<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-QSB
(Mark one)
[x] Quarterly Report under section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarter ended June 30, 1997
[ ] Transition Report under section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 0-27908
Semiconductor Laser International Corporation
------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
New York 16-1446679
- ---------------------------------------- -------------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
15 Link Drive, Binghamton, New York 13904
- ---------------------------------------- -------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (607) 722-3800
Check whether the issuer (1) 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 a 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, 1997, there were outstanding 3,570,242 shares of the
issuers common stock, par value $.01 per share.
Transitional Small Business Disclosure Format
Yes [ ] No [x]
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
Semiconductor Laser International Corporation
Balance Sheet
<TABLE>
<CAPTION>
December 31, June 30,
1996 1997
(unaudited)
------------ ------------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 4,266,168 $ 1,595,674
Accounts Receivable, net of allowance for
doubtful accounts of $25,000 and $25,000,
respectively 61,047 186,070
Inventory 6,316 17,301
------------ ------------
Total current assets 4,333,531 1,799,045
Property, plant and equipment, net 3,035,929 2,699,274
Intangible assets, net 1,348 1,011
Deposits and other assets 655,928 599,416
------------ ------------
Total assets $ 8,026,736 $ 5,098,746
============ ============
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable $ 1,142,272 $ 635,209
Accrued expenses and other liabilities 92,199 38,975
Current portion of long-term debt 25,948 32,344
------------ ------------
Total current liabilities 1,260,419 706,528
Long-term debt 809,926 818,866
Accrued royalty payments 100,000 100,000
------------ ------------
Total liabilities 2,170,345 1,625,394
------------ ------------
Commitments and contingencies (Note 6)
Shareholders' Equity
Common stock, $.01 par value, 20,000,000 shares
authorized, 3,409,607 issued and outstanding
at December 31, 1996, and 3,540,689 issued and
outstanding at June 30, 1997 34,096 35,407
Common stock issuable 1,123,438 51,250
Treasury stock (248,241) (248,241)
Additional paid-in capital 10,081,464 11,152,830
Accumulated deficit (5,134,366) (7,517,894)
------------ ------------
Total Shareholders' Equity 5,856,391 3,473,352
------------ ------------
Total liabilities and
Shareholders' Equity $ 8,026,736 $ 5,098,746
============ ============
</TABLE>
See accompanying notes to financial statements
<PAGE>
Semiconductor Laser International Corporation
Statement of Operations
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1997 1996 1997
(Unaudited) (Unaudited) (Unaudited) (Unuadited)
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Sales $ - $ 178,528 $ - $ 178,528
Cost of Sales - (353,577) - (353,577)
---------- ---------- ------------ ------------
Gross Profit (175,049) (175,049)
Operating expenses:
Research and development expenses 166,128 5,710 249,448 514,526
Selling general and administrative
expenses 275,121 1,211,161 579,591 1,770,223
---------- ---------- ------------ ------------
Total operating expenses 441,249 1,216,871 829,039 2,284,759
---------- ---------- ------------ ------------
Loss from operations 441,249 1,391,920 829,039 2,459,808
Interest income 86,666 32,790 103,853 76,280
---------- ---------- ------------ ------------
Loss before extraordinary
item 354,583 1,359,130 725,186 2,383,528
Extraordinary loss on the early
extinguishment of debt - - 305,301 -
Net loss after extraordinary
item $ 354,583 $ 1,359,130 $ 1,030,487 $ 2,383,528
========== ========== ============ ============
Net loss per share
Loss before extraordinary
item $ (0.11) $ (.39) $ (0.28) $ (0.68)
Extraordinary item - - (0.12) -
------- ------- ------- -------
Net loss $ (0.11) $ (.39) $ (0.40) $ (0.68)
======= ======= ======= =======
Weighted average shares outstanding 3,293,850 3,500,030 2,548,206 3,491,483
========= ========= ========= =========
</TABLE>
See accompanying notes to financial statements
<PAGE>
Semiconductor Laser International Corporation
Statement of Cash Flows
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1997 1996 1997
(unaudited) (unaudited) (unaudited) (Unaudited)
