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, 1999
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: 0-18933
ROCHESTER MEDICAL CORPORATION
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1613227
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE ROCHESTER MEDICAL DRIVE,
STEWARTVILLE, MN 55976
(Address of principal executive offices)
(507) 533-9600
(Issuer's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act during the past 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.
5,349,500 Common Shares as of May 10, 1999.
<PAGE>
TABLE OF CONTENTS
ROCHESTER MEDICAL CORPORATION
REPORT ON FORM 10-Q
FOR QUARTER ENDED
MARCH 31, 1999
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Balance Sheets-- March 31, 1999 and September 30, 1998 .......................... 3
Statements of Operations -- Three months ended March 31, 1999 and
1998; Six months ended March 31, 1999 and 1998 ................................ 4
Statements of Cash Flows-- Six months ended March 31, 1999 and 1998 ............. 5
Notes to Financial Statements ................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ........................................................... 7
PART II. OTHER INFORMATION ................................................................ 12
</TABLE>
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
ROCHESTER MEDICAL CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1999 1998
------------ ------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents ......................... $ 6,178,924 $ 2,864,922
Marketable Securities ............................. 9,050,881 13,545,271
Accounts Receivable ............................... 908,132 1,955,048
Inventories ....................................... 2,672,028 2,209,599
Prepaid Expenses and Other Assets ................. 503,558 489,001
------------ ------------
TOTAL CURRENT ASSETS ..................... 19,340,523 21,063,841
PROPERTY AND EQUIPMENT
Land and Buildings ................................ 5,309,785 5,389,784
Equipment and Fixtures ............................ 9,001,495 8,540,888
------------ ------------
14,392,280 13,930,672
Less: Accumulated Depreciation .................... (3,000,475) (2,510,975)
------------ ------------
TOTAL PROPERTY AND EQUIPMENT ................ 11,391,805 11,419,697
INTANGIBLE ASSETS
Patents, Less Accumulated Amortization ............ 229,224 252,212
------------ ------------
TOTAL ASSETS ......................................... $ 30,961,552 32,735,750
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable .................................. $ 490,481 766,304
Accrued Expenses .................................. 622,754 1,051,717
------------ ------------
TOTAL CURRENT LIABILITIES ................ 1,113,235 1,818,021
SHAREHOLDERS' EQUITY
Common Stock, no par value:
Authorized -- 20,000,000
Issued and Outstanding Shares-- 5,349,500
-- Mar., 1999 and 5,260,500-- Sept., 1998 . 41,352,202 40,692,202
Accumulated Deficit ............................... (11,503,885) (9,774,473)
------------ ------------
TOTAL SHAREHOLDERS' EQUITY ............... 29,848,317 30,917,729
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY ............. $ 30,961,552 32,735,750
============ ============
</TABLE>
Note -- The Balance Sheet at September 30, 1998 was derived from the audited
financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See Notes to Financial Statements
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<PAGE>
ROCHESTER MEDICAL CORPORATION
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
--------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES .............................. $ 1,381,318 $ 2,422,683 $ 3,727,312 $ 4,277,970
COST OF SALES .......................... 1,083,775 1,653,062 2,839,734 2,924,381
----------- ----------- ----------- -----------
GROSS PROFIT ........................... 297,543 769,621 887,578 1,353,589
COSTS AND EXPENSES:
Marketing and Selling ............... 724,672 655,741 1,554,996 1,288,355
Research and Development ............ 288,475 424,314 509,117 722,469
General and Administrative .......... 465,713 388,170 910,663 715,045
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES ... 1,478,860 1,468,225 2,974,776 2,725,869
----------- ----------- ----------- -----------
LOSS FROM OPERATIONS ................... (1,181,317) (698,604) (2,087,198) (1,372,280)
OTHER INCOME (EXPENSE):
Interest Income ..................... 181,884 231,791 357,786 404,442
----------- ----------- ----------- -----------
TOTAL OTHER INCOME (EXP) ............ 181,884 231,791 357,786 404,442
NET LOSS ............................... $ (999,433) $ (466,813) $(1,729,412) $ (967,838)
=========== =========== =========== ===========
NET LOSS PER COMMON SHARE
(Basic and Diluted) .................... $ (0.19) $ (0.09) $ (0.33) $ (0.19)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING ............................ 5,344,556 5,261,500 5,316,146 5,013,637
=========== =========== =========== ===========
</TABLE>
See Notes to Financial Statements
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<PAGE>
ROCHESTER MEDICAL CORPORATION
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
-----------------------------
1999 1998
