FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
------------------
Commission file number 0-16005
Unigene Laboratories, Inc.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2328609
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 Little Falls Road, Fairfield, New Jersey 07004
- -------------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (973) 882-0860
-------------
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, $.01 Par Value--
38,411,722 shares as of November 1, 1997
<PAGE>
INDEX
UNIGENE LABORATORIES, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed balance sheets-
September 30, 1997 and December 31, 1996
Condensed statements of operations-
Three months and nine months ended
September 30, 1997 and 1996
Condensed statements of cash flows-
Nine months ended September 30, 1997 and 1996
Notes to condensed financial statements-
September 30, 1997
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 2. Changes in Securities
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
UNIGENE LABORATORIES, INC.
CONDENSED BALANCE SHEETS
September 30 December 31
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ............... $ 4,199,138 $ 4,491,386
Accounts receivable ..................... 380 100,954
Prepaid expenses and other
current assets ....................... 577,597 882,135
------------ ------------
Total current assets ............... 4,777,115 5,474,475
Property, plant and equipment-net
of accumulated depreciation and
amortization ............................ 9,594,111 10,356,070
Patents and other assets ................... 1,372,144 1,338,691
------------ ------------
$ 15,743,370 $ 17,169,236
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ........................ $ 518,840 $ 1,025,136
Accrued expenses ........................ 889,249 685,568
Notes payable - stockholders ............ 610,000 810,000
------------ ------------
Total current liabilities ......... 2,018,089 2,520,704
Note payable - stockholders ............. 655,000 655,000
9.5% convertible debentures ............. 502,694 1,283,400
10% convertible debentures .............. 450,000 850,000
Stockholders' equity:
Common stock-par value $.01 per share;
authorized 60,000,000 shares, issued
and outstanding 38,401,722 shares in
1997 and 35,352,824 shares in 1996 ... 384,017 353,528
Additional paid-in capital .............. 63,263,493 55,829,641
Accumulated deficit ..................... (51,528,892) (44,322,006)
Less: Treasury stock, at cost,
7,290 shares ......................... (1,031) (1,031)
------------ ------------
Total stockholders' equity ......... 12,117,587 11,860,132
------------ ------------
$ 15,743,370 $ 17,169,236
============ ============
</TABLE>
See notes to condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30 September 30
------------------------------ ------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Licensing and
other revenue ........... $ 3,000,346 $ 1,719 $ 3,001,830 $ 307,528
------------ ------------ ------------ ------------
Operating expenses:
Research and
development ........... 2,585,444 2,285,977 6,988,975 5,836,932
Settlement of contractual
right (Note D) ........ -- -- 1,669,063 --
General and
administrative ........ 519,940 531,172 1,514,537 1,440,382
------------ ------------ ------------ ------------
3,105,384 2,817,149 10,172,575 7,277,314
------------ ------------ ------------ ------------
Operating loss ............ (105,038) (2,815,430) (7,170,745) (6,969,786)
------------ ------------ ------------ ------------
Other income (expense):
Interest/other income ... 67,394 24,461 154,801 161,253
Interest expense ........ (59,643) (166,129) (190,943) (626,771)
------------ ------------ ------------ ------------
7,751 (141,668) (36,142) (465,518)
------------ ------------ ------------ ------------
Net loss .................. $ ( 97,287) $ (2,957,098) $ (7,206,887) $ (7,435,304)
=========== ============ ============ ============
Net loss per share ........ $ -- $ (.11) $ (.19) $ (.29)
============ ============ ============ ============
Weighted average number
of shares outstanding ... 37,934,674 28,127,903 37,041,158 25,732,668
============ ============ ============ ============
</TABLE>
See notes to condensed financial statements.
<PAGE>
<TABLE>
<CAPTION>
UNIGENE LABORATORIES, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
September 30,
--------------------------------
1997 1996
----------- -----------
<S> <C> <C>
Net cash used for operating activities .................. $(4,246,738) $(8,435,855)
----------- -----------
Investing activities:
Construction of leasehold improvements ............... (18,298) (2,950)
Purchase of equipment and furniture .................. (343,143) (228,954)
Increase in patents and other assets ................. (92,224) (110,506)
----------- -----------
(453,665) (342,410)
----------- -----------
Financing activities:
Sales of stock, net of related expenses .............. 2,936,895 300,440
Issuance of debt, net of related expenses ............ -- 8,137,000
Exercise of stock options and warrants ............... 1,471,260 631,735
Repayment of debt .................................... -- (60,000)
----------- -----------
4,408,155 9,009,175
----------- -----------
Net increase (decrease) in cash and
cash equivalents ..................................... (292,248) 230,910
Cash and cash equivalents at
beginning of year .................................... 4,491,386 258,627
----------- -----------
Cash and cash equivalents at
end of period ........................................ $ 4,199,138 $ 489,537
=========== ===========
Supplemental cash flow information:
Exchange of notes ....................................... -- $ 3,300,000
Conversion of convertible debentures
and accrued interest, net of related
offering expenses into common stock .................. $ 1,181,136 $ 8,036,265
Conversion of notes payable-stockholders
into common stock .................................... $ 200,000 --
Interest paid ........................................... $ 48,415 $ 182,923
</TABLE>
See notes to condensed financial statements.
