<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 EXCHANGE ACT OF 1934
For the Quarterly period ended June 30, 1996
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 0-27558
CYTYC CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 02-0407755
------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
85 Swanson Road, Boxborough, MA 01719
---------------------------------------
(Address of principal executive offices, including Zip Code)
(508) 263-8000
--------------
(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: The number of shares of the
issuer's Common Stock, $0.01 par value per share, outstanding as of July
15,1996 was 13,645,432
Total Number of Pages: __
Exhibit Index is on Page __
- --------------------------------------------------------------------------------
<PAGE>
CYTYC CORPORATION
INDEX
-----
Page
----
Part I Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
December 31, 1995 and June
30, 1996 3
Consolidated Statements of
Operations
for the three months and
six months ended June 30,
1995 and 1996 4
Consolidated Statements of
Cash Flows
for the three months and
six months ended June 30,
1995 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II Other Information
Item 1. Legal Proceedings
Item 2. Change in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signature
<PAGE>
Part I Financial Information
Item 1. Consolidated Financial Statements
Cytyc Corporation
Consolidated Balance Sheets
(in thousands, except per share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
December 31, June 30,
1995 1996
---- ----
<S> <C> <C>
Assets:
Current assets
Cash and cash equivalents $ 5,665 $ 35,784
Short-term investments 2,237 14,488
Accounts receivable, net 1,323 956
Inventories 753 990
Prepaid expenses and other current assets 48 441
------------- -------------
Total current assets 10,026 52,659
------------- -------------
Property and equipment, net 940 3,784
Other assets 59 488
------------- -------------
Total assets $ 11,025 $ 56,931
============= =============
Liabilities:
Current liabilities
Accounts payable $ 1,254 $ 1,703
Accrued expenses 1,417 2,189
Deferred revenue 276 326
------------- -------------
Total current liabilities 2,947 4,218
------------- -------------
Stockholders' equity:
Preferred Stock, $.01 par value-
Authorized-5,000,000 shares
No shares issued or outstanding -- --
Convertible preferred stock, $.01 par value-
Authorized, issued in series and outstanding-
9,778,326 in 1995 and no shares in 1996 98 --
Common stock
Authorized- 30,000,000 shares
Issued 308,506 shares in 1995
and 13,645,032 in 1996 3 136
Additional paid-in capital 43,165 93,197
Accumulated deficit (35,188) (40,620)
------------- -------------
Total stockholders' equity 8,078 52,713
------------- -------------
Total liabilities and stockholders' equity $ 11,025 $ 56,931
============= =============
</TABLE>
Page 3
<PAGE>
Cytyc Corporation
Consolidated Statements of Operations
(in thousands, except per share data)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------------- --------------------------
June 30, June 30, June 30, June 30,
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 1,253 $ 1,680 $ 1,864 $ 2,794
Cost of sales 580 1,091 1,048 1,825
--------- --------- --------- ---------
Gross profit 673 589 816 969
--------- --------- --------- ---------
Operating expenses:
Research and development 893 1,311 1,679 2,177
Sales, marketing and customer support 578 1,962 1,091 3,670
General and administrative 326 795 660 1,439
--------- --------- --------- ---------
Total operating expenses 1,797 4,068 3,430 7,286
--------- --------- --------- ---------
Income (loss) from operations (1,124) (3,479) (2,614) (6,317)
Other income (expense) (25) -- (25) (14)
Interest income, net (8) 715 (38) 899
--------- --------- --------- ---------
Total other income (expense) (33) 715 (63) 885
--------- --------- --------- ---------
Net income (loss) $ (1,157) $ (2,764) $ (2,677) $ (5,432)
========= ========= ========= =========
Net income (loss) per share $ (0.11) $ (0.20) $ (0.25) $ (0.44)
========= ========= ========= =========
Shares used in computing net income (loss) per share 10,868 13,612 10,868 12,246
========= ========= ========= =========
</TABLE>
Page 4
<PAGE>
Cytyc Corporation
Statements of Cash Flows
(in thousands)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
---------------------- --------------------
June 30, June 30, June 30, June 30,
1995 1996 1995 1996
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,157) $ (2,764) $ (2,677) $ (5,432)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation and amortization 52 116 91 199
Changes in assets and liabilities --
Accounts receivable (721) (196) (696) 367
Inventories (363) (109) (419) (237)
Prepaid expenses and other assets 18 (416) (17) (452)
Accounts payable 199 544 203 449
Accrued expenses 15 189 116 773
Deferred revenue 87 51 126 50
--------- --------- --------- ---------
Net cash used in operating activities (1,870) (2,585) (3,273) (4,283)
--------- --------- --------- ---------
Cash flows from investing activities:
