<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(Mark One)
[x] Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended JUNE 30, 1995.
[_] 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: 0-10736
MGI PHARMA, INC.
----------------
(Exact name of registrant as specified in its charter)
Minnesota 41-1364647
- ------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
Suite 300E, Opus Center
9900 Bren Road East
Minneapolis, Minnesota 55343 (612) 935-7335
------------------------------ ----------------------------
(Address of principal executive (Registrant's telephone
offices and zip code) 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
----- -----
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 12,728,731 shares
---------------------------- -------------------------------
(Class) (Outstanding at August 1, 1995)
<PAGE>
FORM 10-Q INDEX
MGI PHARMA, INC.
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - June 30,
1995 (unaudited) and December 31, 1994
Consolidated Statements of Operations
(unaudited) - Three Months and Six Months
Ended June 30, 1995 and 1994
Consolidated Statements of Cash Flows
(unaudited) - Six Months Ended June 30,
1995 and 1994
Notes to Consolidated Financial Statements
(unaudited)
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. OTHER INFORMATION
SIGNATURES
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
- ----------------------------
CONSOLIDATED BALANCE SHEETS
MGI PHARMA, INC.
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
----------- ------------
(unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 4,853,993 $ 6,728,006
Short-term investments 10,865,051 9,908,584
Receivables, less allowances of
$326,788 and $347,823 318,805 283,636
Inventories 1,272,946 1,386,909
Prepaid expenses 209,371 595,746
----------- -----------
Total current assets 17,520,166 18,902,881
Equipment and furniture, at cost 291,573 359,393
less accumulated depreciation of
$632,625 and $624,122
Intangible assets, net of accumulated 335,833 371,666
amortization of $7,869,416 and
$7,833,583
Other assets 423,158 448,515
----------- -----------
Total assets $18,570,730 $20,082,455
=========== ===========
</TABLE>
(Continued)
<PAGE>
CONSOLIDATED BALANCE SHEETS
Page 2
<TABLE>
<CAPTION>
June 31, December 31,
1995 1994
------------ ------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $ 485,625 $ 1,752,555
Accrued expenses 1,387,971 1,499,702
Unearned revenue 388,889 777,778
Other current liabilities 30,551 14,124
------------ ------------
Total current liabilities 2,293,036 4,044,159
------------ ------------
Common stockholders' equity:
Common stock, $.01 par value,
30,000,000 authorized shares,
12,722,019 and 11,945,544
issued shares 127,220 119,455
Additional paid-in capital 82,633,827 79,706,292
Notes receivable from officers (441,118) (565,586)
Accumulated deficit (66,042,235) (63,221,865)
------------ ------------
Total common stockholders' equity 16,277,694 16,038,296
------------ ------------
Total liabilities and
stockholders' equity $ 18,570,730 $ 20,082,455
============ ============
</TABLE>
- -----------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS
MGI PHARMA, INC.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues:
Sales $ 1,061,294 $2,874,490 $ 1,998,434 $ 3,262,389
Licensing 639,018 196,430 1,976,503 301,067
Interest and other 253,819 198,515 489,822 398,134
----------- ---------- ----------- -----------
1,954,131 3,269,435 4,464,759 3,961,590
----------- ---------- ----------- -----------
Costs and Expenses:
Research and
development 1,691,801 1,361,061 3,239,596 2,544,397
Cost of sales 171,393 295,902 284,286 366,366
Selling, general and
administrative 1,626,220 2,327,324 3,725,414 4,121,157
Amortization of
intangibles 17,918 222,578 35,833 610,886
----------- ---------- ----------- -----------
3,507,332 4,206,865 7,285,129 7,642,806
----------- ---------- ----------- -----------
Net loss $(1,553,201) $ (937,430) $(2,820,370) $(3,681,216)
=========== ===========
Loss per common share $ (0.12) $ (008) $ (0.23) $ (0.32)
Weighted average number
of common shares
outstanding 12,600,159 11,691,818 12,277,368 11,651,778
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
MGI PHARMA, INC.
