FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
---
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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: 0-19825
SCICLONE PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
California 94-3116852
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
901 Mariners Island Blvd., Suite 315, San Mateo, California 94404
(Address of principal executive offices) (Zip code)
(415) 358-3456
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal
year, if changed since last report)
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________________
As of October 31, 1997, 17,343,358 shares of the registrant's Common
Stock, no par value, were issued and outstanding.
<PAGE>
SCICLONE PHARMACEUTICALS, INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE
NO.
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
September 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations
Three and nine months ended September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows
Nine months ended September 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 8
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
SCICLONE PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
1997 1996
----------- -----------
(unaudited)
Current assets:
Cash and cash equivalents $ 3,021,787 $ 4,642,590
Short-term investments 4,375,174 5,205,529
Accounts receivable, net 1,390,860 245,078
Inventory 2,114,479 2,608,877
Prepaid expenses and other current assets 522,390 1,783,778
----------- -----------
Total current assets 11,424,690 14,485,852
Property and equipment, net 411,823 299,405
Long-term investments 7,808,350 25,257,589
Notes receivable from officers 2,332,656 2,648,292
Other assets 22,394 36,549
----------- -----------
Total assets $21,999,913 $42,727,687
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 260,783 $ 639,392
Accrued compensation and benefits 834,183 817,774
Accrued clinical trials expense 1,031,948 964,331
Accrued professional fees 978,000 1,989,000
Other accrued expenses 287,462 851,562
---------- ----------
Total current liabilities 3,392,376 5,262,059
---------- ----------
Shareholders' equity:
Preferred stock, no par value; 10,000,000 shares
authorized; no shares issued and outstanding -- --
Common stock, no par value; 75,000,000 shares
authorized; 17,039,486 and 17,532,195 shares
issued and outstanding 105,820,235 108,988,019
Notes receivable from former officer (6,024,885) --
Net unrealized loss on available-for-sale
securities (104,202) (171,125)
Accumulated deficit (81,083,611) (71,351,266)
------------ ------------
Total shareholders' equity 18,607,537 37,465,628
------------ ------------
Total liabilities and shareholders' equity $ 21,999,913 $ 42,727,687
============ ============
See notes to consolidated financial statements
3
<PAGE>
<TABLE>
SCICLONE PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Product sales $ 673,499 $ 152,258 $ 1,967,117 $ 400,603
Cost of product sales 263,861 151,696 788,339 555,156
------------ ------------ ------------ ------------
Gross profit 409,638 562 1,178,778 (154,553)
Operating expenses:
Research and development 2,383,822 2,535,828 6,469,421 7,612,902
Marketing 1,017,447 1,046,904 2,996,899 3,148,017
General and administrative 884,455 777,604 2,649,752 2,340,938
------------ ------------ ------------ ------------
Total operating expenses 4,285,724 4,360,336 12,116,072 13,101,857
------------ ------------ ------------ ------------
Loss from operations (3,876,086) (4,359,774) (10,937,294) (13,256,410)
Interest and investment income, net 358,522 588,407 1,204,949 2,016,084
------------ ------------ ------------ ------------
Net loss $ (3,517,564) $ (3,771,367) $ (9,732,345) $(11,240,326)
============ ============ ============ ============
Net loss per share $ (0.21) $ (0.21) $ (0.56) $ (0.65)
============ ============ ============ ============
Weighted average shares used in
computing per share amounts 17,029,555 17,579,717 17,245,047 17,359,726
============ ============ ============ ============
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
4
<PAGE>
<TABLE>
SCICLONE PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<CAPTION>
Nine months ended
September 30,
1997 1996
------------ ------------
<S> <C> <C>
Operating activities:
Net loss $ (9,732,345) $(11,240,326)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 90,614 276,854
Changes in operating assets and liabilities:
Accounts receivable (1,145,782) (24,696)
Inventory 494,398 (104,884)
Prepaid expenses and other assets 1,591,179 (787,530)
Accounts payable and other accrued expenses (942,709) 31,036
Accrued clinical trial expense 67,617 (864,693)
Accrued professional fees (1,011,000) 736,501
Accrued compensation and benefits 16,409 (288,030)
------------ ------------
Net cash used in operating activities (10,571,619) (12,265,768)
------------ ------------
Investing activities:
Purchase of property and equipment (203,032) (56,928)
Sale of marketable securities, net 18,346,517 8,914,997
------------ ------------
Net cash provided by investing activities 18,143,485 8,858,069
------------ ------------
Financing activities:
Proceeds from issuance of common stock, net 1,099,465 3,664,932
Repurchase of common stock (4,267,249) --
Notes receivable from former officer (6,024,885) --
------------ ------------
Net cash (used in) provided by financing activities (9,192,669) 3,664,932
------------ ------------
Net (decrease) increase in cash and cash equivalents (1,620,803) 257,233
Cash and cash equivalents, beginning of period 4,642,590 3,986,307
------------ ------------
Cash and cash equivalents, end of period $ 3,021,787 $ 4,243,540
============ ============
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
5
<PAGE>
SCICLONE PHARMACEUTICALS, INC.