----------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Loss ............................................................... $(1,729,412) $ (967,838)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization .......................................... 551,277 355,476
Changes in assets and liabilities:
Accounts Receivable .................................................... 1,046,916 458,030
Inventories ............................................................ (462,429) (425,236)
Other Current Assets ................................................... (41,557) (79,801)
Accounts Payable ....................................................... (275,822) (161,457)
Other Current Liabilities .............................................. (428,963) (2,974)
----------- ------------
NET CASH (USED IN) OPERATING ACTIVITIES ....................... (1,339,990) (823,800)
INVESTING ACTIVITY
Capital Expenditures ................................................... (461,607) (1,048,918)
Patents ................................................................ (38,791) (23,452)
Marketable Securities .................................................. 4,494,390 (14,535,854)
----------- ------------
NET CASH (USED IN) INVESTING ACTIVITIES ................................ 3,993,992 (15,608,224)
----------- ------------
FINANCING ACTIVITIES
Proceeds from Sale of Common Stock ..................................... 660,000 15,887,003
----------- ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES .............................. 660,000 15,887,003
(DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS ............................................. 3,314,002 (545,022)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD .............................................. 2,864,922 1,191,428
CASH AND CASH EQUIVALENTS AT END OF PERIOD ................................ $ 6,178,924 $ 646,406
=========== ============
</TABLE>
See Notes to Financial Statements
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<PAGE>
ROCHESTER MEDICAL CORPORATION
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1999
NOTE A -- BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. These financial statements should
be read in conjunction with the financial statements and related notes included
in the Company's 1998 Form 10-K. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three month period
ended March 31, 1999 are not necessarily indicative of the results that may be
expected for the year ending September 30, 1999.
NOTE B -- EARNINGS (LOSS) PER SHARE
The Company has adopted Financial Accounting Standards Board Statement No. 128,
"Earnings Per Share." This Statement replaces previously reported primary and
fully diluted earnings per share (EPS) with basic and diluted EPS. Unlike
primary EPS, basic EPS excludes any dilutive effects of options, warrants and
convertible debt. Diluted EPS is very similar to the previously reported fully
diluted EPS. For the six-month periods ended March 31, 1999 and 1998, there is
no difference between basic and diluted net loss per share or between basic and
net loss per share as previously reported. Common equivalent shares from stock
options and convertible debt are excluded as their effects are antidilutive.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The Company develops, manufactures and markets a broad line of
innovative, technologically enhanced latex-free urinary continence care products
to the home care and hospital care markets. The Company markets its products
under its own ROCHESTER MEDICAL(R) brand and through private label arrangements.
RESULTS OF OPERATIONS
The following table sets forth, for the fiscal periods indicated,
certain items from the statements of operations of the Company expressed as a
percentage of net sales.
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
March 31, March 31,
------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Total Net Sales............................... 100% 100% 100% 100%
Cost of Sales................................. 78% 68% 76% 68%
---- ---- ---- ----
Gross Margin......................... 22% 32% 24% 32%
Operating Expenses
Marketing and Selling................ 52% 27% 42% 30%
Research and Development............. 21% 18% 14% 17%
General and Administrative........... 34% 16% 24% 17%
---- ---- ---- ----
Total Operating Expenses...................... 107% 61% 80% 64%
Loss From Operations.......................... (86%) (29%) (56%) (32%)
Interest Income (Expense) Net................. 13% 10% 10% 9%
---- ---- ---- ----
Net Loss...................................... (72%) (19%) (46%) (23%)
==== ==== ==== ====
</TABLE>
THREE MONTH AND SIX MONTH PERIODS ENDED MARCH 31, 1999 AND MARCH 31, 1998
NET SALES. Net sales for the second quarter of fiscal 1999 decreased 43% to
$1,381,000 from $2,423,000 for the comparable quarter of last fiscal year. The
sales decrease resulted from significantly lower private label sales, due
primarily to the discontinuation of orders from Mentor Corporation. Sales of
Rochester Medical brand products in the second quarter of fiscal 1999 were
substantially the same versus the comparable quarter of last fiscal year, with
increased domestic sales of Rochester Medical brand products offset by lower
sales in international markets. The decrease in international sales is due
primarily to lower sales to international distributors.
