<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------
FORM 10-QSB
-------------
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED
SEPTEMBER 30, 1996
[ ] 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 0-27368
ORTEC INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 11-3068704
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3690 BROADWAY
NEW YORK, NEW YORK 10032
(Address of principal executive offices) (Zip Code)
(212) 740-6999
Issuer's telephone number, including area code
----------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act during the past 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
--- ---
The number of shares outstanding of the issuer's common stock is
3,956,032 (as of November 12, 1996).
<PAGE> 2
ORTEC INTERNATIONAL, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
QUARTER ENDED JUNE 30, 1996
ITEMS IN FORM 10-QSB
Page
Facing page
Part I
Item 1. Financial Statements. 1
Item 2. Plan of Operation. 11
Part II
Item 1. Legal Proceedings and Claims. None
Item 2. Changes in Securities. None
Item 3. Default Upon Senior Securities. None
Item 4. Submission of Matters to None
a Vote of Security Holders.
Item 5. Other Information. None
Item 6. Exhibits and Reports on Form 8-K. 13
Signatures
<PAGE> 3
PART I
Item 1. FINANCIAL STATEMENTS
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- --------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $2,535,811 $ 2,364
Other current assets 69 57
---------- --------
Total current assets 2,535,880 2,421
---------- --------
Property and equipment, at cost:
Laboratory equipment 531,736 223,888
Office furniture and equipment 160,764 54,527
Construction in progress 49,847
Leasehold improvements 457,997
---------- --------
1,150,497 328,262
Accumulated depreciation and
amortization 245,122 171,075
---------- --------
905,375 157,187
---------- --------
Other assets:
Patent application costs 404,571 369,600
Deferred offering costs 314,697
Organization costs, net of
amortization 509
Deposits 6,113 4,056
---------- --------
Total other assets 410,684 688,862
---------- --------
Total Assets $3,851,939 $848,470
---------- --------
</TABLE>
See notes to condensed unaudited financial statements.
1
<PAGE> 4
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 445,585 $ 790,869
Current portion of long-term
liabilities 44,851
Notes payable 515,500
----------- -----------
Total current liabilities 490,436 1,306,369
Long-term liabilities:
Note payable, less current portion 459,994
Obligations under capital leases,
less current portion 21,028
Deferred occupancy costs 1,327
----------- -----------
Total liabilities 971,458 1,307,696
----------- -----------
Commitments and contingencies
Stockholders' equity:
Common stock, $.001 par value;
authorized, 10,000,000 shares;
issued and outstanding shares -
3,623,932 at September 30, 1996 and
2,408,972 at December 31, 1995 3,624 2,409
Additional paid-in capital 9,622,455 4,749,384
Deficit accumulated during the
development stage (6,745,598) (5,211,019)
----------- -----------
Total stockholders' equity 2,880,481 (459,226)
----------- -----------
Total Liabilities and
Stockholders' Equity $ 3,851,939 $ 848,470
----------- -----------
</TABLE>
See notes to condensed unaudited financial statements.
2
<PAGE> 5
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended Nine months Cumulative from
September 30, ended September 30, March 12, 1991
------------------------------ ------------------------------ (inception) to
1996 1995 1996 1995 September 30, 1996
----------- ----------- ----------- ----------- ------------------
<S> <C> <C> <C> <C> <C>
Revenue
Interest income $ 33,865 $ 57 $ 105,650 $ 2,683 $ 172,808
----------- ----------- ----------- ----------- -----------
Expenses
Research and development 203,720 117,637 591,572 357,792 2,981,124
Rent 48,676 5,433 63,314 16,299 141,187
Consulting 24,548 94,991 38,541 590,754
Personnel 198,418 73,261 463,907 208,988 1,608,948
General and administrative 152,501 40,541 414,389 121,677 1,521,569
Other expense, net 10,879 12,056 74,824
----------- ----------- ----------- ----------- -----------
638,742 236,872 1,640,229 743,297 6,918,406
----------- ----------- ----------- ----------- -----------
Net loss $ (604,877) $ (236,815) $(1,534,579) $ (740,614) $(6,745,598)
----------- ----------- ----------- ----------- -----------
Net loss per share $ (.15) $ (.09) $ (.40) $ (.27) $ (2.51)
----------- ----------- ----------- ----------- -----------
Weighted average common and
common equivalent shares
outstanding 3,940,465 2,720,208 3,853,429 2,720,208 2,690,874
----------- ----------- ----------- ----------- -----------
</TABLE>
See notes to condensed unaudited financial statements.