Notes to Consolidated Financial Statements
1. The accompanying unaudited consolidated financial statements have been
prepared in conformity with generally accepted accounting principles
consistent with those applied in, and should be read in conjunction
with, the audited financial statements for the year ended December 31,
1996. The interim financial information reflects all normal recurring
adjustments which are, in the opinion of management, necessary for a
fair presentation of the results for the interim periods presented. The
interim results are not necessarily indicative of results for subsequent
interim periods or for the full year.
2. In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share," which is required to be
adopted on December 31, 1997. Under the requirements for calculating net
loss per share, the antidilutive effect of stock options and warrants
will be excluded. The impact of Statement 128 on the calculation of
earnings per share for the quarters ended September 30, 1997 and
September 30, 1996 is not expected to be material, as the Company
already computes net loss per share in this manner. Net loss per share
has been computed using the weighted average number of common shares
outstanding during each period presented. Common equivalent shares for
outstanding options and warrants were not included in the weighted
average shares outstanding because the effect of including such shares
is antidilutive.
<TABLE>
3. The following is a summary of available-for sale securities at September
30, 1997:
<CAPTION>
Available-for-Sale Securities
-----------------------------
Gross Gross Estimated
Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Government &
Agency obligations $ 6,245,309 $ 14,860 $ (32,435) $ 6,227,734
Corporate obligations 5,842,417 9,081 (7,246) 5,844,252
Corporate securities 200,000 11,538 (100,000) 111,538
------------ ------------ ------------ ------------
$ 12,287,726 $ 35,479 $ (139,681) $ 12,183,524
============ ============ ============ ============
<FN>
The amortized cost and estimated fair value of debt and
marketable securities at September 30, 1997 by
contractual maturity are shown below.
</FN>
</TABLE>
Estimated
Fair
Cost Value
---- -----
Due in one year or less $4,277,507 $4,263,636
Due after one year through three years 6,558,245 6,573,046
Due after three years 1,251,974 1,235,304
----------- -----------
12,087,726 12,071,986
Corporate securities 200,000 111,538
------------ ------------
$12,287,726 $12,183,524
=========== ===========
6
<PAGE>
4. The following is a summary of inventories:
September 31, December 31,
1997 1996
Raw materials $1,538,253 $1,545,923
Finished goods 576,226 1,062,954
---------- ----------
$2,114,479 $2,608,877
========== ==========
5. For the nine months ended September 30, 1997, one customer in China
accounted for 69% of the Company's product sales. Such customer
represents 83% of the accounts receivable balance at September 30, 1997.
Such collections to date have been slower than anticipated and the
Company is currently monitoring the situation. If collection of
outstanding accounts receivable does not improve by year end, it may
become necessary to increase related allowances for bad debts.
6. On July 23, 1997, the Company loaned Thomas E. Moore, Chairman and one
of the founders of the Company, $5.95 million secured by approximately
1.9 million shares of SciClone common stock owned by Mr. Moore. The loan
carries interest at 7% and is repayable in two years. During the period
Mr. Moore's loan is outstanding and immediately prior to the closing of
any offering of the Company's securities, the Company may convert the
loan plus accrued interest, in a non-cash exchange, into Mr. Moore's
SciClone common stock by repurchasing his SciClone common stock at a
fixed discount rate from the offering price. To date, the Company has
not repurchased any of Mr. Moore's SciClone common stock. In connection
with this transaction, Mr. Moore resigned from the Company. On September
30, 1997, the balance of the loan was $6.025 million, including accrued
interest and was classified as an offset to shareholders' equity.
