<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
---------
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD 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: 0-016607
ADVANCED TISSUE SCIENCES, INC.
(Exact name of registrant as specified in charter)
---------
Delaware 14-1701513
-------------- ----------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10933 North Torrey Pines Road
La Jolla, California 92037
- - ----------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (619) 450-5730
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 / /
The number of shares of the Registrant's Common Stock, par value $.01 per
share, outstanding at May 1, 1995 was 30,571,793.
<PAGE>
ADVANCED TISSUE SCIENCES, INC.
(A Development Stage Company)
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1995
INDEX
-----
Part I - Financial Information Page
- - ------------------------------ ----
Item 1 - Financial Statements
Introduction to the Financial Statements............. 1
Consolidated Balance Sheet -
March 31, 1995 and December 31, 1994................. 2
Consolidated Statement of Operations -
Three Months Ended March 31, 1995 and 1994
and Cumulative January 21, 1986 (inception)
to March 31, 1995.................................. 3
Consolidated Statement of Cash Flows -
Three Months Ended March 31, 1994 and 1994
and Cumulative January 21, 1986 (inception)
to March 31, 1995.................................. 4
Consolidated Statement of Stockholders' Equity -
Three Months Ended March 31, 1995.................... 5
Notes to the Consolidated Financial Statements....... 6-7
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations........ 8-10
Part II - Other Information
- - ---------------------------
Item 6 - Exhibits and Reports on Form 8-K....................... 11
Signature......................................................... 11
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1 - FINANCIAL STATEMENTS
INTRODUCTION TO THE FINANCIAL STATEMENTS
The financial statements have been prepared by Advanced Tissue Sciences,
Inc. (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. The Company believes that the
disclosures are adequate to make the information presented not misleading when
read in conjunction with the financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.
The financial information presented in this Quarterly Report on Form 10-Q
reflects all adjustments, consisting only of normal recurring adjustments,
which are, in the opinion of management, necessary for a fair statement of the
results for the interim periods presented. The results for the interim
periods are not necessarily indicative of results to be expected for the full
year.
-1-
<PAGE>
ADVANCED TISSUE SCIENCES, INC.
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
Dollars in Thousands
<TABLE>
<CAPTION>
March 31, December 31,
1995 1994
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 12,378 $ 12,417
Short-term investments 3,636 9,616
Prepaid expenses 846 861
Other current assets 1,215 1,183
---------- ----------
Total current assets 18,075 24,077
Property - net 8,353 8,374
Patent costs - net 851 824
Other assets 158 151
---------- ----------
Total assets $ 27,437 $ 33,426
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of obligations under
capital leases $ 10 $ 10
Accounts payable 1,096 1,850
Accrued expenses 3,516 3,180
---------- ----------
Total current liabilities 4,622 5,040
---------- ----------
Long-term portion of obligations under
capital leases 34 36
---------- ----------
Stockholders' equity:
Preferred Stock, 1,000,000 authorized shares;
none issued -- --
Common Stock, $.01 par value; 50,000,000
authorized shares; issued and outstanding,
30,570,993 shares at March 31, 1995 and
30,568,713 shares at December 31, 1994 306 306
Additional paid-in capital 121,608 121,600
Deficit accumulated during development stage (99,133) (93,556)
---------- ----------
Total stockholders' equity 22,781 28,350
---------- ----------
Total liabilities and stockholders' equity $ 27,437 $ 33,426
========== ==========
</TABLE>
See the accompanying notes to the consolidated financial statements.
-2-
<PAGE>
ADVANCED TISSUE SCIENCES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF OPERATIONS
In Thousands, Except Per Share Amounts
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
January 21,
1986
Three Months Ended March 31, (inception)
---------------------------- to March 31,
1995 1994 1995
---------- --------- ------------
<S> <C> <C> <C>
Revenues:
Product sales $ 261 $ 363 $ 3,960
Contract and fees 561 30 5,183
Interest and other 283 266 5,881
---------- --------- ----------
Total revenues 1,105 659 15,024
---------- --------- ----------
Costs and expenses:
Research and development 4,406 3,799 50,868
Selling, general and administrative 1,460 1,599 27,123
Professional and consulting 468 403 8,845
Cost of goods sold 346 375 4,950
Interest 2 2 545
In-process technology and other -- -- 21,826
---------- --------- ----------
Total costs and expenses 6,682 6,178 114,157
---------- --------- ----------
Net loss $ (5,577) $ (5,519) $ (99,133)
========== ========= ==========
Net loss per share $ (.18) $ (.19)
========== =========
Weighted average number of common
shares used in computation of
net loss per share 30,571 29,297
========== =========
</TABLE>
See the accompanying notes to the consolidated financial statements.