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (354,583) $(1,359,130) $ (1,030,487) $ (2,383,528)
Adjustments to reconcile net loss to
net cash used in operating
activities:
Depreciation 14,863 34,153 25,896 59,347
Amortization of debt discount 51,585
Amortization of deferred expenses 23,294
Extraordinary loss on early
extinguishment of debt 305,301
Gain on sale of equipment (17,364)
Change in assets and liabilities:
(Increase)decrease in accounts
receivable, net (3,950) (112,579) (16,785) (125,024)
Decrease (increase)in inventory (7,921) 12,514 (8,661) (10,985)
(Increase) decrease in deposits
and other assets (8,910) 23,991 (8,910) (309,049)
(Increase) decrease in deferred
financing costs 134,431
Increase (decrease) in accounts
payable (55,647) 120,528 47,845 271,647
Increase(decrease) in accrued
expenses and other liabilities (115,010) (4,670) (51,060) (53,224)
Increase in accrued royalty
payments
----------- ----------- ----------- -----------
Net cash used in operating activities (531,158) (1,285,193) (550,845) (2,544,886)
----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchase of plant, property and
equipment (308,935) (271,838) (339,904) (2,818,291)
Sale of equipment 2,676,855
Increase in intangible assets
----------- ----------- ----------- -----------
Net cash provided from (used for)
investing activities (308,935) (271,838) (339,904) (141,436)
----------- ----------- ----------- -----------
Cash flows from financing activities
Proceeds from long-term debt 455,000 31,306
Payments on long-term debt (20,434) (7,762) (859,223) (15,971)
Issuance of common stock, net of
expenses 243,457 493 7,567,442 493
----------- ----------- ----------- -----------
Net cash provided by financing
activities 223,023 (7,269) 7,163,219 15,828
----------- ----------- ----------- -----------
Net (decrease) increase in cash, cash
equivalents and restricted cash (617,070) (1,564,300) 6,272,470 (2,670,494)
Cash, cash equivalents and restricted
cash at beginning of period 7,420,582 3,159,974 531,042 4,266,168
----------- ----------- ----------- -----------
Cash, cash equivalents and restricted
cash at end of period $ 6,803,512 $ 1,595,674 $ 6,803,512 $ 1,595,674
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
Semiconductor Laser International Corporation
Notes to Financial Statements
June 30, 1997
1. Organization
Semiconductor Laser International Corporation (the "Company") was
incorporated in New York State on September 21, 1993 to produce high power
semiconductor diode laser wafers and bars ("HPDLs") and to market these
products worldwide.
The Company's primary activities since incorporation as a development
stage enterprise had been research and development, business planning,
raising capital, and constructing and equipping its manufacturing
facility. The Company had previously relied on facilities provided
through the Wright Cooperative Research and Development Agreement (CRDA)
with the U.S. Air Force for the development and quality control testing
of its HPDLs. The Company has since completed the construction of its
manufacturing facility in Binghamton, New York where it is conducting all
activities.
Production of the Company's products has begun at the Company's new
facility in Binghamton, New York. Effective April 1, 1997 the Company is
no longer considered a development stage enterprise. As a result, the
accompanying financial statements are presented on the same basis as those
of fully operating enterprises.
2. Basis of Presentation
The accompanying unaudited financial statements have been prepared by the
Company. Certain information and footnote disclosures normally included
in financial statements prepared in conformity with generally accepted
accounting principles have been condensed or omitted. In the opinion of
the Company's management, the disclosures made are adequate to make the
information presented not misleading, and the financial statements
contain all adjustments necessary to present fairly the financial
position as of June 30, 1997 and the results of operations and cash
flows for the three and six month periods ended June 30,1997 and 1996.
The results of operations for the three and six month periods ended
June 30,1997 are not necessarily indicative of the results to be expected
for the full year.
3. Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amount of revenue
and expenses during the period. Actual results could differ from those
estimates.
