,562,000
<DEPRECIATION> 5,224,000
<TOTAL-ASSETS> 61,417,000
<CURRENT-LIABILITIES> 2,636,000
<BONDS> 6,835,000
0
0
<COMMON> 122,000
<OTHER-SE> 51,824,000
<TOTAL-LIABILITY-AND-EQUITY> 61,417,000
<SALES> 12,863,000
<TOTAL-REVENUES> 12,863,000
<CGS> 6,362,000
<TOTAL-COSTS> 15,039,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 522,000
<INCOME-PRETAX> (1,170,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,170,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,170,000)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
