<PAGE> 1
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 Quarterly Period Ended: June 30, 1996
Commission File Number: 0-22303
ILLINOIS SUPERCONDUCTOR CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-3688459
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
451 KINGSTON COURT, MOUNT PROSPECT, IL 60056
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (847) 391-9400
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 August 1, 1996 there were outstanding 4,604,119 shares of common
stock, par value $.001, of the registrant.
<PAGE> 2
ILLINOIS SUPERCONDUCTOR CORPORATION
QUARTER ENDED JUNE 30, 1996
INDEX
PAGE
PART I - FINANCIAL INFORMATION 3
Item 1. Financial Statements...................................................3
Condensed Balance Sheets as of June 30, 1996 (unaudited) and
December 31, 1995....................................................3
Condensed Statements Of Operations (unaudited) for the three
months ended June 30, 1996 and 1995, and the six months ended
June 30, 1996 and 1995 and the cumulative period from October
18, 1989 (date of inception) to June 30, 1996........................4
Condensed Statements Of Cash Flows (unaudited) for the six months
ended June 30, 1996 and 1995 and the cumulative period from
October 18, 1989 (date of inception) to June 30, 1996................5
Notes To Condensed Financial Statements...................................6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ....................................................8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ...................................................10
Item 2. Changes in Securities ...............................................10
Item 3. Default Upon Senior Securities ......................................10
Item 4. Submission of Matters to a Vote of Security Holders .................10
Item 5. Other Information ...................................................11
Item 6. Exhibits and Reports on Form 8-K ....................................11
Exhibit 27.1 - Financial Data Schedule .......................................13
SIGNATURES ...................................................................12
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ILLINOIS SUPERCONDUCTOR CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
--------------------- -----------------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 296,847 $ 953,093
Investments 9,295,244 5,083,809
Receivables 80,441 310,529
Inventory 1,011,517 -
Prepaid expenses and other 168,331 465,298
--------------------- -----------------------
Total current assets $10,852,380 $ 6,812,729
Property and equipment:
Property and equipment 5,448,049 4,156,749
Less: accumulated depreciation 1,385,091 962,972
--------------------- -----------------------
Net property and equipment 4,062,958 3,193,777
Other assets:
Restricted certificates of deposit 400,000 862,500
Other assets 312,996 236,760
--------------------- -----------------------
712,996 1,099,260
--------------------- -----------------------
Total assets $ 15,628,334 $ 11,105,766
===================== =======================
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Notes and accounts payable $ 1,097,842 $ 972,949
Other current liabilities 355,462 381,306
--------------------- -----------------------
Total current liabilities 1,453,304 1,354,255
Long term debt 131,454 509,079
Deferred occupancy costs 66,433 57,053
Stockholders' equity:
Common stock ($.001 par value); 15,000,000
shares authorized and 4,574,716 and 3,998,952
issued and outstanding at June 30, 1996 and
December 31, 1995, respectively 4,574 3,999
Additional paid-in capital 33,896,492 24,670,560
Deferred compensation (25,310) (41,392)
Deficit accumulated during the development stage (19,898,613) (15,447,788)
------------------- ----------------------
Total stockholders' equity 13,977,143 9,185,379
------------------- ----------------------
Total liabilities and stockholders' equity $ 15,628,334 $11,105,766
=================== ======================
</TABLE>
NOTE: The condensed 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 to Condensed Financial Statements
3
<PAGE> 4
ILLINOIS SUPERCONDUCTOR CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
OCTOBER 18, 1989
THREE MONTHS ENDED SIX MONTHS ENDED (DATE OF INCEPTION)
JUNE 30, JUNE 30, TO JUNE 30,
-------------------------------- ----------------------------------- -------------------
1996 1995 1996 1995 1996
----------------- ----------- --------------- --------------- -------------------
<S> <C> <C> <C> <C> <C>
Net revenues $ 2,700 $ - $ 59,822 $ 983 $844,627
Cost of revenues 844 - 51,625 491 680,316
---------------- ----------- ---------------- --------------- ------------------
Gross profit 1,856 - 8,197 492 164,311
Expenses:
Research and development 1,234,221 1,274,663 2,366,139 2,128,780 10,155,230
Selling and marketing 528,800 119,094 781,137 255,864 2,015,181
General and
administrative 790,508 703,603 1,613,420 1,445,804 9,263,015
