<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period
ended June 30, 1997 Commission File Number 0-20991
CAMBRIDGE HEART, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3679946
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1 OAK PARK DRIVE
BEDFORD, MASSACHUSETTS 01730
(Address of principal executive offices) (Zip Code)
617-271-1200
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---------- --------
Number of shares outstanding of the issuer's classes of common stock as of
August 1, 1997;
Class Number of Shares Outstanding
- --------------------------------------- ----------------------------
Common Stock, par value $.001 per share 10,477,384
<PAGE>
CAMBRIDGE HEART, INC.
INDEX
PAGE NUMBER
-----------
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BALANCE SHEET AT JUNE 30, 1997
AND DECEMBER 31, 1996 3
STATEMENT OF OPERATIONS
FOR THE THREE MONTH AND SIX MONTH
PERIODS ENDED JUNE 30, 1997 AND 1996 4
STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODS ENDED
JUNE 30, 1997 AND 1996 5
NOTES TO CONDENSED FINANCIAL
STATEMENTS 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 8
ITEM 5. OTHER INFORMATION 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 11
SIGNATURES
This Quarterly Report on Form 10-Q contains forward-looking statements.
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,"
and similar expressions are intended to identify forward-looking statements.
The important factors discussed below under the caption "Certain Factors That
May Affect Future Operating Results," among others, could cause actual results
to differ materially from those indicated by forward-looking statements made
herein and presented elsewhere by management from time to time.
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1
FINANCIAL STATEMENTS
BALANCE SHEET
<TABLE>
<CAPTION>
December 31, June 30,
1996 1997
------------ ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents....................... $18,588,583 $ 11,544,617
Marketable securities........................... - 4,108,241
Accounts receivable............................. 420,984 542,999
Inventory....................................... 251,788 235,407
Prepaid expenses and other current assets....... 384,422 184,535
------------ ------------
Total current assets.......................... 19,645,777 16,615,799
Fixed assets, net............................... 423,159 573,371
Other assets.................................... 160,523 125,180
------------ ------------
$20,229,459 $ 17,314,350
============ ============
Current liabilities:
Accounts payable................................ $ 202,377 $ 211,945
Accrued expenses................................ 283,333 235,412
License fees payable............................ 14,011 9,758
------------ ------------
Total current liabilities..................... 499,721 457,115
------------ ------------
Common stock, $.001 par value; 20,000,000 shares
authorized; 10,214,783 and 10,474,325 shares
issued and outstanding at December 31, 1996
and June 30, 1997, respectively............... 10,215 10,474
Additional paid-in-capital...................... 29,216,646 29,213,106
Accumulated deficit............................. (9,115,685) (12,303,532)
------------ ------------
20,111,176 16,920,048
Less: deferred compensation..................... (381,438) (62,813)
------------ ------------
Total stockholders' equity.................... 19,729,738 16,857,235
------------ ------------
$20,229,459 $ 17,314,350
============ ============
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
CAMBRIDGE HEART, INC.
STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
------------------------------------ -----------------------------------
1996 1997 1996 1997
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Revenue............................................... $ 209,482 $ 418,452 $ 264,702 $ 737,480
Cost of goods sold.................................... 258,294 332,359 307,331 637,717
---------------- ---------------- ---------------- ---------------
(48,812) 86,093 (42,629) 99,763
Cost and expenses:
Research and development.............................. 485,341 1,075,228 886,332 2,028,941
Selling, general and administrative................... 485,375 924,838 803,587 1,724,021
---------------- ---------------- ---------------- ---------------
Loss from operations................................ (1,019,528) (1,913,973) (1,732,548) (3,653,199)
---------------- ---------------- ---------------- ---------------
Interest income....................................... 33,760 209,569 80,314 465,352
---------------- ---------------- ---------------- ---------------
Net loss.............................................. $ (985,768) $ (1,704,404) $ (1,652,234) $ (3,187,847)
================ ================ ================ ===============
Net loss per share.................................... $ (0.16) $ (0.31)
================ ===============
Weighted average common
shares outstanding................................... 10,401,567 10,362,586
================ ================
Pro forma net loss per share.......................... $ (0.12) $ (0.20)
================ ================
Pro forma weighted average common and
common equivalent shares outstanding................. 8,102,288 8,102,288
============= =============
</TABLE>
See accompanying notes to condensed financial statements.