3
<PAGE> 6
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Deficit
accumulated
Common Stock Additional in the
------------------------------ Paid-in development
Shares Amount Capital stage Total
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Issuance of stock:
Founders 1,553,820 $ 1,554 $ (684) $ 870
First private placement 217,440 217 64,783 65,000
The Director 149,020 149 249,851 250,000
Second private placement 53,020 53 499,947 500,000
Share issuance expenses (21,118) (21,118)
Net loss for the period from
March 12, 1991 (inception) to
December 31, 1991 $ (281,644) (281,644)
----------- ----------- ----------- ----------- -----------
Balance - December 31, 1991 1,973,300 1,973 792,779 (281,644) 513,108
Issuance of stock:
Second private placement 49,320 49 465,424 465,473
Stock purchase agreement with
The Director 31,820 32 299,966 299,998
Share issuance expenses (35,477) (35,477)
Net loss for the year ended
December 31, 1992 (785,941) (785,941)
----------- ----------- ----------- ----------- -----------
Balance - December 31, 1992 2,054,440 2,054 1,522,692 (1,067,585) 457,161
Issuance of stock:
Third private placement 132,150 132 1,321,368 1,321,500
Stock purchase agreement with
Home Insurance Company 111,111 111 999,888 999,999
Stock purchase agreement with
The Director 21,220 21 199,979 200,000
Shares issued in exchange
for commissions earned 600 1 5,999 6,000
Share issuance expenses (230,207) (230,207)
Net loss for the year ended
December 31, 1993 (1,445,624) (1,445,624)
----------- ----------- ----------- ----------- -----------
Balance - December 31, 1993 2,319,521 $ 2,319 $ 3,819,719 $(2,513,209) $ 1,308,829
----------- ----------- ----------- ----------- -----------
</TABLE>
See notes to condensed unaudited financial statements.
4
<PAGE> 7
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Deficit
accumulated
Common Stock Additional in the
------------------- Paid-in development
Shares Amount Capital stage Total
--------- ------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
(brought forward) 2,319,521 $2,319 $ 3,819,719 $(2,513,209) $ 1,308,829
Issuance of stock:
Fourth private placement 39,451 40 397,672 397,712
Stock purchase agreement with
Home Insurance Company 50,000 50 499,950 500,000
Share issuance expenses (8,697) (8,697)
Net loss for the year ended
December 31, 1994 (1,675,087) (1,675,087)
--------- ------ ----------- ----------- -----------
Balance - December 31, 1994 2,408,972 2,409 4,708,644 (4,188,296) 522,757
Rent forgiveness 40,740 40,740
Net loss for the year ended
December 31, 1995 (1,022,723) (1,022,723)
--------- ------ ----------- ----------- -----------
Balance - December 31, 1995 2,408,972 2,409 4,749,384 (5,211,019) (459,226)
Issuance of stock:
Public offering 1,200,000 1,200 5,998,800 6,000,000
Exercise of warrants 14,960 15 14,945 14,960
Share issuance expenses (1,140,674) (1,140,674)
Net loss for the nine months
ended September 30, 1996 (1,534,579) (1,534,579)
--------- ------ ----------- ----------- -----------
Balance - September 30, 1996 3,623,932 $3,624 $ 9,622,455 $(6,745,598) $ 2,880,481
--------- ------ ----------- ----------- -----------
</TABLE>
See notes to condensed unaudited financial statements.