Cash Equivalents
The Company considers all highly liquid debt instruments purchased with
an initial maturity of three months or less to be cash equivalents.
<PAGE>
Inventory
Inventory is valued at the lower of cost or market. Cost is determined
by the first in, first out (FIFO) method and the cost of finished goods
includes costs to purchase materials and subcontracted labor costs.
Depreciation and Amortization
Property plant and equipment are recorded at cost and depreciated over
the assets' estimated useful lives ranging from three to thirty years.
Depreciation is computed using the straight line method for financial
reporting and the modified accelerated cost recovery system for income
tax purposes. Expenditures for major renewals and betterments that
extend the useful lives of the property and equipment are capitalized.
Expenditures for maintenance and repairs are charged to expense as
incurred.
Intangible assets are amortized using the straight-line method over
five years.
Research and Development
Research and development costs are expended as incurred. Included in
research and development expenses are costs related to the development
of prototypes of $508,816 for the six month period ended June 30, 1997.
Income Taxes
The Company follows the asset and liability approach for deferred income
taxes. This method provides that deferred tax assets and liabilities
are recorded, using currently enacted tax rates, based upon the
difference between the tax bases of assets and liabilities and their
carrying amounts for financial statement purposes. A valuation
allowance is recorded when it is more likely than not that deferred
tax assets will not be realized.
Net Loss Per Share
Net loss per share is computed using the weighted average number of
common shares outstanding and dilutive common share equivalents. Common
shares issued, and options and warrants granted, by the Company during
the twelve months preceding the initial public offering have been
included in the calculation of common and common equivalent shares
outstanding as if they were outstanding for all periods presented using
the Treasury Stock method and an initial public offering price of $5.00
per share. Options and warrants granted before the aforementioned
twelve-month period and subsequent to the Company's initial public
offering have been included in the calculation of common and common
equivalent shares outstanding when dilutive.
In February 1997, the Financial Accounting Standards Board issued
Statement of Accounting Standards No. 128, "Earnings per Share"
("FAS 128"), which requires the presentation of basic earnings per share
in financial statements for reporting periods ending subsequent to
December 15, 1997. Early adoption of FAS 128 is not permitted. The
adoption of FAS 128 is not expected to have a material impact on the
Company's financial statements.
As of June 30, 1997, the Company had outstanding warrants and options
to purchase 2,176,334 and 163,308 shares of Common Stock, respectively,
which are not included in the calculation of earnings per share for the
three and six month periods ended June 30, 1997, and would not be included
in such calculation under the guidance prescribed by FAS 128, due to the
anti-dilutive nature of these instruments.
4. Commitment, Contingencies and Other Matters
Operating Leases
In October 1996, the Company entered into a master equipment lease
agreement with FINOVA Technology Finance, Inc. ("FINOVA"). The agreement
provides for the sale and leaseback by the Company of up to $3,850,000 of
equipment, furnishings and fixtures. As part of the consideration for
the agreement, the Company issued a warrant certificate for 58,334
warrants, entitling FINOVA to purchase a corresponding number of shares
of the Company's common stock at $5.00 per share. The warrants cannot
be assigned, sold, transferred or otherwise disposed of prior to
February 27, 1998. The warrants are currently exercisable and have been
valued at $167,710 and are being amortized over the term of the lease.
Rent expense under non-cancellable operating leases, including the FINOVA
leases, was $459,455 for the six months ended June 30,1997.
Future minimum payments under non-cancellable operating leases, including
the FINOVA lease agreement, at June 30, 1997, are as follows:
<TABLE>
<CAPTION>
Year ending
December 31, Commitment
------------- -------------
<S> <C> <C>
1997 $ 535,000
1998 1,009,000
1999 1,009,000
2000 1,009,000
2001 213,000
-------------
$3,775,000
=============
</TABLE>
Litigation
The Company is currently engaged in a dispute with Theodore Konopelski
("Konopelski"), a former director, employee and officer of the Company.