Decrease (increase) in other assets (36) (262) (28) (372)
Purchase of property and equipment (4) (1,780) (25) (3,042)
Purchases of short-term investments -- (13,719) -- (13,719)
Proceeds from sale and maturity of short-term investment -- 1,468 -- 1,468
--------- --------- --------- ---------
Net cash used in investing activities (40) (14,293) (53) (15,665)
--------- --------- --------- ---------
Cash flows from financing activities:
Proceeds from notes payable to stockholders -- -- --
Exercise of stock options -- 76 -- 81
Sale of common stock 12,915 6,696 12,915 49,986
-------- -------- -------- --------
Net cash provided by financing activities 12,915 6,772 12,915 50,067
-------- -------- -------- --------
Net increase (decrease) in cash 11,005 (10,106) 9,589 30,119
Cash and cash equivalents, beginning of period 1,361 45,890 2,777 5,665
--------- --------- --------- ---------
Cash and cash equivalents, end of period $ 12,366 $ 35,784 $ 12,366 $ 35,784
========= ========= ========= =========
</TABLE>
Page 5
<PAGE>
Cytyc Corporation
Notes to Consolidated Financial Statements
NOTES
1. Significant Accounting Policies
The accompanying consolidated financial statements are unaudited. They have
been prepared by the Company pursuant to the rules and regulations of the
Securities and Exchange Commission and are subject to year end audit by
independent public accountants. 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. It is suggested that the financial statements be read in
conjunction with the financial statements and notes included in the Company's
Registration Statement on Form S-1 (File No. 333-00300).
The information furnished reflects all adjustments which, in the opinion of
management, are necessary for a fair presentation of results for the interim
periods. Such adjustments consisted only of normal recurring items. It should
also be noted that results for the interim periods are not necessarily
indicative of the results expected for the full year or any future period.
The preparation of these consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
2. Initial Public Offering
On March 8, 1996, the Company sold, through an underwritten initial public
offering, 3,000,000 shares of its common stock at $16 per share. Upon the
closing of the Company's initial public offering, all outstanding shares of the
convertible preferred stock were converted into 9,778,326 shares of common
stock. On April 4, 1996, the underwriters of the Company's initial public
offering exercised their over-allotment option in full to purchase 450,000
shares of its common stock at $16 per share.
3. Net Loss Per Share
Net loss per share for the three months and six months ended June 30, 1996 is
computed based upon the weighted average number of common and common equivalent
shares outstanding during the period. Common stock equivalents consist of stock
options and are not included in the calculation of earnings per share because
their effect would be antidilutive. Fully diluted earnings per share have not
been presented, as the amounts would not differ significantly from primary
earnings per share.
Net loss per share for the three months and six months ended June 30, 1995 is
computed based upon the pro forma weighted average number of common shares
outstanding during the period, assuming conversion of all classes of convertible
preferred stock into common stock. Common equivalent shares are not included in
the per share calculation where the effect of their inclusion would be
antidilutive, except that, in accordance with the Securities and Exchange
Commission requirements, common and common equivalent shares issued during the
twelve-month period prior to the filing of an initial public offering have been
included in the calculation as if they were outstanding for the entire period,
using the treasury stock method and the initial public offering price.
Page 6
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview
The Company designs, develops, manufactures and markets the ThinPrep sample
preparation system for medical diagnostic applications. The Company has
marketed the ThinPrep System to clinical laboratories and hospitals for use in
non-gynecological testing applications since 1991. On May 20, 1996, the Company
was cleared to market and sell the ThinPrep System for cervical cancer screening
by the United States Food & Drug Administration (the "FDA"). The ThinPrep
System includes the ThinPrep 2000 Processor and predecessor instruments and
related reagents, filters and other supplies. To date, all of the Company's
revenues have been derived from sales of these products.
Since 1991, the Company has devoted significant resources to the development of
the ThinPrep System for cervical cancer screening. In 1995, the Company engaged
the services of an independent contract research organization to manage a
clinical trial of the ThinPrep System for cervical cancer screening involving
6,747 patients at six sites in the United States. This clinical trial became
the basis for the PMA application which was cleared by the FDA in May 1996.