4
<PAGE>
STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six months ended June 30,
------------------------------
1996 1997
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss.................................................. $ (1,652,234) $ (3,187,847)
Adjustments to reconcile net loss to net
cash used for operating activities:
Depreciation.............................................. 25,542 83,038
Amortization of deferred compensation..................... 22,437 152,750
Changes in assets and liabilities:
Increase in accounts receivable......................... (223,218) (122,015)
(Increase) decrease in inventory........................ (62,469) 16,381
Decrease in prepaid expenses and other
current assets......................................... 18,333 199,887
(Increase) decrease in other assets..................... (12,791) 35,343
Decrease in accounts payable
and accrued expenses................................... (60,218) (38,353)
Decrease in license fees payable........................ - (4,253)
------------ --------------
Net cash used for operating activities.................. (1,944,618) (2,865,069)
------------ --------------
Cash flows from investing activities:
Net purchase of marketable securities..................... - (4,108,241)
Purchase of fixed assets.................................. (89,779) (233,250)
------------ --------------
Net cash used for investing activities.................. (89,779) (4,341,491)
------------ --------------
Cash flows from financing activities:
Proceeds from issuance of common stock.................... 15,377 162,594
------------ --------------
Net decrease in cash and cash equivalents................. (2,019,020) (7,043,966)
------------ --------------
Cash and cash equivalents at beginning
of period............................................... 3,948,147 18,588,583
------------ --------------
Cash and cash equivalents at end
of period............................................... $ 1,929,127 $ 11,544,617
============ ==============
</TABLE>
Supplemental disclosure of Non-Cash Activities:
In connection with the initial public offering of Common Stock, the Company
incurred $131,270 of deferred financing costs during the six months ended June
30, 1996 which had not been paid as of this date.
See accompanying notes to condensed financial statements.
5
<PAGE>
CAMBRIDGE HEART, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. NATURE OF BUSINESS
Cambridge Heart, Inc. (the "Company"), was incorporated in Delaware on
January 16, 1990 and is engaged in the research, development and
commercialization of products for the non-invasive diagnosis of cardiac
disease.
2. BASIS OF PRESENTATION
The condensed financial statements have been prepared by the Company
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted pursuant to such rules and
regulations. These condensed financial statements should be read in
conjunction with the financial statements and the notes thereto included in
the Company's filing of its Form 10-K, dated March 31, 1997. In the opinion
of management, all adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial position of Cambridge
Heart, Inc. as of June 30, 1997, and the results of its operations and its
cash flows for the three and six month periods ended June 30, 1996 and
1997, have been made. The results of operations for such interim periods
are not necessarily indicative of the results for the full year.
Certain amounts in the three and six month periods ended June 30, 1996 have
been reclassified to conform to the current period presentation. These
reclassifications had no effect on the Company's reported net income.
3. INVENTORIES
Inventories, consisting primarily of purchased components, are stated at
the lower of cost or market. Cost is determined using the first in, first
out (FIFO) method.
4. NET LOSS AND PRO FORMA NET LOSS PER SHARE
Net loss per share is determined by dividing net loss by the weighted
average number of common shares outstanding during the period. Common
share equivalents, consisting of common stock options and warrants and
convertible preferred stock, have been excluded from the calculation as
their effect is anti-dilutive.
Pro forma net loss per share is determined by dividing net loss by the
weighted average number of common shares and certain common share
equivalents outstanding during the period, as discussed below. Common
share equivalents have been excluded from the
6
<PAGE>
calculation as their effect is anti-dilutive, except that, pursuant to
Securities and Exchange Commission Staff Accounting Bulletin No. 83, common
share equivalents issued and common stock sold at prices below the offering
price in the twelve month period preceding the initial filing of the
Company's Registration Statement on Form S-1 and through the effective date
of the initial public offering have been included in the calculation as if
outstanding for all periods through June 30, 1996.
On August 2, 1996, the date of the Company's initial public offering, all
of the preferred stock was converted to 4,455,708 shares of common stock.
The pro forma net loss per share information included in the accompanying
statement of operations for the three and six month periods ended June 30,
1996 reflect the impact on pro forma net loss per share of such conversion
as of the beginning of the period using the if-converted method.
Historical net loss per share has not been presented for the three and six
month periods ended June 30, 1996 on the basis that it is irrelevant due to
the significant change in the Company's capital structure and resultant
loss per share which resulted upon conversion of the convertible preferred
stock.