-3-
<PAGE>
ADVANCED TISSUE SCIENCES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CASH FLOWS
Dollars in Thousands
(Unaudited)
<TABLE>
<CAPTION>
Cumulative
January 21,
1986
Three Months Ended March 31, (inception)
---------------------------- to March 31,
1995 1994 1995
--------- --------- ----------
<S> <C> <C> <C>
Operating activities:
Net loss $ (5,577) $ (5,519) $ (99,133)
Adjustments to reconcile net
loss to cash used in operating
activities:
Depreciation and amortization 291 267 3,811
Write-off of acquired in-process
technology -- -- 21,000
Compensation for services paid
in stock or stock options -- -- 1,493
Other adjustments to net loss 3 3 287
Change in assets and liabilities:
Prepaid expenses and other current
assets (17) (300) (2,061)
Other assets (7) 149 29
Accounts payable (754) (430) 1,096
Accrued expenses 336 (793) 3,516
--------- --------- ----------
Net cash used in operating
activities (5,725) (6,623) (69,962)
--------- --------- ----------
Investing activities:
Purchases of short-term
investments (787) (15,724) (119,828)
Sales of short-term investments 6,767 3,386 116,192
Acquisition of property (266) (1,760) (9,969)
Patent application costs (34) (30) (1,025)
--------- --------- ----------
Net cash provided by (used in)
investing activities 5,680 (14,128) (14,630)
--------- --------- ----------
Financing activities:
Proceeds from borrowings -- -- 529
Payments of borrowings (2) (1) (2,899)
Loans received from officers -- -- 1,132
Payment of loan to shareholders -- -- (50)
Net proceeds from sale of equity -- 26,214 91,194
Options exercised 8 30 7,335
Purchase of options and other -- -- (271)
--------- --------- ----------
Net cash provided by financing
activities 6 26,243 96,970
--------- --------- ----------
Net increase (decrease) in cash
and cash equivalents (39) 5,492 12,378
Cash and cash equivalents at the
beginning of period 12,417 18,308 --
--------- --------- ----------
Cash and cash equivalents at the
end of period $ 12,378 $ 23,800 $ 12,378
========= ========= ==========
</TABLE>
See the accompanying notes to the consolidated financial statements.
-4-
<PAGE>
ADVANCED TISSUE SCIENCES, INC.
(A Development Stage Company)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
In Thousands, Except Per Share Amounts
(Unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During Total
--------------- Paid-In Development Stockholders'
Shares Amount Capital Stage Equity
------ ------ --------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Balance December 31,
1994 30,569 $ 306 $ 121,600 $ (93,556) $ 28,350
Options exercised (at
$3.38 to $8.13 per
share) 2 8 8
Net loss (5,577) (5,577)
------ ------ --------- ---------- ---------
Balance March 31, 1994 30,571 $ 306 $ 121,608 $ (99,133) $ 22,781
====== ====== ========= ========== =========
</TABLE>
See the accompanying notes to the consolidated financial statements.
-5-
<PAGE>
ADVANCED TISSUE SCIENCES, INC.
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
Organization - Advanced Tissue Sciences, Inc. is a development stage, tissue
engineering company engaged in the growth of human tissues and organs for
potential therapeutic and laboratory applications. Using its proprietary three-
dimensional culture system, the Company has successfully replicated a variety
of human tissues, including skin, cartilage, bone marrow and liver. The
Company's first therapeutic products, tissue engineered skin products for the
treatment of severe burns and chronic skin ulcers, are in multi-site human
clinical trials in the United States and France.
Liquidity and Capital Resources - As of March 31, 1995, the Company had
available working capital of $13.5 million. The Company believes this is
sufficient working capital to fund its operations at current levels into the
fourth quarter of 1995. Accordingly, the Company will require additional funds
to support its operations after such time and in any event prior to the commer-
cial introduction of its therapeutic products. Should the Company be unsuccess-
ful in raising such funds, it will be required to adjust the number and extent
of the projects being pursued. These adjustments would be expected to include
reductions in development programs, personnel, and leased space, deferrals or
reductions in executive compensation, and the sale or closure of certain
technology or divisions. If these steps are not sufficient to allow the
Company to obtain additional sources of financing, the Company would then be
forced to delay or reduce the number of clinical trials being pursued.
