<PAGE>
UNITED STATES
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 March 31, 2000
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: 0-23247
FOCAL, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 94-3142791
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
4 MAGUIRE ROAD, LEXINGTON, MA 02421
---------------------------------------
(Address of principal executive offices
including zip code)
(781) 280-7800
------------------------------
(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 of time that
the registrant was required to file such reports), and (2) has been subject
to such filing requirements for at least the past 90 days.
Yes X No
----- -----
As of April 30, 2000, the Registrant had 14,854,293 shares of Common Stock
outstanding.
<PAGE>
FOCAL, INC.
Form 10-Q for the Quarter Ended March 31, 2000
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
<S> <C>
INDEX ............................................................... 2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
Condensed Balance Sheets at December 31, 1999
and March 31, 2000 ........................................ 3
Condensed Statements of Operations for the Three
Months Ended March 31, 1999 and 2000 ...................... 4
Condensed Statements of Cash Flows for the Three
Months Ended March 31, 1999 and 2000 ...................... 5
Notes to Condensed Financial Statements ....................... 6
ITEM 2 - Management's Discussion & Analysis of Financial
Condition and Results of Operations .................... 8
ITEM 3 - Qualitative and Quantitative Disclosures About
Market Risk ............................................ 12
PART II - OTHER INFORMATION
ITEMS 1 - 6 ......................................................... 14
SIGNATURES .......................................................... 15
EXHIBIT INDEX ....................................................... 16
</TABLE>
2
<PAGE>
FOCAL, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 2000
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ........................................ $ 8,746,897 $ 7,867,816
Marketable securities ............................................ 4,715,842 1,572,274
Inventories ...................................................... 1,573,934 1,944,151
Accounts receivable and prepaid expenses ......................... 557,461 749,628
----------- -----------
Total current assets .................................................... 15,594,134 12,133,869
Notes receivable from related parties ................................... 271,753 274,031
Property, plant & equipment, net ........................................ 2,871,034 2,702,745
Other assets ............................................................ 14,025 14,151
----------- -----------
Total assets ............................................................ $18,750,946 $15,124,796
=========== ===========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities ......................... $ 3,343,409 $ 3,338,533
Current portion of capital lease obligations ..................... 926,041 856,845
----------- -----------
Total current liabilities ............................................... 4,269,450 4,195,378
Capital lease obligations ............................................... 1,333,090 1,196,638
Total stockholders' equity .............................................. 13,148,406 9,732,780
----------- -----------
Total liabilities and stockholders' equity .............................. $18,750,946 $15,124,796
=========== ===========
</TABLE>
3
<PAGE>
FOCAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months
ended March 31,
------------------------------
1999 2000
<S> <C> <C>
REVENUES:
Collaborative R&D revenues .......... $ 608,160 $ 0
Product revenues .................... 717,832 237,366
------------ ------------
Total revenues ...................... 1,325,992 237,366
COSTS AND EXPENSES:
Cost of product revenues ............ 921,236 455,792
R & D and Clinical/Regulatory........ 3,727,720 3,166,252
General & administrative ............ 1,011,740 864,067
------------ ------------
Total costs and expenses ............ 5,660,696 4,486,111
Insurance recovery ........................ 475,408
Interest income (net) ..................... 250,970 131,498
------------ ------------
NET LOSS .................................. ($4,083,734) ($3,641,839)
============ ============
Basic and diluted net loss
per share .............................. ($0.30) ($0.26)
============ ============
Shares used in computing net loss
per share .............................. 13,391,484 14,235,994
============ ============
</TABLE>
4
<PAGE>
FOCAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three months ended March 31,
------------------------------
1999 2000
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) ..................................... $(4,082,734) $(3,641,839)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization .................... 303,961 256,240
Amortization of deferred compensation ............ 76,165 80,696
Non-cash transactions ............................ 8,475
Interest accrued on notes receivable ............. (17,625) (11,781)
Loss on disposal of equipment, furniture and
fixtures ....................................... (506)
Increase (decrease) in cash arising from changes
of operating assets and liabilities:
Accounts receivable and prepaid expenses .... (286,315) (192,168)
Inventories ................................. (180,346) (370,217)
Accounts payable and accrued liabilities .... (175,869) (4,876)
Deferred revenue ............................ (550,000) --
Other assets ................................ (101) (126)
Notes receivable ............................ 27,810 6,049
----------- -----------
Net cash used in operating activities ................. (4,885,054) (3,870,053)
INVESTING ACTIVITIES
Purchase of marketable securities ..................... (2,077,345) (3,757,999)
Sale of marketable securities ......................... 5,051,233 6,893,568
Purchase of property and equipment .................... (470,875) (87,445)
----------- -----------
Net cash provided by (used in) investing activities ... 2,503,013 3,048,124
FINANCING ACTIVITIES
Proceeds from exercise of stock options ............... 120,405 19,454
Principal payments on notes receivable ................ 407,749 129,042
Adjustment for ESPP Plan Withholdings .................