<TABLE>
<CAPTION>
Six Months Ended June 30,
----------------------------
1995 1994
------------- -------------
(unaudited) (unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (2,820,370) $ (3,681,216)
Adjustments for non-cash items:
Depreciation and asset amortization 92,027 679,366
Unearned revenue amortization (388,889) --
Facility rent abatement (39,264) (38,786)
Other 52,990 48,146
Change in operating assets and liabilities:
Receivables (35,169) 2,405,603)
Inventories 113,963 (681,265)
Prepaid expenses 386,375 (174,598)
Accounts payable and accrued expenses (1,324,170) (585,328)
Unearned strategic alliance revenue -- 1,166,667
Other current liabilities (9,807) (53,050)
------------ ------------
Net cash used in operating activities (3,972,314) (5,725,667)
------------ ------------
INVESTING ACTIVITIES:
Purchase of investments (11,665,926) (11,148,863)
Maturity of investments 10,709,458 15,526,066
Purchase of equipment and furniture (3,600) (77,227)
Other 149,825 (9,617)
------------ ------------
Net cash provided (used) by
investing activities (810,243) 4,290,359
------------ ------------
FINANCING ACTIVITIES:
Market value of strategic alliance stock
issuance -- 2,333,333
Proceeds from issuance of shares 2,837,687 --
Issuance of shares under stock
plans 70,857 388,040
------------ ------------
Net cash provided by financing
activities 2,908,544 2,721,373
------------ ------------
Increase (decrease) in cash and cash
equivalents (1,874,013) 1,286,065
Cash and cash equivalents at
beginning of period 6,728,006 4,684,085
------------ ------------
Cash and cash equivalents at
end of period $ 4,853,993 $ 5,970,150
============ ============
</TABLE>
- -----------------------------------
See accompanying notes to consolidated financial statements.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
MGI PHARMA, INC.
(1) Basis of Presentation
---------------------
MGI PHARMA, INC. ("MGI" or the "Company") is a pharmaceutical company that
acquires, develops and markets pharmaceuticals that address unmet medical needs.
The Company is initially focused on products that treat cancer or improve the
quality of life for cancer patients.
The consolidated financial statements include the accounts of the Company and
Molecular Genetics Research, Inc., its wholly owned subsidiary, for all periods
presented until it was merged into MGI and ceased to exist in November 1994.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of
normal, recurring accruals) considered necessary for fair presentation have been
included. Interim results may not be indicative of annual results. For further
information, refer to the consolidated financial statements and footnotes
included in the Company's report on Form 10-K for the year ended December 31,
1994.
(2) Loss Per Common Share
---------------------
Loss per common share is based upon the weighted average number of shares
outstanding during each period. Common stock equivalents are not included as
their effect is antidilutive.
(3) Short-Term Investments
----------------------
Held-to-maturity investments at June 30, 1995, including estimated fair value
based on quoted market prices or valuation models, are summarized in the
following table:
<TABLE>
<CAPTION>
Estimated
Cost Fair Value
---------- -----------
<S> <C> <C>
Eurodollar certificates 1,025,520 $ 1,025,520
Commercial paper 9,839,531 9,839,531
---------- -----------
Short-term investments 10,865,051 $10,865,051
========== ===========
</TABLE>
<PAGE>
(4) Inventories
-----------
Inventories at June 30, 1995, and December 31, 1994, are summarized in the
following table:
1995 1994
----------- ----------
Raw materials and supplies $ 18,486 $ 145,164
Work in process 185,608 14,676
Finished goods 1,068,852 1,227,069
----------- ----------
Total $1,272,946 $1,386,909
=========== ==========
Inventories are stated at the lower of cost or market. Cost is determined on a
first-in, first-out basis.
(5) Accrued Expenses
----------------
Accrued expenses at June 30, 1995, and December 31, 1994, are summarized in the
following table:
1995 1994
---------- ----------
Product development commitments $ 390,502 $ 477,358
Bonuses 302,712 226,776
Other accrued expenses 694,757 795,568
---------- ----------
$1,387,971 $1,499,702
========== ==========
(6) Strategic Alliance
------------------
During June 1994, in conjunction with granting Kissei Pharmaceutical Co., Ltd.,
a Japanese pharmaceutical company, an option to license commercial rights in
Japan for Salagen(R) Tablets, MGI issued 217,054 shares of common stock to
Kissei Pharmaceutical at a premium over market value. The issuance premium of
$1,166,667 will be amortized evenly through December 31, 1995, with the
unamortized balance of $388,889 at June 30, 1995 recorded as unearned licensing
revenue in the accompanying balance sheet. Proceeds of $3.5 million from the
stock issuance are being used to supplement funding of MGI's clinical studies
with Salagen(R) Tablets as a potential treatment for chronic dry mouth symptoms
resulting from Sjogren's syndrome.
(7) Stock Incentive Plans
---------------------
Under stock incentive plans, designated persons (including officers, directors
and employees) have been or may be granted rights to acquire Company common
stock. These rights include, but are not limited to, stock options, limited
stock appreciation rights and restricted stock units.