Since inception, the Company has incurred substantial losses, principally from
expenses associated with seeking FDA approval of the Company's ThinPrep System
for cervical cancer screening, engineering and development efforts related to
the ThinPrep 2000 Processor which was introduced in May 1995 for use in non-
gynecological applications, and the establishment of its sales and
administrative organization. The Company expects such losses to continue for
the foreseeable future as it commences market introduction of the ThinPrep Pap
Test for cervical cancer screening, continues its product development efforts,
expands its marketing, sales and administrative activities and initiates
commercial-scale manufacturing. The operating results of the Company have
fluctuated significantly in the past on an annual and a quarterly basis. The
Company expects that its operating results will fluctuate significantly from
quarter to quarter and from year to year in the future and will depend on a
number of factors, many of which are outside of the Company's control.
The Company moved its operations to a larger facility in June 1996. The Company
believes that the equipment currently installed in its new facility is
inadequate to meet full-scale commercial production demands and has contracted
for custom-built automated equipment which will increase the Company's
production capabilities. The delivery of such custom-built equipment is
currently scheduled for late 1996. FDA approval of both the new facility and
such equipment is required before products manufactured in this facility or
using this equipment may be sold. The Company anticipates receiving FDA
approval of its new facility in 1996 and FDA approval of its new equipment in
early 1997.
The Company will continue to increase expenditures for sales, marketing and
customer support activities, principally for the full-scale commercial launch of
the ThinPrep System for cervical cancer screening expected to occur in early
1997. The Company expects to increase its expenditures for research and
development to fund development of follow-on products and additional
applications. The Company also will continue to increase the amount of
expenditures for administrative activities, principally for the employment of
additional administrative personnel, increases in professional fees and the
incremental costs associated with being a publicly-held company.
Results of Operations
Three Months Ended June 30, 1995 and June 30, 1996
Net sales increased to $1.7 million in the second quarter of 1996 from $1.3
million in the same period of 1995, an increase of 34.0%. This increase in
sales was primarily due to an increase in the number of the ThinPrep Processors
sold and additional sales and price increases of related reagents, filters and
other supplies. Sales of ThinPrep Pap Test disposables for cervical cancer
screening during the quarter ended June 30, 1996 were insignificant. Gross
profit decreased to $589,000 in the second quarter of 1996 from $673,000 in the
same period of 1995 and the gross margin decreased to 35.0% in 1996 from 53.7%
in 1995. Management attributes the decrease in gross margin in 1996 to the
lower unit margin for international units shipped during the second quarter and
the expenses incurred in moving the Company's operations to its new facility in
Boxborough, Massachusetts in June 1996.
Page 7
<PAGE>
Total operating expenses increased to $4.1 million in the second quarter of 1996
from $1.8 million in the same period of 1995, an increase of 126.4%. Research
and development costs increased to $1.3 million in the second quarter of 1996
from $893,000 in the second quarter of 1995, an increase of 46.8%, as a result
of employment of additional research and development personnel and engineering
consulting expenses. Sales, marketing and customer support increased to $2.0
million in the second quarter of 1996 from $578,000 in the same period of 1995,
an increase of 239.4%. The increase in sales, marketing and customer support
costs reflects the employment of additional sales and customer support
personnel, increased commissions and additional marketing consulting costs
related to the commercial launch of the ThinPrep System. Administrative costs
increased to $795,000 in 1996 from $326,000 in 1995, an increase of 143.9%, due
to the employment of additional administrative personnel, increased business
insurance costs and expenses associated with being a publicly-held company.
Six Months Ended June 30, 1995 and June 30, 1996
Net sales increased to $2.8 million for the six months ended June 30, 1996 from
$1.9 million in the same period of 1995, an increase of 49.9%. This increase
in sales was primarily due to an increase in the number of ThinPrep Processors
sold and additional sales of related reagents, filters and other supplies.
Gross profit increased to $969,000 in the six months ended June 30, 1996 from
$816,000 in the same period of 1995 and the gross margin decreased to 34.7% in
the six months ended June 30, 1996 from 43.8% in the six months ended June 30,
1995. Management attributes the decrease in gross margin in 1996 to the lower
unit margin for international units shipped during the second quarter and the
expenses incurred in moving the operation to Boxborough, Massachusetts in June
1996.
Total operating expenses increased to $7.3 million for the six months ended June
30, 1996 from $3.4 million in the same period of 1995, an increase of 112.4%.