7. In October 1997, the Company's Board of Directors authorized the filing
of a registration statement in connection with a proposed public
offering of 1.5 million shares of the Company's Common Stock.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following material contains certain forward-looking statements
including statements regarding the application of ZADAXIN(R) thymosin alpha 1 in
disease areas beyond hepatitis B, the potential for regulatory approvals of
ZADAXIN and the launching of ZADAXIN in additional markets, the commencement of
clinical trials, and the Company's expectations regarding increases in revenues
from ZADAXIN, increases in marketing and research and development expense levels
and the expansion of its commercialization and marketing efforts and the pursuit
of strategic relationships. These statements are subject to certain risks and
uncertainties. These risks and uncertainties include the Company's current
reliance on a single product, ZADAXIN , for its revenues, the absence of
regulatory approval for ZADAXIN in significant markets, the expensive, time
consuming and uncertain regulatory approval process, risks associated with the
manufacture and supply of ZADAXIN, competition from competing therapies,
uncertainties regarding the outcome of the Company's efforts to commercialize
additional products and the need for additional funds for the commencement of
additional trials, as well as other risks and uncertainties described herein and
in the Company's other reports filed with the Securities and Exchange
Commission.
The Company is an emerging pharmaceutical company that acquires,
develops and commercializes specialist-oriented proprietary drugs for treating
chronic and life-threatening diseases for which there are no adequate treatment
modalities, including chronic hepatitis B, chronic hepatitis C, cancer, immune
system disorders and cystic fibrosis. Currently, the Company has two products in
clinical development: ZADAXIN for hepatitis B and C, cancer and immune system
disorders; and CPX for cystic fibrosis, as well as several preclinical
candidates. To date, the Company's principal focus has been the development and
commercialization of ZADAXIN.
From commencement of operations through September 30, 1997, the
Company incurred a cumulative net loss of approximately $81.1 million. The
Company expects its operating expenses to increase over the next several years
as it expands its research and development, clinical testing and marketing
capabilities. The Company's ability to achieve profitable operations is
primarily dependent on securing regulatory approvals for ZADAXIN in additional
countries, successfully launching ZADAXIN if approved in such countries and
meeting increased demand for ZADAXIN, if it arises. In addition, other factors
may also impact the Company's ability to achieve a profitable level of
operations such as spending associated with the successful development of CPX,
acquiring rights to additional drugs, and entering into and extending agreements
for product development and commercialization, where appropriate. There can be
no assurance that the Company will be able to attain these objectives or that
the Company will ever achieve a profitable level of operations.
The Company's operating results may fluctuate from period to period
as a result of, among other things, the timing and costs associated with
clinical trials and the regulatory approval process, and the acquisition of
additional product rights. The Company participates in a highly dynamic
industry, which often results in significant volatility of the Company's common
stock price. Setbacks in clinical trials, in the regulatory approval process or
in relationships with collaborative partners, and any shortfalls in revenue or
earnings from levels expected by securities analysts, among other developments,
have in the past had and could in the future have an immediate and significant
adverse effect on the trading price of the Company's common stock in any given
period.
8
<PAGE>
Results of Operations
Product sales reached approximately $673,000 and $1,967,000 for the
three and nine month periods ended September 30, 1997, respectively, as compared
to approximately $152,000 and $401,000 for the corresponding periods in 1996.
Currently, the Company has received approval to market ZADAXIN in China, the
Philippines and Singapore and commercially launched ZADAXIN during the first
quarter of 1997. For the nine months ended September 30, 1997, one customer in
China accounted for 69% of the Company's product sales. The Company's accounts
receivable collections in China are typically 180 days or longer. Such customer
represents 83% of the accounts receivable balance at September 30, 1997. Such
collections to date have been slower than anticipated and the Company is
currently monitoring the situation. If collection of outstanding accounts
receivable does not improve by year end, it may become necessary to increase
related allowances for bad debts. The Company has filed for approval to market
ZADAXIN in 14 additional countries in Asia, Latin America and the Middle East
and anticipates additional filings in other countries. The Company expects
product sales to increase in 1997 and beyond, as a result of the commercial
launch of ZADAXIN in its existing approved markets and upon the commencement of
the commercial launch of ZADAXIN in additional markets once regulatory approvals
are secured. The level of such product sales increase is dependent upon
additional ZADAXIN marketing approvals and successfully launching ZADAXIN.
Although the Company remains optimistic regarding the prospects of ZADAXIN,
there can be no assurance that the Company will achieve significant levels of
product sales.
Cost of product sales was approximately $264,000 and $788,000 for
the three and nine month periods ended September 30, 1997, respectively, as
compared to approximately $152,000 and $555,000 for the corresponding periods in
1996. The increase is attributable to increased product sales. The Company
expects cost of product sales to vary from quarter to quarter, dependent upon
the level of product sales, the absorption of fixed product-related costs, and
any charges associated with excess or expiring finished product.