Proceeds from lease financing ......................... 198,896 79,086
Principal payments on capital lease obligations ....... (265,089) (284,734)
----------- -----------
Net cash provided by financing activities ............. 461,961 (57,152)
Net decrease in cash and cash equivalents ............. (1,920,080) (879,081)
Cash and cash equivalents at beginning of the period .. 8,516,936 8,746,897
----------- -----------
Cash and cash equivalents at end of the period ........ $ 6,596,856 $ 7,867,816
=========== ===========
</TABLE>
5
<PAGE>
FOCAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
Focal, Inc. develops, manufactures and commercializes synthetic, absorbable,
liquid surgical sealants, tissue coatings and local drug delivery products,
based on its proprietary polymer technology. The Company's family of surgical
sealant products is being developed for use inside the body to seal air and
fluid leaks resulting from lung, neurological, cardiovascular and
gastrointestinal surgery.
The accompanying unaudited, condensed financial statements have been prepared
by the Company 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 by generally accepted accounting principles for complete financial
statements. In the opinion of management, the accompanying financial
statements include all adjustments, including normal recurring accruals,
considered necessary for a fair presentation of the financial position,
results of operations, and cash flows for the periods presented.
The results of operations for the three months ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the entire
fiscal year ended December 31, 2000.
These financial statements should be reviewed in conjunction with the audited
financial statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1999.
NOTE 2. NET LOSS PER SHARE
Basic and diluted net loss per share is computed using the weighted average
number of shares of common stock outstanding during the period. The effect of
stock options and warrants are excluded in the diluted calculation, as their
effect is antidilutive.
NOTE 3. REVENUE RECOGNITION FOR PRODUCT SALES
Revenues from product sales are recorded in full as product shipments are
made, as there are no contractual right of return or stock rotation
privileges. All product revenues recorded during the three months ended March
31, 1999 are attributable to sales of surgical sealant products to Ethicon
Inc., a Johnson & Johnson Company. All product revenues recorded during the
three months ended March 31, 2000 are attributable to sales of light sources
and AdvSeal-S to Ethicon Inc., a Johnson & Johnson Company and light sources
to Genzyme Surgical Products.
6
<PAGE>
NOTE 4. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market. At December 31, 1999 and March 31, 2000, inventories consisted of the
following:
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
------------ ----------
<S> <C> <C>
Raw materials ............................... $ 146,906 $ 423,078
Work in process ............................. 1,265,623 1,446,833
Finished goods .............................. 161,405 74,240
---------- ----------
$1,573,934 $1,944,151
========== ==========
</TABLE>
NOTE 5. COMPREHENSIVE LOSS
The components of comprehensive loss for the three month periods ended
March 31, 1999 and 2000 are as follows:
<TABLE>
<CAPTION>
Three months ended March 31,
1999 2000
-----------------------------------
<S> <C> <C>
Net loss ...................................... $(4,082,734) $(3,641,839)
Other comprehensive income:
Change in unrealized loss
on marketable securities ................... $1,115 $338
-----------------------------------
Comprehensive loss ............................ $(4,081,619) $(3,641,501)
====================================
</TABLE>
NOTE 6. SUBSEQUENT EVENT
On April 14, 2000, the company had closed on the second investment of $5.0
million, purchase of approximately 614,000 shares at a 25% premium to the ten
day average.
On May 8, 2000, the company was granted approval from the U.S. Food and Drug
Administration panel of its pre-market approval application to market
FocalSeal-L -Registered Trademark- in the United States.
7
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS:
The following discussion should be read in conjunction with the accompanying
unaudited, condensed financial statements and the related footnotes thereto,
appearing elsewhere in this report. This Management's Discussion and Analysis
contains certain forward-looking statements regarding future events with
respect to the Company. For this purpose, any statements contained herein
that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, the words
"believes," "anticipates," "plans," "expects," "intends," and similar
expressions are intended to identify forward-looking statements. There are a
number of important factors that could cause the Company's actual results to
differ materially from those indicated in such forward-looking statements,
including those factors set forth under the captions "Business -Patents and
Proprietary Rights," "-Government Regulation," "-Sales and Marketing,"
"-Manufacturing," "-Competition and Technological Change," "-Third Party
Reimbursement" and "Factors Affecting Operating Results" in the Company's
Annual Report on Form 10-K for the year ended December 31, 1999, which
captioned discussion is expressly incorporated herein by reference.
