<PAGE> 1
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 quarter ended June 30, 1997
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 0-24540
INCONTROL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 91-1501619
- ---------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6675 - 185TH AVENUE N.E.
REDMOND, WA 98052-6734
(425) 861-9800
(Address and telephone number of registrant's principal executive offices)
---------------------
Indicate by check mark (x) 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 has been required to file such reports), and (2) has been subject to
filing requirements for the past 90 days.
Yes X No
--- ---
As of July 22, 1997, there were 17,119,445 shares of the registrant's Common
Stock, $.01 par value per share, outstanding.
Page 1 of 11 sequentially numbered pages
<PAGE> 2
INCONTROL, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)............................3
Consolidated Balance Sheets -
June 30, 1997 and December 31, 1996......................3
Consolidated Statements of Operations -
three and six months ended June 30, 1997 and 1996........4
Consolidated Statements of Cash Flows -
six months ended June 30, 1997 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 4. Submission of Matters to a Vote of Security Holders........10
Item 6. Exhibits and Reports on Form 8-K...........................10
Signature..................................................11
</TABLE>
Page 2 of 11 sequentially numbered pages
<PAGE> 3
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
INCONTROL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
JUNE 30,
1997 DECEMBER 31,
(UNAUDITED) 1996
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 3,498,132 $ 4,287,617
Securities available for sale 17,665,457 32,714,022
Inventories 2,399,860 2,314,841
Prepaid expenses and other current assets 1,422,077 727,526
------------- -------------
Total current assets 24,985,526 40,044,006
Property and equipment, net 6,844,112 4,861,566
Notes receivable from employees 771,042 746,042
Other assets 224,077 265,273
------------- -------------
Total assets $ 32,824,757 $ 45,916,887
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 706,642 $ 313,888
Accrued expenses 2,341,660 1,960,642
Current portion of long-term obligations 1,453,331 1,197,614
------------- -------------
Total current liabilities 4,501,633 3,472,144
Long-term obligations, less current portion 2,047,759 1,418,701
Commitments
Stockholders' equity:
Preferred stock, $.01 par value:
Authorized shares--10,000,000;
Issued and outstanding shares--none -- --
Common stock, $.01 par value:
Authorized shares--40,000,000;
Issued and outstanding shares--
17,118,945 at June 30, 1997 and
16,960,700 at December 31, 1996 129,333,099 129,237,938
Deficit accumulated during development stage (102,534,829) (87,614,031)
Notes receivable from stockholders (581,000) (660,000)
Cumulative translation adjustment 58,095 62,135
------------- -------------
Total stockholders' equity 26,275,365 41,026,042
------------- -------------
Total liabilities and stockholders' equity $ 32,824,757 $ 45,916,887
============= =============
</TABLE>
See accompanying notes.
Page 3 of 11 sequentially numbered pages
<PAGE> 4
INCONTROL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
------------------------------- -------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 301,737 $ 108,348 $ 612,485 $ 108,348
Cost of revenues 258,517 -- 484,406 --
------------ ------------ ------------ ------------
Gross profit 43,220 108,348 128,079 108,348
Expenses:
Research and development 5,525,307 6,000,872 11,027,302 11,328,536
Sales and marketing 1,150,710 774,529 2,201,249 1,323,502
General and
administrative 1,256,909 1,387,784 2,527,449 2,410,236
------------ ------------ ------------ ------------
7,932,926 8,163,185 15,756,000 15,062,274
Interest income 387,823 659,658 899,366 893,572
Interest expense (131,478) (121,424) (235,946) (235,162)
------------ ------------ ------------ ------------
Net loss $ (7,633,361) $ (7,516,603) $(14,964,501) $(14,295,516)
============ ============ ============ ============
Net loss per share (Note 1) $ (0.45) $ (0.47) $ (0.88) $ (0.95)
============ ============ ============ ============
Shares used in computation
of net loss per share 17,090,747 16,131,927 17,011,349 14,985,820
</TABLE>
See accompanying notes.