At June 30, 1995, 3,049,116 shares of common stock remain reserved for issuance
to employees and nonemployees of which 1,390,382 remain available for grant
(includes 150,500 authorized by the Company's Board of Directors for the purpose
of future technology acquisitions) and options to purchase 1,658,734 shares of
common stock were outstanding, of which 720,743 were
<PAGE>
exercisable. Options outstanding had a weighted average exercise price of $8.42
per share.
Loans to officers were made for their exercises of options and
payment of associated tax obligations. The loans are full recourse, unsecured
obligations with principal and accrued interest payable on demand. At June 30,
1995, $539,100 of principal remains outstanding. The portion required to
exercise options is presented as "Notes receivable from officers" within common
shareholders' equity and the remaining balance is presented as "Other assets" in
the accompanying balance sheet.
(8) Stockholders' Equity
--------------------
Changes in common stock and additional paid-in capital were as follows:
<TABLE>
<CAPTION>
Notes
Common stock Additional receivable
--------------------- paid-in from
Shares Par value capital officers
---------- --------- ----------- -----------
<S> <C> <C> <C> <C>
SIX MONTHS ENDED JUNE 30, 1994:
Balance at December 31, 1993 11,557,491 $115,575 $76,592,239 $(437,388)
Exercise of stock options 115,376 1,154 429,584 (133,650)
Employee stock purchase plan 9,882 99 89,729 --
Employee retirement savings
plan contribution 2,893 29 42,927 --
Strategic alliance issuance 217,054 2,170 2,331,163 --
---------- -------- ----------- ---------
Balance at June 30, 1994 11,902,696 $119,027 $79,485,642 $(571,038)
========== ======== =========== =========
SIX MONTHS ENDED JUNE 30, 1995:
Balance at December 31, 1994 11,945,544 $119,455 $79,706,292 $(565,586)
Exercise of stock options 5,700 57 25,218 --
Employee stock purchase plan 14,289 143 45,439 --
Employee retirement savings
plan contribution 6,486 65 26,691 --
Issuance of shares 750,000 7,500 2,830,187 --
Note payments -- -- -- 124,468
---------- -------- ----------- ---------
Balance at June 30, 1995 12,722,019 $127,220 $82,633,827 $(441,118)
========== ======== =========== =========
</TABLE>
In April 1995, MGI issued 750,000 shares of common stock to Dainippon
Pharmaceutical Co., Ltd. in conjunction with granting Dainippon an option to
license commercial rights in Japan for acylfulvenes, a family of early stage
anti-tumor compounds. Net proceeds of $2,837,687 were received from this
issuance.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
- ------------------------------------------------------------------------
Results of Operations
---------------------
Overview
- --------
MGI PHARMA, INC. ("MGI" or the "Company") is a pharmaceutical company which
acquires, develops and markets pharmaceuticals that address unmet medical needs.
The Company is initially focused on products that treat cancer or improve the
quality of life for cancer patients.
In March 1994, MGI received approval from the Food and Drug Administration to
market Salagen(R) Tablets for the treatment of radiation-induced dry mouth in
head and neck cancer patients. Product launch in the United States occurred
during the 1994 second quarter. The rate at which sales of Salagen(R) Tablets
increase will likely be the primary determinant of the Company's operating
results, rate of investment in development programs, and long-term financial
condition.
Commercialization of Salagen(R) Tablets outside the United States is being
accomplished through licensing and distributor relationships in various
geographic territories. In 1995, the Company entered into distributor
agreements in Taiwan and Israel. In 1994, license rights for Canada and Japan
were granted to The Upjohn Company of Canada and Kissei Pharmaceutical Co. Ltd.,
respectively, and follow the 1992 granting of license rights for Europe to
Chiron Therapeutics.
Results of Operations
- ---------------------
The Company's net loss of $1,553,201 in the 1995 second quarter compares with a
net loss of $937,430 in the corresponding 1994 period. The 1995 first half net
loss of $2,820,370 compares with a net loss of $3,681,216 in the corresponding
1994 period. The increased quarterly loss reflects the impact of the initial
stocking sales in the 1994 second quarter associated with the launch of
Salagen(R) Tablets. The decreased 1995 first half loss primarily reflects
increased licensing revenues due to the strategic alliance agreements with
Chiron Therapeutics and Kissei Pharmaceutical, including a $1 million non-
recurring milestone payment during the 1995 first quarter.
As a result of initial stocking sales of Salagen(R) Tablets in the 1994 second
quarter, sales revenues in both the 1995 second quarter and first half declined
compared to corresponding 1994 periods. Sales revenues in the last four
consecutive quarters have been $405,405, $608,233, $937,140 and $1,061,294,
respectively. These increases were comprised of increasing sales of Salagen(R)
Tablets, partially reduced by continuation of the long-term decline in sales of
DIDRONEL(R) I.V. Infusion.
