<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number
March 31, 1996 0-19635
GENTA INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CERTIFICATE OF INCORPORATION)
Delaware 33-0326866
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
3550 General Atomics Court
San Diego, California 92121
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(619) 455-2700
(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.
Class Shares Outstanding at April 30, 1996
----- ------------------------------------
Common Stock, $.001 par value 26,341,870
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<PAGE>
Genta Incorporated
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at March 31, 1996
and December 31, 1995 . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the
Quarters Ended March 31, 1996 and 1995. . . . . . . . . . . . . 4
Condensed Consolidated Statements of Cash Flows for the
Quarters Ended March 31, 1996 and 1995. . . . . . . . . . . . . 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 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . .10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
2
<PAGE>
GENTA INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1996 1995
------------ ------------
(UNAUDITED) (NOTE)
<S> <C> <C>
Current assets:
Cash and cash equivalents........................................................... $ 5,445,600 $ 271,755
Receivable from sale of preferred stock............................................. - 2,785,800
Trade accounts receivable........................................................... 747,814 471,296
Notes receivable from officers and employees........................................ 62,000 362,000
Inventories......................................................................... 795,808 702,644
Other current assets................................................................ 291,355 151,923
------------ ------------
Total current assets................................................................... 7,342,577 4,745,418
------------ ------------
Property and equipment, net............................................................ 4,318,909 4,656,955
Investment in and advances to joint venture............................................ - 258,896
Intangibles, net....................................................................... 3,583,984 3,577,654
Deposits and other assets.............................................................. 2,466,609 2,392,220
------------ ------------
$ 17,712,079 $ 15,631,143
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................................... $ 1,888,500 $ 2,260,495
Accrued dividends payable........................................................... 2,216,081 1,572,588
Other accrued expenses.............................................................. 1,703,033 2,036,498
Deficit in joint venture............................................................ 294,944 -
Deferred revenue.................................................................... 194,718 148,532
Short-term notes payable............................................................ - 760,000
Current portion of notes payable and
capital lease obligations........................................................ 1,065,330 1,120,013
------------ ------------
Total current liabilities.............................................................. 7,362,606 7,898,126
------------ ------------
Notes payable, less current portion.................................................... 1,335,824 1,437,481
Capital lease obligations, less current portion........................................ 733,923 896,465
Stockholders' equity:
Preferred stock; 5,000,000 shares authorized:
Series A convertible preferred stock, $.001 par value; 600,000 shares
issued and outstanding at March 31, 1996 and December 31, 1995,
liquidation value $31,550,000 at March 31, 1996............................... 600 600
Series B convertible preferred stock, $.001 par value; no shares and 3,000
shares issued and outstanding at March 31, 1996 and December 31, 1995,
respectively.................................................................. - 3
Series C convertible preferred stock, $.001 par value; 7,044 shares and no
shares issued and outstanding at March 31, 1996 and December 31, 1995,
respectively, liquidation value $7,052,000 at March 31, 1996.................. 7 -
Common stock, $.001 par value; 45,000,000 shares
authorized, 26,292,980 shares and 23,963,534 shares
issued and outstanding at March 31, 1996 and December 31, 1995,
respectively..................................................................... 26,293 23,964
Additional paid-in capital.......................................................... 108,473,356 102,374,105
Accumulated deficit................................................................. (100,170,554) (96,949,625)
Notes receivable from stockholders.................................................. (49,976) (49,976)
------------ ------------
Total stockholders' equity............................................................. 8,279,726 5,399,071
------------ ------------
$ 17,712,079 $ 15,631,143
------------ ------------
------------ ------------
</TABLE>
Note: The balance sheet at December 31, 1995 has been 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 accompanying notes.
