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 quarter ended March 31, 1995
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: 0-10379
INTERFERON SCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-2313648
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
783 Jersey Avenue, New Brunswick, New Jersey 08901
(Address of principal executive offices) (Zip code)
(908) 249 - 3250
(Registrant's telephone number, including area code)
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 outstanding of each of issuer's classes of common
stock as of April 28, 1995:
Common Stock 21,808,768 shares
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
TABLE OF CONTENTS
Page No.
Part I. Financial Information:
Consolidated Condensed Balance Sheets--March 31, 1995
and December 31, 1994 1
Consolidated Condensed Statements of Operations--Three
Months Ended March 31, 1995 and 1994 2
Consolidated Condensed Statement of Changes in
Stockholders' Equity--Three Months Ended
March 31, 1995 3
Consolidated Condensed Statements of Cash Flows--Three
Months Ended March 31, 1995 and 1994 4
Notes to Consolidated Condensed Financial Statements 5-7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
Qualification Relating to Financial Information 12
Part II. Other Information 13
Signatures 14
<PAGE>
PART I. FINANCIAL INFORMATION
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
<S> <C> <C>
March 31, December 31,
1995 1994
(Unaudited) *
ASSETS __________ ____________
Current assets
Cash and cash equivalents $ 105,248 $ 330,617
Accounts and other receivables 140,064 35,546
Inventories 1,151,590 1,029,158
Consignment inventory 220,410
Receivables from affiliated
companies, net 20,001 20,001
Prepaid expenses and other
current assets 68,586 55,221
___________ ____________
Total current assets 1,485,489 1,690,953
___________ ____________
Property, plant and equipment, at cost 11,826,069 11,826,069
Less accumulated depreciation and
amortization (6,199,111) (6,013,839)
___________ ____________
5,626,958 5,812,230
___________ ____________
Intangible assets, net of amortization 349,624 355,019
Other assets 323,900 323,900
Total assets $7,785,971 $ 8,182,102
___________ ____________
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 274,370 $ 409,275
Accounts payable and accrued expenses 1,641,469 1,629,025
Amount due NPDC 244,113 134,347
Amount due Purdue for repurchase of
common stock 232,217 300,000
___________ ____________
Total current liabilities 2,392,169 2,472,647
___________ ____________
Common stock subject to repurchase
commitment (682,494 shares) 2,729,976 2,729,976
___________ ____________
Commitments and contingencies
Stockholders' equity
Preferred stock, par value $.01 per share;
authorized-5,000,000 shares; none issued
and outstanding
Common stock, par value $.01 per share;
authorized-40,000,000 shares; issued
and outstanding-20,876,274 and
19,509,291 shares 208,763 195,093
Capital in excess of par value 67,041,073 65,572,243
Accumulated deficit (64,586,010) (62,787,857)
___________ ____________
Total stockholders' equity 2,663,826 2,979,479
___________ ____________
Total liabilities and stockholders'
equity $7,785,971 $ 8,182,102
___________ ____________
*The condensed balance sheet as of December 31, 1994 has been
summarized from the Company's audited balance sheet as of that
date.
The accompanying notes are an integral part of these consolidated
condensed financial statements.
</TABLE>
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
Three Months Ended
March 31,
__________________________
<S> <C> <C>
1995 1994
____________ ____________
Revenues
Sales
Alferon N Injection $ 174,710 $
Research products and other revenues 4,909 1,316
____________ ____________
Total revenues 179,619 1,316
____________ ____________
Costs and expenses
Cost of goods sold and excess/idle
production costs 568,095 462,786
Research and development
(net of $45,498 and $37,500
of rental income received from NPDC) 960,152 1,169,300
General and administrative
(includes $304,654 and $471,664
of charges from NPDC for management
fees and reimbursements of expenses) 446,392 739,943
____________ ____________
Total costs and expenses 1,974,639 2,372,029
____________ ____________
Loss from operations (1,795,020) (2,370,713)
Interest and other income 6,776 90,224
Interest expense (9,909) (65,305)
____________ ____________
Net loss $(1,798,153) $(2,345,794)
____________ ____________
Net loss per share $ (.09) $ (.12)
____________ ____________
Weighted average number of
shares outstanding 21,125,277 19,417,410
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN
STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1995
(Unaudited)
<TABLE>
<C> <C> <C> <C> <C> <C>
Total
Capital in Accumu- Stock-
Common Stock Excess of lated holders'
Shares Amount par value Deficit Equity
______ ______ __________ _______ ________
Balance at Dec.