A pattern of substantially increasing sales revenues is critical for achievement
of management's goal of making MGI sustainably profitable. Sales revenues of
Salagen(R) Tablets increased 31% from the first quarter to
<PAGE>
the second quarter of 1995, following a 101% increase in the prior quarter.
Management has been disappointed with the 1995 rate of sales growth and degree
of market penetration for Salagen(R) Tablets.
Due to the impact of higher sales volume in 1994 associated with the initial
stocking sales, cost of sales decreased 42% from $295,902 in the 1994 second
quarter to $171,393 in the 1995 second quarter, and decreased 22% from $366,366
in the 1994 first half to $284,286 in the 1995 first half. Management believes
future cost of sales as a percent of sales will be significantly influenced by
the unit sales volume of Salagen(R) Tablets, because fixed production costs will
be allocated across a larger base of production activity if unit sales increase.
Licensing revenues increased 225% from $196,430 in the 1994 second quarter to
$639,018 in the 1995 second quarter, and increased 556% from $301,067 in the
1994 first half to $1,976,503 in the 1995 first half. The quarterly increase is
primarily due to a $250,000 payment received from Dainippon Pharmaceutical Co.,
Ltd. ("Dainippon") in conjunction with granting Dainippon a six month option to
acquire a license for the right to develop and market acylfulvenes, a family of
early stage anti-tumor compounds, in Japan. The 1995 first half increase is
primarily due to a non-recurring $1 million milestone payment from Chiron
Therapeutics following approval of Salagen(R) Tablets for marketing in the
United Kingdom. Future licensing revenues will likely fluctuate from one
quarter to the next and between years depending on current partners achievement
of milestones and the amount of their recurring royalty generating activities,
and the timing of initiating additional license relationships.
Interest and other income increased 28% from $198,515 in the 1994 second quarter
to $253,819 in the 1995 second quarter, and increased 23% from $398,134 in the
1994 first half to $489,822 in the 1995 first half. The 1995 increases result
from increased investment yields, partially reduced by decreases in funds
available for investment. Until the Company realizes positive cash flow,
whether from operations or outside funding, funds available for investments will
continue to decline. Interest income would also decline, assuming yields remain
constant.
Total research and development expense increased 24% from $1,361,061 in the 1994
second quarter to $1,691,801 in the 1995 second quarter, and increased 27% from
$2,544,397 in the 1994 first half to $3,239,596 in the 1995 first half.
Expenses in 1995 primarily include continued development of Salagen(R) Tablets,
especially toward expansion of the approved indication, and of acylfulvenes, a
family of early stage anti-tumor compounds.
Research and development expenses will likely fluctuate from one quarter to the
next and between years depending on the phase of development for individual
programs and the timing of these phases across all programs. In addition, the
Company's pace of development will be influenced by continued safe and
efficacious results from Company studies, regulatory decisions, and competitive
circumstances.
<PAGE>
Selling, general and administrative expenses decreased 30% from $2,327,324 in
the 1994 second quarter to $1,626,220 in the 1995 second quarter, and decreased
10% from $4,121,157 in the 1994 first half to $3,725,414 in the 1995 first half.
The decreases primarily result from the effect of non-recurring 1994 selling
expenses associated with the launch of Salagen(R) Tablets in the second quarter
of 1994.
Using the purchase method of accounting to record acquisition of DIDRONEL(R)
I.V. Infusion, acquired intangible assets were recorded at their estimated fair
market value at their acquisition in 1990. The purchase price in excess of
these values is recorded as goodwill. These assets are being amortized over
their estimated useful lives (generally within five years, but ranging up to
fifteen years) on a straight-line basis which resulted in $222,578 and $17,919
of amortization expense in the second quarters of 1994 and 1995, respectively,
and $610,886 and $35,833 of amortization expense in the first halves of 1994 and
1995, respectively. Amortization of recognized intangible assets will result in
relatively nominal annual expense during the remainder of the amortization
period.
Liquidity and Capital Resources
- -------------------------------
At June 30, 1995, the Company had cash and cash equivalents and investments of
$15,719,044 and working capital of $15,277,130 compared to $16,636,590 and
$14,858,722, respectively, at December 31, 1994. During the six month period
ended June 30, 1995, the Company used cash of $3,972,314 to fund its operating
activities, and received $2,837,687 of cash from the issuance of shares in
conjunction with the licensing option granted to Dainippon.