------------ ------------ ------------ ------------ ------------
Total expenses 2,553,529 2,097,360 4,760,696 3,830,448 21,433,426
------------ ------------ ------------ ------------ ------------
2,551,673 2,097,360 4,752,499 3,829,956 21,269,115
Other income (expense): ------------- ------------ ------------ ------------ ------------
Investment income 156,110 117,708 320,594 289,348 1,474,933
Interest expense (8,921) (9,719) (18,920) (17,545) (104,431)
------------- ------------ ------------ ------------ -----------
147,189 107,989 301,674 271,803 1,370,502
------------- ------------ ------------ ------------ ------------
Net loss $ (2,404,484) $(1,989,371) $ (4,450,825) $ (3,558,153) $(19,898,613)
============= ============ ============ ============ ============
Net loss per common share $ (0.53) $ $(0.55) $ (1.01) $(0.99)
Weighted average number ============= ============ ============ ============
of common shares
outstanding 4,544,557 3,586,360 4,386,911 3,582,978
============= ============ ============ ============
</TABLE>
See Accompanying Notes to Condensed Financial Statements
4
<PAGE> 5
ILLINOIS SUPERCONDUCTOR CORPORATION
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
OCTOBER 18, 1989 (DATE
SIX MONTHS ENDED OF INCEPTION) TO
JUNE 30, JUNE 30,
------------------------------------- ------------------------
1996 1995 1996
----------------- --------------- ------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss $(4,450,825) $(3,558,153) $(19,898,613)
Adjustment to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 425,186 298,845 1,548,344
Loss on disposal of property and equipment - - 15,569
Loss (gain) on available-for-sale securities (24,614) (41,295) 45,321
Net (amortization) of bond (premiums) discounts (19,418) (6,394) (38,835)
Payment of patent costs (79,304) (23,803) (327,349)
Note receivable from officer - - 179,400
Provision for interest on notes payable - - 17,398
Stock compensation expense 16,082 46,444 389,126
Cancellation of stock options (5,440) - (63,576)
Changes in operating assets and liabilities (348,799) (449,269) 190,102
---------------- --------------- ------------------
Net cash used in operating activities (4,487,132) (3,733,625) (17,943,113)
INVESTING ACTIVITIES:
Purchases of available-for-sale securities (29,604,489) (1,796,285) (53,356,443)
Sales of available-for-sale securities - 3,993,766 7,553,685
Maturities of available-for-sale securities 25,437,086 3,600,000 36,501,028
(Increase) decrease in certificates of deposit, net 462,500 - (400,000)
Acquisitions of property and equipment (1,291,300) (1,399,543) (5,336,638)
Decrease in notes receivable from officers (179,400)
---------------- ---------------- ------------------
Net cash provided by (used in) investing activities (4,996,203) 4,397,938 (15,217,768)
FINANCING ACTIVITIES:
Payments of organization costs - - (64,495)
Proceeds from notes payable to stockholders - - 550,000
Proceeds from issuance of preferred stock - - 4,907,500
Proceeds from issuance of common stock - net of
offering costs 8,344,744 - 27,062,394
Exercise of stock options 130,454 2,978 236,165
Exercise of warrants 756,750 - 776,750
Proceeds from bank loan 92,182 500,000 742,700
Payments on long-term debt (497,041) (12,500) (541,900)
Payments under capital lease obligations - (22,887) (211,386)
------------------ ---------------- ------------------
Net cash provided by financing activities 8,827,089 467,591 33,457,728
------------------ ---------------- ------------------
Increase (decrease) in cash and cash equivalents (656,246) 1,131,904 296,847
Cash and cash equivalents at beginning of period 953,093 90,362 -
----------------- ---------------- ------------------
Cash and cash equivalents at end of period $296,847 $1,222,266 $296,847
================= ================ =================
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest $18,920 $17,545 $85,687
================= ================ =================
Equipment capitalized under lease agreements - $59,739 $211,386
Conversion of notes payable and accrued interest ================== ================ =================
to preferred and common stock - - $567,398
================== ================= =================
</TABLE>
See Accompanying Notes to Condensed Financial Statements
5
<PAGE> 6
ILLINOIS SUPERCONDUCTOR CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals) considered necessary for
a fair presentation have been included. Operating results for the six months
ended June 30, 1996 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1996. For further information, refer
to the financial statements and footnotes thereto included in Illinois
Superconductor Corporation's annual report on Form 10-K for the year ended
December 31, 1995.
NOTE 2 - NET LOSS PER COMMON SHARE
Net loss per common share is computed based on the weighted average number
of common shares outstanding. Common equivalent shares are not included in the
net loss per share calculations since the effect of their inclusion would be
antidilutive.