31, 1994 19,509,291 $195,093 $65,572,243 $(62,787,857) $2,979,479
Net proceeds
from the sale
of common
stock to
Fujimoto
Diagnostics,
Inc. 1,034,483 10,345 1,472,155 1,482,500
Issuance of
common stock
in exchange
for warrants
to purchase
common stock 332,500 3,325 (3,325)
Net loss (1,798,153) (1,798,153)
______________________________________________________________
Balance at March
31, 1995 20,876,274 $208,763 $67,041,073 $(64,586,010) $2,663,826
</TABLE>
The accompanying notes are an integral part of these consolidated condensed
financial statements.
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
Three Months Ended
March 31,
___________________________
<S> <C> <C>
1995 1994
____________ ____________
Cash flows used for operations:
Net loss $(1,798,153) $(2,345,794)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation and amortization 194,015 201,023
Net gain on sales of marketable
securities (9,102)
Change in operating assets and liabilities:
Inventories (122,432) 158,440
Consignment inventory 220,410
Receivables from affiliated companies (93,913)
Accounts and other receivables (172,301) 30,226
Prepaid expenses and other current
assets (13,365) (158,161)
Accounts payable and accrued expenses 12,444 (3,855)
____________ ____________
Net cash used for operations (1,679,382) (2,221,136)
____________ ____________
Cash flows from investing activities:
Purchases of marketable securities (2,496,445)
Sales of marketable securities 2,006,797
Additions to property, plant and
equipment (54,805)
Additions to intangible and other assets (3,348) (13,329)
____________ ____________
Net cash used for investing activities (3,348) (557,782)
____________ ____________
Cash flows from financing activities:
Net proceeds from sale of common stock 1,482,500
Increase (decrease) in advances from
NPDC 109,766 (8,050)
Reduction of long-term debt (134,905) (366,037)
Purchase of common stock
from Runham and Banela (250,000)
____________ ____________
Net cash provided by (used for) financing
activities 1,457,361 (624,087)
____________ ____________
Net decrease in cash and cash equivalents (225,369) (3,403,005)
Cash and cash equivalents at beginning
of period 330,617 4,247,067
____________ ____________
Cash and cash equivalents at end of period $ 105,248 $ 844,062
____________ ____________
Cash paid for interest expense $ 8,564 $ 52,463
____________ ____________
Noncash investing and financing activities:
Offset of receivables in settlement of
obligation to repurchase stock $ 67,783 $
____________ ____________
Reductions in marketable securities $ $ 152,666
____________ ____________
Commitment to purchase common stock $ $ 3,729,976
____________ ____________
</TABLE>
The accompanying notes are an integral part of these consolidated
condensed financial statements.
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Amended Agreements with The Purdue Frederick Company
On January 27, 1994, the Company reacquired marketing and
distribution rights for ALFERON N Injection from Mundipharma
Pharmaceutical Company, a related entity of The Purdue Frederick
Company in Western Europe, Israel, India and Australia.
Mundipharma and Purdue Pharma retained exclusive marketing and
distribution rights for Canada and the United States, respectively,
subject to the Company's option to reacquire the United States and
Canadian marketing and distribution rights at a price of $12
million until July 26, 1995 (the "Repurchase Option"). Purdue gave
the Company a new purchase order for 45,000 vials of ALFERON N
Injection at an agreed upon price. In addition, the Company will
pay Mundipharma a 3% royalty on net sales in the reacquired
territories. This rate will be reduced to 1% after certain
aggregate royalty payments have been made. The Company was also
obligated to provide Purdue with up to 15,000 vials of ALFERON N
Injection, at an agreed upon price, to replace any inventory of
Purdue existing on the date of the amendment which goes out of
date. The Company also granted Purdue an option, exercisable until
July, 1995, to purchase an additional 100,000 vials of ALFERON N
Injection at an agreed upon price.
Under the amended agreements (the "1994 Purdue Amendments"),
the Company assumed responsibility for the conduct and funding of
clinical trials to develop new indications of ALFERON N Injection.
Upon the Company obtaining approval in the United States for
additional indications of ALFERON N Injection, Purdue and
Mundipharma were obligated, in order to maintain their exclusive
license, to repay certain of the Company's research and development
costs and make certain additional payments to the Company for the
rights for the first five of any such new uses.
The Company also agreed to buy back 994,994 shares of its
common stock then held by Purdue and two related entities at an
agreed upon price of $4.00 per share (the "Company's Purchase
Obligation")over an 18-month period. In January 1994, the Company
purchased 62,500 of such shares for $250,000 and such shares were
cancelled by the Company. The Company was obligated to pay an
additional $1,000,000 to purchase 250,000 shares during 1994. In
1994, the Company and Purdue agreed to offset $700,000 owed to the
Company by Purdue, for the purchase of ALFERON N Injection during
1994, against the Company's obligation to purchase $1,000,000 of
the Company's Common Stock from Purdue in 1994. The Company has
reflected the Common Stock subject to repurchase commitment as
temporary equity, and $300,000 of this obligation to Purdue that
was not paid in 1994 as a current liability on the balance sheet.