Page 4 of 11 sequentially numbered pages
<PAGE> 5
INCONTROL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
-------------------------------
1997 1996
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $(14,964,501) $(14,295,516)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,386,110 1,162,283
Employees' compensation used to retire loans -- 552,516
to stockholders
Changes in operating assets and liabilities:
(Increase) decrease in prepaid expenses
and other current assets (445,450) (212,316)
(Increase) decrease in inventories (73,106) (818,585)
Increase (decrease) in accounts payable,
accrued expenses, and sales tax payable 837,865 (139,905)
------------ ------------
Net cash used in operating activities (13,259,082) (13,751,523)
INVESTING ACTIVITIES:
Purchases of property and equipment (3,257,530) (1,286,018)
Loans to employees (30,000) (30,000)
Proceeds from collection of employee loans 20,000 12,000
Purchases of securities (1,169,911) (28,353,507)
Proceeds from maturity of securities 15,863,623 10,715,000
Proceeds from sale of securities -- 1,618,182
------------ ------------
Net cash provided by (used in) investing activities 11,426,182 (17,324,343)
FINANCING ACTIVITIES:
Proceeds from lease financing 1,510,188 244,551
Payments on lease financing (594,290) (421,799)
Proceeds from collection of stockholders' loans 79,000 26,000
Proceeds from exercise of stock options 95,161 95,444
Net proceeds from sale of common stock -- 46,167,230
------------ ------------
Net cash provided by financing activities 1,090,059 46,111,426
Effect of exchange rate changes on cash (46,644) 19,175
------------ ------------
Net increase (decrease) in cash and cash equivalents (789,485) 15,054,735
Cash and cash equivalents at beginning of period 4,287,617 2,048,600
------------ ------------
Cash and cash equivalents at end of period $ 3,498,132 $ 17,103,335
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH PAID:
Interest $ 235,946 $ 235,162
============ ============
</TABLE>
See accompanying notes.
Page 5 of 11 sequentially numbered pages
<PAGE> 6
INCONTROL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
INTERIM FINANCIAL INFORMATION
The consolidated financial statements included herein have been prepared by
InControl, Inc. ("InControl" or the "Company") without audit, according to the
rules and regulations of the Securities and Exchange Commission (the
"Commission"). Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations. The
consolidated financial statements reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position and results of operations as of and for
the periods indicated.
The results of operations for the six-month period ended June 30, 1997, are not
necessarily indicative of results to be expected for the entire year ending
December 31, 1997 or for any other fiscal period.
INVENTORIES
Inventories are valued at the lower of cost (first-in, first-out method) or
market. Allowances are made for obsolete, unsalable, or unusable inventories.
The components of inventories are as follows:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ ----------
<S> <C> <C>
Raw materials $ 808,304 $ 888,639
Work in process 1,010,603 727,284
Finished products 580,953 698,918
------------ ----------
$ 2,399,860 $2,314,841
============ ==========
</TABLE>
The Company purchases components and certain related peripheral equipment for
its products from outside vendors, including components from sole source
vendors. The establishment of additional or replacement sources of supply would
require the Company to certify the new vendors, which in the case of certain
components would cause a delay in the Company's ability to manufacture the
products.
NET LOSS PER SHARE
Net loss per share is computed based on the weighted average number of shares of
Common Stock outstanding. Common equivalent shares are not included in the
per-share calculation as the effect of their inclusion would be antidilutive.
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share" ("Statement 128"), which the Company will be required
to adopt on December 31, 1997. At that time, the Company will change the method
currently used to compute net loss per share and restate all prior periods. The
impact of Statement 128 on the calculation of net loss per share is not expected
to be material.
SUBSEQUENT EVENTS
On July 29, 1997, the Company completed a private placement offering of
1,615,740 shares of Common Stock at $9.45 per share (prior to the deduction of
fees and commissions associated with the offering).
Page 6 of 11 sequentially numbered pages
<PAGE> 7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This discussion contains forward-looking statements that are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those projected. The words "believe", "expect", "anticipate" and similar
expressions identify forward-looking statements. Factors that could affect the
Company's financial results are described in the following paragraphs and in the
Company's latest Annual Report on Form 10-K filed with the Commission. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date of this report. InControl undertakes no
obligation to publicly release the results of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date of this report or to reflect the occurrence of unanticipated
events.