The dispute involves the termination of Konopelski's employment for
cause. An arbitration proceeding was instituted by Konopelski in
Syracuse, New York challenging his termination under his employment
contract. Konopelski is seeking damages in the aggregate of $500,000.
The arbitration is in process and the Company believes the termination
was proper and that no amount should be awarded to Konopelski.
Subsequent to the commencement of the arbitration, the Company brought
an action against Konopelski in the New York Supreme Court (Broome
County) alleging violation by Konopelski of his obligations under the
terms of a non-disclosure agreement between Konopelski and the Company.
The Court had issued a temporary restraining order barring Konopelski from
making any disclosures or using confidential information or trade
secrets. Subsequently, the Court ruled that the issue of the
non-disclosure agreement was not in their jurisdiction and rescinded the
temporary restraining order and referred the issue of the non-disclosure
agreement to the arbitration process.
Mr. Konopelski was not proposed for reelection as a director and was not
reelected as a director of the Company at the Annual Meeting of
Stockholders held on June 20, 1997.
The Company believes it will prevail in the arbitration as well as in all
matters with respect to the enforcement of Konopelski's non-disclosure
obligations.
<PAGE>
Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
The following information should be read in conjunction with the
unaudited financial statements included herein. See Item 1.
OVERVIEW
The Company's future results of operations and the other forward
looking statements contained in this discussion involve a number of risks
and uncertainties. In addition to the factors discussed below are other
factors that could cause actual results to differ materially such as
business conditions, growth in the industry and the general economy.
The Company has begun the production of its products at its new facility
in Binghamton, New York. Since its inception in 1993, the Company had been
engaged primarily in research and development, business and financial
planning, recruitment of key management and technical personnel, raising
capital to fund operations and the development of its HPDL prototypes. As
a result, the Company has not generated any significant product sales through
March 31, 1997. The Company has completed the construction and equipping of
the first phase of its manufacturing facility and has begun production of its
products and the generation of sales revenues. The Company also continues to
secure licensing and other agreements for the production, marketing and sale
of technologically improved products which complement its product line.
As of August 1, 1997, the Company's orders backlog approximated $4,000,000.
RESULTS OF OPERATIONS
Three months ended June 30, 1997, compared to three months ended June 30,
1996.
Effective April 1, 1997, the Company is no longer considered to be in the
Development Stage Enterprise. During the period in which the Company was
considered a Development Stage enterprise, sales and the costs associated
therewith were insignificant and were offset against research and
development expenses.
Sales were $179,000 compared to $0 for the same period in the prior
year primarily the result of increasing commercial production during the
three months ended June 30, 1997. Sales from prototypes in the same period
in the prior year were insignificant and were offset against research and
development expenses.
Cost of Sales, which includes materials, production labor and certain
overheads was $354,000 compared to $0 for the same period in the prior year.
The increase is primarily associated with increased levels of labor
and materials associated with the production process. Cost of sales levels
are expected to exceed sales levels until sales levels commensurate with
production capacity are achieved. It is currently expected
that such levels will be achieved during the fourth quarter of 1997.
Research and development expenditures were $5,710 for the three months
ended June 30, 1997 as compared to $166,128 for the three months ended
June 30, 1996. The decrease of approximately $160,000 is primarily
associated with labor, materials and subcontract work being reflected as
cost of sales where previously such costs were charged to research and
development. Pure research and development expenditures were lower as a
result of a concentration of resources on the production process.
Selling, general and administrative expenses were $ 1,211,161 for the three
months ended June 30, 1997 as compared to $275,121 for the same period in
1996, an increase of approximately $936,000. The increase is attributable
to increased levels of employment, increased levels of employee benefits and
overheads associated with higher levels of employment, increased levels of
marketing expenses associated with the sales effort, increased legal and
professional fees associated with ongoing litigation and patent activities,
increased equipment leasing expenses, increased depreciation, increased
utility costs and increases in expendable supplies.
Interest income was $32,790 for the three months ended June 30, 1997, a
decrease of approximately $54,000. The decrease is attributable to lower
levels of invested cash during the three months period ended June 30,1997.
