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 January 31, 1998; or
[ ] TRANSITION REPORT PERSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission File Number: 0-28010
MEDWAVE, INC.
(Exact name of registrant as specified in its charter)
Minnesota 41-1493458
(State or other jurisdiction of (IRS employer
incorporation or organization) identification number)
4382 Round Lake Road West
Arden Hills, Minnesota 55112
(Address of principal executive offices,
zip code)
(612) 639-1227
(Registrant's telephone number, including
area code)
Indicate by mark whether the issuer (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 as 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 [ ]
As of January 31, 1998, the issuer had 4,926,896 shares of Common Stock
outstanding.
<PAGE>
Medwave, Inc.
Form 10-Q
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets - April 30, 1997 and January 31, 1998 2
Statements of Operations - Three Months Ended January 31, 1998 3
and January 31, 1997, Nine Months Ended January 31, 1998
and January 31, 1997, and Period from June 27, 1984
(Inception) to January 31, 1998
Statements of Cash Flows - Three Months Ended January 31, 1998 4
and January 31, 1997, Nine Months Ended January 31, 1998 and
January 31, 1997, and Period from June 27, 1984 (Inception) to
January 31, 1998
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition 5
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities and Use of Proceeds 8
Item 3. Defaults Upon Senior Securities 9
Item 4. Submission of Matters To A Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 9
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Medwave, Inc.
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
April 30, January 31,
1997 1998
-----------------------------
(see note 2) (unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 1,240,100 $ 2,005,308
Short term investments 2,539,905 511,250
Accounts receivable 41,986 157,619
Inventories 114,467 282,658
Prepaid expenses 81,182 105,594
------------ ------------
Total current assets 4,017,640 3,062,429
Investments 1,298,658 1,087,648
Property and equipment:
Research and development equipment 237,561 243,630
Office Equipment 121,193 118,690
Manufacturing and engineering equipment 68,262 71,582
Sales and marketing equipment 34,371 58,165
Leasehold improvements 31,613 31,613
------------ ------------
493,000 523,680
Accumulated depreciation (336,320) (376,331)
------------ ------------
156,680 147,349
Patents, net 78,818 59,769
------------ ------------
Total Assets $ 5,551,796 $ 4,357,195
============ ============
Liabilities and shareholders' equity
Current liabilities:
Accounts payable $ 78,390 $ 83,918
Accrued payroll 50,810 147,286
------------ ------------
Total current liabilities 129,200 231,204
Shareholders' equity:
Common Stock, no par value:
Authorized shares--50,000,000
Issues and outstanding shares -- 4,818,738 at 12,764,703 13,237,386
April 30, 1997 and 4,926,896 at Jan 31, 1998
Unrealized gain/(loss) on investments (24,919) --
Deficit accumulated during the development stage (7,317,188) (9,111,395)
------------ ------------
Total shareholders' equity 5,422,596 4,125,991
------------ ------------
Total liabilities and shareholders' equity $ 5,551,796 $ 4,357,195
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Medwave, Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Period from
June 27, 1984
(Inception)
Three months ended January 31 Nine months ended January 31 to
---------------------------- ----------------------------
1998 1997 1998 1997 January 31, 1998
---------------------------- ---------------------------- -----------
<S> <C> <C> <C> <C> <C>
Revenue:
Net Sales $ 166,013 $ 20,481 $ 458,809 $ 25,476 $ 531,751
Operating expenses:
Cost of sales and product development 129,582 51,551 435,348 60,904 548,608
Research and development 230,686 191,351 812,041 605,810 5,399,773
Sales and marketing 284,372 136,669 844,444 336,228 1,492,720
General and administrative 126,828 139,129 333,542 358,390 2,548,032
---------- ---------- ----------- ----------- -----------
Operating loss ($ 605,455) ($ 498,219) ($1,966,566) ($1,335,856) ($9,457,382)
Other income:
Interest income 48,816 76,818 172,358 249,460 972,748
---------- ---------- ----------- ----------- -----------
Net loss $ (556,639) $ (421,401) $(1,794,208) $(1,086,396) $(8,484,634)
========== ========== =========== =========== ===========
Net loss per share $ (0.12) $ (0.09) $ (0.37) $ (0.23) $ (3.62)
========== ========== =========== =========== ===========
Weighted average number of common and
common equivalent shares outstanding 4,828,528 4,811,034 4,822,831 4,780,629 2,346,640