Cash in excess of current operating needs is invested in marketable debt
securities in accordance with the Company's investment policy. This policy
emphasizes principal preservation, so it requires strong issuer credit ratings
and limits the amount of credit exposure from any one issuer or industry.
The Company recognizes that substantial amounts of capital will be required to
finance continuing product development and commercialization efforts. The
degree to which commercialization of Salagen(R) Tablets is successful will
influence future spending decisions. Actual expenditures will depend on, among
other things: the outcome of product development opportunities which may become
available to the Company in the future, including acquisitions and other
business combinations; the outcome of marketing initiatives and strategic
marketing decisions; delays or changes in governmentally required testing and
approval procedures; and technological and competitive developments.
To meet financing requirements, the Company will utilize existing liquid assets,
interest earned thereon and other internally generated funds. In addition, the
Company expects to continue to seek financial assistance from other sources,
including contributions by others to joint ventures and other collaborative
arrangements for developing, testing, manufacturing and marketing products. MGI
may also finance working capital requirements and capital expenditures through
borrowings, lease arrangements, additional equity offerings or other financing
techniques.
<PAGE>
MGI PHARMA, INC.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
- ------------------------------------------------------------
The Company held its Annual Meeting of Shareholders on May 9, 1995 and
sufficient favorable votes were cast to approve all management proposals as
follows:
. Election of management's entire slate of six directors by the following
vote tallies:
<TABLE>
<CAPTION>
For Withhold
--------- --------
<S> <C> <C>
Frederick W. Armstrong 9,995,593 455,219
Charles E. Austin 9,998,600 452,212
Hugh E. Miller 9,997,757 453,055
Robert W. Powell, Jr. 9,993,580 457,232
Lee J. Schroeder 9,982,475 468,337
Kenneth F. Tempero 9,908,959 541,853
</TABLE>
. Ratification of independent auditors by a vote of 10,126,864 for, 261,150
against and 62,798 abstaining.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) LISTING OF EXHIBITS:
11 Computation of Net Loss Per Common Share
27 Financial Data Schedule
(b) REPORTS ON FORM 8-K
There were no reports on Form 8-K filed during the three months ended
June 30, 1995.
<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.
MGI PHARMA, INC.
Date August 1, 1995 By /s/ James V. Adam
-------------- -----------------------------
James V. Adam, Vice President,
Chief Financial Officer
(authorized signatory and
principal financial officer)
<PAGE>
MGI PHARMA, INC.
Quarterly Report on Form 10-Q
for the
Quarter Ended June 30, 1995
EXHIBIT INDEX
-------------
. Sequentially
Exhibit Numbered
Number Description Page
------ ----------- ------------
11 Computation of Net Loss per Common Share
27 Financial Data Schedule
<PAGE>
Exhibit 11
COMPUTATION OF NET LOSS PER COMMON SHARE
(unaudited)
MGI PHARMA, INC.
The following information is required in computations of primary and fully
diluted loss per common share for each period:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
LOSS:
Net loss $(1,553,201) $ (937,430) $(2,820,370) $(3,681,216)
COMMON SHARES:
Adjusted weighted
shares
outstanding (a) 12,600,159 11,691,818 12,277,368 11,651,778
LOSS PER COMMON SHARE:
Net loss $ (0.12) $ (0.08) $ (0.23) $ (0.32)
</TABLE>
(a) Net loss per common share shown on the face of the statements of operations
is the equivalent of a simple capital structure presentation since it excludes
common stock equivalents as their effect is antidilutive. There are no pro
forma fully diluted share outstanding adjustments, so primary and fully diluted
share amounts are identical.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from the
accompanying consolidated balance sheet of MGI PHARMA, INC as of June 30, 1995
and the related consolidated statement of operations for the six months ended
June 30, 1995 and is qualified in its entirety by reference to such financial
statements.</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 4,853,993
<SECURITIES> 10,865,051
<RECEIVABLES> 318,805
<ALLOWANCES> 326,788
<INVENTORY> 1,272,946
<CURRENT-ASSETS> 17,520,166
<PP&E> 291,573
<DEPRECIATION> 632,625
<TOTAL-ASSETS> 18,570,730
<CURRENT-LIABILITIES> 2,293,036
<BONDS> 0
<COMMON> 16,277,694
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 18,570,730
<SALES> 1,998,434
<TOTAL-REVENUES> 4,464,759
<CGS> 284,286
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,239,596
<LOSS-PROVISION> 6,498
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,820,370)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,820,370)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,820,370)
<EPS-PRIMARY> (.23)
<EPS-DILUTED> (.23)
</TABLE>