Research and development costs increased to $2.2 million in 1996 from $1.7
million in 1995, an increase of 29.7%, as a result of employment of additional
research and development personnel and engineering consulting expenses. Sales,
marketing and customer support increased to $3.7 million for the six months
ended June 30, 1996 from $1.1 million in the same period of 1995, an increase of
236.4%. The increase in sales, marketing and customer support costs reflects
the employment of additional sales and customer support personnel, increased
commissions and additional marketing consulting costs related to the commercial
launch of the ThinPrep System. Administrative costs increased to $1.4 million
in 1996 from $660,000 in 1995, an increase of 118.0%, due to the employment of
additional administrative personnel, increased business insurance costs and
expenses associated with being a publicly-held company.
Liquidity and Capital Resources
Since inception, the Company's expenses have significantly exceeded its
revenues, resulting in an accumulated deficit of $40.6 million as of June 30,
1996. The Company has funded its operations primarily through the private
placement and public sale of equity securities aggregating $93.3 million, net of
offering expenses. At June 30, 1996, the Company had cash, cash equivalents and
short-term investments of $50.3 million. Cash, cash equivalents and short-term
investments increased for the six months ended June 30 1996 primarily due to the
issuance of 3,450,000 shares of Common Stock for aggregate net proceeds of $50.0
million. Cash used in the Company's operations was $1.9 million and $2.6
million for the quarters ended June 30, 1995 and 1996, respectively, and $3.3
million and $4.3 million for the six months ended June 30, 1995 and 1996,
respectively. The increase in cash used in operations in the first quarter and
first half of 1996 was due to increased levels of operating costs.
The Company's capital expenditures for the quarters ended June 30, 1995 and 1996
were $4,000 and $1.8 million, respectively and $25,000 and $3.0 million for the
six months ended June 30, 1995 and 1996, respectively. The increase in capital
expenditures in 1996 was due primarily to amounts paid for customized
manufacturing equipment and leasehold improvements for its new facility.
Additionally, as of June 30, 1996, the Company had commitments for customized
manufacturing equipment of approximately $450,000, and for leasehold
improvements of approximately $400,000.
The Company plans to finance its capital needs principally from its existing
capital resources and interest thereon, and, to the extent available and deemed
appropriate, from bank or lease financing. The Company does not have any bank
or other financing arrangements at this time.
Page 8
<PAGE>
Accounts receivable decreased $367,000 to approximately $1 million during the
six months ended June 30, 1996 due, in part, to improved collection efforts.
Inventories increased approximately $237,000 to $990,000 from December 31,1995
to June 30, 1996 due primarily to the Company's planned increase in production
of Thinprep 2000 Processors and related reagents, filters and supplies in
anticipation of the Company's move to its new facility. Stockholder equity
increased approximately $44.6 million from December 31, 1995 to June 30, 1996
primarily due to the sale of 3,450,000 shares of Common Stock which was
partially offset by the net loss of $5.4 million.
The Company believes that its existing capital will be sufficient to fund its
operations through at least 1997. However, the Company's future liquidity and
capital requirements will depend upon numerous factors, including the progress
of the Company's research and development programs, the receipt of and the time
required to obtain regulatory clearances and approvals, and the resources the
Company devotes to developing, manufacturing and marketing its ThinPrep System
for cervical cancer screening. The Company's capital requirements will also
depend on the resources required to hire and develop a direct sales force in the
United States, the resources required to further expand manufacturing capacity
and facilities, the extent to which the Company's ThinPrep System for cervical
cancer screening generates market acceptance and demand, and other factors.
There can be no assurance that the Company will not require additional financing
or will not in the future seek to raise additional funds through bank
facilities, debt or equity offerings or other sources of capital. Additional
funding may not be available when needed or on terms acceptable to the Company,
which would have a material adverse effect on the Company's business, financial
condition and results of operations.
Certain Factors Which May Affect Future Results
The Company does not provide financial performance forecasts. The forward
looking statements in this Form 10-Q are made under the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995. The Company's
operating results and financial condition have varied and may in the future vary
significantly depending on a number of factors. Except for the historical
information contained herein, the matters contained in this report include
forward-looking statements that involve risks and uncertainties. The following
factors, among others, could cause actual results to differ materially from
those contained in forward-looking statements made in this report and presented
elsewhere by management from time to time. The Company's risk factors included
its dependence on a single product, uncertainty of market acceptance and
additional cost, a limited number of customers, a limited operating history,
risks associated with commercialization, dependence on third-party
reimbursement, limited marketing and sales experience, a history of losses,
potential fluctuations in future quarterly results, intense competition,
uncertainty of additional applications, extensive government regulation, limited
manufacturing experience and capacity, dependence on patents copyrights,
licenses and proprietary rights, risk of third party claims of infringement and
dependence on single source suppliers. Such factors, among others, may have a
material adverse effect upon the Company's business, results of operations and
financial conditions. Because of these and other factors, past financial
performance should not be considered an indication of future performance.