OVERVIEW
Focal was founded in 1991, and is focused on the development, manufacture and
commercialization of synthetic, absorbable surgical sealants based on the
Company's proprietary polymer technology. Since inception, Focal has funded
its operations primarily through the private placement of equity securities
and through an initial public offering of common stock. In addition, Focal
has entered into strategic alliances with corporate partners and has recorded
revenues totaling $28.7 million through March 31, 2000, in connection with
these alliances.
Focal has incurred net losses in each year since its inception, including net
losses of approximately $16.8 million during 1999. At March 31, 2000, Focal
had an accumulated deficit of $79.8 million. Focal's operating losses have
resulted primarily from expenses incurred in connection with its research and
development activities, including preclinical and clinical trials,
development of manufacturing processes and general and administrative
expenses. Focal expects to incur net losses at least through 2001 and may
incur net losses in subsequent periods although the amount of future net
losses and the time required by Focal to reach profitability are highly
uncertain. The Company's ability to achieve and sustain profitability will be
dependent upon obtaining regulatory approval for and successfully
commercializing its FOCALSEAL surgical sealants in North America. The Company
has marketing and distribution partners for the majority of its products
throughout the world, including Genzyme Surgical Products, a division of
Genzyme Corporation, in North America and Ethicon, a Johnson & Johnson
company, in Europe and other international markets. The
8
<PAGE>
Company's ability to achieve and sustain profitability is dependent in large
part on the ability of its marketing partners to effectively market and
distribute the Company's sealant products. There can be no assurance that
Focal will obtain required regulatory approvals, or successfully develop,
manufacture, commercialize and market products or that Focal will ever
achieve profitability.
Focal introduced its first commercial product, FOCALSEAL-L surgical sealant
for lung surgery indications, in Europe in 1998 through its strategic
marketing alliance with Ethicon. Focal anticipates the launch of FOCALSEAL-L
sealant for lung surgery indications in North America through its marketing
partner, Genzyme Surgical Products, in 2000. Focal anticipates that revenues
derived from the sales of FOCALSEAL-L surgical sealant for lung surgery will
account for all of the Company's near term product revenues.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31,
1999
Revenues for the three months ended March 31, 2000, (the "2000 Quarterly
Period") decreased to $237,000 from $1.3 million for the three months ended
March 31, 1999 (the "1999 Quarterly Period"). Included in the 2000 Quarterly
period were product revenues of $237,000 compared with $718,000 of product
revenues and $608,000 of collaborative revenues during the 1999 Quarterly
Period. This included shipments of light sources and AdvaSeal-S, neurosurgery
sealant, to Ethicon, a Johnson & Johnson company, and light sources to
Genzyme Surgical Products in anticipation of the Canadian launch of the
recently approved lung surgery product, FOCALSEAL-L. Product revenues in the
first quarter of 1999 were $718,000, representing shipments of AdvaSeal-L
surgical sealant to Ethicon. During the first quarter of 2000, Ethicon
continued to ship AdvaSeal-L from previously purchased inventory. Focal
anticipates this to continue at least through the third quarter of 2000.
There were no collaborative R&D revenues in the first quarter of 2000 as
compared to $608,000 of R&D revenues primarily related to Ethicon funded
sealant projects in the first quarter of 1999.
Cost of product revenues for the 2000 Quarterly period of $456,000 were
recorded relating to the commercial sales of the Company's FOCALSEAL-L
surgical sealant and AdvaSeal-S, neurosurgery sealant product versus cost of
product revenues of $921,000 for the 1999 Quarterly Period. Gross margins
remained negative due to the startup phase of the Company's manufacturing
operations and the resulting lack of economies of scale. Additionally, costs
related to fixed overhead, and inefficiencies surrounding sterile fill and
finish processes further burdened cost of product revenues for the 2000
Quarterly Period.
Research and development expenses decreased to $3,166,000 for the 2000
Quarterly Period, from $3,728,000 for the 1999 Quarterly Period. This
decrease was primarily due to reduced staffing levels and lower clinical
trial costs in the 2000 Quarterly Period, compared with the same period in
1999. During the 1999 Quarterly Period,
9
<PAGE>
the Company was engaged in a European clinical trial of FocalSeal-S surgical
sealant for neuro-surgery indications.