In addition, as of March 31, 1995 the Company had applied an
additional $67,783 of offsets based upon additional sales of
ALFERON N Injection by Purdue. In April 1995, the Company was
required to purchase 62,500 shares of Common Stock for $250,000 and
in July 1995 is obligated to purchase 619,994 shares of Common
Stock for $2,479,976. As of May 4, 1995, the Company had generated
sufficient additional offsets based upon additional sales of
ALFERON N Injection to and by Purdue to repay the $232,217 owed to
Purdue as of March 31, 1995 and to pay $140,000 of the $250,000
owed to Purdue for the April 1995 stock repurchase. The Company
anticipates that the $110,000 unpaid balance of the purchase price
for the 62,500 shares required to be repurchased in April 1995 will
be paid through additional offsets or working capital or both. The
Company currently anticipates repurchasing certain marketing rights
from Purdue.
In March 1995, the Company entered into an amendment of the
1994 Purdue Amendments (the "1995 Purdue Amendment") pursuant to
which the Company obtained an option, exercisable until June 30,
1995, (the "Option") to reacquire the remaining marketing and
distribution rights from Purdue Pharma and Mundipharma. The
exercise price of the option is (i) $2,962,193 in cash (less any
amounts paid after March 29, 1995 for the repurchase of Common
Stock described above) and (ii) 2.5 million shares of Common Stock.
As of May 4, 1995, an aggregate of $370,000 had been so paid after
March 29, 1995, and an additional $110,000 will be so paid prior to
any exercise of the Option, reducing the cash component of the
option exercise price to $2,482,193. Eighteen months from the date
of exercise of the Option by the Company (the "Valuation Date"),
the 2.5 million shares of Common Stock must have a value of at
least $9 million, which value will be calculated using the average
of the closing bid and asked prices of the Common Stock as quoted
by the NASDAQ National Market System for the ten trading days
ending two days prior to the Valuation Date. In the event of a
shortfall, the Company has agreed to issue a note for such
shortfall, if any, which will bear interest at the prime rate, and
will become due and payable 24 months from the Valuation Date. The
Company agreed that the 2.5 million shares of Common Stock will be
registered and freely tradeable 18 months from the date of exercise
of the Company's option. If the Option is exercised, the
Repurchase Option, the royalty obligations, and Purdue's right to
obtain marketing and distribution rights for new indications
contained in the 1994 Purdue Amendment will terminate and the
Company will receive the repurchase obligation for no additional
consideration.
Note 2. Agreement with Fujimoto Diagnostics, Inc.
On February 7, 1995, the Company concluded an agreement with
Fujimoto Diagnostics, Inc. (Fujimoto) of Osaka, Japan, for the
commercialization of the Company's ALFERON N Injection and ALFERON
N Gel in Japan. In connection with the agreement, Fujimoto
purchased 1,034,483 shares of the Company's Common Stock for
$1,500,000 ($1.45 per share, the then current market price) and
committed to purchase an additional $500,000 of Common Stock in
February 1996 based on the then current market price. The
agreement grants Fujimoto exclusive rights to develop, distribute
and sell ALFERON N Injection and ALFERON N Gel in Japan. Under the
agreement, Fujimoto agreed to fund and conduct all preclinical and
clinical studies required for regulatory approval in Japan.
Fujimoto will purchase quantities of ALFERON N Injection and
ALFERON N Gel at agreed-upon prices during the preclinical and
clinical phases.
Note 3. Inventories
Inventories, consisting of material, labor and overhead, are
classified as follows:
March 31, December 31,
1995 1994
______________ ______________
Finished goods $ 387,330 $ 342,330
Work in process 389,118 303,111
Raw materials 375,142 383,717
____________ ____________
$ 1,151,590 $ 1,029,158
Finished goods inventories at March 31, 1995 and December 31,
1994, are stated net of a 1993 write-down of $300,000 to reflect
the Company's continuing obligation to Purdue to replace up to
15,000 vials of ALFERON N Injection at an agreed upon reduced
price.
Finished goods inventory consists of approximately 15,000
vials of ALFERON N Injection and is scheduled to expire in October
1996.