5. RECENTLY ENACTED ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS
128"). SFAS 128 specifies modifications to the calculation of earnings per
share from that currently used by the Company. Under SFAS 128, "basic
earnings per share" will be calculated based upon the weighted average
number of common shares actually outstanding, and "diluted earnings per
share" will be calculated based upon the weighted average number of common
shares, dilutive common share equivalents and other dilutive convertible
securities outstanding. SFAS 128 is effective in the Company's fourth
quarter of 1997 and will be adopted at that time, with retroactive
restatement of all prior periods. The Company has determined that adoption
of the provisions of SFAS 128 will not have a material impact on its
reported results of operations for the periods presented. The adoption of
SFAS 128 will have no effect on the Company's financial position or cash
flows.
7
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Cambridge Heart, Inc., a Delaware corporation (the "Company") is engaged in
the research, development and commercialization of products for the non-invasive
diagnosis of cardiac disease. The Company has generated limited revenues from
the shipment of units of its first product and has experienced substantial net
losses since its inception, and expects to incur substantial and increasing net
losses for the foreseeable future. The Company believes that its research and
development expenses will increase significantly in the future as it develops
additional products and funds clinical trials of its products. The Company's
research and development expenses may also increase in the future as it
supplements its internal research and development with additional third party
technology licenses and potential product acquisitions. The Company also expects
that its selling, general and administrative expenses will continue to increase
in connection with the Company's continued expansion of its sales and marketing
activities. Revenues generated from the sale of the Company's products will
depend upon numerous factors, including the timing of regulatory actions,
progress of product development, the extent to which the Company's products gain
market acceptance, varying pricing promotions and volume discounts to customers,
competition and the availability of third party reimbursement. The Company has
incurred cumulative net losses since inception through June 30, 1997 of
approximately $12,300,000.
RESULTS OF OPERATIONS
The Company's first product is the CH 2000 System. The system received
510(k) clearance from the U.S. Food and Drug Administration ("FDA") in February
1996 and the Company's proprietary HiRes/TM/ disposable electrode received
510(k) clearance in August 1996. This electrode enables the CH 2000 System to
measure T-wave alternans and perform more accurate electrocardiogram ("ECG")
readings.
THREE AND SIX MONTH PERIODS ENDED JUNE 30, 1997 AND 1996
Revenues for the three months ended June 30, 1997 and 1996 were $418,452
and $209,482, respectively. The revenues for the six months ended June 30, 1997
and 1996 were $737,480 and $264,702, respectively. This increase of product
revenue reflects continued shipments of the CH 2000 System to Japan as well as
to domestic and European sites. The cost of goods sold for the quarter ended
June 30, 1997 was $332,359, compared to $258,294 for the quarter ended June 30,
1996. Cost of goods sold for the six months ended June 30, 1997 and 1996
amounted to $637,717 and $307,331, respectively. The Company has incurred a
number of fixed costs as it has expanded its manufacturing operations. As the
volume of production increases the Company expects that the cost of goods sold
will decrease as a percentage of revenue.
Research and Development expenses increased to $1,075,228 in the quarter
ended June 30, 1997 from $485,341 in the same period a year earlier. Research
and Development expenses for the six months ended June 30, 1997 and 1996 were
$2,028,941 and $886,332, respectively. This increase was principally due to
increased staffing in engineering and software development, as well as higher
clinical trial expenses. The Company expects to continue to selectively increase
personnel in this area and expand clinical trials.
General and Administrative expenses increased to $924,838 in the quarter
ended June 30, 1997 from $485,375 in the same period in 1996. General and
administrative expenses for the six months ended June 30, 1997 and 1996 amounted
to $1,724,021 and $803,587, respectively. Most of this increase was due to
increases in staffing in management, sales and marketing.
During the three months ended June 30, 1997, the Company had several
management changes, as described in Item 5 below. The Company recorded total
expenses of $230,475 during the quarter associated with severance and other
costs related to these changes.
8
<PAGE>
Interest income was $209,569 for the three months ended June 30, 1997
compared to $33,760 for the same period in 1996. Interest income for the six
months ended June 30, 1997 and 1996 amounted to $465,352 and $80,314,
respectively. This increase reflects the investment of the proceeds of the
initial public offering of the Company's common stock in August 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company initially financed operations primarily from the sale of
convertible preferred stock. Through June 30, 1996, the Company had raised
$9,065,000 (net of stock issuance costs) from the sales of equity securities,
with net proceeds of $5,697,000 received in 1993 and $3,353,000 received in
1995. On August 2, 1996, the Company raised approximately $19,650,000 (net of
stock issuance costs) from the sale of 2,437,750 shares of Common Stock in the
Company's initial public offering. In conjunction with the initial public
offering, 4,455,708 shares of preferred stock were converted to Common Stock.