Page 9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
-----------------
Not applicable.
Item 2. Changes in Securities.
---------------------
Not applicable.
Item 3. Defaults upon Senior Securities.
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
---------------------------------------------------
Not applicable
Item 5. Other Information.
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits.
--------
11.1 Statement of Computation of Weighted
Average Shares Outstanding
27 Financial Data Schedule
(b) Reports on Form 8-K.
-------------------
There were no reports on Form 8-K filed by the Company for the
quarter ending June 30, 1996.
<PAGE>
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.
CYTYC CORPORATION
Date: July 15, 1996 By: /s/ Joseph W. Kelly
-------------------------------------------
Joseph W. Kelly
Vice President, Chief Financial Officer,
Treasurer and Secretary
(Principal Financial and Accounting
Officer)
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
- ------ ----------- ----
<C> <S> <C>
11.1 Statement of Computation of Weighted Average Shares
Outstanding
27 Financial Data Schedule AA
</TABLE>
<PAGE>
Cytyc Corporation
Exhibit 11.1
Statement of Computation of Weighted Average Shares Outstanding
<TABLE>
<CAPTION>
For the three months ended June 30, For the six months ended June 30,
---------------------------------- ---------------------------------
1995 1996 1995 1996
------------ ------------ ------------ ------------
(pro forma) (pro forma)
<S> <C> <C> <C> <C>
Weighted average Series A-1 Convertible
Preferred Stock outstanding during the period,
assuming conversion to common stock 2,399,573 -- 2,399,573 --
Weighted average Series B-1 Convertible
Preferred Stock outstanding during the period,
assuming conversion to common stock (1) 3,569,370 -- 3,569,370 --
Weighted average Series C-1 Convertible
Preferred Stock outstanding during the period,
assuming conversion to common stock (2) 3,809,383 -- 3,809,383 --
Weighted average Common Stock outstanding
during the period (3) 307,655 13,611,639 307,382 12,245,763
Net share issuable upon exercise of stock options
granted subsequent to January 15, 1995 (2) 782,274 -- 782,274 --
---------- ---------- ---------- ----------
10,868,255 13,611,639 10,867,982 12,245,763
========== ========== ========== ==========
</TABLE>
- -----------------------------------
(1) All outstanding shares of Series B1 Convertible Preferrred Stock are
assumed to have been converted into shares of Common Stock at the time of
issuance of the four prior series of Convertible Preferred Stock, which
automatically converted into Series B1 Convertible Preferred Stock in 1995.
(2) Common Stock equivalents issued and stock options granted during the twelve
month period immediately prior to the filing of the initial public offering
have been included as outstanding for all periods presented prior to the
initial public offering using the treasury-stock method and the public
offering price.
(3) In March, 1996, the Company sold, through an initial public offering,
3,000,000 shares of its Common Stock at $16 per share. All shares of the
Company's Convertible Preferred Stock were automatically converted into
9,778,326 shares of Common Stock at the time of the initial public offering
and are assumed to be issued Common Stock as of January 1, 1996.
Additionally, on April 4, 1996, the Underwriters of the Company's initial
public offering exercised their over-allotment option in full to purchase
an additional 450,000 shares of the Company's Common Stock at $14.88 per
share.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 35,784
<SECURITIES> 14,488
<RECEIVABLES> 835
<ALLOWANCES> 121
<INVENTORY> 990
<CURRENT-ASSETS> 52,659
<PP&E> 4,822
<DEPRECIATION> 1,038
<TOTAL-ASSETS> 56,931
<CURRENT-LIABILITIES> 4,218
<BONDS> 0
0
0
<COMMON> 136
<OTHER-SE> 52,577
<TOTAL-LIABILITY-AND-EQUITY> 56,931
<SALES> 0
<TOTAL-REVENUES> 2,794
<CGS> 1,825
<TOTAL-COSTS> 1,825
<OTHER-EXPENSES> 7,286
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (899)
<INCOME-PRETAX> (5,432)
<INCOME-TAX> 0
<INCOME-CONTINUING> (6,317)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,432)
<EPS-PRIMARY> (.44)
<EPS-DILUTED> 0
</TABLE>