Research and development expenses were approximately $2,384,000 and
$6,469,000 for the three and nine month periods ended September 30, 1997,
respectively, as compared to approximately $2,536,000 and $7,613,000 for the
corresponding periods in 1996. The decrease is primarily attributable to
decreased professional fees partially offset by increased clinical trial
expenses. Clinical expenses in the 1997 period were impacted by additional
clinical trial expenses for the clinical development of CPX, a synthetic
compound licensed in April 1996 from the National Institutes of Health as a
potential treatment for cystic fibrosis. In April 1997, CPX entered a Phase I
clinical trial in the United States. In addition, the Company is organizing its
U.S. and European ZADAXIN clinical trial strategy, which may or may not result
in entering into collaborative arrangements for the development of ZADAXIN in
these territories. The initiation of these trials by the Company will have a
significant effect on the Company's research and development expenses in the
future and would require the Company to seek additional capital resources. In
general, the Company expects research and development expenses to increase over
the next several years and to vary quarter to quarter as the Company pursues its
strategy of initiating additional clinical trials and testing, acquiring product
rights, and expanding regulatory activities.
9
<PAGE>
Marketing expenses were approximately $1,017,000 and $2,997,000 for
the three and nine month periods ended September 30, 1997, respectively, as
compared to $1,047,000 and $3,148,000 for the corresponding periods in the prior
year. The decrease is primarily attributable to decreased professional services
and travel expenses partially offset by increased publications and promotional
material expenses associated with the launch of ZADAXIN in its approved markets.
The Company expects marketing expenses to increase in the next several quarters
and years once additional ZADAXIN regulatory approvals are secured and as it
anticipates expanding its commercialization and marketing efforts and pursuing
other strategic relationships.
General and administrative expenses were approximately $884,000 and
$2,650,000 for the three and nine month periods ended September 30, 1997,
respectively, as compared to approximately $778,000 and $2,341,000 for the
corresponding periods in the prior year. The increase is primarily attributable
to increased general office expenses associated with increased rent and office
relocation expenses and investment banking fees associated with the Company's
adoption of a shareholder rights plan. In the near term, the Company expects
general and administrative expenses to vary quarter to quarter as the Company
augments its general and administrative activities to support increased
expenditures on clinical trials and testing, and regulatory,
pre-commercialization and marketing activities.
Net interest and investment income was approximately $359,000 and
$1,205,000 for the three and nine month periods ended September 30, 1997,
respectively, as compared to approximately $588,000 and $2,016,000 in the same
periods in 1996. The changes in the three and nine month periods primarily
resulted from decreased interest and investment income due to lower average
invested cash balances.
Liquidity and Capital Resources
At September 30, 1997, the Company had approximately $15,205,000 in
cash, cash equivalents and short and long term investments. On July 23, 1997,
the Company loaned Thomas E. Moore, Chairman and one of the founders of the
Company, $5.95 million secured by approximately 1.9 million shares of SciClone
common stock owned by Mr. Moore. In connection with this transaction, Mr. Moore
resigned from the Company. The loan carries interest at 7% and is repayable in
two years. During the period Mr. Moore's loan is outstanding and immediately
prior to the closing of any offering of the Company's securities, the Company
may convert the loan plus accrued interest, in a non-cash exchange, into Mr.
Moore's SciClone common stock by repurchasing his SciClone common stock at a
fixed discount rate from the offering price. To date, the Company has not
repurchased any of Mr. Moore's SciClone common stock, however, as discussed
below, the Company may effect a cancellation of some or all of such shares in
connection with a pending offering.
10
<PAGE>
Net cash used by the Company in operating activities amounted to
approximately $10,572,000 for the nine month period ended September 30, 1997.
Net cash used in operating activities in the 1997 period is greater than the
Company's net loss for such period primarily due to increases in accounts
receivable associated with sales from the Company's launch of ZADAXIN in its
approved markets and increases in payments to third parties for goods and
services. These uses of cash were offset by non-cash charges associated with
depreciation and amortization, decreases in prepayments of certain future period
expenses, and increases in amounts owed to third parties for clinical trials.
Net cash used by the Company in operating activities amounted to approximately
$12,266,000 for the nine month period ended September 30, 1996. Net cash used in
operating activities in the 1996 period is greater than the Company's net loss
for such period primarily due to cash used for inventory purchases, increases in
prepayments of certain future period expenses and decreases in amounts owed to
third parties for goods and services related to clinical trial expenses and to
employees for compensation and benefits. These were offset by non-cash charges
associated with depreciation and amortization and increases in amounts owed for
accounts payable and accrued professional fees.
Net cash provided by investing activities for the nine month period
ended September 30, 1997 related to the net sale of approximately $18,347,000 of
marketable securities offset by the purchase of $203,000 in equipment and
furniture. Net cash provided by investing activities for the comparable 1996
period primarily resulted from the net sale of $8,915,000 of marketable
securities offset by the purchase of $57,000 in equipment and furniture.