Principles of Consolidation - The consolidated financial statements include the
accounts of the Company's wholly owned subsidiaries. The Company's fifty
percent interest in the Advanced Tissue Sciences-Smith & Nephew joint venture
is accounted for under the equity method. All intercompany accounts and
transactions have been eliminated.
NOTE 2 - IN VITRO LABORATORY TESTING BUSINESS
In March 1995, the Company entered into a definitive agreement whereby Stratum
Laboratories International ("Stratum Laboratories") will license the technology
and purchase certain net assets associated with the Company's in vitro
laboratory testing ("IVLT") business. In total, the Company could receive up
to $5 million, $1.4 million on the close of the transaction and $3.6 million
in license fees and milestone payments. The Company will also have rights
to royalties on certain product sales. The close of the transaction is
subject to Stratum Laboratories obtaining sufficient funding.
As of March 31, 1995, the net book value of the assets and liabilities to be
acquired under the agreement was $221,000. Costs associated with the IVLT
business were $730,286 and $773,448 in the three months ended March 31, 1995
and 1994, respectively.
NOTE 3 - NET LOSS PER SHARE
The net loss per share for the three month periods ended March 31, 1995 and 1994
is based on the weighted average number of shares of Common Stock outstanding
during the period. Shares to be issued under options have not been included in
the calculation of the net loss per share in any period as their effect is
antidilutive.
-6-
<PAGE>
NOTE 4 - STOCK OPTIONS
The following table summarizes activity under the Company's 1992 Stock
Option/Stock Issuance Plan (the "1992 Plan") and for other options for Common
Stock during the three months ended March 31, 1995:
<TABLE>
<CAPTION>
1992 Plan Other Options
---------------------------- ----------------------------
Number Price Per Number Price Per
of Shares Share of Shares Share
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Outstanding
December 31, 1994 2,296,348 $1.69 - 16.88 1,898,33 $1.47 - 10.13
Granted 18,000 $6.00 - 8.88 --
Exercised (2,280) $3.38 - 8.13 --
Canceled (23,445) $3.38 - 11.75 --
--------- ---------
Outstanding
March 31, 1995 2,288,623 $1.69 - 16.88 1,898,334 $1.47 - 10.13
========= =========
</TABLE>
NOTE 5 - CASH FLOW INFORMATION
Net cash from operating activities reflects cash payments for interest expense
of approximately $2,000 in both the three-month periods ended March 31, 1995
and 1994. Cash payments for interest expense for the period January 26, 1986
(inception) to March 31, 1995 have totaled $595,000.
NOTE 6 - SUBSEQUENT EVENTS
The Company is in active negotiations with a leading biopharmaceutical company
related to the development and licensing of a stem cell proliferation factor
("SCPF") for commercialization in the United States and Europe. However, under
a collaborative research agreement and license option with Kirin Brewery
Company, Limited ("Kirin") for the development and commercialization of SCPF in
certain Asian countries, the Company is prohibited from entering into a
collaboration with any other commercial entity prior to the achievement of
certain milestones. In April 1995, in the interest of advancing the research
and development of SCPF, the Company and Kirin mutually agreed and are in the
process of terminating their collaborative research agreement, although Kirin
has expressed a continuing interest in possibly obtaining Asian rights in the
future. The Company cannot predict with any certainty that (i) it will be able
to enter into any additional collaboration or license agreement on acceptable
terms, (ii) any such collaboration will be successful, or (iii) it will receive
any additional funding related to SCPF. The Company licensed rights to SCPF
from the University of Florida Research Foundation, Inc. ("UFRFI") in
December 1992. Under the license agreement with UFRFI, the Company will be
obligated to pay a portion of certain payments received and royalties paid by
any sublicensee on SCPF products to UFRFI.
-7-
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Advanced Tissue Sciences, Inc. is a development stage company engaged in the
development and manufacture of living human tissue products for therapeutic and
laboratory applications. The Company has incurred, and expects to continue to
incur, substantial expenses in support of the development and clinical trials
of its Dermagraft (trademark) products for burn and skin ulcer applications,
in developing manufacturing systems and facilities for the production of
Dermagraft and in advancing other applications of the Company's core
technology.
In addition to Dermagraft, the Company is focusing its activities on the
development of tissue engineered cartilage and cardiovascular products. In May
1994, the Company entered into a fifty-fifty joint venture with Smith & Nephew
plc ("Smith & Nephew") for the worldwide development, manufacture and marketing
of human tissue engineered cartilage for orthopedic applications. The Company
has also entered into a research and development agreement with St. Jude
Medical, Inc. ("St. Jude Medical") under which St. Jude Medical is funding the
development of tissue engineered heart valves.