========== ========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Medwave, Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Period from
June 27, 1984
(Inception)
Three months ended January 31 Nine months ended January 31 to
--------------------------- ----------------------------
1998 1997 1998 1997 January 31, 1998
--------------------------- ---------------------------- -------------
<S> <C> <C> <C> <C> <C>
Operating activities
Net loss $ (556,639) $ (421,401) $ (1,794,208) $ (1,086,396) $ (8,484,634)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation 21,039 12,713 58,472 29,229 535,355
Amortization 6,350 6,530 19,049 23,481 78,089
Loss on sale of equipment -- -- -- -- 7,375
Issuance of Common Stock for consulting services -- -- -- -- 3,413
Changes in operating assets and liabilities:
Accounts receivable (92,726) (328) (115,633) (5,323) (157,619)
Inventories (123,621) 18,278 (168,191) (98,142) (282,658)
Prepaid expenses (97,225) 32,156 (24,412) (8,506) (105,594)
Accounts payable and accrued expenses (65,315) 5,074 5,528 (39,850) 83,918
Accrued payroll and related taxes 93,388 1,067 96,476 13,367 147,286
------------ ----------- ----------- --------- ---------
Net cash used in operating activities (814,749) (345,911) (1,922,919) (1,172,140) (8,175,069)
Investing activities
Patent expenditures -- -- -- (27,157) (137,858)
Purchase of investments (297,144) (6,046,921) (1,785,193) (11,262,975) (30,654,654)
Sales and maturity of investments -- 6,419,501 4,050,460 11,660,978 29,056,438
Purchase of property and equipment (3,666) (27,660) (49,823) (86,310) (706,317)
Proceeds from sale of equipment -- -- -- -- 18,200
------------ ----------- ----------- --------- ---------
Net cash used in investing activities (300,810) 344,920 2,215,444 284,536 (2,424,191)
Financing activities
Net proceeds from issuance of Convertible Preferred Stock -- -- -- -- 4,848,258
Net proceeds from issuance of Common Stock 469,683 2,850 472,683 293,859 7,756,310
------------ ----------- ----------- --------- ---------
Net cash provided by financing activities 469,683 2,850 472,683 293,859 12,604,568
------------ ----------- ----------- --------- ---------
(Decrease) increase in cash and cash equivalents (645,876) 1,859 765,208 (593,745) 2,005,308
Cash and cash equivalents at beginning of period 2,651,184 173,517 1,240,100 769,121 --
------------ ----------- ----------- --------- ---------
Cash and cash equivalents at end of period $ 2,005,308 $ 175,376 $ 2,005,308 $ 175,376 $ 2,005,308
============ =========== =========== ========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Medwave, Inc.
(A Development Stage Company)
Notes To Financial Statements
January 31, 1998
1. Organization and Description of Business
Medwave, Inc. (the Company) is a development stage enterprise engaged
exclusively in the development, manufacturing and marketing of a
proprietary, non-invasive system that continually monitors arterial blood
pressure of adults.
2. Basis of Presentation
The financial information presented as of January 31, 1998 has been
prepared from the books and records without audit. Financial information
as of April 30, 1997 is based on audited financial statements of the
Company but does not include all disclosures required by generally
accepted accounting principles. In the opinion of management, all
adjustments, consisting only of normal recurring adjustments necessary for
a fair presentation of the financial information for the periods
indicated, have been included. For further information regarding the
Company's accounting policies, refer to the financial statements and
related notes included in the Company's Annual Report on Form 10-KSB for
the fiscal year ended April 30, 1997.
3. Net 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 three month and nine month
periods ended January 31, 1997 and January 31, 1996, 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 warrants are excluded as their effects are
anti-dilutive.
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operation
The following discussion should be read in conjunction with, and is qualified
by, the Company's financial statements set forth in Item 1 of this Form 10-Q.
General
The Company, which was formed in 1984, is a development stage company that
currently employs fifteen full-time employees and three part-time employees.
Since its inception, the Company has been engaged exclusively in the development
of a non-invasive, blood pressure measurement and monitoring system. Utilizing
the Company's proprietary technology, the Vasotrac(R) system monitors blood
pressure continually, providing new readings about every fifteen heartbeats. The
continual, efficacious and non-invasive qualities of the Vasotrac(R) system make
it a new approach to blood pressure monitoring.