-7-
<PAGE>
Net sales for the six months ended March 31, 1999 decreased 13% to
$3,727,000 from $4,278,000 for the comparable six-month period of last fiscal
year. Primary factors leading to the decline in six-month sales results are
the lower private label sales in the second quarter and comparably lower
international sales throughout the current six-month period.
Because of the decrease in net sales during the six-month period ended
March 31, 1999 and the continuing effects of the discontinuation of Mentor
sales, the Company expects that total net sales for fiscal 1999 will be lower
than last year, and that its net loss for fiscal 1999 also will increase as a
result of lower sales levels. This expectation does not take into account any
significant sales contribution from the RELEASE NF(TM) catheter, the timing of
which will depend in part on the timing and results of on-going product
evaluations by potential customers.
GROSS MARGIN. The Company's gross margin as a percentage of net sales for
the second quarter of fiscal 1999 was 22% compared to 32% for the comparable
quarter of last fiscal year. The current quarter's margin reflects costs
associated with increased production capacity as well as the impact of
decreased production rates related to lower sales in the current quarter.
Costs associated with increased capacity are anticipated to continue until the
Company achieves sufficient sales to absorb the additional capacity.
The Company's gross margin as a percentage of net sales for the six months
ended March 31, 1999 was 24% compared to 32% for the comparable six-month
period of last fiscal year. Factors related to the decline in the six-month
margin are generally consistent with those discussed above for the current
quarter.
MARKETING AND SELLING. Marketing and selling expense for the second quarter
of fiscal 1999 increased 10% to $725,000 from $656,000 for the comparable
quarter of last fiscal year. The increase in marketing and selling expense is
due to increased selling activities of the Company's domestic field sales
force as part of the Company's sales campaign for the RELEASE NF(TM) catheter
and the addition of marketing and sales management personnel. The Company
anticipates that marketing and selling expenses will increase in future
periods as the Company expands its promotional and market development
activities related to Rochester Medical brand products, particularly the
Company's RELEASE NF(TM) catheter and FEMSOFT(R) INSERT.
Marketing and selling expense for the six months ended March 31, 1999
increased 21% to $1,555,000 from $1,289,000 for the comparable six-month
period of last fiscal year. Factors affecting the comparative six-month
expense levels are generally consistent with those discussed above for the
current quarter.
RESEARCH AND DEVELOPMENT. Research and development expense for the second
quarter of fiscal 1999 decreased 32% to $288,000 from $424,000 for the
comparable quarter of last fiscal year. The decrease in research and
development expense primarily reflects a reduction in accruals for costs of
the FEMSOFT(R) INSERT clinical trials related to stage of completion.
-8-
<PAGE>
Research and development expense for the six months ended March 31, 1999
decreased 30% to $509,000 from $722,000 for the comparable six-month period of
last fiscal year. Factors affecting the comparative six-month expense levels
are generally consistent with those discussed above for the current quarter.
GENERAL AND ADMINISTRATIVE. General and administrative expense for the
second quarter of fiscal 1999 increased 20% to $466,000 from $388,000 for the
comparable quarter of last fiscal year. The increase in general and
administrative expense is related to upgrading of business systems and general
increases in administrative support costs.
General and administrative expense for the six months ended March 31, 1999
increased 27% to $911,000 from $715,000 for the comparable six-month period of
last fiscal year. Factors affecting the comparative six-month expense levels
are generally consistent with those discussed above for the current quarter.
INTEREST INCOME. Interest income for the second quarter of fiscal 1999
decreased 22% to $182,000 from $232,000 for the comparable quarter of last
fiscal year. The decrease in interest income reflects the comparatively lower
average level of invested cash balances in the current quarter due to the
utilization of cash for operations and capital expenditures.