3
<PAGE>
GENTA INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED MARCH 31,
--------------------------------
1996 1995
------------ ------------
<S> <C> <C>
Revenues:
Product sales................................................. $ 1,245,559 $ 708,747
Collaborative research
and development............................................. - 375,000
------------ ------------
1,245,559 1,083,747
------------ ------------
Cost and expenses:
Cost of products sold......................................... 555,392 416,852
Research and development...................................... 1,576,436 3,545,954
Charge for acquired in-process research and development....... - 1,150,000
Selling, general and administrative........................... 1,109,077 1,442,798
------------ ------------
3,240,905 6,555,604
------------ ------------
Loss from operations............................................. (1,995,346) (5,471,857)
Equity in net loss of joint venture.............................. (1,207,847) (1,983,442)
Other income (expense):
Interest and other income..................................... 76,987 91,630
Interest expense.............................................. (94,723) (84,739)
------------ ------------
(17,736) 6,891
------------ ------------
Net loss......................................................... $ (3,220,929) $ (7,448,408)
Dividends on preferred stock..................................... (677,500) (637,500)
------------ ------------
Net loss applicable to common shares............................. $ (3,898,429) $ (8,085,908)
------------ ------------
------------ ------------
Net loss per common share........................................ $ (.16) $ (.58)
------------ ------------
------------ ------------
Shares used in computing net loss per
common share................................................... 24,796,633 13,875,307
------------ ------------
------------ ------------
</TABLE>
See accompanying notes.
4
<PAGE>
GENTA INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTERS ENDED MARCH 31,
--------------------------------
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net loss....................................................... $ (3,220,929) $ (7,448,408)
Items reflected in net loss not requiring cash:
Depreciation and amortization............................... 402,537 433,177
Equity in net loss of joint venture......................... 1,207,847 1,983,442
Changes in operating assets and liabilities................. (743,466) 406,586
------------ ------------
Net cash used in operating activities.......................... (2,354,011) (4,625,203)
INVESTING ACTIVITIES
Maturities of short-term investments........................... - 3,843,685
Investment in and advances to joint venture.................... (654,007) (2,632,639)
Deposits and other............................................. (101,210) (1,402,896)
------------ ------------
Net cash used in investing activities.......................... (755,217) (191,850)
FINANCING ACTIVITIES
Proceeds from notes payable.................................... 240,000 3,339,815
Receipt of proceeds from sale of preferred stock............... 2,785,800 -
Repayments of notes payable and capital lease obligations...... (318,882) (339,009)
Proceeds from issuance of preferred stock, net................. 5,568,658 -
Other.......................................................... 7,497 650
------------ ------------
Net cash provided by financing activities...................... 8,283,073 3,001,456
------------ ------------
Increase (decrease) in cash and cash equivalents............... 5,173,845 (1,815,597)
Cash and cash equivalents at beginning of period............... 271,755 7,259,220
------------ ------------
Cash and cash equivalents at end of period..................... $ 5,445,600 $ 5,443,623
------------ ------------
------------ ------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid.................................................. $ 57,434 $ 84,739
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Preferred stock dividends accrued.............................. 677,500 637,500
Preferred stock issued upon conversion of short-term
notes payable and accrued interest........................... 1,044,000 -
</TABLE>
See accompanying notes.
5
<PAGE>
GENTA INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
(1) BASIS OF PRESENTATION
The unaudited consolidated 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 to be presented for
complete financial statements. The accompanying financial statements reflect
all adjustments (consisting only of normal recurring accruals) which are, in the
opinion of management, necessary for a fair presentation of the results for the
interim periods presented. Certain balances in 1995 have been reclassified to
conform with the presentation in 1996.
The consolidated financial statements and related disclosures have been
prepared with the presumption that users of the interim financial information
have read or have access to the audited financial statements for the preceding
fiscal year. Accordingly, these financial statements should be read in
conjunction with the audited consolidated financial statements and the related
notes thereto included in the Registrant's Annual Report on Form 10-K for the
year ended December 31, 1995.
The Company has experienced significant quarterly fluctuations in operating
results and it expects that these fluctuations in revenues, expenses and losses
will continue.
(2) INVENTORIES
Inventories are comprised of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ -----------
(Unaudited)
<S> <C> <C>
Raw materials and supplies. . . . $ 301,545 $ 280,621
Work-in-process . . . . . . . . . 267,105 162,097
Finished goods. . . . . . . . . . 227,158 259,926
------------ -----------
$ 795,808 $ 702,644
============ ===========
</TABLE>
(3) NET LOSS PER COMMON SHARE
Net loss per common share is computed using the weighted average number of
common shares outstanding during each of the interim periods. Shares issuable
upon the exercise of outstanding stock options and warrants and upon the
conversion of convertible preferred stock are not reflected as their effect is
anti-dilutive.