As of June 30, 1997, the Company had cash, cash equivalents and marketable
securities of $15,652,858. The proceeds of the equity offerings have been used
primarily to fund operating losses of $12,303,532, reflecting expenditures made
primarily to support research and development activities, to support a marketing
and sales organization, and to support an administrative infrastructure and the
investment of approximately $813,000 in property and equipment as of June 30,
1997. In 1996, the Company used $4,674,000 to fund operating activities.
The Company expects its capital expenditures to increase as it continues to
commercialize its products, particularly in connection with the manufacture of
its proprietary Hi-Res electrodes. The Company does not expect capital
expenditures to exceed an aggregate $3,000,000 over the next two years.
Under the terms of various license, consulting and technology agreements,
the Company is required to pay royalties on sales of its products. Minimum
license maintenance fees under these license agreements, which are creditable
against royalties otherwise payable for each year, range from $20,000 to $45,000
per year in total through 2008. The Company is committed to pay an aggregate of
$450,000 of such minimum license maintenance fees subsequent to June 30, 1997.
As part of these agreements, the Company is also committed to meet certain
development and sales milestones, including a requirement to spend a minimum of
$200,000 in any two-year period for research and development, clinical trials,
marketing, sales and/or manufacturing of products related to certain technology
covered by the consulting and technology agreements.
The Company anticipates that its existing capital resources, including the
amounts raised in the initial public offering, will be adequate to satisfy its
capital requirements until at least the end of 1998. There may be circumstances,
however, that would accelerate the Company's use of this capital. If this
occurs, the Company may from time to time incur indebtedness or issue, in public
or private transactions, equity or debt securities. However, there can be no
assurance that suitable debt or equity financing will be available to the
Company on acceptable terms, if at all.
CERTAIN FACTORS THAT MAY AFFECT FUTURE OPERATING RESULTS
The foregoing forward-looking statements involve risks and uncertainties.
As a direct or indirect result of any or a combination of any of the following
factors, the Company's actual results may differ significantly from the results
discussed in such forward-looking statements: The Company has a history of
operating losses and there is no assurance of market acceptance of the Company's
primary product, the CH 2000 System. The Company's products, product development
activities, manufacturing processes and sales and marketing are subject to
extensive and rigorous regulation by the FDA and comparable agencies in foreign
countries. The process of obtaining marketing clearance or approval for new
medical devices from the FDA can be
9
<PAGE>
costly and time consuming, and there can be no assurance that such clearance or
approval will be granted for the Company's future products on a timely basis, if
at all, or that the FDA review will not involve delays that will adversely
affect the Company's ability to commercialize additional products or expand
permitted uses of existing products. The medical device market is characterized
by intensive development efforts and rapidly advancing technology and is highly
competitive, and there can be no assurance that the Company will keep pace with
advancing technology and competitive innovations. The Company's future success
will depend, in part, on its ability to continue to develop patentable products,
enforce its patents and obtain patent protection for its products both in the
United States and in other countries. However, patent positions of medical
device companies, including the Company, are generally uncertain and involve
complex legal and factual questions. No assurance can be given that patents will
issue from any patent applications owned by or licensed to the Company or that,
if patents do issue, the claims allowed will be sufficiently broad to protect
the Company's technology. In addition, no assurance can be given that any issued
patents owned by or licensed to the Company will not be challenged, invalidated
or circumvented, or that the rights granted thereunder will provide competitive
advantages to the Company. The Company has limited manufacturing and marketing
experience and is dependent upon certain key suppliers. The Company is also
dependent upon certain key management personnel and consultants. The Company has
limited international sales and operations experience. The manufacture and sale
of medical devices entails significant risk of product liability claims in the
event that the use of such devices is alleged to have resulted in adverse
effects to a patient. The Company's product liability insurance coverage is
limited. For additional and more comprehensive discussion of the risks
associated with ownership of Common Stock of the Company, please see the
Company's Registration Statement filed on Form S-1 with the Securities and
Exchange Commission on May 31, 1996 and the Company's Annual Report filed on
Form 10-K with the Securities and Exchange Commission on March 31, 1997. As a
result of these and other factors, there can be no assurance that the Company
will not experience material fluctuations in future operating results on a
quarterly or annual basis.
RECENTLY ENACTED ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128").