<PAGE>
UNIGENE LABORATORIES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
NOTE A-BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments considered necessary
for a fair presentation have been included. Operating results for the nine month
period ended September 30, 1997 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1997. For further
information, please refer to the Company's financial statements and footnotes
thereto included in the Company's annual report on Form 10-K for the year ended
December 31, 1996.
NOTE B-LICENSING AGREEMENT WITH WARNER-LAMBERT COMPANY
In July 1997, the Company signed a worldwide licensing agreement for oral
calcitonin with the Parke-Davis division of Warner-Lambert Company. Pursuant to
the terms of the licensing agreement, Unigene received $6 million in up-front
payments from Warner-Lambert. This total consisted of a $3 million purchase of
the Company's common stock (at a price of approximately $4.32 per share which
was the average closing price of stock for the 60 day period ending on August
14, 1997) and a licensing fee of $3 million. Unigene is also eligible to receive
up to an additional $48.5 million in milestone payments during the development
program if specified milestones are achieved. If the product is successfully
commercialized, the Company will receive revenue from the sale of raw material
to Warner-Lambert and royalties on product sales. As part of the agreement,
Warner-Lambert will develop and market an oral calcitonin product and the
Company will be the exclusive supplier of the bulk calcitonin and will provide
certain analytical support services.
NOTE C - CONVERSION OF NOTES PAYABLE TO STOCKHOLDERS INTO COMMON STOCK
In 1995, executive officers of the company, Warren Levy, Ronald Levy and Jay
Levy, and another member of the Levy family loaned to the Company an aggregate
of $1,905,000. A total of $440,000 of these loans was repaid in 1996. On May 2,
1997, an aggregate of $200,000 in principal amount of these loans was converted
into 57,200 shares of the common stock of the Company at a conversion price of
$3.4965 per share. The closing price of the common stock on May 1, 1997, as
reported in the Wall Street Journal, was $3.21875 per share.
NOTE D - SETTLEMENT OF CONTRACTUAL RIGHT
On February 7, 1997, the Company issued an aggregate of 490,000 shares of common
stock to the holders of the Company's 9.5% Senior Secured Convertible Debentures
(the "Debentures") in exchange for the surrender of certain contractual rights.
The shares were issued in consideration for the cancellation of an obligation of
the Company to pay to the holders a fee equal to 2% of the sum of the market
value as of December 31, 1998 of the Company's common stock plus the principal
amount of all outstanding debt of the Company, less its cash on deposit, up to a
maximum fee of $3,000,000. The expense associated with this transaction was
valued at $1,669,063, based on a closing price of the common stock of $3.40625
on February 7, 1997.
<PAGE>
NOTE E - CONVERTIBLE DEBENTURES
During the period January 1, 1997 through September 30, 1997, $780,706 of
principal amount of the Company's 9.5% Senior Secured Convertible Debentures was
converted into 697,058 shares of common stock.
During the period January 1, 1997 through September 30, 1997, $400,000 of
principal amount of the Company's 10% Convertible Debentures, plus $40,931 of
accrued interest, was converted into 220,465 shares of common stock.
Item 2. Management's Discussion And Analysis Of Financial Condition And Results
Of Operations
Revenues for the three months and nine months ended September 30, 1997 included
a license fee of $3,000,000 from Warner-Lambert Company for a worldwide
licensing agreement for oral calcitonin. Revenues for the first nine months of
1996 included a license fee of $300,000 from the Company's joint venture in
China. Revenues from hormone and enzyme sales were $2,000 and $8,000 for the
nine months ended September 30, 1997 and 1996, respectively.