(4) STOCKHOLDERS' EQUITY
In March 1996, the Company raised gross proceeds of $6 million
(approximately $5.6 million net of offering fees and costs) in a private
placement of 6,000 shares of Series C Convertible Preferred Stock (the "Series C
Preferred Stock") sold to institutional investors. The Series C Preferred Stock
is convertible at the option of the holders into shares of Genta's common stock
at a conversion price based upon 75% of the average Nasdaq closing bid prices of
Genta's common stock for a specified period. Terms of the Series C Preferred
Stock also provide for dividends payable in shares of the Company's common
stock. Concurrent with the closing of the private placement of Series C
Preferred Stock, short-term promissory notes with an aggregate principal balance
of $1 million plus accrued interest were converted into 1,044 shares of the
Company's Series C Preferred Stock.
6
<PAGE>
During February 1996, holders of 3,000 shares of Series B Convertible
Preferred Stock converted such shares and related accrued dividends into
approximately 2,269,000 shares of the Company's common stock pursuant to terms
of the Series B Purchase Agreements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Since its inception in February 1988, Genta has devoted its principal
efforts toward drug discovery, research and development. Genta has been
unprofitable to date incurring substantial operating losses associated with
ongoing research and development activities, preclinical testing and clinical
trials, manufacturing activities, and development activities undertaken by Genta
Jago Technologies B.V. ("Genta Jago"), the Company's joint venture with Jagotec
AG. From the period since its inception to March 31, 1996, the Company has
incurred a cumulative net loss of $100.2 million. The Company has experienced
significant quarterly fluctuations in operating results and it expects that
these fluctuations in revenues, expenses and losses will continue.
During 1995, the Company restructured its operations to focus on its near-
term drug delivery (GEOMATRIX) development pipeline and the ANTICODE cancer area
and reduce its operating expenses. Genta Jago entered into a collaborative
licensing and development agreement with Apothecon, Inc. ("Apothecon"), the
multisource subsidiary of Bristol-Myers Squibb in March 1996 and is currently
negotiating with other pharmaceutical companies regarding additional
collaborative agreements. If successfully completed, the Company believes that
these collaborations would further reduce the Company's cash requirements
associated with its development activities. The Company plans to reduce its
investment in its ANTICODE program to a nominal level during 1996 through
funding from corporate partners or other sources, if collaborative agreements or
other sources of financing can be successfully secured, and expense reductions.
However, depending on the level of financing available from corporate partners
and other sources, and the status of technological advances and other factors,
the Company may elect to pursue additional research and development in the
ANTICODE area. The Company is also actively seeking additional equity financing
and other funding arrangements. However, there can be no assurance that any
such collaborative agreements or other sources of funding will be available on
favorable terms, if at all.
Except for the historical information contained herein, the matters
discussed in this Quarterly Report on Form 10-Q are forward-looking statements
that involve risks and uncertainties, including obtaining sufficient financing
to maintain the Company's planned operations, the timely development, receipt of
necessary regulatory approvals and acceptance of new products, the successful
application of the Company's technology and products, the impact of competitive
products and pricing and reimbursement policies, changing market conditions and
other risks detailed throughout this Form 10-Q. Actual results may differ
materially from those projected. These forward-looking statements represent the
Company's judgment as of the date of the filing of this Form 10-Q. The Company
disclaims, however, any intent or obligation to update these forward-looking
statements.
RESULTS OF OPERATIONS
Operating revenues increased to $1.25 million in the first quarter of 1996
compared to $1.1 million in the first quarter of 1995 due to increased sales of
specialty chemical and pharmaceutical intermediate products. Increased sales of
such products were primarily attributable to increased market penetration of
existing products and, to a lesser degree, the introduction of new products.
The Company has historically experienced significant quarterly fluctuations in
its level of product sales, generally reflecting the timing of customer demand
for certain products, and the Company anticipates that these sales fluctuations
may continue in future periods. Collaborative research and development revenues
recorded during the first quarter of 1995 represented revenues earned pursuant
to the Company's collaboration with The Procter & Gamble Company which ended in
late 1995. The Company is actively seeking to establish new collaborative
agreements with
7
<PAGE>
potential corporate partners. However, there can be no assurance that any such
collaborative agreements will be successfully secured.