OVERVIEW
InControl is engaged in the design, development and manufacture of implantable
atrial defibrillators and related products, including transvenous defibrillation
leads, temporary defibrillation catheters, and temporary heartwires designed for
post-operative atrial defibrillation. The majority of the Company's resources
have been and continue to be devoted to research and development activities
related to the METRIX System, a proprietary system designed to treat atrial
fibrillation. The METRIX System is comprised of an implantable defibrillator,
transvenous leads to connect the defibrillator to the heart, a system analyzer,
and a system programmer. The Company has entered into agreements where the
Company distributes catheters and related products in certain geographic
markets. The design and development of an implantable medical device has
required the Company to make significant investments in research and development
activities and, as such, the Company has accumulated a deficit of $102.5 million
as of June 30, 1997. The Company expects to incur substantial additional losses
in the near future as any moderate increase in revenues from expanding clinical
trials and expected limited commercial release of the Company's products in
Europe should be more than offset by increases in the Company's expenses.
Increases in expenses will be due primarily to InControl's continuing investment
in research and development efforts, the additional expenses of the increases in
clinical trial activities, the expansion of European and domestic marketing and
sales capabilities and increasing domestic manufacturing activity. The amount
and timing of the Company's future revenues and, as a result, the amount and
timing of the Company's future losses will be affected by, among other things,
the progress and costs of preclinical studies and clinical trials, including the
recruitment of suitable patients, the timing of regulatory approvals, the
availability of third-party reimbursement for the Company's products, the rate
of market acceptance and adoption of the METRIX System, the costs associated
with increases in marketing and sales capabilities in the United States and
Europe, the costs associated with the development of manufacturing capabilities,
the costs associated with product development efforts and the status of
competing products.
The Company achieved several important milestones in the second quarter of 1997.
In Europe, the Company was awarded the CE Mark on the METRIX System, which
allowed for, and was followed by, the subsequent commercial release of the
METRIX System in the European Union. In the United States, the Company was
granted clearance by the FDA for expansion of the clinical trial of the METRIX
System to 170 patients, in a total of 25 centers, and approved the use of the
device's patient-activated mode for out-of-hospital therapy. In addition, the
FDA reclassified the METRIX System as a Category B medical device for
reimbursement purposes. InControl was also awarded the CE Mark on the Company's
TADPOLE Heart Wires for treatment of post-operative atrial fibrillation.
The Company believes that it will incur losses at least until the METRIX System
has gained market acceptance in the United States. Market acceptance of the
METRIX System in the United States is dependent on obtaining regulatory approval
from the Food and Drug Administration (the "FDA") for its commercial release,
which is in turn dependent on the success of clinical trials of the METRIX
System in the United States. There can be no assurance that clinical trials in
the United States will be successful or that regulatory approval for the METRIX
System will be obtained in the United States. Furthermore, there can be no
assurance that the METRIX System will achieve market acceptance in Europe or, if
regulatory approval is obtained, the United States.
Page 7 of 11 sequentially numbered pages
<PAGE> 8
RESULTS OF OPERATIONS
REVENUES
Net revenues for the quarter ended June 30, 1997, were $302,000, an increase of
178.5% from the comparable period in 1996. For the six months ended June 30,
1997, net revenues were $612,000, an increase of 465.3% from the comparable
period in 1996. Revenues result from the sale of METRIX devices, leads, and
accessories associated with commercial release of the METRIX System in Europe
and worldwide clinical investigations and, to a lesser degree, distribution of
catheters and related products in Europe. Revenues in future quarters will be
primarily dependent on the rate of market acceptance in Europe and the success
of the Company's expanded United States clinical trial activities. There can be
no assurance, however, that the METRIX System will achieve market acceptance in
Europe or that the Company's clinical trials in the United States will be
successful in obtaining regulatory approval of the METRIX System.
GROSS PROFITS
Gross profits for the quarter ended June 30, 1997 totaled $43,000 or 14% of net
revenues. Revenues for 1996 were the result of implants during clinical trials
and, accordingly, the cost of revenues were charged to research and development
expense. The Company's products are at an early stage in their product life
cycles; therefore, current period cost of revenues and gross profits may not be
indicative of future cost of revenues or gross profits. The Company has limited
experience in manufacturing, and is currently operating at volumes well below
expected facility capacity. While certain capacity and experience-related costs
are considered manufacturing development and are therefore charged to research
and development expense, cost of revenues and gross profits will continue to be
influenced by these factors in the foreseeable future. In addition, gross
profits will be influenced by sales discounts granted during the remainder of
the various clinical trials and discounts or allowances, if any, that accompany
the initial commercial release of the Company's products. Cost of revenues and
gross profits may also be affected by the Company's success in obtaining, and
therefore the timing of, regulatory approvals and market acceptance of the
Company's products, which would affect the mix of products sold.