Results of Operations
- - ---------------------
Revenues were $1,105,000 and $659,000 for the three-month periods ended
March 31, 1995 and 1994, respectively. During the quarter ended March 31,
1995, the Company recognized contract revenues of $561,000 from its joint
venture with Smith & Nephew and from St. Jude Medical for research performed
related to orthopedic applications of cartilage tissue and tissue engineered
heart valves, respectively. Sales of the Company's Skin2 (registered
trademark) laboratory testing kits decreased $102,000 to $261,000 in the
quarter ended March 31, 1995 as compared to the corresponding quarter in
1994. This primarily reflects a decline in the number of units sold to the
Company's Asian distributor as higher purchases were made for a validation
study in 1994. Product sales in the 1995 period include approximately $37,000
related to validation studies performed, as compared to $176,000 in the first
quarter of 1994.
Research and development expenditures increased $607,000 to $4,406,000 in
the quarter ended March 31, 1995 as compared to the corresponding period in
1994. The increase in research and development costs reflects higher costs
associated with the production of Dermagraft products for clinical trials and
the validation of components of the Company's commercial manufacturing
facility. In addition, the Company incurred higher costs in support of the
development of orthopedic cartilage and cardiovascular products for the Smith
& Nephew joint venture and St. Jude Medical research programs discussed above.
These increases were partially offset by lower costs for preclinical studies of
Dermagraft and of liver tissues. Specifically, the increased costs are
principally reflected in higher costs for materials and supplies, outside
services and overhead.
Selling, general and administrative costs were $1,460,000 for the three
months ended March 31, 1995, as compared to $1,599,000 in the corresponding
period of the prior year. The decrease in selling, general and administrative
expenses primarily reflects a reduction in headcount and associated costs as
compared to 1994.
Professional and consulting costs for legal, accounting and other consulting
services incurred in the three months ended March 31, 1995 and 1994 were
$468,000 and $403,000, respectively. The 1995 quarter included higher fees for
consultants in support of corporate development activities and for legal fees,
while the 1994 period included higher fees for clinical and regulatory
consultants.
-8-
<PAGE>
Cost of goods sold represents direct and indirect costs of manufacturing the
Company's Skin2 laboratory testing kits. Cost of goods sold is net of the
costs of products transferred to research and development for use in developing
additional applications of the Company's testing kits. The cost of such
products is included in research and development expenses based upon estimated
direct and indirect production costs assuming planned production capacity.
Cost of goods sold for the three-month periods ended March 31, 1995 and 1994
were $346,000 and $375,000, respectively. Cost of goods sold declined as fewer
kits were produced in the 1995 quarter as compared to the corresponding period
in 1994.
Liquidity and Capital Resources
- - -------------------------------
As of March 31, 1995, the Company had available working capital of
$13,453,000, a decrease of $5,584,000 from December 31, 1994. The decrease
principally reflects funds used for operations and capital expenditures during
the first quarter. Capital expenditures were $266,000 in the first three
months of 1995, a significant portion of which is related to the validation of
the Company's manufacturing facility.
As discussed above, the alliances formed with Smith & Nephew and St. Jude
Medical are helping to fund the development of tissue engineered cartilage for
orthopedic applications and fibroblast-based heart valves and, to the extent not
offset by additional or increased activities, are reducing the Company's use of
working capital in support of these programs during 1995. However, the Company
expects to continue to incur substantial research and development expenses,
including costs associated with clinical trials, the development of
manufacturing processes, and additional expenditures for capital equipment and
patents.
The Company believes it has sufficient working capital to fund its
operations at current levels into the fourth quarter of 1995. However, based
on the timing of regulatory reviews and approvals, the Company could use
working capital at an accelerated rate for such activities as validation of
the Company's manufacturing facility and to establish necessary sales,
marketing and distribution capabilities. In any event, the Company will
require additional funds to support its operations prior to the commercial
introduction of its therapeutic products. Sources of such funds may include
existing or future strategic alliances or other joint venture arrangements
which provide funding to the Company, and public or private offerings of
debt or equity securities, among other sources. There can be no assurance that
any additional funds will be available when needed or on terms favorable to the
Company, or that the Company will be successful in entering into any other
strategic alliances or joint ventures.
Should the Company be unsuccessful in raising funds it will be required to
adjust the number and extent of the projects being pursued. These adjustments
are expected to include reductions in development programs, personnel, and
leased space, deferrals or reductions in executive compensation, and the sale or
closure of certain technology or divisions. If these steps are not sufficient
to allow the Company to obtain additional sources of financing, the Company
would then be forced to delay or reduce the number of clinical trials being
pursued.