<PAGE>
The Company has incurred an accumulated deficit of $(9,111,395) from its
inception through January 31, 1998. Significant additional losses from further
development, testing, regulatory compliance, sales, marketing, and other
expenses are expected to be incurred by the Company at least until it emerges
from the development stage.
The Company's success is dependent upon the successful development and marketing
of the Vasotrac(R) system. However, there can be no assurance that the
Vasotrac(R) system can be successfully marketed or sold in sufficient quantities
and at margins necessary to achieve or maintain profitability. The Company is
currently conducting a controlled market rollout of the Vasotrac(R) system in
order to allow flexibility if product design alterations are required in
response to customer feedback. The Company hopes to be ready for nationwide
sales by April 1998. In preparing for nationwide sales, the Company is in the
process of adding and training dealers. The Company recently added dealers in
the southern United States and California. Depending upon whether the Company's
sales efforts are successful and given the relatively long length of time of the
hospital sales cycle for capital equipment, it will likely be mid-calendar 1998
before the Company starts to receive orders from these dealers. A nationwide
sales effort is highly dependent on the development process for the system, the
scale-up process, customer acceptance, and distribution methods that become
available to the Company.
As the Company emerges from the development stage, its success will also depend
on its ability to hire additional employees for key operating positions,
including sales and marketing positions. Competition for such employees is
intense and there can be no assurance that the Company will be successful in
hiring such employees on acceptable terms or when required, or in maintaining
the services of its present employees. The Company estimates that within the
next twelve months, it may require approximately 10 additional persons, for key
positions in areas including general and administrative, sales and marketing,
research and development and manufacturing. The Company preliminarily estimates
that these employees will increase employee-related expenses in excess of
$500,000 during the next twelve months. However, such requirements are subject
to change and are highly dependent on the development process for the system,
including the manufacturing scale-up process, market acceptance, and the
Company's distribution methods.
Cash and cash equivalents, and short and long-term investments are being used
primarily to continue clinical testing of the Vasotrac(R) system, to begin
manufacturing and marketing, to conduct any additional research and product
development efforts that may be necessary, and to provide working capital. Over
the next twelve months, the Company expects to spend in excess of $900,000 for
research and development, including amounts expected to be spent on clinical
trials. The funds are expected to be used to develop improved sensors and wrist
holders and to sustain engineering support for manufacturing. No significant
amount of equipment is expected to be required. The Company believes that the
cash and cash equivalents, and short and long-term investments will allow the
Company to meet its cash requirements for approximately twelve months from
January 31, 1998. If the development process for the system does not proceed as
expected because significant product design changes are required to achieve
market acceptance, or unexpected difficulties are encountered in attaining
cost-effective manufacturability, the Company may require additional capital at
an earlier date. Such capital may be sought through bank borrowing, equipment
financing, equity financing, and other methods. The Company's financing needs
are subject to change depending on, among other things, market conditions and
opportunities, equipment or other asset-based financing that may be available,
and cash flow from operations. Any material favorable or unfavorable deviation
from its anticipated expense could significantly affect the timing and amount of
additional financing that may be required. Additional financing may not be
available when needed or, if available, may not be on terms that are favorable
to the Company or its security holders. In addition, any such financing could
result in substantial dilution to then existing security holders.
<PAGE>
Results of Operations
The results of operations compares the three months and nine months ended
January 31, 1998 and 1997, respectively. The analysis of liquidity and capital
resources compares January 31, 1998 to April 30, 1997.
Operating revenue was $166,013 and $20,481 for the quarters ended January 31,
1998 and January 31, 1997, respectively. Operating revenue was $458,809 and
$25,476 for the nine months ended January 31, 1998 and January 31, 1997
respectively. The Company commenced sales in the second quarter of fiscal year
1997.
Cost of sales and product development was $129,582 and $51,551 for the quarters
ended January 31, 1998 and January 31, 1997, respectively. Cost of sales and
product development was $435,348 and $60,904 for the nine months ended January
31, 1998 and January 31, 1997, respectively. The Company commenced sales during
the second quarter of fiscal year 1997.
The Company incurred $230,686 and $191,351 for research and development expenses
for the quarters ended January 31, 1998 and January 31, 1997, respectively. The
Company incurred $812,041 and $605,810 for research and development expenses for
the nine months ended January 31, 1998 and January 31, 1997, respectively. The
research and development expense increase was primarily attributed to conducting
a multi-site clinical study on the accuracy of the Vasotrac(R) system.