Net cash provided by financing activities for the nine month period
ending September 30, 1997 consisted of approximately $1,099,000 in proceeds
received from the issuance of common stock by the exercise of outstanding
warrants and from the issuance of common stock under the Company's stock option
plan and employee stock purchase plan, offset by repurchases of the Company's
common stock under the Company's approved stock repurchase plan of approximately
$4,267,000 and the amounts loaned to Mr. Thomas E. Moore referred to above of
approximately $6,025,000 (including accrued interest). Net cash provided by
financing activities for the nine month period ending September 30, 1996
primarily consisted of approximately $3,665,000 in proceeds received for the
issuance of common stock under the Company's stock option plan.
Management believes its existing capital resources and interest on
funds available are adequate to maintain its current and planned operations
through 1998. The Company has filed a registration statement with the Securities
and Exchange Commission with respect to a proposed registered direct placement
of its Common Stock. The Company's determination to proceed with such offering
will depend upon market conditions and other factors, and the Company believes
its capital resources will be sufficient for calendar 1998 even if it does not
proceed with such offering. The Company is considering corporate partnering and
other opportunities to increase its capital resources and if the proposed
offering or one or more of such other opportunities occurred, the Company would
consider accelerating drug development activities, including clinical trials.
The Company's capital requirements may change depending upon numerous factors,
including the level of ZADAXIN product sales, the availability of complementary
products, technologies and businesses, the initiation of clinical trials and
testing, the timing of regulatory approvals, developments in relationships with
collaborative partners and the status of competitive products. If the Company
cannot eventually generate sufficient funds from operations, it will need to
raise additional financing. There can be no assurance that such financing will
be available on acceptable terms, or at all.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit
Number Description
3(i).1 Restated Articles of Incorporation
(incorporated by reference from the Company's
Registration Statement on Form S-1 (No.
33-45446), declared effective by the Commission
on March 17, 1992).
3(i).2 Certificate of Amendment of Restated
Articles of Incorporation (incorporated by
reference from the Company's Registration
Statement on Form S-8 (No. 33-66832) filed with
the Commission on August 3, 1993).
3(ii).1 Bylaws (incorporated by reference from the
Company's Registration Statement on Form S-1
(No. 33-45446), declared effective by the
Commission on March 17, 1992).
3(ii).2 Certificate of Amendment of Bylaws
(incorporated by reference from the Company's
Registration Statement on Form S-8 (No.
33-66832) filed with the Commission on August 3,
1993).
4.1 Rights Agreement, dated as of July 25,
1997, between Sciclone and ChaseMellon
Shareholder Services, LLC. (incorporated by
reference to the Company's Current Report on
Form 8-K filed on October 14, 1997).
10.1 Purchase and Sale, Pledge and Security
Agreement; Release dated as of July 23, 1997 by
Thomas Moore, in favor of SciClone
Pharmaceuticals, Inc. (incorporated by reference
to the Company's Registration Statement on Form
S-3 (File No. 333-38773) filed on October 27,
1997).
27 Financial Data Schedule
(b) Reports on Form 8-K
Form 8-K filed on October 14, 1997 announcing
Shareholder Rights Plan.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
SCICLONE PHARMACEUTICALS, INC.
(Registrant)
Date: November 10, 1997 Donald R. Sellers
------------------------------------------
Donald R. Sellers
Chief Executive Officer
(Principal Executive Officer)
Date: November 10, 1997 Mark A. Culhane
------------------------------------------
Mark A. Culhane
Vice President, Finance and Administration
and Chief Financial Officer
(Principal Financial & Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000880771
<NAME> 0
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,021,787
<SECURITIES> 12,183,524
<RECEIVABLES> 3,723,516
<ALLOWANCES> 0
<INVENTORY> 2,114,479
<CURRENT-ASSETS> 11,424,690
<PP&E> 1,102,110
<DEPRECIATION> (690,297)
<TOTAL-ASSETS> 21,999,913
<CURRENT-LIABILITIES> 3,392,376
<BONDS> 0
0
0
<COMMON> 105,820,235
<OTHER-SE> (87,212,698)
<TOTAL-LIABILITY-AND-EQUITY> 21,999,913
<SALES> 1,967,117
<TOTAL-REVENUES> 1,967,117
<CGS> 788,339
<TOTAL-COSTS> 788,339
<OTHER-EXPENSES> 12,116,072
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9,732,345)
<INCOME-TAX> 0
<INCOME-CONTINUING> (9,732,345)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,732,345)
<EPS-PRIMARY> (0.56)
<EPS-DILUTED> 0
</TABLE>