SFAS 128 specifies modifications to the calculation of earnings per share from
that currently used by the Company. Under SFAS 128, "basic earnings per share"
will be calculated based upon the weighted average number of common shares
actually outstanding, and "diluted earnings per share" will be calculated based
upon the weighted average number of common shares, dilutive common share
equivalents and other dilutive convertible securities outstanding. SFAS 128 is
effective in the Company's fourth quarter of 1997 and will be adopted at that
time. The Company has determined that the provisions of SFAS 128 would not have
a material impact on its reported results of operations for the periods
presented. The adoption of SFAS 128 will have no effect on the Company's
financial position or cash flows.
Item 5. OTHER INFORMATION
In July 1997, Kenneth Collins M.D. joined the Company as Vice President of
Clinical and Regulatory Affairs replacing Robert T. Miragliuolo who left the
Company in June 1997.
In July 1997, Paul Albrecht, Ph.D., became the Chief Scientist of the
Company and will have an overall technical advisory role on a reduced time
basis. He was previously the Vice President of Engineering.
In August 1997, Eric Dufford joined the Company as Vice President of Sales
and Marketing replacing Alex Martin, formerly the Vice President of Sales and
Business Development, who resigned in May 1997.
In August 1997, Thomas V. Hennessey, Jr. resigned as Vice President of
Operations, Treasurer and Chief Financial Officer. The Company is engaged in a
search to fill the position of Chief Financial Officer.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6
EXHIBITS AND REPORTS ON FORM 8-K
a. The exhibits listed in the Exhibit Index filed as part of this report
are filed as part of or are included in this report.
b. The Company filed no reports on Form 8-K during the quarter for which
this report is filed.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
CAMBRIDGE HEART, INC.
Date: August 13, 1997 By: /s/ Jeffrey M. Arnold
---------------------------------------
Jeffrey M. Arnold
President, Chief Executive Officer
and Acting Chief Financial Officer
11
<PAGE>
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
11 Statement re Computation of Net Loss and Pro Forma
Net Loss per Share
27 Financial Data Schedule
<PAGE>
Exhibit 11
Cambridge Heart, Inc.
Computation of Net Loss and Pro Forma Net Loss per Share
<TABLE>
<CAPTION>
For the three months ended For the six months ended
June 30, 1996 June 30, 1997 June 30, 1996 June 30, 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net Loss $ (985,768) $ (1,704,404) $ (1,652,234) $ (3,187,847)
============= ============= ============ =============
Weighted average shares outstanding:
a. Shares attributable to common stock outstanding 10,401,567 10,362,586
============= =============
Net loss per share $ (0.16) $ (0.31)
============= =============
Pro forma weighted average shares outstanding:
a. Shares attributable to common stock outstanding 3,219,716 3,191,934
b. Shares attributable to certain
common stock options (1) 426,864 454,646
c. Shares attributable to the assumed conversion of
Series A and B convertible preferred stock
outstanding upon closing of initial
public offering 4,455,708 4,455,708
------------- -------------
Pro forma weighted average common and common
equivalent shares outstanding 8,102,288 8,102,288
============= ============
Pro forma net loss per share $ (0.12) $ (0.20)
============= ============
- ----------------
</TABLE>
[FN]
(1) Pursuant to Securities and Exchange Commission Staff Accounting Bulletin No.
83, stock options issued during the twelve months prior to the Company's
initial registration statement on Form S-1 have been included in the above
computation as if outstanding for periods through June 30, 1996, even if
such impact is anti-dilutive.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED JUNE 30, 1997 FINANCIAL STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 11,544,617
<SECURITIES> 4,108,241
<RECEIVABLES> 542,999
<ALLOWANCES> 0
<INVENTORY> 235,407
<CURRENT-ASSETS> 16,615,799
<PP&E> 781,145
<DEPRECIATION> 207,774
<TOTAL-ASSETS> 17,314,350
<CURRENT-LIABILITIES> 457,115
<BONDS> 0
0
0
<COMMON> 10,474
<OTHER-SE> 16,846,761
<TOTAL-LIABILITY-AND-EQUITY> 17,314,350
<SALES> 737,480
<TOTAL-REVENUES> 737,480
<CGS> 637,717
<TOTAL-COSTS> 637,717
<OTHER-EXPENSES> 3,752,962
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,187,847)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,187,847)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,187,847)
<EPS-PRIMARY> (0.31)
<EPS-DILUTED> 0
</TABLE>