NOTE 3 - INVESTMENTS
Management determines the appropriate classification of debt securities at
the time of purchase and reevaluates such designation as of each balance sheet
date. All of the Company's investments are classified as available-for-sale.
Available-for-sale securities are carried at fair value, with unrealized gains
and losses, net of tax, reported in a separate component of stockholders'
equity. The amortized cost of debt securities in this category is adjusted for
amortization of premiums and accretion of discounts to maturity. Such
amortization is included in investment income. Realized gains and losses and
declines in value judged to be other-than-temporary on available-for-sale
securities are included in investment income. The cost of securities sold is
based on the specific identification method. Interest and dividends on
securities classified as available-for-sale are included in investment income.
The following is a summary of available-for-sale securities at June 30,
1996:
<TABLE>
<CAPTION>
AVAILABLE-FOR-SALE SECURITIES
----------------------------------
AMORTIZED COST FAIR VALUE
-------------- ----------
<S> <C> <C>
U. S. Treasury securities and obligations of
U.S. government agencies $ $500,313 $ $500,313
U. S. corporate securities 8,794,931 8,794,931
---------------- ----------------
$ $9,295,244 $ $9,295,244
================ ================
</TABLE>
NOTE 4 - INVENTORIES
The components of inventory at June 30, 1996 consist of the following:
<TABLE>
<S> <C>
Raw materials.................. $ 14,284
Work in process................ 408,096
Finished product............... 589,137
----------
$1,011,517
=========
</TABLE>
6
<PAGE> 7
ILLINOIS SUPERCONDUCTOR CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
NOTE 5 - RESEARCH AND DEVELOPMENT EXPENSES
In March 1993, the Company entered into a cost-sharing cooperative
agreement with the United States Government under the Department of Commerce's
Advanced Technology Program. The three year agreement was funded in one year
increments and was subject to annual renewal by the United States Government.
The expenses reimbursed under this agreement have been offset against the
Company's related research and development expenses. The contract was
completed in March 1996. Total research and development expenses for the six
month periods ended June 30, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------------
1996 1995
----------- -----------
<S> <C> <C>
Total research and development expenses $2,566,584 $2,349,033
Less: reimbursements under cost-sharing agreement (200,445) (220,253)
----------- ----------
Net research and development expenses $2,366,139 $2,128,780
=========== ==========
</TABLE>
NOTE 6 - CAPITAL STOCK
On February 9, 1996, the Board of Directors of the Company adopted a
shareholder rights plan. Pursuant to such plan, a Series A Right is associated
with, and trades with, each share of common stock outstanding. The record date
for distribution of such Series A Rights was February 22, 1996, and for so long
as the Series A Rights are associated with the common stock, each new share of
common stock issued by the Company will include one Series A Right.
On February 23, 1996, the Company completed the private placement and
issuance of 408,526 shares of common stock at $21.80 per share. Proceeds, net
of related expenses, approximated $8,440,000.
In May 1996, the Securities and Exchange Commission declared effective the
Company's Form S-3 Registration Statement to register 2,994,048 shares of the
Company's common stock for potential future resale. Of those shares
registered, 1,843,397 shares were previously issued and 1,150,651 shares were
available for issuance on that date upon the exercise of certain outstanding
warrants.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Illinois Superconductor Corporation (the "Company") was founded in 1989 by
ARCH Development Corporation, an affiliate of The University of Chicago, to
commercialize superconducting technologies developed initially at Argonne
National Laboratory. Since its inception, the Company has been in the
development stage, primarily engaging in research and development activities,
both internally funded and under government funded contracts and cooperative
agreements, recruiting technical and administrative personnel and raising
capital. To date, the Company has received virtually all of its revenues from
government research contracts and cooperative agreements, and to a very limited
extent from sales of its commercial products. The Company generated its first
revenues in 1991 and has incurred cumulative losses of $19,898,613 from
inception to June 30, 1996.
Throughout its development stage, the Company's primary focus has been to
use its patented and proprietary high temperature superconducting (HTS)
materials technologies to develop radio frequency (RF) component products for
the cellular telephone and other wireless telecommunications markets. In
November 1995, the Company began the first field trials of its
SpectrumMaster(TM) line of RF preselector filters. A continuing series of
field trials now ongoing with major cellular telephone operators.
SpectrumMaster(TM) product field trials are conducted in commercially
operational cell sites, and are considered essential steps in a cellular
operator's adoption of a new product for use in its network.