Six months ended June 30, 1997 compared to six months ended June 30, 1996.
Increases in sales ($178,828) and increases in cost of sales ($353,577) are
attributable to increased commercial production during the period. In the
six months ended June 30, 1996, sales of prototype products were
insignificant and were reported as a reduction of research and development
expenses.
Research and development expenses for the six month period ended June 30,
1997 were $514,526 as compared to $249,448 for the six month period ended
June 30, 1996, an increase of approximately $265,000. This increase is
primarily attributable to increased levels of research and
development activities during the first quarter of 1997, offset by the
the concentrated effort on production versus research activities.
Selling, general and administrative expenses increased approximately
$1,500,000 for the six months ended June 30, 1997 as compared to the six
months ended June 30, 1996 as a result of increased levels of employment,
increased employee benefits and overhead associated with increased number
of employees, increased insurance as a result of increased investment in
capital assets, increased marketing expenses associated with the sales
effort, increased professional fees associated with ongoing litigation,
patent activities and ongoing requirements associated with reporting as a
public Company, increased lease expenses associated with increased
levels of leased equipment and increases in utility costs and depreciation
associated with the Company's new production facility.
Interest income decreased approximately $27,000 as a result of lower levels
of cash available for investment purposes.
The loss associated with the early extinguishment of debt decreased as a
result of a non-recurrence of the event giving rise to such loss.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements have been significant and are expected to
remain significant. The Company's cash and cash equivalents at June 30,
1997 were $1,595,674 as compared to $4,266,168 at December 31, 1996, a
decrease of approximately $ 2,671,000 for the six months ended June 30,
1997.
The net cash used in operating activities for the six month period ended
June 30, 1997 was $2,544,886 which funded the operating loss of $2,383,528
and net changes in other working capital of $226,935, and which were offset
by net non-cash expenditures of $65,277.
Net cash used in investing activities of $141,436 was primarily the result
of the excess of purchases of property and equipment over that which was
sold to and leased back from FINOVA under the terms of that agreement.
Although cash expenditures have been significant over the period and are
expected to increase, additional cash flow is expected to result from full
production levels and the increased sales of the Company's products.
However, the timing of these sales cannot be assured and, based upon present
cash levels and projected cash needs, the Company expects to raise additional
capital in the near term to meet not only it present working capital
requirements but also it needs associated with an expansion of its facilities
to meet projected sales demand. The Company believes sources of capital will
be available to meet these demands.
<PAGE>
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is involved in litigation described in Note 4 in the
financial statements. This litigation does not involve more than
10% of the Company's assets
Item 2. Change in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
(a) The Annual Meeting of Shareholders of Semiconductor Laser
International Corporation was held on June 20, 1997
(b) The following five Directors were elected at the Annual Meeting:
Dr. Geoffrey T. Burnham
Susan M. Burnham
George W. Barrett
David L. Koffman
Brian J. Thompson
(c) The vote was as follows for the ratification of Price Waterhouse
LLP as the Company's independent Public Accountants:
For 2,883,981
Against 3,000
Abstain 11,550
Item 5. Other Information.
On July 15, 1997, the Board of Directors ratified the appointment
of Mr. Michael P. Murphy, Esq. to the Board Of Directors of
Semiconductor Laser International Corporation. Mr. Murphy is a
partner in the firm of Arter & Haden and is based in their Washington,
D.C. office.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
No. 11 Statement re: Computation of Weighted Average
Shares Outstanding
No. 27 Financial Data Schedule
(b) Reports on Form 8-K.
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
Semiconductor Laser International Corporation
---------------------------------------------
(Registrant)
Date:August 14, 1997 By:/s/ Geoffrey T Burnham
----------------------------
Geoffrey T. Burnham
Chairman, President and
Chief Executive Officer
Date: August 14, 1997 By:/s/ Nicholas L.Prioletti, Jr.
-----------------------------
Nicholas L. Prioletti, Jr.