General and administrative expenses decreased to $864,000 for the 2000
Quarterly Period, compared with $1,012,000 for the same period in 1999, as a
result of controlling costs.
Insurance recovery income for the 2000 Quarterly Period was a payment for
damage to inventory stored offsite.
Interest income, net of interest expense, decreased to $131,000 for the 2000
Quarterly Period, from $251,000 for the 1999 Quarterly Period, as a result of
lower average cash balances available for investment.
The Company recorded a net loss of $(3,642,000) for the 2000 Quarterly
Period. During the 1999 Quarterly Period, the Company recorded a net loss of
$(4,084,000). The decrease in net loss is primarily attributed to Focal's
cost cutting efforts. The Company expects that it will incur net operating
losses through at least 2001.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company has financed its operations primarily from
the sale of preferred stock in private placements as well as the Company's
1997 initial public offering. In October 1999, Focal received a $5.0 million
equity investment from Genzyme Surgical Products, in connection with the
agreement described below. Through March 31, 2000, the Company has raised
approximately $88.5 million from equity financings and has received $7.1
million in equipment lease financing. In addition, the Company has received
collaborative funding, exclusive of equity investments, from Ethicon and
other corporate partners totaling approximately $28.5 million through March
31, 2000.
Cash used in operations totaled $3.9 million for the three months ended March
31, 2000, as compared to the use of $4.9 million for the same period in 1999.
The decrease in cash used in operations was due to lower net losses incurred
in 2000, compared to 1999, as well as lower investments in working capital.
Cash used in operations is equal to the net loss incurred for each period,
plus non-cash charges such as depreciation and amortization of property and
equipment plus any changes in working capital.
Capital expenditures from inception through March 31, 2000 totaled $8.8
million, representing laboratory equipment, office furniture and equipment,
computers and certain leasehold improvements. The majority of these purchases
have been financed through either direct financing leases or sale and
leaseback arrangements. As of March 31, 2000, the Company did not have any
material commitments for future capital expenditures. The Company has
commitments from lenders in the form of lease lines totaling approximately
$670,000 to provide for its expected capital needs during 2000.
10
<PAGE>
In October 1999, in connection with entering into a Marketing and
Distribution Agreement with Genzyme Surgical Products, Focal and Genzyme
Surgical Products entered into a Stock Purchase Agreement, with up to $20.0
million in purchases of the Company's common stock committed by Genzyme
Surgical over an eighteen month period. The first $5.0 million purchase was
made by Genzyme Surgical in November 1999, with Genzyme purchasing
approximately 810,000 shares at a 25% premium to the ten day average trading
price of the Company's common stock prior to the investment. The second
investment of $5.0 million closed on April 14, 2000, with Genzyme purchasing
approximately 614,000 shares at a 25% premium to the ten day average trading
price of the Company's common stock prior to the investment. At Focal's
option, up to two additional $5.0 million investments will be made by Genzyme
Surgical Products. The final two investments of $5.0 million each may be
called by Focal in October 2000 and April 2001, respectively. These final two
investments will be priced based upon the twenty day trading average of the
Company's common stock.
The Company believes that its existing capital resources will be sufficient
to satisfy its current and projected funding requirements for at least 15
months. The Company intends to seek additional funding through strategic
alliances, and may seek additional funding through public or private sales of
the Company's securities, including the sale of up to an additional $10.0
million of the Company's common stock to Genzyme Corporation, subject to the
satisfaction of specified closing conditions. In addition, the Company has
obtained equipment lease financing and other forms of debt financing and may
continue to pursue opportunities to obtain additional lease or debt financing
in the future. There can be no assurance, however, that additional equity or
debt financing will be available on reasonable terms, if at all. Any
additional equity financing would be dilutive to the Company's stockholders.
If adequate funds are not available, the Company may be required to curtail
significantly one or more of its research and development programs and/or
obtain funds through arrangements with corporate partners or others that may
require the Company to relinquish rights to certain of its technologies or
product candidates.
Under certain agreements with universities and consultants, the Company is
obligated to make payments for sponsored research and consulting services.
The Company's research funding commitments under these agreements totaled
approximately $85,000 at March 31, 2000. Payments under these agreements are
typically made on a quarterly or monthly basis. There can be no assurance
that the Company's capital resources will be sufficient to enable the Company
to conduct its research and development programs as planned. The Company's
future capital requirements will depend on many factors, including continued
progress in its research and development programs, progress with preclinical
testing and clinical trials, the time and costs involved in obtaining
regulatory approvals, if any, the costs involved in filing and processing
patent applications and enforcing patent claims, competing technological and
market developments, the establishment of additional strategic alliances, the
cost of manufacturing facilities and of commercialization activities and
arrangements, the success of the sales and distribution efforts of its
marketing partners, and the cost of product in-licensing and any possible
acquisitions. There can be no
11
<PAGE>
assurance that the Company's cash, cash equivalents and marketable securities
will be adequate to satisfy its capital and operating requirements.