The Company incurred $284,372 and $136,669 for sales and marketing expenses for
the quarters ended January 31, 1998 and January 31, 1997, respectively. The
Company incurred $844,444 and $336,228 for sales and marketing expenses for the
nine months ended January 31, 1998 and January 31, 1997 respectively. The sales
and marketing expense increase was attributable to the hiring of additional
sales and marketing personnel and an increase in travel expenses as the Company
continues the controlled market rollout of the Vasotrac(R).
The Company incurred $126,828 and $139,129 for general and administrative
expenses for the quarters ended January 31, 1998 and January 31, 1997,
respectively. The Company incurred $333,542 and $358,390 for the nine months
ended January 31, 1998 and January 31, 1997 respectively. The general and
administrative expenses decrease was primarily attributable to lower insurance
expenses.
Interest income was $48,816 and $76,818 for the quarters ended January 31, 1998
and January 31, 1997, respectively. Interest income was $172,358 and $249,458
for the nine months ended January 31, 1998 and January 31, 1997 respectively.
The decrease reflects lower cash, cash equivalents, and short and long-term
investments as the Company incurs the cost of rolling out the Vasotrac(R)
system.
Liquidity and Capital Resources
The Company's cash, cash equivalents, and short- and long-term investments were
$3,604,206 and $5,078,663 at January 31, 1998 and April 30, 1997, respectively.
The Company incurred cash expenditures of $814,749 for operations for the
quarter ended January 31, 1998.
With the cash and cash equivalents, and short and long-term investments, the
Company believes that sufficient liquidity is available to satisfy its working
capital needs for approximately twelve months from January 31, 1998. The Company
has no significant capital expenditure commitments.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On January 9, 1998, the Registrant sold 12,658 shares of Common Stock for cash
consideration of $23,670. Such shares were sold to David B. Johnson, a
shareholder of the Registrant, upon exercise of a warrant issued by the
Registrant in February 1991. No commissions were paid in connection with such
sale. The sale of such Common Stock was deemed to be exempt from registration by
virtue of Section 4(2) thereof. Mr. Johnson represented his intention to acquire
the Common Stock for investment purposes only and not with a view to the
distribution thereof, in addition, a restrictive securities legend has been
placed on the certificates representing the shares.
Use of proceeds for the period ending: January 31, 1998
(1) Effective Date: November 9, 1995
SEC File Number: 0-28010-6
(2) Offering Date: November 9, 1995
(4)(ii) Managing Underwriter: Miller, Johnson & Kuehn, Inc.
(4)(iii) Title of Security: Common Stock
(4)(iv) Amount Registered: 1,610,000
Aggregate Offering Price: $8,050,000
Amount Sold: 1,610,000
Aggregate Offering Price Sold: $8,050,000
(4)(v) Underwriting Discount and Commissions: $ 805,000
Expenses paid to or for underwriters: $ 194,169
Other expenses: $ 217,263
Total expenses: $ 1,216,432
All 4(v) are direct or indirect payments to others
(4)(vi) Net offering proceeds: $6,833,568
(4)(vii) Temporary Investments (specify)
Construction of Plant, building and Facilities
(A) Direct or indirect payments to directors,
officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: None
(B) Direct or indirect payment to others: $ 31,613
Purchases and installation of machinery and equipment
(A) Direct or indirect payments to directors,
officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: None
(B) Direct or indirect payment to others: $215,170
Reserve Asset Management Account:
(A) Direct or indirect payments to directors,
officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: None
(B) Direct or indirect payment to others: $1,024,572
<PAGE>
Marketing & Manufacturing:
(A) Direct or indirect payments to directors,
officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: $ 399,516
(B) Direct or indirect payment to others: $2,020,761
Research & Development:
(A) Direct or indirect payments to directors,
officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: $ 236,868
(B) Direct or indirect payment to others: $1,765,980
General & Administrative:
(A) Direct or indirect payments to directors,
officers, general partners of issuer or their
associates, to persons owning ten percent
(10%) or more of any class of equity securities
of the issuer and to affiliates of the issuer: $ 245,881
(B) Direct or indirect payment to others: $ 893,207
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
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: Statements in this filing, and elsewhere, which look forward in time
involve risks and uncertainties which may affect the actual results of
operations. The following important factors, among others, have affected and, in
the future, could affect the Company's actual results: resistance to the
acceptance of new medical products, the market acceptance of the Vasotrac(R)
system, hospital budgeting cycles, the possibility of adverse findings or
negative commentary from clinical researchers or other users of the product, and
the Company's success in creating a network of distributors capable of selling
the Company's product and the Company's ability to scale up its manufacturing
process.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
EXHIBITS DESCRIPTION
11 Statement regarding Computation of Earnings Per Share
27 Financial data schedule
(B) REPORTS ON FORM 8K:
No reports on Form 8-K were filed by the Company during
the quarter ended January 31, 1998
<PAGE>
SIGNATURES
In accordance with 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.