Costs and expenses decreased to $3.2 million in the first quarter of 1996
compared to $6.6 million in the first quarter of 1995 primarily due to the
Company's restructuring, related workforce reductions and other cost savings
measures implemented during 1995 and early 1996. Costs and expenses during the
first quarter of 1995 also included a charge of $1.15 million for acquired in-
process research and development associated with the expansion of Genta Jago to
obtain the rights to develop additional GEOMATRIX-based products. In addition
to the Company's restructuring and cost saving measures implemented in 1995, the
Company is seeking to realize additional reductions in operating expenses during
the remaining quarters of 1996. However, the Company anticipates that, if
sufficient collaborative revenues and other funding is available, research and
development and other operating expenses may increase in future periods due to
requirements for clinical trials and increased regulatory costs.
The Company's equity in net loss of joint venture (Genta Jago) decreased to
$1.2 million in the first quarter of 1996 from $2.0 million in the comparable
quarter of 1995. Such decrease is largely attributable to the fact that a
greater portion of development activities were funded pursuant to Genta Jago's
collaborative agreements and that the joint venture's development efforts are
now focused exclusively on GEOMATRIX-based drug delivery products.
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company has financed its operations primarily from
private and public offerings of its equity securities. Net cash provided from
these offerings totaled approximately $96 million through March 31, 1996,
including net proceeds of $5.6 million raised during the first quarter of 1996
and $4 million of financing obtained during 1995 in exchange for promissory
notes later converted into shares of the Company's equity securities. At March
31, 1996, the Company had cash and cash equivalents totaling $5.4 million
compared to a total of $272,000 at December 31, 1995. The increase in cash and
cash equivalents during the first quarter of 1996 is largely attributable to
proceeds from the Company's private placements of preferred stock, including the
receipt of $2.8 million in net proceeds from the Company's sale of Series B
Preferred Stock completed in December 1995 and reflected as a receivable at
December 31, 1995, less cash used in the Company's operations.
In connection with the Genta Jago joint venture, the Company entered into a
working capital agreement with Genta Jago which expires in October 1998.
Pursuant to this agreement, the Company is required to make loans to Genta Jago
up to a mutually agreed upon maximum commitment amount, which amount is
established by the parties on a periodic basis. As of March 31, 1996, the
Company had advanced working capital loans of approximately $13.8 million to
Genta Jago, net of principal repayments, which amount fully satisfied the loan
commitment established by the parties through March 31, 1996. Such loans bear
interest and are payable in full in October 1998, or earlier in the event
certain revenues are received by Genta Jago from third parties. There can be no
assurance, however, that Genta Jago will obtain sufficient financial resources
to repay such loans to Genta. The amount of future loans by Genta to Genta Jago
will depend upon several factors including the amount of funding obtained by
Genta Jago through collaborative arrangements, Genta's ability to provide loans,
and the timing and cost of Genta Jago's preclinical studies, clinical trials and
regulatory activities. Genta Jago entered into collaborative development
agreements with Gensia, Inc. and Apothecon during January 1993 and March 1996,
respectively. Such agreements provide funding to Genta Jago for the development
and clinical testing of selected controlled-release pharmaceuticals in addition
to potential milestone payments and royalties on future product sales.
Terms of the Company's Series A and Series C preferred stock require the
payment of dividends. Dividends may be paid in cash or common stock or a
combination thereof, at the Company's option. The Company may redeem the Series
A preferred stock under certain circumstances and is required to redeem the
Series A preferred stock, subject to certain conditions, in September 1996 at a
redemption price of $50 per share, plus accrued and unpaid dividends (the
"Redemption Price"). The Redemption Price may be paid in cash or common stock
or a combination thereof, at the Company's option. As the Company currently
plans to redeem the Series A preferred stock with shares of its common stock,
holders of common stock will experience substantial dilution at the time of such
redemption. The Company has the ability and it intends to pay dividends and the
8
<PAGE>
Redemption Price in shares of the Company's common stock. The Company is
restricted from paying cash dividends on common stock until such time as all
cumulative dividends on outstanding shares of Series A and Series C preferred
stock have been paid. The Company also has commitments associated with its
notes payable, capital leases and operating leases.
The Company anticipates that its existing cash funds will enable the
Company to maintain its presently planned operations into the third quarter of
1996. However, substantial additional sources of financing will be required in
order for the Company to continue its planned operations thereafter. The Company
is negotiating with potential corporate partners and other sources regarding
collaborative agreements and other financing arrangements and is actively
seeking additional equity financing. However, there can be no assurance that
any such collaborative agreements or other sources of funding will be available
on favorable terms, if at all. If such funding is unavailable, the Company will
be required to consider the license or sale of certain of its assets and
technology, delay or curtailment of certain of its development programs, further
reductions in workforce and spending, other restructuring alternatives and the
implementing of other measures in order to continue its operations.