In July 1996, the Company received its first commercial order for its
SpectrumMaster(TM) superconducting cellular filter products. The Company
believes it will begin shipping commercial units of its SpectrumMaster(TM)
cellular filter products during the third quarter of 1996.
RESULTS OF OPERATIONS
The Company's net revenues increased to $2,700 and $59,822 in the second
quarter and first six months ended June 30, 1996, respectively, from $0 and
$983 in the same periods in 1995. Current period revenues primarily resulted
from work performed under a government research and development contract which
was completed in March 1996 and to a lesser extent from sales of its commercial
products while prior period revenues resulted from sales of its commercial
products. The Company does not expect net revenues to increase materially
unless and until it ships a significant number of its superconducting cellular
filter products.
Cost of revenues increased to $844 and $51,625 in the second quarter and
first six months ended June 30, 1996, respectively, compared to $0 and $491 in
the same periods in 1995. The second quarter costs consisted primarily of the
allocation of the research and development expenses attributable to the
commercial products while costs for the first six months consisted primarily of
the research and development expenses associated with the government contract,
which included engineering personnel, engineering materials and other overhead
costs. Prior period costs consisted of the allocation of the research and
development expenditures attributable to the commercial products.
The Company's internally funded research and development expenses for the
second quarter and first six months of 1996 were $1,234,221 and $2,366,139
respectively compared to $1,274,663 and $2,128,780 in the same periods in
1995. The Company incurred increased expenditures as it expanded its
SpectrumMaster(TM) product line and continued to support growth of its internal
research and development activities through hiring of additional personnel and
expenditures on materials and services to support ongoing
8
<PAGE> 9
product development and field trials. Under the terms of the three-year
government cooperative agreement entered into in March 1993, the United States
Government agreed to share costs of certain of the Company's research efforts.
The contract was completed in March 1996. Funding of $0 and $200,445 for the
second quarter and first six months of 1996 has been offset against the related
research and development costs. This compares to $100,831 and $220,253 in the
same periods in 1995.
Selling and marketing and general and administrative expenses for the
second quarter and first six months of 1996 increased to $1,319,308 and
$2,394,557, respectively, from $822,697 and $1,701,668 in the same periods in
1995. The increases were attributable to the addition of sales and marketing
personnel, increased expenditures for field tests, product marketing and
advertising efforts and occupancy costs as a result of its move to a new
facility. Selling and marketing expenses are expected to continue to increase
during the remainder of 1996 due to a broadened product marketing effort for
the Company's RF filter products.
Investment income, net of interest expense, for the second quarter and
first six months of 1996 increased to $147,189 and $301,674, respectively, from
$107,989 and $271,803 in the same periods in 1995. The increase was primarily
due to the larger investment portfolio resulting from the Company's private
placement completed in February 1996 and the Company's sale of
available-for-sale securities for a net realizable gain of $25,139 in the first
quarter of 1996, which were offset partially by lower yields on its investment
portfolio in 1996 compared to yields in 1995.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 1996, the Company's cash, cash equivalents and investments,
including certain restricted investments, totaled approximately $9,992,000.
On May 17, 1996, the Company borrowed $92,000 under an existing $250,000
secured credit facility with a bank. The loan agreement requires monthly
principal and interest payments of $2,916 through May 17, 1999 with interest at
8.5%. The agreement is collateralized by certain manufacturing and lab
equipment.
On June 18, 1996 the Company retired $437,500 of bank debt secured by a
certificate of deposit.
During the first six months of 1996, the Company began manufacturing units
in its SpectrumMaster(TM) line of cellular filters in anticipation of commercial
orders. Accumulated costs reflected in inventory as of June 30, 1996 totaled
$1,012,000.
As of June 30, 1996, the Company estimates it will incur additional
investments for machinery, equipment and leasehold improvements associated with
the initiation of commercial production of its planned wireless
telecommunications products of approximately $2.1 million during the next 6
months. Without consideration of any funds from new government contracts or
cooperative agreements, or from the sale of its SpectrumMaster(TM) products, the
Company believes that its available cash, cash equivalents and investments
provide sufficient funds to meet the Company's current operating plans and debt
service requirements for at least the next 12 months. The Company will
continue to evaluate its needs for capital and may pursue additional sources of
capital it considers appropriate based upon Company requirements and market
conditions.
Statements contained in this Form 10-Q that are not historical facts are
forward looking statements that are made pursuant to the Safe Harbor Provisions
of the Private Securities Litigation Reform Act of 1995. See the Company's
Current Report on Form 8-K, dated March 29, 1996 and its other filings with the
Securities and Exchange Commission for the important factors which could cause
the Company's actual results for 1996 and beyond to differ materially from
those expressed in any forward looking statements made by, or on behalf of, the
Company.