5
<PAGE> 8
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended Nine months Cumulative from
September 30, ended September 30, March 12, 1991
------------------------ ------------------------- (inception) to
1996 1995 1996 1995 September 30, 1996
----------- --------- ----------- --------- ------------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (604,877) $(236,815) $(1,534,579) $(740,614) $ (6,745,598)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Deferred occupancy costs (1,392) (1,327) (4,176)
Depreciation and amortization 44,348 14,433 74,556 43,298 255,360
Unrealized loss on marketable
securities 67,204
Realized loss on marketable
securities 5,250 5,250
Changes in operating assets and
liabilities
Other current assets 1 50 (12) 9,247 (69)
Accounts payable and accrued
liabilities 108,590 60,190 ( 345,284) 95,005 486,325
----------- --------- ----------- --------- -------------
Net cash used in operating
activities (451,938) (163,534) (1,806,646) (591,990) (5,931,528)
----------- --------- ----------- --------- -------------
Cash flows from investing activities:
Purchases of property and equipment (455,200) (18,007) (822,235) (18,007) (1,150,497)
Payments for patent application (9,969) (31,599) (34,971) (80,566) (404,571)
Organization costs (10,238)
Deposits 8 (2,057) 39 (6,113)
Purchases of marketable securities (398) (594,986)
Sale of marketable securities 153,561 522,532
----------- --------- ----------- --------- -------------
Net cash (used in) provided by
investing activities (465,161) (49,606) (859,263) 54,629 (1,643,873)
----------- --------- ----------- --------- -------------
</TABLE>
See notes to condensed unaudited financial statements.
6
<PAGE> 9
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Quarter ended Nine months Cumulative from
September 30, ended September 30, March 12, 1991
------------------------ ------------------------- (inception) to
1996 1995 1996 1995 September 30, 1996
----------- --------- ----------- --------- ------------------
<S> <C> <C> <C> <C> <C>
Cash flows from financing
activities:
Proceeds from issuance of notes
payable $ 302,882 $ 191,000 $ 500,000 $ 316,000 $ 1,015,500
Repayment of notes payable (5,490) (520,990) (520,990)
Capitalized leases obligations (452) 31,363 31,363
Proceeds from issuance of common
stock 6,014,960 11,015,512
Share issuance expenses (825,977) (1,430,173)
----------- --------- ----------- --------- ------------
Net cash provided by financing
activities 296,940 191,000 5,199,356 316,000 10,111,212
----------- --------- ----------- --------- ------------
Net increase (decrease) in cash (620,159) (22,140) 2,533,447 (221,361) 2,535,811
Cash at beginning of period 3,155,970 26,933 2,364 226,154
----------- --------- ----------- --------- ------------
Cash at end of period $ 2,535,811 $ 4,793 $ 2,535,811 $ 4,793 $ 2,535,811
----------- --------- ----------- --------- ------------
</TABLE>
See notes to condensed unaudited financial statements.
7
<PAGE> 10
ORTEC INTERNATIONAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1995 AND 1996
NOTE 1 - FINANCIAL STATEMENTS
The condensed balance sheet as of September 30, 1996 and the statements
of operations, shareholders' equity and cash flows for the three and nine month
periods ended September 30, 1996 and 1995 and for the period from March 12, 1991
(inception) to September 30, 1996 have been prepared by the Company without
audit. In the opinion of management, all adjustments (which include only normal
recurring accrual adjustments) necessary to present fairly the financial
position, results of operations and cash flows at September 30, 1996 and for all
periods presented have been made. Certain information and footnote disclosure
normally included in the financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted. It is
suggested that these condensed financial statements be read in conjunction with
the financial statements and notes thereto in the Company's December 31, 1995
annual report on Form 10-KSB filed with the Securities and Exchange Commission.
The results of operations for the quarter ended September 30, 1996 are not
necessarily indicative of the operating results for the full year.
NOTE 2 - FORMATION OF THE COMPANY AND BASIS OF PRESENTATION
Formation of the Company
Ortec International, Inc. ("Ortec" or the "Company") was incorporated
in March 1991 as a Delaware corporation to secure and provide funds for the
further development of the technology developed by Dr. Mark Eisenberg of Sydney,
Australia, to replicate in the laboratory, composite cultured skin for use in
skin replacement procedures (the "Technology"). Pursuant to a license agreement
dated September 7, 1991, Dr. Eisenberg has granted Ortec a license for a term of
ten years, which may be automatically renewed by Ortec for two additional
ten-year periods, to commercially use and exploit the Technology for the
development of products, subject to certain limitations. At the expiration or
earlier termination of the agreement, Dr. Eisenberg is entitled to the exclusive
rights in the Technology, and Ortec is entitled to the exclusive rights to all
improvements to the Technology developed during the license period.
8
<PAGE> 11
The Skin Group, Ltd. (the "Skin Group") also was formed as a Delaware
corporation, in March 1991, to raise funds for development of the Technology. On
July 27, 1992, the Skin Group was merged with and into Ortec. Owners of Skin
Group shares were given .83672 of an Ortec share for each Skin Group share. The
merger was accounted for as if it were a pooling of interests and, accordingly,
the accompanying financial statements include the accounts of Skin Group for all
periods presented.