Interest income for the six months ended March 31, 1999 decreased 11% to
$358,000 from $404,000 for the comparable six-month period of last fiscal
year. The decrease reflects a comparatively lower average level of invested
cash balances for the current quarter as discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash, cash equivalents and marketable securities were
$15,230,000 at March 31, 1999 compared with $16,410,000 at September 30, 1998.
The Company used a net $1,339,000 of cash from operating activities during the
quarter, primarily reflecting the net loss before non-cash depreciation.
During the six-month period ended March 31, 1999, the Company's working
capital position, excluding cash and marketable securities, decreased by a net
$162,000. Accounts receivable balances decreased 54% or $1,047,000 during this
period as a result of receivable collections and lower sales in the current
quarter. Inventories increased 21% or $462,000 during the recent six-month
period, which management expects will be absorbed by future customer orders.
Current liabilities decreased 39% or $705,000 during the recent six-month
period, reflecting a reduction in raw material purchase volumes related to
lower sales levels and payment of clinical trial and accrued compensation
obligations. Changes in other asset and liability balances during the recent
six-month period related to timing of expense recognition.
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<PAGE>
The Company believes that its capital resources on hand at March 31, 1999,
together with revenues from sales, will be sufficient to satisfy its working
capital requirements for the foreseeable future as described in the Liquidity
and Capital Resources portion of Management's Discussion and Analysis of
Financial Condition and Results of Operations in the Company's Annual Report
on Form 10-K (Part II, Item 6) for the fiscal year ended September 30, 1998.
IMPACT OF YEAR 2000
The Year 2000 issue is the result of computer programs which were written
using two digits rather than four to determine the applicable year. The Year
2000 issue may also affect computer chips that process data-sensitive
information which are embedded in computer hardware and machinery. Any
computer programs and hardware or equipment that have date-sensitive software
or chips may recognize a date using "00" as the year 1900 rather than the year
2000. This could result in a system failure or miscalculations causing
disruptions to operations, including temporary inability to process
transactions, send invoices or engage in similar normal business activities.
The Company utilizes a variety of computer programs, primarily purchased
software, for its systems of manufacturing, distribution and administration.
The Company has made inquiries of its vendors who provide the Company with
computer programs and equipment, including hardware and software used in the
Company's automated manufacturing processes. The Company has also utilized the
services of an outside consultant to assist the Company with an inventory and
assessment of its computer programs and equipment and the implementation of a
Year 2000 remediation plan. The Company has completed the inventory and
assessment phases of its Year 2000 review. Based upon results of this review
to date and upon certifications and assurances received from its software
vendors, the Company has not identified any material Year 2000 compliance
issues related to its core hardware and software systems, manufacturing
systems, or communications systems. The Company anticipates that it will be
able to implement its Year 2000 remediation plan by July 1, 1999 at an
estimated total cost of $100,000, including costs associated with the
replacement of computer hardware and software and consulting services to
implement the same. In addition, once its year 2000 remediation plan has been
implemented, the Company intends to test its software programs to verify that
these programs are Year 2000 compliant.
If for any reason the Company's ongoing Year 2000 review discovers that any
of the Company's computer programs or equipment have other components that are
not Year 2000 compliant and the Company is unable to implement necessary
modifications on a cost-effective or timely basis, the Company could
experience a significant operational issue that could have a material impact
on the operations of the Company. Such impacts could include disruptions in
one or more of the Company's manufacturing processes resulting in delays in
production and the Company's inability to manufacture and deliver product to
fulfill customer orders.
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<PAGE>
In addition, the Company has made inquiry to each of its material
suppliers, such as banks, payroll processors and vendors who must address
their own Year 2000 issues. To date, none of these inquiries has identified
any definite Year 2000 issues. The failure of these companies to be Year 2000
compliant may affect the ability of the Company, among other things, to obtain
critical supplies or receive payment on outstanding invoices. Depending on the
extent of such issues, this could have a material adverse effect on the
Company's results of operations and liquidity.