9
<PAGE> 10
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On June 5, 1996, Craig M. Siegler filed a complaint against the
Company in the Circuit Court of Cook County, Illinois, County
Department, Chancery Division. The complaint alleges that, in
connection with the Company's private placement of securities in
November 1995, the Company breached and repudiated an oral contract
with Mr. Siegler for the issuance and sale by the Company to Mr.
Siegler of 370,370.37 shares of the Company's common stock, plus
warrants (immediately exercisable at $13.00 per share) to purchase an
additional 370,370.37 shares of the Company's common stock, for a
total price of $4,000,000. The sole remedy sought by Mr. Siegler is
a sale to him of such securities on the terms of the November 1995
private placement. The Company has filed a motion to dismiss the
complaint, which is pending. The Company believes that the suit is
without merit and intends to continue to defend itself vigorously in
this litigation. The Company believes that the ultimate resolution
of this litigation will not have a material adverse effect on the
financial condition or operations of the Company.
ITEM 2. CHANGES IN SECURITIES - Not Applicable
ITEM 3. DEFAULT UPON SENIOR SECURITIES - Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a) The Annual Meeting of Stockholders of the Company was held on
June 13, 1996.
b) The stockholders voted to re-elect two Class III directors to
the Company's Board of Directors:
<TABLE>
<CAPTION>
AUTHORITY BROKER
DIRECTORS FOR AGAINST WITHHELD ABSTENTIONS NON-VOTES
- --------- --------- ------- --------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Leonard A. Batterson 3,583,042 ------- 61,285 --------- -----------
Steven Lazarus 3,583,042 ------- 61,285 --------- -----------
</TABLE>
Peter Fuss, Ora E. Smith and Paul G. Yovovich continue as members of
the Company's Board of Directors.
c) The stockholders also voted to (1) approve an amendment to the
Illinois Superconductor Corporation 1993 Amended and Restated Stock
Option Plan providing an additional 400,000 option shares and an
increase in the number of options granted annually to outside
directors. Results of the voting were as follows:
<TABLE>
<CAPTION>
AUTHORITY BROKER
FOR AGAINST WITHHELD ABSTENTIONS NON-VOTES
- --------- ------- --------- ----------- ---------
<S> <C> <C> <C> <C>
1,972,211 176,670 --------- 38,857 1,456,589
</TABLE>
and, (2) to ratify the selection by the Board of Directors of Ernst &
Young LLP as the independent auditors of the Company's financial
statements for the year ended December 31, 1996 as follows as
follows:
<TABLE>
<CAPTION>
AUTHORITY BROKER
FOR AGAINST WITHHELD ABSTENTIONS NON-VOTES
- --------- ------- --------- ----------- ---------
<S> <C> <C> <C> <C>
3,454,461 168,385 --------- 21,481 ---------
</TABLE>
ITEM 5. OTHER INFORMATION - Not Applicable
10
<PAGE> 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. EXHIBITS
Exhibit 27.1 - Financial Data Schedule
B. REPORTS ON FORM 8-K - Not Applicable
11
<PAGE> 12
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.
ILLINOIS SUPERCONDUCTOR CORPORATION
Registrant
Date: August 12, 1996 By: /s/ Ora E. Smith
-----------------------------------
Ora E. Smith
President and Chief Executive Officer
Date: August 12, 1996 By: /s/ Stephen G. Wasko
------------------------------------------
Stephen G. Wasko
Vice President and Chief Financial
Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 296,847
<SECURITIES> 9,295,244
<RECEIVABLES> 80,441
<ALLOWANCES> 0
<INVENTORY> 1,011,517
<CURRENT-ASSETS> 10,852,380
<PP&E> 5,448,049
<DEPRECIATION> 1,385,091
<TOTAL-ASSETS> 15,628,334
<CURRENT-LIABILITIES> 1,453,304
<BONDS> 0
<COMMON> 4,574
0
0
<OTHER-SE> 13,972,569
<TOTAL-LIABILITY-AND-EQUITY> 15,628,334
<SALES> 59,822
<TOTAL-REVENUES> 59,822
<CGS> 51,625
<TOTAL-COSTS> 51,625
<OTHER-EXPENSES> 4,760,696
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,920
<INCOME-PRETAX> (4,450,825)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,450,825)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,450,825)
<EPS-PRIMARY> (1.01)
<EPS-DILUTED> (1.01)
</TABLE>