Basis of Presentation
The Company is a development stage enterprise, and has neither realized
any operating revenue nor has any assurance of realizing any future operating
revenue. Successful future operations depend upon the successful development and
marketing of the composite cultured skin to be used in skin replacement
procedures.
Initial Public Offering
On January 19, 1996, the Company completed an initial public offering
("IPO") of 1,200,000 units. Each unit consists of one share of the Company's
common stock, one Class A warrant to purchase one share of common stock at $10,
expiring July 1997 and one Class B warrant to purchase one share of common stock
at $15, expiring January 1999. The Class A and B warrants will be redeemable by
the Company at $.01 per warrant, if the market price of the Company's common
stock equals or exceeds $10 for 10 consecutive trading days during a specified
period, as defined.
The IPO raised gross proceeds of $6,000,000, of which $800,000,
$515,500 and approximately $341,000 were used to pay underwriting commissions,
notes payable and deferred offering costs, respectively, thereby providing the
Company with net proceeds of approximately $4,343,500. The Company has used and
intends to use the proceeds for continued research and development of composite
cultured skin, performing human clinical trials and general corporate purposes.
1996 Private Placement
At the end of July 1996 the Company commenced a private placement
offering of shares of its common stock, in multiples of 100 shares only, for up
to $6,000,000 and at a purchase price which is the lower of 80% of the average
closing price of the Company's common stock as quoted on the NASDAQ SmallCap
Market for the five business days ending on (a) the date prior to the day the
purchaser's subscription is received, or (b) the date the sale of such shares is
closed. There was a first closing of shares sold in the private placement
offering at which time the Company sold 332,100 shares at an average price of
$6.53 per share (80% of the average closing prices for the Company's shares
9
<PAGE> 12
in the five-day periods before the subscriptions for these restricted shares
were received) for aggregate gross proceeds of $2,170,224. Out of such gross
proceeds the Company has paid to placement agents in such offering an aggregate
of $148,441 and granted them five-year warrants to purchase an aggregate of
32,360 shares of the Company's common stock at exercise prices of $7.87 per
share (for 30,500 shares) and $7.08 per share (for 1,860 shares) for their
services in the sale of 323,600 shares. $140,056 of such $148,441 was paid to,
and 30,500 of the 32,360 warrants were granted to Mr. Joseph Stechler, a
director of the Company, for his placement of 305,000 shares. The Company has
extended the offering period for such private placement to December 12, 1996.
The Company expects that it will sell more shares in that private placement
offering.
The Company intends to use the net proceeds it has received and may
continue to receive in such private placement offering for continued research
and development of its composite cultured skin, performing human clinical trials
and for general corporate purposes.
10
<PAGE> 13
ITEM 2. PLAN OF OPERATION
OPERATIONS FOR THE NEXT TWELVE MONTHS
For the next twelve months the Company will continue to conduct human
clinical trials. To that end, the Company intends to continue to recruit
hospital burn centers which will provide the necessary patients.
The Company estimates that the cost to it of each human clinical trial
will be approximately $8,000, which includes testing for pathogens and payments
to the hospital, but does not include any allocation to the cost of such trials
of salaries, rent or other overhead expenses.
The Company presently employs eleven persons and is in the process of
hiring one more. When the Company's new laboratory in New York City is fully
operational (now expected to be at the end of November 1996), the Company will
initially employ at least two additional persons to work in that laboratory.
CASH REQUIREMENTS
The Company anticipates that the net proceeds received by it on January
19, 1996 from the public offering of its Common Stock, Class A Warrants and
Class B Warrants and the net proceeds received by it to date from the sale of
its common stock in a private placement offering, will be sufficient to fund its
operations until approximately May 1998. The Company will have to secure
additional funds prior thereto or thereafter to complete its human clinical
trials, if not then already completed, to secure FDA pre-market approval for
commercial sales and thereafter to produce and market its composite cultured
skin in commercial quantities. The private placement offering period has been
extended by the Company to December 12, 1996. The Company expects to sell more
of its shares in such private placement offering.
