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 March 31, 2000
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 0-13634
MACROCHEM CORPORATION
---------------------
(Exact name of registrant as specified in its charter)
Delaware 04-2744744
- -------------------------------- ------------------
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
110 Hartwell Avenue, Lexington, Massachusetts 02421-3134
--------------------------------------------------------
(Address of principal executive offices, Zip Code)
781-862-4003
------------
(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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at May 15, 2000:
- ---------------------------- ---------------------------
Common Stock, $.01 par value 22,452,173
<PAGE>
MACROCHEM CORPORATION
INDEX TO FORM 10-Q
------------------
Page Number
-----------
PART I FINANCIAL INFORMATION
Item 1 Unaudited Financial Statements
Balance Sheets
March 31, 2000 and December 31, 1999 3
Statements of Operations
Three Months Ended March 31, 2000 and 1999 4
Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999 5
Notes to Unaudited Financial Statements 6-7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
Item 3 Quantitative and Qualitative Disclosures About Market Risk 10-11
PART II OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 11
SIGNATURES 12
2
<PAGE>
Item 1. Financial Statements
<TABLE>
<CAPTION>
MACROCHEM CORPORATION
BALANCE SHEETS
(Unaudited)
(Amounts in thousands except share data)
March 31, December 31,
2000 1999
---------- ------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 13,583 $ 15,183
Accounts receivable 43 67
Receivable due from related party 21 21
Prepaid expenses and other current assets 268 166
------ ------
Total current assets 13,915 15,437
------ ------
Property and equipment, net 394 375
------ ------
Other assets:
Patents, net 503 471
Deposits 29 29
------ ------
Total other assets 532 500
------ ------
Total assets $ 14,841 $ 16,312
====== ======
LIABILITIES
Current liabilities:
Accounts payable $ 74 $ 71
Accrued expenses 273 492
Deferred compensation and related
accrued interest 97 96
------ ------
Total current liabilities 444 659
Deferred revenue --- 500
------ ------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred Stock --- ---
Common Stock, $.01 par value, 60,000,000 shares authorized;
22,615,120 and 22,597,564 shares issued at March 31,
2000 and December 31, 1999, respectively 226 226
Additional paid-in capital 49,469 49,387
Accumulated deficit (34,202) (33,295)
Unearned compensation ( 302) ( 382)
Less treasury stock, at cost, 162,947 and 160,165 shares at
March 31, 2000 and December 31, 1999, respectively ( 794) ( 783)
------ ------
Total stockholders' equity 14,397 15,153
Total liabilities and stockholders' equity $ 14,841 $ 16,312
====== ======
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
3
<PAGE>
MACROCHEM CORPORATION
STATEMENTS OF OPERATIONS
For the three months ended March, 31 2000 and 1999
(Unaudited)
(Amounts in thousands except per share data)
For the three months ended March 31,
------------------------------------
2000 1999
---- ----
Research contract revenues $ 543 $ 59
Costs and expenses:
Research and development 1,026 1,550
Marketing, general and administrative 604 778
Consulting fees with related parties 12 12
------ ------
Total costs and expenses 1,642 2,340
------ ------
Loss from operations ( 1,099) ( 2,281)
Other income (expense):
Interest income 193 225
Interest expense ( 1) ( 1)
------ ------
Total other income 192 224
------ ------
Net loss $( 907) $( 2,057)
====== ======
Net loss per common share - basic and diluted $( 0.04) $( 0.09)
====== ======
Weighted average common shares
Outstanding (basic and diluted) 22,438 22,179
====== ======
The accompanying notes are an integral part of these unaudited financial
statements.