If the Company successfully secures sufficient levels of collaborative
revenues and other sources of financing, it expects to incur substantial
additional costs, including costs related to ongoing research and development
activities, preclinical testing and clinical trials, manufacturing activities,
costs associated with the market introduction of potential products, expansion
of its administrative activities, and development activities undertaken by Genta
Jago. The Company will need substantial additional funds before it can expect
to realize significant product revenue. The Company anticipates that significant
additional sources of financing, including equity financings, will be required
in order for the Company to continue its planned principal operations. The
Company's working capital and additional funding requirements will depend upon
numerous factors, including: (i) the availability of funding; (ii) the progress
of the Company's research and development programs; (iii) the timing and results
of preclinical testing and clinical trials; (iv) the timing and costs of
obtaining regulatory approvals; (v) the level of resources devoted to Genta
Jago; (vi) the level of resources that the Company devotes to sales and
marketing capabilities; (vii) technological advances; (viii) the activities of
competitors; and (ix) the ability of the Company to establish and maintain
collaborative arrangements with others to fund certain research and development,
to conduct clinical trials, to obtain regulatory approvals and, if such
approvals are obtained, to manufacture and market products.
9
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
Exhibit
Number Description of Document
- - ------- -----------------------
3(i).1 (1) Restated Certificate of Incorporation as amended by the Certificate
of the Powers, Designations, Preferences and Rights of the Series
B Convertible Preferred Stock as amended by the Certificate of the
Powers, Designations, Preferences and Rights of the Series C
Convertible Preferred Stock.
4.7 (1) Form of Securities Subscription Agreement entered into between the
Company and certain purchasers of the Series C Convertible
Preferred Stock.
10.19 (1) Promissory Note dated March 7, 1996 between the Company and Dr.
Donald Picker.
10.69 (2) Amendment to promissory note effective March 22, 1996 between the
Company and Institutional Venture Partners IV.
10.70 (2) Amendment to promissory note effective March 22, 1996 between the
Company and Domain Partners, L.P.
10.71 (2) Amendment to promissory note effective March 22, 1996 between the
Company and Domain Partners II, L.P.
(1) Incorporated herein by reference to the exhibit of the same number
to the Company's Annual Report on Form 10-K for the year ended
December 31, 1995, Commission File No. 0-19635.
(2) Incorporated herein by reference to exhibits 10.1, 10.2 and 10.3,
respectively, to the Company's Registration Statement on Form S-3
(Registration No. 333-3846).
(b) Reports on Form 8-K
The Company filed a Form 8-K dated as of December 29, 1995,
reporting under Item 5, the sale of 3,000 shares of the
Company's Series B Convertible Preferred Stock.
10
<PAGE>
SIGNATURES
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.
GENTA INCORPORATED
(Registrant)
Date: May 8, 1996 THOMAS H. ADAMS
----------------------------------------
Thomas H. Adams, Ph.D.
Chairman and Chief Executive Officer
Date: May 8, 1996 HOWARD SAMPSON
----------------------------------------
Howard Sampson,
Vice President and Chief Financial
Officer
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
CONTAINED IN THE COMPANY'S QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDED
MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 5,445,600
<SECURITIES> 0
<RECEIVABLES> 747,814
<ALLOWANCES> 0
<INVENTORY> 795,808
<CURRENT-ASSETS> 7,342,577
<PP&E> 9,597,712
<DEPRECIATION> (5,278,803)
<TOTAL-ASSETS> 17,712,079
<CURRENT-LIABILITIES> 7,362,606
<BONDS> 2,069,747
0
607
<COMMON> 26,293
<OTHER-SE> 8,252,826
<TOTAL-LIABILITY-AND-EQUITY> 17,712,079
<SALES> 1,245,559
<TOTAL-REVENUES> 1,245,559
<CGS> 555,392
<TOTAL-COSTS> 3,240,905
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 94,723
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,220,929)
<EPS-PRIMARY> (.16)
<EPS-DILUTED> 0
</TABLE>