Research and development, the Company's largest expense, increased 13% from
$2,286,000 to $2,585,000, and 20% from $5,837,000 to $6,989,000 for the three
months and nine months ended September 30, 1997, respectively, as compared to
the same periods in 1996. The three month increase was primarily related to
regulatory filing fees in Europe and increased salaries. The nine month increase
was primarily related to regulatory filing fees in Europe, regulatory
documentation preparation fees and increased expenditures for supplies and
salaries.
Expenses for the nine month period included the settlement of a contractual
right of a third party against the Company. On February 7, 1997, the Company
issued an aggregate of 490,000 shares of its common stock to the holders of the
Company's 9.5% Senior Secured Convertible Debentures (the "Debentures") in
exchange for the cancellation of an obligation of the Company to pay to the
holders a fee equal to 2% of the sum of the market value as of December 31, 1998
of the Company's outstanding common stock and the principal amount of all
outstanding debt of the Company, less its cash on deposit, up to a maximum fee
of $3,000,000. The expense associated with this transaction was valued at
$1,669,063, based on a closing price of the common stock of $3.40625 on February
7, 1997.
General and administrative expenses decreased 2% from $531,000 to $520,000 and
increased 5% from $1,440,000 to $1,515,000, for the three months and nine months
ended September 30, 1997, respectively, as compared to the same periods in 1996.
The three month decrease was primarily due to reduced public relations expenses
partially offset by increased health insurance costs. The nine month increase
was primarily due to higher insurance and legal expenses.
Interest and other income increased $45,000 and decreased $6,000 for the three
months and nine months ended September 30, 1997, respectively, as compared to
the same periods in 1996. The three month increase was due to additional funds
available for investment in the third quarter as a result of the receipt of $6
million from Warner-Lambert in July 1997. The nine month decrease was due to
gains on settlement of debt recognized in 1996. Interest expense decreased
$106,000 and $436,000 for the three months and nine months ended September 30,
1997, respectively, as compared to the same periods in 1996 due to conversions
in 1996 and 1997 of a substantial portion of the Company's convertible
debentures.
<PAGE>
As a result of increased revenue due to the $3 million licensing fee from
Warner-Lambert, as well as reduced interest expense, partially offset by
increased research and development expenses, net loss decreased $2,860,000 or
97% for the three months ended September 30, 1997 as compared to the same period
in 1996. As a result of increased revenue from the aforementioned licensing fee
and decreased interest expense, mostly offset by increased operating expenses
which included the $1,669,000 settlement in the first quarter of 1997, the
Company's net loss decreased $228,000 or 3% for the nine months ended September
30, 1997, as compared to the same period in 1996.
As of December 31, 1996, the Company had available for income tax reporting
purposes net operating loss carryforwards in the approximate amount of
$44,300,000, expiring from 1997 through 2011, which are available to reduce
future earnings that otherwise would be subject to federal income taxes. For the
nine months ending September 30, 1997, the Company accumulated additional losses
of approximately $7,200,000. In addition, at December 31, 1996, the Company has
investment tax credits and research and development credits in the amounts of
$64,000 and $1,662,000, respectively, which are available to reduce the amount
of future federal income taxes. These credits expire from 1997 through 2011.
The Company follows Statement of Financial Accounting Standards No. 109 (FASB
109), "Accounting for Income Taxes". Given the Company's past history of
incurring operating losses, any deferred tax assets that are recognizable under
FASB 109 have been fully reserved. As of January 1, 1997, under FASB 109, the
Company had deferred tax assets of approximately $19,200,000, subject to a
valuation allowance of $19,200,000. The deferred tax assets were generated
primarily as a result of the Company's net operating losses and available tax
credits. For the nine-month period ended September 30, 1997, the Company's
deferred tax assets and valuation allowances each increased by approximately
$3,100,000.
Statement of Financial Accounting Standards No. 128 "Earnings Per Share" changes
the reporting requirements for earnings per share (EPS) for publicly traded
companies by replacing primary EPS with basic EPS and changing the disclosures
associated with this change. The Company is required to adopt this standard in
the fourth quarter of 1997 and is currently evaluating the impact of this
standard.
Liquidity and Capital Resources
During 1994, the Company completed construction of its peptide production
facility in Boonton, New Jersey. The facility was constructed in a shell
building that is being leased under a ten year net lease which began in February
1994. The Company has two ten-year renewal options as well as an option to
purchase the facility. The cost of leasehold improvements and process equipment
for this facility, including current validation costs, totaled approximately $12
million. The improvements and equipment have been primarily financed from the
remainder of the $17 million of proceeds received as a result of the exercise by
the warrant holders of the Company's Class A Warrants in 1991 and the proceeds
of $2.2 million from the sale of stock in 1994. There are currently no material
commitments for capital expenditures relating to either the Boonton facility or
the Company's facility in Fairfield, New Jersey.