4
<PAGE>
<TABLE>
<CAPTION>
MACROCHEM CORPORATION
STATEMENTS OF CASH FLOWS
For the three months ended March 31, 2000 and 1999
(Unaudited)
(Amounts in thousands)
For the three months ended March 31,
------------------------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $( 907) $( 2,057)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 47 53
Stock-based compensation 94 324
401(k) contribution in Company common stock 16 19
Changes in assets and liabilities:
Accounts receivable 24 5
Prepaid expenses and other current assets ( 102) 11
Accounts payable and accrued expenses and other liabilities ( 216) ( 382)
Deferred compensation and related accrued interest 1 1
Deferred revenue ( 500) ---
------ ------
Net cash used by operating activities ( 1,543) ( 2,026)
------ ------
Cash flows from investing activities:
Expenditures for property and equipment ( 61) ( 100)
Additions to patents ( 37) ( 16)
------ ------
Net cash used for investing activities ( 98) ( 116)
------ ------
Cash flows from financing activities:
Purchases of treasury stock ( 21) ---
Proceeds from exercise of common stock options 62 137
------ ------
Net cash provided from financing activities 41 137
------ ------
Net change in cash and cash equivalents ( 1,600) ( 2,005)
Cash and cash equivalents at beginning of period 15,183 20,504
------ ------
Cash and cash equivalents at end of period $ 13,583 $ 18,499
====== ======
</TABLE>
The accompanying notes are an integral part of these unaudited financial
statements.
5
<PAGE>
MACROCHEM CORPORATION
NOTES TO UNAUDITED FINANCIAL STATEMENTS
(1) Basis of Presentation
---------------------
The financial statements included herein have been prepared by
MacroChem Corporation ("MacroChem" or the "Company") without audit,
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. In the opinion of management, the
accompanying unaudited financial statements include all adjustments
(consisting only of normal recurring adjustments) necessary to present
fairly the financial position, results of operations and cash flows of
the Company at the dates and the periods indicated. The unaudited
financial statements included herein should be read in conjunction with
the audited financial statements and the notes thereto included in the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1999.
The results disclosed in the Statement of Operations for the three
months ended March 31, 2000 are not necessarily indicative of the
results to be expected for the full year.
MacroChem is a biopharmaceutical company engaged in the development and
commercialization of a portfolio of products through the application of
SEPA(R) (Soft Enhancer of Percutaneous Absorption), its patented
topical drug delivery technology.
(2) Basic and Diluted Loss Per Share
--------------------------------
<TABLE>
<CAPTION>
The following table sets forth the computation of basic and diluted
loss per share:
Three Months Ended March 31,
---------------------------
2000 1999
---------- -----------
<S> <C> <C>
Numerator for basic and diluted loss per share:
Net loss $ 907,000 $ 2,057,000
========== ==========
Denominator for basic and diluted loss per share:
Weighted average shares outstanding 22,438,000 22,179,000
========== ==========
Net loss per share - basic $ 0.04 $ 0.09
========== ==========
Net loss per share - diluted $ 0.04 $ 0.09
========== ==========
</TABLE>
During the three month period ended March 31, 2000, securities not
included in the computation of diluted earnings per share, because
their exercise price exceeded the average market price during the
period, were options to purchase 835,450 shares of Common Stock at
prices ranging from $6.56 to $12.69, and with expiration dates ranging
up to February 8, 2009. Additionally, during the three month period
ended March 31, 2000, securities not included in the computation of
diluted earnings per share, because they would have an anti-dilutive
effect due to the net loss for the period, were options to purchase
3,160,175 shares of Common Stock at prices ranging from $0.44 to $6.06
and with expiration dates ranging up to February 7, 2010.
6
<PAGE>
During the three month period ended March 31, 1999, securities not
included in the computation of diluted earnings per share, because
their exercise price exceeded the average market price during the
period, were options to purchase 368,000 shares of Common Stock at
prices ranging from $11.00 to $12.69, and with expiration dates ranging
up to May 22, 2008. Additionally, during the three month period ended
March 31, 1999, securities not included in the computation of diluted
earnings per share, because they would have an anti-dilutive effect due
to the net loss for the period, were options to purchase 3,601,637
shares of Common Stock at prices ranging from $0.44 to $8.50 and with
expiration dates ranging up to February 8, 2009.
(3) Stockholders'Equity
--------------------
The Company granted 13,000 Common Stock Options under the 1994 Equity
Incentive Plan (the "1994 Plan") during the three months ended March
31, 2000. During this same period, 16,666 options under the 1994 Plan
were exercised. In addition, no options under the 1994 Plan were
canceled in the three month period. All options were issued with an
exercise price at the fair market value of the underlying common stock
determined on the date of grant.
(4) Comprehensive Income
--------------------
The Company reports comprehensive income in accordance with Statement
of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income", which requires businesses to disclose
comprehensive income and its components in their general-purpose
financial statements. Comprehensive income (loss) is equal to the
Company's net loss for the three months ended March 31, 2000 and 1999.