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Financial Condition and Liquidity
As of May 12, 1995, the Company had an aggregate of $350,000
in cash. Consequently, management is actively pursuing raising
required additional capital by doing one or more of the following
actions (i) issuing securities in a public or private equity
offering, (ii) licensing rights to its injectable, topical or oral
formulations of alpha interferon (as it did with Fujimoto), or
(iii) entering into collaborative or other arrangements with
corporate partners. Lack of funds has required the Company to
delay or scale back some of its clinical activities and continued
lack of funding will require the Company to eliminate certain or
all of its activities or license third parties to commercialize
products or technologies that the Company would otherwise seek to
develop itself.
On May 3, 1995, three principal stockholders of the Company
committed to loan the Company an aggregate of $1,070,000. Such
loans bear interest at prime plus 2% and mature on the earlier of
(i) the first date that the Company receives gross proceeds of at
least $7,500,000 from a public offering (the "Public Offering") of
Common Stock and (ii) November 2, 1995. If the indebtedness
matures as a result of a Public Offering, repayment of principal of
the indebtedness may be made, at the option of the Company, by
delivery of shares of Common Stock valued at the public offering
price per share in the Public Offering.
On February 7, 1995, the Company concluded an agreement with
Fujimoto for the commercialization of ALFERON N Injection and
ALFERON N Gel in Japan. In connection with the agreement, Fujimoto
purchased $1,500,000 of the Company's Common Stock ($1.45 per
share, the then current market price) and is committed to purchase
an additional $500,000 of Common Stock in February, 1996 at the
then market price.
In connection with the amendments to agreements with Purdue
during January 1994, Purdue ordered 45,000 vials of ALFERON N
Injection at an agreed upon price. With respect to this order,
approximately three-quarters of the purchase price of the vials was
payable upon shipment by the Company to Purdue and the balance was
payable upon sale by Purdue. A portion of the shipments to fill
this order was made on a consignment basis, i.e. the purchase was
subject to a right of return until notification by Purdue that such
vials have been resold. In June and August 1994, the Company began
to fill this order by making shipments of 10,000 and 10,735 vials,
respectively, of ALFERON N Injection to Purdue on a consignment
basis. In addition, shipments of 5,928 and 10,040 vials of ALFERON
N Injection were made to Purdue in September 1994 and April 1995,
respectively, on a non-consignment basis. The 8,297 vial balance
of this order is expected to be shipped prior to the end of 1995.
Purdue has informed the Company that from June 1994 through
December 31, 1994, it had sold or distributed as free samples
approximately 15,800 vials of the 20,735 vials purchased on a
consignment basis, and that as of March 1995, Purdue had sold or
distributed as free samples the balance of such consignment
inventory. Purdue has also informed the Company that during the
three months ended March 31, 1995 and the year ended December 31,
1994, it sold approximately 6,800 vials and 25,000 vials,
respectively, and distributed as free samples approximately 200
vials and 2,000 vials, respectively, of ALFERON N Injection from
its inventory.
In January 1994, the Company amended its marketing and
distribution agreements with Purdue and related parties. Pursuant
to such amended agreements, the Company assumed sole responsibility
to conduct and fund clinical trials required to obtain FDA approval
for additional indications for ALFERON N Injection. Prior to these
amendments, Purdue was responsible for the payment of the costs of
such clinical trials. The Company anticipates that the expansion
of its research and development efforts and clinical trial
activities and its assuming responsibility of the conduct and
funding thereof will increase operating expenses. The Company
intends to seek to enter into joint ventures or other arrangements
with strategic partners who agree to bear all or part of such
expenses.
In connection with the amendments to the agreements with
Purdue, the Company agreed to purchase an aggregate of 994,994
shares of its Common Stock for $3,979,976 ($4.00 per share) from
Purdue and two related entities over a period of 18 months. The
Company purchased 62,500 of such shares of Common Stock for
$250,000 in January 1994 and was obligated to purchase an
additional 250,000 shares of Common Stock for $1,000,000 in 1994.
In 1994, the Company and Purdue agreed to offset $700,000 owed to
the Company by Purdue, for the purchase of ALFERON N Injection
during 1994, against the Company's obligation to purchase
$1,000,000 of the Company's Common Stock from Purdue in 1994. As of
December 31, 1994, $300,000 of this obligation to Purdue had not
been paid and was reflected as a current liability on the balance
sheet. In addition, as of March 31, 1995 the Company had generated
and applied an additional $67,783 of offsets based upon additional
sales of ALFERON N Injection by Purdue. In April 1995, the Company
was required to purchase 62,500 shares of Common Stock for $250,000
and in July 1995 is obligated to purchase 619,994 shares of Common
Stock for $2,479,976.