Date: February 12, 1998 Medwave, Inc.
By: /s/ G. Kent Archibald
G. Kent Archibald
President and Chief Executive Officer
/s/ Mark T. Bakko
Mark T. Bakko
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
MEDWAVE, INC.
FORM 10-Q
FOR QUARTER ENDED
JANUARY 31, 1998
Exhibit No. Description
11 Statement regarding Computation of Earnings Per Share
27 Financial Data Schedule (filed in electronic format only)
EXHIBIT 11
Exhibit 11.1 - Statement Regarding Computation of Earnings Per Share
<TABLE>
<CAPTION>
Period from
June 27, 1984
(Inception)
Three Months Ended Jan 31 Nine Months Ended Jan 31 to
------------------------ ----------------------------
1998 1997 1998 1997 Jan 31, 1998
------------------------ ---------------------------- --------------
Basic loss per share:
<S> <C> <C> <C> <C> <C>
Shares outstanding 4,926,896 4,812,333 4,926,896 4,812,333 4,926,896
Effect of using weighted average common and (98,368) (1,299) (104,065) (31,704) (2,818,075)
common equivalent shares
Effect of shares issuable under common stock * * * * *
warrants using the treasury stock method
Effect of shares issuable under stock options * * * * *
using the treasury stock method
SAB No. 83 - for stock options granted at
exercise price less than the initial public
offering price during the 12 months preceding
the initial public offering using the treasury
method N/A N/A N/A N/A 237,819
---------- ---------- ------------ ------------ -----------
Total 4,828,528 4,811,034 4,822,831 4,780,629 2,346,640
========== ========== ============ ============ ===========
Net loss $ (556,639) $ (421,401) $ (1,794,208) $ (1,086,396) $(8,484,634)
========== ========== ============ ============ ===========
Net loss per share ($ 0.12) ($ 0.09) ($ 0.37) ($ 0.23) ($ 3.62)
========== ========== ============ ============ ===========
Diluted loss per share:
Shares used in computing basic earnings per share 4,828,528 4,811,034 4,822,831 4,780,629 2,346,640
Assumed conversion of all series of redeemable
convertible preferred stock None None None None None
---------- ---------- ------------ ------------ -----------
Total 4,828,528 4,811,034 4,822,831 4,780,629 2,346,640
========== ========== ============ ============ ===========
Net Loss $ (556,639) $ (421,401) $ (1,794,208) $ (1,086,396) $(8,484,634)
========== ========== ============ ============ ===========
Pro forma net loss per share $ (0.12) $ (0.09) $ (0.37) $ (0.23) $ (3.62)
========== ========== ============ ============ ===========
</TABLE>
* Antidilutive
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
the financial statements contained in the Registrant's Form 10-Q for the
quarter ended January 31, 1998
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U. S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-START> MAY-01-1997
<PERIOD-END> JAN-31-1998
<EXCHANGE-RATE> 1
<CASH> 2,005,308
<SECURITIES> 511,250
<RECEIVABLES> 157,619
<ALLOWANCES> 0
<INVENTORY> 282,658
<CURRENT-ASSETS> 3,062,429
<PP&E> 523,680
<DEPRECIATION> 376,331
<TOTAL-ASSETS> 4,357,195
<CURRENT-LIABILITIES> 231,204
<BONDS> 0
0
0
<COMMON> 13,237,386
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,357,195
<SALES> 458,809
<TOTAL-REVENUES> 458,809
<CGS> 0
<TOTAL-COSTS> 435,348
<OTHER-EXPENSES> 1,990,027
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,794,208)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,794,208)
<EPS-PRIMARY> (.37)
<EPS-DILUTED> (.37)
</TABLE>