RESEARCH AND DEVELOPMENT EXPENSES
Research and development expenses for the quarter ended June 30, 1997 were $5.5
million, a decrease of 7.9% from the comparable period in 1996. For the six
months ended June 30, 1997, research and development expenses were $11.0
million, a decrease of 2.7% from the comparable period in 1996. The
quarter-to-quarter decrease is primarily related to a one-time compensation
expense taken in the second quarter of 1996. It is anticipated that research and
development expenses will increase in future quarters as the Company continues
to develop its technology. Primary components of research and development
expenses are the investment in primary research and development costs associated
with the next generation of atrial defibrillation products, the continued
funding of preclinical studies and clinical trials of the Company's products in
Europe and North America, and certain expenses associated with manufacturing
development.
SALES AND MARKETING EXPENSES
Sales and marketing expenses for the quarter ended June 30, 1997 were $1.2
million, an increase of 48.6% from the comparable period in 1996. For the six
months ended June 30, 1997, sales and marketing expenses were $2.2 million, an
increase of 66.3% from the comparable period in 1996. The Company has increased
sales and marketing personnel worldwide, but primarily in its European
subsidiaries. This increase in personnel and subsequent personnel-related costs
are primarily related to support of the commercial release of the METRIX System
(and temporary atrial defibrillation products) and to support the ongoing
distribution activities in Europe. InControl believes that the intended
expansion of European and domestic sales and marketing activities and the
related increases in personnel and personnel-related costs associated with the
expansion will result in a substantial increase in sales and marketing expense
throughout the remainder of 1997, as compared to prior periods.
Page 8 of 11 sequentially numbered pages
<PAGE> 9
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the quarter ended June 30, 1997 were
$1.3 million, a decrease of 9.4% from the comparable period in 1996. For the six
months ended June 30, 1997, general and administrative expenses were $2.5
million, an increase of 4.9% from the comparable period in 1996. The
quarter-to-quarter decrease is primarily related to a one-time compensation
expense, taken in the second quarter of 1996. Exclusive of the effects of this
one-time compensation expense, the increase in general and administrative
expenses in the six-month period ended June 30, 1997 from the comparable period
in 1996 is primarily attributable to an increase in administrative personnel and
facilities costs throughout the Company and, to a lesser degree, professional
service expenses.
INTEREST INCOME AND INTEREST EXPENSE
Interest income for the quarter ended June 30, 1997 was $388,000, a decrease of
41.2% from the comparable period in 1996. For the six months ended June 30,
1997, interest income was $899,000, an increase of 0.6% from the comparable
period in 1996. The decrease quarter to quarter is attributable to decreased
average balances of cash, cash equivalents, and securities available for sale.
The modest increase between year-to-date periods is a result of low average
balances of cash, cash equivalents, and securities available for sale in the
first quarter of 1996 and the subsequent increase in these balances due to a
public offering of stock completed in April 1996. As a result of the financing
completed in July 1997, as described below, interest income will rise from
current period amounts during the balance of 1997 and then decrease from those
levels as these capital resources are used to fund operations and the related
average balances of cash, cash equivalents, and securities available for sale
decline.
Interest expense for the quarter ended June 30, 1997 was $131,000, an increase
of 8.3% from the comparable period in 1996. For the six months ended June 30,
1997, interest expense was $236,000, an increase of 0.3% from the comparable
period in 1996. The increase was related primarily to the Company's higher
average balance of equipment lease financing. Interest expense in future periods
will depend on the rate of capital expenditures and the success and timing of
the Company's efforts to secure additional sources of lease financing for those
expenditures.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had cash, cash equivalents, and securities
available for sale totaling $21.2 million, compared to a balance of $37.0
million at December 31, 1996. The decrease was used to fund $13.3 million in
operating activities and $3.3 million in purchases of property and equipment,
which was partially offset by a net increase in lease financing of $916,000.
During the comparable period in 1996, the Company funded $13.8 million in
operating activities and $1.3 million in purchases of property and equipment.