The Company, at September 30, 1997, had cash and cash equivalents of $4,200,000,
a decrease of $292,000 from December 31, 1996.
<PAGE>
The Company's ability to generate cash from operations will depend primarily
upon signing research or licensing agreements, achieving defined benchmarks in
such agreements, receiving regulatory approval for its licensed products, and
the commercial sale of these products. As of September 30, 1997, the Company had
one joint venture agreement and one licensing agreement in effect.
In 1996, the Company entered into a joint venture agreement with a
pharmaceutical company in China. This joint venture contributed $300,000 to 1996
revenues. It is uncertain whether any additional revenues will be recognized or
received in connection with this joint venture.
In July 1997, the Company entered into an agreement under which it granted to
the Parke-Davis division of Warner-Lambert Company, a worldwide license to the
Company's oral calcitonin technology. Simultaneously with entering into the
agreement, the Company received $6 million in payments from Warner-Lambert,
consisting of a $3 million licensing fee and a $3 million equity investment by
Warner-Lambert. In addition, the Company is eligible to receive up to an
additional $48.5 million in milestone payments during the course of the
development program if specified milestones are achieved, of which $15.5 million
would be received prior to the commencement of Phase I clinical studies in the
U.S. If the product is successfully commercialized, the Company also would
receive revenue from the sale of raw material to Warner-Lambert and royalties on
product sales by Warner-Lambert and affiliates. The Company has retained the
right to license the use of its technologies for injectable and nasal
formulations of calcitonin on a worldwide basis.
The Company's cash requirements have increased to approximately $9 million per
year with the opening of its peptide manufacturing facility. In addition, the
Company faces principal and interest obligations over the next several years
under its outstanding convertible debentures and other indebtedness. However,
because of the current below-market conversion prices of each of the issues of
debentures, a substantial portion of such debentures has been, and a substantial
portion of the remainder is expected to be, converted into common stock thereby
decreasing the amount of cash required for principal and interest payments.
After the receipt of $6 million from Warner-Lambert, management believes that
the Company currently has sufficient financial resources to sustain its
operations at the current level through the first quarter of 1998. The Company
will require additional funds to ensure continued operations beyond that time.
Management currently believes that the various milestones in the Warner-Lambert
agreement can be achieved on a timely basis thereby precluding the need for any
outside financing of the Company's operations in the near term. Early-stage
milestones primarily relate to the product's performance characteristics, while
the latter-stage milestones are primarily related to regulatory filings and
approvals.
In addition to the Warner-Lambert agreement, management is actively seeking
other licensing and/or supply agreements with pharmaceutical companies for
injectable and nasal forms of calcitonin. However, there is no assurance that
any additional revenue-generating agreements will be signed. In the absence of
or the delay in achieving the Warner-Lambert milestones or in signing other
agreements, obtaining adequate funds from other sources, which might include a
debt or equity financing, would be necessary to sustain the Company's
operations. However, there is no assurance as to the terms on which such
additional funds would be available or that in such circumstances sufficient
funds could be obtained.
<PAGE>
While the Company believes that the implementation of the Warner-Lambert
licensing transaction will satisfy the Company's liquidity requirements over the
near-term, satisfying the Company's long-term liquidity requirements will
require the successful commercialization of the product licensed to
Warner-Lambert or one of its other calcitonin products. In addition, the
commercialization of a calcitonin product will require the Company to incur
additional capital expenditures, including expenditures to expand or upgrade the
Company's manufacturing operations to satisfy its supply obligations under the
Warner-Lambert License agreement. However, neither the cost or timing of such
capital expenditures are determinable at this time.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or activities of the Company, or industry results, to be materially different
from any future results, performance or activities expressed or implied by such
forward-looking statements. Such factors include: general economic and business
conditions, the financial condition of the Company, competition, the Company's
dependence on other companies to commercialize, manufacture and sell products
using the Company's technologies, the uncertainty of results of preclinical and
clinical testing, the risk of product liability and liability for human clinical
trials, the Company's dependence on patents and other proprietary rights,
dependence on key management officials, the availability and cost of capital,
the availability of qualified personnel, changes in, or the failure to comply
with, governmental regulations and the failure to obtain regulatory approvals of
the Company's products.