In March 1995, the Company entered into a definitive agreement whereby
Stratum Laboratories International ("Stratum Laboratories") will purchase
certain net assets and license the technology associated with the Company's
in vitro laboratory testing business. In total, the Company could receive up
to $5 million, $1.4 million on the close of the transaction and $3.6 million
in license fees and milestone payments. The disposition of the in vitro
laboratory business could reduce the Company's use of working capital from
$1 million to $2 million annually, depending on the Company's ability to
reduce fixed and semi-variable costs associated with the business. The close
of the transaction is subject to Stratum Laboratories obtaining funding.
Assuming such funding is obtained, the transaction is expected to close in
the third quarter. See Note 2 to the consolidated financial statements.
-9-
<PAGE>
In addition to the above, the Company will continually review its product
development activities in an effort to allocate its resources to those products
the Company believes have the greatest commercial potential. Factors
considered by the Company in determining the products to pursue include
projected markets and need, potential for regulatory approval and reimbursement
under the existing health care system as well as anticipated health care
reforms, technical feasibility, expected and known product attributes and
estimated costs to bring the product to market, among others. Based on these
and other factors which the Company considers relevant, the Company may from
time to time reallocate its resources among its product development
activities. Additions to products under development or changes in products
being pursued can substantially and rapidly change the Company's funding
requirements.
Financial Condition
- - -------------------
Cash, cash equivalents and short-term investments as of March 31, 1995 have
decreased from December 31, 1994 reflecting cash used to fund operations.
Accounts payable has decreased significantly from December 31, 1994 to March
31, 1995 primarily reflecting payments related to costs associated with the
annual renewal of the Company's liability insurance, for clinical trials and
for sponsored research. Accrued expenses have increased over the same period
principally due to accruals for salaries, benefits and sponsored research,
partially offset by lower accruals for clinical trials.
-10-
<PAGE>
PART II - OTHER INFORMATION
---------------------------
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None
(b) Reports on Form 8-K
On January 5, 1995, the Company adopted a Shareholder Rights Plan and
pursuant thereto issued one preferred share purchase right ("Right") on each
outstanding share of Common Stock. The Rights are exercisable only if a person
or group acquires, or makes a tender offer to acquire, 15% or more of the
Company's Common Stock. In connection with the adoption of the Shareholder
Rights Plan, the Company's Board of Directors designated and reserved 500,000
shares of the Company's authorized preferred stock as Series A Junior
Participating Preferred Stock, par value $.01 per share (the "Series A
Preferred Stock"). The Rights have no voting privileges and expire on
January 6, 2005.
When exercisable, each Right entitles its holder to buy one-hundredth of a
share of the Series A Preferred Stock at an exercise price of $55, subject to
certain antidilution adjustments. In addition, if at any time after the Rights
become exercisable, should (i) the Company be acquired in a merger or other
business combination transaction, or sell 50% or more of its consolidated
assets or earnings power, each Right will entitle its holder to purchase a
number of the acquiring ompany's common shares having a market value at the
time of twice the Right's exercise price or (ii) a person or group acquires
15% or more of the Company's outstanding Common Stock, each Right will
entitle its holder, other than the acquirer, to purchase, at the Right's then-
current exercise price, a number of the Company's Common Stock having a market
value of twice the Right's exercise price. The rights are redeemable for one
cent per Right at any time up to and including ten days after the acquisition
of 15% of the then outstanding Common Stock.
SIGNATURE
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.
ADVANCED TISSUE SCIENCES, INC.
Date: May 11, 1995 /s/ Arthur J. Benvenuto
------------------ --------------------------------
Arthur J. Benvenuto
Chairman of the Board, President
and Chief Executive Officer
Date: May 11, 1995 /s/ Michael V. Swanson
------------------ --------------------------------
Michael V. Swanson
Vice President, Finance and
Administration
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 12,378
<SECURITIES> 3,636
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 18,075
<PP&E> 11,947
<DEPRECIATION> 3,594
<TOTAL-ASSETS> 27,437
<CURRENT-LIABILITIES> 4,622
<BONDS> 34
<COMMON> 306
0
0
<OTHER-SE> 22,475
<TOTAL-LIABILITY-AND-EQUITY> 22,781
<SALES> 261
<TOTAL-REVENUES> 1,105
<CGS> 346
<TOTAL-COSTS> 261
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2
<INCOME-PRETAX> (5,577)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,577)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,577)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