The Company has used its own personnel to make inquiries to vendors and to
conduct the Year 2000 assessment process. Other than such personnel expenses,
the Company estimates that it has spent approximately $15,000, primarily for
outside consulting services, which services included a general assessment of
the Company's computer hardware and software needs, in addition to an
assessment of Year 2000 issues. Although the Company estimates that the total
cost of its Year 2000 review will not exceed $100,000, specific factors that
might require material expenditures not now anticipated by the Company
include, but are not limited to, the availability and cost of trained
personnel, the validity of certifications and assurances furnished by software
and hardware vendors, the effectiveness of software upgrades received by the
Company from its software vendors, the results of the ongoing Year 2000 review
and similar uncertainties.
Based upon the results of the inventory and assessment phases of its year
2000 review, the Company believes that any Year 2000 issues will not have a
material effect on the Company's business and a contingency plan is not
necessary at this time. However, the Company intends to develop contingency
plans, as appropriate, once it has completed testing of its software programs
following implementation of the Company's Year 2000 remediation plan.
Moreover, the Company intends to follow up with its material suppliers and
establish contingency plans where Year 2000 compliance on the part of these
suppliers cannot be assured.
FORWARD-LOOKING STATEMENTS
Statements other than historical information contained herein constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements may be
identified by the use of terminology such as "may," "will," "expect,"
"anticipate," "predict," "intend," "designed," "estimate," "should" or
"continue" or the negatives thereof or other variations thereon or comparable
terminology. Such forward-looking statements involve known or unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among other things, the following: the lack and uncertainty of regulatory
approval or market acceptance for the Company's products in development,
primarily the FEMSOFT(R) INSERT; the uncertainty of market acceptance of the
RELEASE NF(TM) catheter and the FEMSOFT(R) INSERT; the risks associated with
the Company's expanded reliance on sales of Rochester Medical brand products
as well as other risk factors
-11-
<PAGE>
listed from time to time in the Company's SEC reports, including, without
limitation, the sections entitled "Business Outlook" and "Risk Factors" in the
Company's Annual Report on Form 10-K (Part II, Item 6) for the year ended
September 30, 1998.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not a party to any material legal proceedings.
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.
The Company held its annual meeting on February 4, 1999, in Minneapolis,
Minnesota. The Company solicited proxies and filed its definitive proxy
statement with the Commission pursuant to Regulation 14A. The matters voted
upon at the meeting and the votes cast were as follows:
(a) ELECTION OF DIRECTORS
For Withhold Authority
--- ------------------
Darnell L. Boehm 4,462,135 503,034
Anthony J. Conway 4,462,235 502,934
Peter R. Conway 4,462,135 503,034
Philip J. Conway 4,462,235 502,934
Richard D. Fryar 4,462,235 502,934
Roger W. Schnobrich 4,462,135 503,034
Brian J. Wierzbinski 4,462,235 502,934
-12-
<PAGE>
(b) Approval of Amendment to Stock Option Plan
For: 2,660,300 Against: 873,611 Abstain: 14,503
Not Voted: 1,416,755
(c) Approval of Ernst & Young as Accountants
For: 4,936,431 Against: 2,300 Abstain: 26,438
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
None
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ROCHESTER MEDICAL CORPORATION
Date: May 12, 1999 By: /s/ Anthony J. Conway
------------------------
Anthony J. Conway
CHIEF EXECUTIVE OFFICER
Date: May 12, 1999 By: /s/ Brian J. Wierzbinski
------------------------------
Brian J. Wierzbinski
CHIEF FINANCIAL OFFICER
-14-
<PAGE>
EXHIBIT INDEX
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Page
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27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,178,924
<SECURITIES> 9,050,881
<RECEIVABLES> 963,192
<ALLOWANCES> 55,060
<INVENTORY> 2,672,028
<CURRENT-ASSETS> 19,340,523
<PP&E> 14,392,280
<DEPRECIATION> 3,000,474
<TOTAL-ASSETS> 30,961,552
<CURRENT-LIABILITIES> 1,113,236
<BONDS> 0
0
0
<COMMON> 41,352,202
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 30,961,552
<SALES> 3,727,312
<TOTAL-REVENUES> 3,727,312
<CGS> 2,839,734
<TOTAL-COSTS> 5,814,510
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (2,087,198)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,729,412)
<EPS-PRIMARY> (0.33)
<EPS-DILUTED> (0.33)
</TABLE>