(5) Recent Accounting Pronouncements
--------------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts (collectively
referred to as derivatives), and for hedging activities. SFAS No. 133
requires companies to recognize all derivatives as either assets or
liabilities, with the instruments measured at fair value. The
accounting for changes in fair value, gains or losses, depends on the
intended use of the derivative and its resulting designation.
Management has not yet determined whether the effect of adopting SFAS
No. 133 will be material to the Company's financial position or results
of operations.
In June 1999, the FASB issued SFAS No. 137 which defers the effective
date of adoption of SFAS No. 133 to fiscal years beginning after
June 15, 2000.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
- -------
MacroChem Corporation's primary business is the development of pharmaceutical
products for commercialization by employing SEPA(R) (Soft Enhancer of
Percutaneous Absorption), its patented topical drug delivery technology. SEPA
compounds, when properly combined with drugs, provide pharmaceutical
formulations (creams, gels, solutions, etc.) that enhance the transdermal
delivery of drugs into the skin or into the bloodstream. The Company currently
derives no significant revenue from product sales, royalties or license fees.
The Company plans to develop specific SEPA formulations for use with proprietary
and non-proprietary drugs manufactured by pharmaceutical companies, and to
commercialize these products through the formation of partnerships, strategic
alliances and license agreements with those companies. In order to attract
strategic partners, the Company is conducting clinical testing of certain
SEPA-enhanced drugs.
The Company's results of operations can vary significantly from year to year and
quarter to quarter, and depend, among other factors, on the signing of new
licenses and product development agreements, the timing of revenues recognized
pursuant to license agreements, the achievement of milestones by licensees, the
progress of clinical trials conducted by the licensees and the Company and the
degree of research, marketing and administrative effort. The timing of the
Company's revenues may not match the timing of the Company's associated product
development expenses. To date, research and development expenses have generally
exceeded revenue in any particular period and/or fiscal year.
AMERICAN HOME PRODUCTS LICENSE AGREEMENT
The Company was notified by American Home Products ("AHP"), that AHP, for
internal strategic reasons, was terminating its License and Stock Purchase
Agreement between the Company and AHP (the "AHP Agreement") related to the
development of a SEPA-based product. All rights to the subject product reverted
to the Company and the Company is continuing to develop and seek licensees for
the product.
As a result of the termination of the AHP Agreement, the Company recognized
$500,000 in deferred revenue in the quarter ended March 31, 2000.
Results of Operations
- ---------------------
Revenues, consisting of research contract revenues, increased $484,000, or 820%,
to $543,000 in the three month period ended March 31, 2000 from $59,000 in the
three month period ended March 31, 1999. Research contract revenues are
represented by one research contract related to the Company's proprietary SEPA
technology. The increase in revenues during the three month period ended March
31, 2000 is a result of the Company's recognition of $500,000 in deferred
revenue upon the termination of the AHP Agreement.
Research and development expenses decreased $524,000, or 34%, to $1,026,000 in
the three month period ended March 31, 2000 from $1,550,000 in the three month
period ended March 31, 1999. This decrease is primarily attributable to
completion during 1999 of various Phase I/II clinical trials of the Company's
product candidates. The Company expects to initiate additional clinical testing
of its lead products during 2000.
Marketing, general and administrative expenses decreased $174,000, or 22%, to
$604,000 in the three months ended March 31, 2000 from $778,000 in the three
8
<PAGE>
month period ended March 31, 1999. The decrease is primarily attributable to
reductions in stock compensation charges, legal fees, and consulting fees with
financial advisors and an investment banker. These decreases were partially
offset by an increase in rent expense which is due to additional office and
laboratory space leased by the Company.
Other income decreased $32,000, or 14%, to $192,000 in the three month period
ended March 31, 2000 from $224,000 in the three month period ended March 31,
1999 primarily due to lower balances of cash and cash equivalents resulting from
funds used in Company operations.
For the reasons described above, net loss decreased $1,150,000, or 56%, to
$907,000 in the three month period ended March 31, 2000 from $2,057,000 in the
three month period ended March 31, 1999.
Liquidity and Capital Resources
- -------------------------------
Since inception, the primary source of funding for the Company's operations has
been the private and public sale of its securities, and to a lesser extent, the
licensing of its proprietary technology and products, government grants and the
limited sales of products and test materials. During the first three months of
2000, the Company received aggregate net proceeds of approximately $62,000 from
the exercise of stock options, compared to approximately $137,000 for the three
months ended March 31, 1999.