As of May 12, 1995, the Company had generated sufficient
additional offsets based upon additional sales of ALFERON N
Injection to and by Purdue to repay the $232,217 owed to Purdue as
of March 31, 1995 and to pay $140,000 of the $250,000 owed to
Purdue for the April 1995 stock repurchase. The Company
anticipates that the $110,000 unpaid balance of the purchase price
for the 62,500 shares required to be repurchased in April 1995 will
be paid through additional offsets or from working capital or both.
If the Company exercises the Option to reacquire the remaining
marketing rights from Purdue, the 619,994 shares of Common Stock
required to be repurchased from Purdue in July 1995 will be
cancelled for no additional consideration. However, there can be
no assurances that the Company will be able to obtain on a timely
basis the cash necessary to exercise the Option or repurchase the
619,994 shares. In addition, as of March 31 1995, the Company was
obligated to pay an aggregate of $286,000 to U.S. Capital
Corporation, which was past due. Such amount was paid in April,
1995.
Results of Operations
For the three months ended March 31, 1995, the Company's
revenue of $179,619 included $174,710 from the sale of ALFERON N
Injection and the balance was derived from sales of research
products. Revenue of $1,316 for the three months ended March 31,
1994 was derived from sales of research products. Notwithstanding
the suspension of ALFERON N Injection production during a portion
of the three months ended March 31, 1995 and during all of the
three months ended March 31, 1994, the Company recorded cost of
goods sold and ongoing production facility costs of $568,095 and
$462,786, respectively.
Research and development expenses during the three months
ended March 31, 1995 of $960,152 decreased by $209,148 from
$1,169,300 for the same period in 1994, principally because the
Company reduced its level of research and product development and
improvement on ALFERON N Injection. The Company received $45,498
and $37,500 during the three months ended March 31, 1995 and 1994,
respectively, as rental income from National Patent for the use of
a portion of the Company's facilities, which offset research and
development expenses.
General and administrative expenses for the three months ended
March 31, 1995 were $446,392 as compared to $739,943 for the same
period in 1994. The decrease of $293,551 was principally due to
decreases in payroll and other expenses. National Patent provides
certain administrative services for which the Company paid National
Patent $30,000 for each of the three month periods ended March 31,
1995 and 1994. In addition, National Patent provides to the
Company, at its estimated cost, certain personnel and services
which the Company uses in its operations. For the three months
ended March 31, 1995 and 1994, such charges amounted to $274,654
and $441,664, respectively.
Interest and other income for the three months ended March 31,
1995 was $6,776 as compared to $90,224 for the same period in 1994.
The decrease of $83,448 was due to less funds available for
investment in the current period.
Interest expense for the three months ended March 31, 1995 and
1994 was $9,909 and $65,305, respectively. The decrease of $55,396
was due to reduced long-term debt.
As a result of the foregoing, the Company incurred net losses
of $1,798,153 and $2,345,794 for the three months ended March 31,
1995 and 1994, respectively.
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
QUALIFICATION RELATING TO FINANCIAL INFORMATION
MARCH 31, 1995
The financial information included herein is unaudited. Such
information, however, reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary to a fair statement of the results for the
interim periods. The results for interim periods are not
necessarily indicative of results to be expected for the year.
<PAGE>
INTERFERON SCIENCES, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(b) Reports on Form 8-K
There were no reports on Form 8-K filed for the period
ended March 31, 1995.
<PAGE>
INTERFERON SCIENCES, INC.
MARCH 31, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed in
its behalf by the undersigned thereunto duly authorized.
INTERFERON SCIENCES, INC.
DATE: May 15, 1995 By: /s/ Samuel H. Ronel, Ph.D.
Samuel H. Ronel, Ph.D.
President
DATE: May 15, 1995 By: /s/ Donald W. Anderson
Donald W. Anderson
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000351532
<NAME> INTERFERON SCIENCES, INC.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 105,248
<SECURITIES> 0
<RECEIVABLES> 140,064
<ALLOWANCES> 0
<INVENTORY> 1,151,590
<CURRENT-ASSETS> 1,485,489
<PP&E> 11,826,069
<DEPRECIATION> 6,199,111
<TOTAL-ASSETS> 7,785,971
<CURRENT-LIABILITIES> 2,392,169
<BONDS> 0
<COMMON> 208,763
0
0
<OTHER-SE> 2,455,063
<TOTAL-LIABILITY-AND-EQUITY> 7,785,971
<SALES> 179,619
<TOTAL-REVENUES> 179,619
<CGS> 568,095
<TOTAL-COSTS> 568,095
<OTHER-EXPENSES> 1,406,544
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,909
<INCOME-PRETAX> (1,798,153)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,798,153)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,798,153)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
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