The Company completed on July 29, 1997, subsequent to the date of the
consolidated financial statements contained herein, a private placement offering
of 1,615,740 shares of Common Stock at $9.45 per share.
InControl expects that its cash needs will increase in future periods due to the
Company's expected sustained investment in research and development efforts, as
well as increases in spending on clinical trial activities and the expansion of
marketing, sales and manufacturing capabilities. The Company's future capital
requirements will depend on many factors, including the progress and costs of
preclinical studies and clinical trials, including the recruitment of suitable
patients, the timing of regulatory approvals, the availability of third-party
reimbursement for the Company's products, the rate of market acceptance and
adoption of the METRIX System, the costs associated with increases in marketing
and sales capabilities in the United States and Europe, the costs associated
with the development of manufacturing capabilities, the costs associated with
its product development efforts and the status of competing products. The
Company believes that together with the proceeds from the financing completed in
July 1997, its existing cash, cash equivalents, securities available for sale,
and interest thereon will be sufficient to meet its capital requirements through
mid-1998. Within this period, the Company will seek additional funding, through
either public or private sources, to meet its future operational requirements.
There can be no assurance such funds will be available as needed or on terms
that are acceptable to the Company. Insufficient funding will require the
Company to delay, reduce or eliminate some or all of its research and
development activities, planned clinical trials, and manufacturing and
administrative programs.
Page 9 of 11 sequentially numbered pages
<PAGE> 10
PART II: OTHER INFORMATION
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of InControl, Inc. was held on May 15, 1997.
A total of 14,305,521 shares of the Company's Common Stock were represented in
person or by proxy at the meeting, which comprised 84.1% of the total number of
shares of the Company's Common Stock outstanding as of March 20, 1997, the
record date for the meeting.
At the meeting, Michael J. Levinthal was re-elected to serve as a director of
the Company for a term of three years until the Company's Annual Meeting of
Stockholders in 2000. Mr. Levinthal received 13,794,211 votes, which represents
96.4% of the shares present at the meeting in person or by proxy.
Continuing as directors of the Company are Alan D. Frazier and Kurt C. Wheeler,
whose terms expire in 1998, and Mark B. Knudson and Donald C. Harrison, whose
terms expire in 1999.
Also at the meeting, the Company's stockholders approved an amendment to the
Company's Restated 1990 Stock Option Plan to increase the number of shares
issuable under the plan by 1,000,000. Of the votes represented at the meeting,
9,583,053 votes were cast in favor of the amendment, 3,790,264 votes were cast
against the amendment, and 6,609 votes abstained or were withheld from voting.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
--------
Exhibit No.
-----------
27.1 Financial Data Schedule
b) Reports on Form 8-K
-------------------
No reports on Form 8-K were filed during the quarter ended June 30, 1997.
Page 10 of 11 sequentially numbered pages
<PAGE> 11
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.
INCONTROL, INC.
(Registrant)
By: /s/ DONALD F. SEATON III
-------------------------
Donald F. Seaton III
Vice President, Finance,
Chief Financial Officer and
Secretary
(Authorized Officer and Principal
Financial Officer)
Dated: August 13, 1997
Page 11 of 11 sequentially numbered pages
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No.
-----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INCONTROL
INC'S 2ND QUARTER 10-Q BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH INCONTROL INC'S 2ND QUARTER 10-Q
AND 1996 10-K FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,498
<SECURITIES> 17,665
<RECEIVABLES> 491
<ALLOWANCES> 84
<INVENTORY> 2,400
<CURRENT-ASSETS> 24,986
<PP&E> 14,585
<DEPRECIATION> 7,741
<TOTAL-ASSETS> 32,825
<CURRENT-LIABILITIES> 4,502
<BONDS> 2,048
0
0
<COMMON> 129,333
<OTHER-SE> (103,058)
<TOTAL-LIABILITY-AND-EQUITY> 32,825
<SALES> 612
<TOTAL-REVENUES> 612
<CGS> 484
<TOTAL-COSTS> 484
<OTHER-EXPENSES> 15,756
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 236
<INCOME-PRETAX> (14,965)
<INCOME-TAX> 0
<INCOME-CONTINUING> (14,965)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (14,965)
<EPS-PRIMARY> (.88)
<EPS-DILUTED> (.88)
</TABLE>