CLINICAL TRIALS AND PRODUCT RESEARCH AND DEVELOPMENT
The Company has used and intends to use approximately $1,712,000 of the
net proceeds from the recent public offering and private placement of its
securities to continue the human clinical trials and approximately $3,618,000
for research and development. These amounts include the salaries of its officers
and employees and payments to consultants who will be involved in producing the
composite cultured skin and in research and development and regulatory matters,
payments to members of the Company's Scientific Advisory Board, performing
quality control, securing hospital burn centers to participate in the human
11
<PAGE> 14
clinical trials, monitoring the progress of the patients thereafter and to
prepare reports to be filed with the FDA.
NEW LABORATORY
In March 1996, the Company entered into a five-year lease with Columbia
University ("Columbia") for 5,765 square feet of space at 3960 Broadway, New
York, New York, in Columbia's new Audubon Biomedical Science and Technology
Park. The Company relocated its executive offices to its new laboratory facility
in July 1996. The Company initially pays rent of $10,809 per month, with
increases in the fourth and fifth years of the lease. The Company granted
Columbia a warrant expiring March 10, 2001, to purchase 5,000 shares of Common
Stock at an exercise price of $10.00 per share. The Company has the option to
renew the lease for an additional five-year term at a modest increase in base
rent. Columbia provided the Company with a $400,000 grant and loaned the Company
$600,000 to construct the new laboratory and office, to pay for architectural
and engineering costs for such construction and for equipment for such new
laboratory. The Company has used and will use approximately $100,000 of its own
funds to purchase the equipment for its new laboratory.
The Company will use its new laboratory when it is fully operational to
produce its composite cultured skin for use in the remaining FDA approved human
clinical trials and for further research to develop the Company's proprietary
technology for treatment of other wounds. The Company intends to further equip
its new laboratory as a pilot production facility for its composite cultured
skin. Audubon's new center is a dedicated biomedical research facility and the
Company, as a tenant, is entitled to utilize the resources of Columbia
University's Health Sciences Research facility at the Center as well as those at
Columbia University-Presbyterian Medical Center across the street from the
Center.
NUMBER OF EMPLOYEES
The Company presently employs eleven persons, including its three
executive officers. Only one executive officer is employed on a full time basis.
The Company also retains four consultants. The Company intends to employ at
least three additional full time employees, two when its new laboratory is fully
operational and both of whom will be involved in the clinical trials and in
research and development. The Company expects that it will employ additional
persons as its needs may otherwise require.
12
<PAGE> 15
PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. Description
3.1 Agreement of Merger of the Skin Group, Ltd.
and the Company dated July 9, 1992 (1)
3.2 Original Certificate of Incorporation (1)
3.3 By-Laws (1)
4.1 Form of Certificate evidencing shares of
Common Stock (1)
4.2 Form of Underwriter's Option (1)
4.3 Form of Warrant Agreement for the public
Class A and Class B Common Stock Purchase
Warrants (1)
4.4 Form of Certificate for the public Class A
Common Stock Purchase Warrants filed as
Exhibit A to Exhibit 4.3 (1)
4.6 Form of Certificate for public Class B
Warrants filed as Exhibit B to Exhibit 4.3
(1)
99 (Formerly 28) FDA approval for human clinical trials (1)
- --------------
(1) Filed as an Exhibit to the Company's Registration Statement on
Form SB-2 (File No. 33-96090), or Amendment 1 thereto, and
incorporated herein by reference.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the third quarter of 1996.
13
<PAGE> 16
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereto duly authorized.
Registrant:
ORTEC INTERNATIONAL, INC.
By: /s/ Steven Katz
------------------------
President and
Chief Executive Officer
Dated: November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ORTEC
INTERNATIONAL, INC. (A DEVELOPMENT STAGE ENTERPRISE) FINANCIAL STATEMENTS AS
PRESENTED IN THE COMPANY'S FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,535,811
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,535,880
<PP&E> 1,150,497
<DEPRECIATION> 245,122
<TOTAL-ASSETS> 3,851,939
<CURRENT-LIABILITIES> 490,436
<BONDS> 0
0
0
<COMMON> 3,624
<OTHER-SE> 2,876,857
<TOTAL-LIABILITY-AND-EQUITY> 3,851,939
<SALES> 0
<TOTAL-REVENUES> 105,650
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,640,229
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,534,579)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,534,579)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,534,579)
<EPS-PRIMARY> (.40)
<EPS-DILUTED> 0
</TABLE>