<PAGE>
PART II. OTHER INFORMATION
Item 2. Changes in Securities
(a) and (b) Not applicable
(c) Recent Sales of Unregistered Securities
On August 19, 1997, the Company sold for cash 695,066 shares of common
stock to Warner-Lambert Company at a price of approximately $4.32 per share.
These shares were issued pursuant to a stock purchase agreement dated as of July
15, 1997. All of such shares were issued by the Company without registration in
reliance on an exemption under Section 4(2) of the Securities Act.
In the third quarter of 1997, the Company sold for cash 64,500 shares
of common stock upon the exercise of an equal number of warrants exercisable to
purchase one share of common stock at an exercise price of $2.10 per share. An
additional 5,012 shares were issued upon the "cashless" exercise of a total of
10,000 warrants. The warrants were issued by the Company as compensation for
placement agent services in connection with the sale of the 10% Debentures in
March 1996. The sale of such shares was effected in reliance on an exemption
from registration pursuant to Section 4(2) of the Securities Act.
In the third quarter of 1997, the Company sold for cash an aggregate of
204,000 shares of common stock to certain financial and public relations
consultants upon the exercise of an equal number of warrants exercisable to
purchase one share of common stock at exercise prices ranging from $1.38 to
$3.00 per share. The aggregate consideration received was $320,500. The sale of
such shares was effected in reliance on an exemption from registration pursuant
to Section 4(2) of the Securities Act.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
3.1.2 Amendment to Certificate of Incorporation
filed August 22, 1997.
(b) Reports on Form 8-K:
July 15, 1997 (announcement of a worldwide licensing agreement
for oral calcitonin with the Parke-Davis division of
Warner-Lambert Company, as well as a stock purchase agreement
with Warner-Lambert).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNIGENE LABORATORIES, INC.
-----------------------------
(Registrant)
/s/ Warren P. Levy
November 12, 1997 -----------------------------
Warren P. Levy, President
(Chief Executive Officer)
/s/ Jay Levy
November 12, 1997 -----------------------------
Jay Levy, Treasurer
(Chief Financial Officer and
Chief Accounting Officer)
EXHIBIT 3.1.2
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
UNIGENE LABORATORIES, INC.
UNIGENE LABORATORIES, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware, DOES
HEREBY CERTIFY:
FIRST: That the Board of Directors of Unigene Laboratories, Inc., by
the unanimous written consent of its members, filed with the Minutes of the
Board, duly adopted resolutions setting forth a proposed Amendment to the
Certificate of Incorporation of said Corporation, declaring said Amendment to be
advisable and calling a meeting of the stockholders of said Corporation for
consideration thereof. The resolution setting forth the proposed Amendment is as
follows:
RESOLVED, that the Board of Directors hereby declares that it is
advisable to increase the number of shares of Common Stock authorized
for issuance by amending Article FOURTH of the Corporation's
Certificate of Incorporation to read as follows:
"FOURTH: The total number of shares of stock which the
Corporation shall have authority to issue is sixty million
(60,000,000), having a par value of $.01 per share. All such shares are
of one class and are common stock."
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, an annual meeting of the stockholders of said Corporation was duly
called and held, upon notice in accordance with Section 222 of the General
Corporation Law of the State of Delaware, at which meeting the necessary number
of shares as required by statute were voted in favor of the Amendment.
THIRD: That said Amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE>
IN WITNESS WHEREOF, said Unigene Laboratories, Inc. has caused this
Certificate to be signed by Warren P. Levy, its President, and attested by
Ronald S. Levy, its Secretary, this 22nd day of August, 1997.
UNIGENE LABORATORIES, INC.
By: /s/ WARREN P. LEVY
------------------
Warren P. Levy
President
ATTEST:
/s/RONALD S. LEVY
- -----------------
Ronald S. Levy
Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 4,199,138
<SECURITIES> 0
<RECEIVABLES> 380
<ALLOWANCES> 0
<INVENTORY> 499,761
<CURRENT-ASSETS> 4,777,115
<PP&E> 17,009,119
<DEPRECIATION> 7,415,008
<TOTAL-ASSETS> 15,743,370
<CURRENT-LIABILITIES> 2,018,089
<BONDS> 1,607,694
0
0
<COMMON> 384,017
<OTHER-SE> 11,733,570
<TOTAL-LIABILITY-AND-EQUITY> 15,743,370
<SALES> 1,830
<TOTAL-REVENUES> 3,001,830
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,172,575
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 190,943
<INCOME-PRETAX> (7,206,887)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,206,887)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,206,887)
<EPS-PRIMARY> (.19)
<EPS-DILUTED> (.19)
</TABLE>