YEAR 2000 DISCLOSURE
Year 2000 issues, created by information systems that are unable to
accurately interpret dates after December 31, 1999, created potential risks
for the Company, including the information technology ("IT") and non-IT
systems that the Company uses in its business operations. The Company was
also exposed to risks from third parties with whom the Company interacts who
fail to adequately address their own year 2000 issues.
The Company's plans to address these year 2000 issues with its IT systems
consisting of four phases: (1) inventory-identifying all IT systems; (2)
identifying IT systems that use date functions and assessing them for year
2000 functionality; (3) remediation reprogramming or replacing where
necessary inventoried items to ensure that they are year 2000 ready; and (4)
testing and certification testing the code modifications and new inventory
with other associated systems, including extensive date testing and
performing quality assurance testing to ensure successful operation in the
post-1999 environment.
The Company completed substantially all planned phases of its year 2000
program without significant incident. The Company had also identified its
most important customers, suppliers and business partners to assess any year
2000 issues which they might pose to the Company. To date, the Company has
not experienced any significant problems with its most important customers,
suppliers and business partners. The Company used both internal and external
resources to reprogram or replace and test software for year 2000 issues. As
of December 31, 1999, the Company spent approximately $340,000 on its year
2000 project and the development of new systems and system modifications.
Focal developed contingency plans late in 1999 to address any potential year
2000 issues. These contingency plans included the use of manual or
alternative processes. Focal has not had to use these contingency plans to
date.
ITEM 3.
QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
The Company maintains an investment portfolio in accordance with its
Investment Policy. The primary objectives of the Company's Investment Policy
are to preserve principal, maintain proper liquidity to meet operating needs
and maximize yields. The Company's Investment Policy specifies credit quality
standards for the
12
<PAGE>
Company's investments and limits the amount of credit exposure to any single
issue, issuer or type of investment.
The Company's investments consist of securities of various types and
maturities. The Company accounts for its investments in accordance with
Statement of Accounting Standards No. 115, "Accounting for certain
investments in Debt and Equity Securities" (SFAS 115). All of the Company's
cash equivalents and marketable securities are treated as available-for-sale
under SFAS 115.
The securities held in the company's investment portfolio are subject to
interest rate risk. Changes in interest rates affect the fair market value of
the available-for-sale securities. After a review of the Company's marketable
securities as of September 30, 1999, the Company has determined that in the
event of a hypothetical ten percent increase in interest rates, the resulting
decrease in fair market value of the Company's marketable investment
securities would be insignificant to the financial statements as a whole.
13
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. None
Item 2. Changes in Securities and use of Proceeds.
There have been no material changes in the use of proceeds from the
sale of securities under the Company's Registration Statement on Form S-1
(333-38379), which was declared effective on December 11, 1997, from that set
forth in the Company's report on Form 10-K for the year ended December 31,
1999.
Item 3. Defaults upon Senior Securities. None
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Matters. None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The exhibits listed in the Exhibit Index are included
in this report.
(b) Reports on Form 8-K
None
14
<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.
Date: May 15, 2000 FOCAL, INC.
By: /s/ Robert J. DePasqua
------------------------
Robert J. DePasqua
President and C.E.O.
15
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Quarterly Report on form
10-Q:
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedule
16
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 7,867,816
<SECURITIES> 1,572,274
<RECEIVABLES> 566,459
<ALLOWANCES> 0
<INVENTORY> 1,944,151
<CURRENT-ASSETS> 12,133,869
<PP&E> 8,329,904
<DEPRECIATION> (5,627,159)
<TOTAL-ASSETS> 15,124,796
<CURRENT-LIABILITIES> 4,195,378
<BONDS> 0
0
0
<COMMON> 142,400
<OTHER-SE> 9,590,380
<TOTAL-LIABILITY-AND-EQUITY> 15,124,796
<SALES> 237,366
<TOTAL-REVENUES> 237,366
<CGS> 455,792
<TOTAL-COSTS> 4,030,319
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,052
<INCOME-PRETAX> (3,641,839)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,641,839)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,641,839)
<EPS-BASIC> (.26)
<EPS-DILUTED> (.26)
</TABLE>