At March 31, 2000 working capital was approximately $13,471,000, compared to
$14,778,000 at December 31, 1999. The reduction in the Company's working capital
was due primarily to the cash used by operating activities. Until such time as
the Company obtains agreements with third-party licensees or partners to provide
funding for the Company's anticipated business activities or the Company is able
to obtain funds through the private or public sale of its securities, the
Company's working capital will be utilized primarily to fund its operating
activities.
Pursuant to a plan approved by the Company's Board of Directors, the Company is
authorized to repurchase 1,000,000 shares of its Common Stock to be held as
treasury shares for future use. During the three month period ended March 31,
2000, the Company repurchased 5,000 shares of Common Stock at a cost of $21,000.
At March 31, 2000, 162,947 repurchased shares remain available for future use
and 807,650 shares remain available for repurchase under the plan.
Capital expenditures and additional patent development costs for the three
months ended March 31, 2000 were approximately $98,000. The Company anticipates
capital expenditures of approximately $202,000 for the remainder of the current
year.
The Company's long term capital requirements will depend upon numerous factors,
including the progress of the Company's research and development programs; the
resources that the Company devotes to self-funded clinical testing of
SEPA-enhanced compounds, proprietary manufacturing methods and advanced
technologies; the ability of the Company to enter into additional licensing
arrangements or other strategic alliances; the ability of the Company to
manufacture products under those arrangements and the demand for its products or
the products of its licensees or strategic partners if and when approved for
sale by regulatory authorities. In any event, substantial additional funds will
be required before the Company is able to generate revenues sufficient to
support its operations. There is no assurance that the Company will be able to
obtain such additional funds on favorable terms, if at all. The Company's
inability to raise sufficient funds could require it to delay, scale back or
eliminate certain research and development programs.
The Company believes that its existing cash and cash equivalents will be
sufficient to meet its operating expenses and capital expenditure requirements
9
<PAGE>
for at least the next twelve months. The Company's cash requirements may vary
materially from those now planned because of changes in focus and direction of
the Company's research and development programs, competitive and technical
advances, patent developments or other developments. It is not believed that
inflation will have any significant effect on the results of the Company's
operations.
Year 2000 Compliance
- --------------------
The Company's Year 2000 compliance programs were completed on time. The
Company's business has not been adversely affected due to the failure of key
third parties to successfully complete the Year 2000 conversion. Although there
can be no assurance that all of the Company's material third-party relationships
had successful conversion programs, management does not expect that any such
failure would have a material adverse effect on the financial position, results
of operations or liquidity of the Company. The costs of the Company's Year 2000
program to date have not been material, and the Company knows of no further
required modifications to its information technology or embedded technology
systems that would have a material impact on its financial position, results of
operations or liquidity.
Future Adoption Of Accounting Pronouncements
- --------------------------------------------
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). SFAS No. 133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives), and for hedging
activities. SFAS No. 133 requires companies to recognize all derivatives as
either assets or liabilities, with the instruments measured at fair value. The
accounting for changes in fair value, gains or losses, depends on the intended
use of the derivative and its resulting designation. Management has not yet
determined whether the effect of adopting SFAS No. 133 will be material to the
Company's financial position or results of operations.
In June 1999, the FASB issued SFAS No. 137 which defers the effective date of
adoption of SFAS No. 133 to fiscal years beginning after June 15, 2000.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
CASH AND CASH EQUIVALENTS
As of March 31, 2000, the Company is exposed to market risks which relate
primarily to changes in U.S. interest rates. The Company's cash equivalents are
subject to interest rate risk and will decline in value if interest rates
increase. Due to the short duration of these financial instruments, three months
or less, changes to interest rates would not have a material effect upon the
Company's financial position. A hypothetical 10% change in interest rates would
result in an increase or decrease of approximately $19,000 on interest income
within the Company's statement of operations for the three months ended March
31, 2000.
THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY FROM THE
RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS IN THIS REPORT AND IN
FORWARD-LOOKING STATEMENTS MADE FROM TIME TO TIME BY THE COMPANY ON THE BASIS OF
MANAGEMENT'S THEN-CURRENT EXPECTATIONS. FACTORS THAT MIGHT CAUSE SUCH A
DIFFERENCE INCLUDE, BUT ARE NOT LIMITED TO THE FOLLOWING: THE COMPANY'S HISTORY
10
<PAGE>
OF OPERATING LOSSES AND NEED FOR CONTINUED WORKING CAPITAL; TECHNOLOGICAL
UNCERTAINTY RELATING TO TRANSDERMAL DRUG DELIVERY SYSTEMS AND THE EARLY STAGE OF
DEVELOPMENT OF THE COMPANY'S PROPOSED PRODUCTS; THE COMPANY'S NEED FOR
SIGNIFICANT ADDITIONAL PRODUCT DEVELOPMENT EFFORTS AND ADDITIONAL FINANCING;
UNCERTAINTIES RELATED TO CLINICAL TRIALS OF THE COMPANY'S PROPOSED PRODUCTS; THE
COMPANY'S DEPENDENCE ON THIRD PARTIES FOR COMMERCIALIZATION; NO ASSURANCE OF
LICENSE ARRANGEMENTS; THE LACK OF SUCCESS OF THE COMPANY'S PRIOR DEVELOPMENT
EFFORTS; UNCERTAINTIES RELATING TO GOVERNMENT REGULATION AND REGULATORY
APPROVALS; THE COMPANY'S DEPENDENCE ON THIRD PARTIES FOR THE FDA APPLICATION
PROCESS; THE COMPANY'S LACK OF EXPERIENCED MARKETING PERSONNEL AND DEPENDENCE ON
THIRD PARTIES FOR MARKETING AND DISTRIBUTION; THE COMPANY'S DEPENDENCE ON THIRD
PARTIES FOR MANUFACTURING; THE COMPANY'S RELIANCE ON KEY EMPLOYEES, THE LIMITED
PERSONNEL OF THE COMPANY AND ITS DEPENDENCE ON ACCESS TO SCIENTIFIC TALENT;
UNCERTAINTIES RELATING TO COMPETITION, PATENTS AND PROPRIETARY TECHNOLOGY;
UNCERTAINTIES RELATING TO RISKS OF PRODUCT LIABILITY CLAIMS, LACK OF PRODUCT
LIABILITY INSURANCE, AND EXPENSE AND DIFFICULTY OF OBTAINING ADEQUATE INSURANCE
COVERAGE; UNCERTAINTY OF PHARMACEUTICAL PRICING AND RELATED MATTERS; AND OTHER
FACTORS. ADDITIONAL INFORMATION ON THESE AND OTHER FACTORS WHICH COULD AFFECT
THE COMPANY'S ACTUAL RESULTS AND EXPERIENCE ARE INCLUDED IN THE COMPANY'S ANNUAL
REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999 AND, IN PARTICULAR, THE
SECTION ENTITLED "RISK FACTORS".
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed herewith:
27. Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter
for which this report is filed.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MacroChem Corporation
---------------------
(Registrant)
May 15, 2000 /s/ Alvin J. Karloff
--------------------
Alvin J. Karloff
President and Chief Executive
Officer
(Principal Executive Officer)
/s/ Kenneth L. Rice, Jr.
------------------------
Kenneth L. Rice, Jr.
Chief Financial Officer, Treasurer,
and Secretary
(Principal Financial Officer)
12
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's balance sheet, statement of operations, statement of stockholders'
equity and statement of cash flows and is qualified in its entirety by reference
to such financial statements.
</LEGEND>
<CIK> 0000743884
<NAME> MacroChem Corporation
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-1-2000
<PERIOD-END> Mar-31-2000
<EXCHANGE-RATE> 1
<CASH> 13,583,000
<SECURITIES> 0
<RECEIVABLES> 43,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 13,915,000
<PP&E> 1,366,000
<DEPRECIATION> 973,000
<TOTAL-ASSETS> 14,841,000
<CURRENT-LIABILITIES> 444,000
<BONDS> 0
0
0
<COMMON> 226,000
<OTHER-SE> 14,171,000
<TOTAL-LIABILITY-AND-EQUITY> 14,841,000
<SALES> 0
<TOTAL-REVENUES> 543,000
<CGS> 0
<TOTAL-COSTS> 1,642,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,000)
<INCOME-PRETAX> (907,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (907,000)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