Chief Financial Officer,
Principal Financial Officer
and Principal Accounting
Officer
<PAGE>
EXHIBIT 11
SEMICONDUCTOR LASER INTERNATIONAL CORPORATION
COMPUTATION OF WEIGHTED AVERAGE SHARES OUTSTANDING
PERIOD ENDED JUNE 30, 1996
"CHEAP STOCK" METHOD
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
SHARES ISSUED OR SHARES REDEEMED USING JUNE 30, 1996 JUNE 30, 1996
WARRANTS AND OPTIONS PROCEEDS FROM SHARES WEIGHTED AVERAGE WEIGHTED AVERAGE
DEEMED EXERCISED ISSUED DEEMED EXERCISED SHARES SHARES
OF WARRANTS & OPTIONS OUTSTANDING
OUTSTANDING
-------------------- ----------------------- ----------------- ------------------
<S> <C> <C> <C> <C>
1993 SHARES OUTSTANDING (NOTE 1) 729,003 0 729,003 729,003
1994 SHARES OUTSTANDING (NOTE 1) 192,344 0 192,344 192,344
1995 SHARES OUTSTANDING (NOTE 1) 472,306 0 472,306 472,306
1996 "CHEAP" STOCK 150,000 (59,000) 91,000 150,000
1996 WEIGHTED SHARES ISSUED IN
IPO (NOTE 2) 943,407 0 943,407 1,700,000
1993 OPTIONS 1,971 (75) 1,896
1995 OPTIONS 11,000 (11,000) 0
1995 OPTIONS 88,659 (887) 87,772
WARRANTS ISSUED IN 1994 &
1995 (NOTE 1) 54,576 (0) 54,576
1995 WARRANTS 17,732 (10,440) 7,292
1996 SHARES 57,957 (32,875) 25,082 50,197
ADD BACK ANTI-DILUTIVE OPTIONS
& WARRANTS (56,471)
---------- ---------
WEIGHTED AVERAGE SHARES OUTSTANDING 2,548,207 3,293,850
========== =========
</TABLE>
NOTE 1: SHARES AND WARRANTS ISSUED MORE THAN ONE YEAR PRIOR
TO INITIAL PUBLIC OFFERING ("IPO")
NOTE 2: COMPUTED USING THE WEIGHTED AVERAGE METHOD
PERIOD ENDED JUNE 30,1997
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
JUNE 30,1997 JUNE 30, 1997
SHARES ISSUED WEIGHTED AVERAGE WEIGHTED AVERAGE
AND OUTSTANDING SHARES OUTSTANDING SHARES OUTSTANDING
------------- ------------------ ------------------
<S> <C> <C> <C>
COMMON SHARES ISSUED AND
OUTSTANDING JANUARY 1, 1997 3,374,144 3,374,144 3,374,144
COMMON SHARES ISSUED JANUARY 10,
1997 120,000 114,033 120,000
COMMON SHARES ISSUED FEBRUARY 9,
1997 1,231 966 1,231
COMMON SHARES ISSUED MAY 19,
1997 9,851 2,340 4,655
--------- --------- ---------
WEIGHTED AVERAGE SHARES OUTSTANDING 3,505,226 3,491,483 3,500,030
========= ========= =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,595,674
<SECURITIES> 0
<RECEIVABLES> 211,070
<ALLOWANCES> (25,000)
<INVENTORY> 17,301
<CURRENT-ASSETS> 1,799,045
<PP&E> 2,834,195
<DEPRECIATION> (134,921)
<TOTAL-ASSETS> 5,098,746
<CURRENT-LIABILITIES> 706,528
<BONDS> 0
0
0
<COMMON> 35,407
<OTHER-SE> 3,437,945
<TOTAL-LIABILITY-AND-EQUITY> 5,098,746
<SALES> 178,528
<TOTAL-REVENUES> 0
<CGS> 353,577
<TOTAL-COSTS> 353,577
<OTHER-EXPENSES> 2,284,759
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 43,714
<INCOME-PRETAX> (2,383,528)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,383,528)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,383,528)
<EPS-PRIMARY> (0.68)
<EPS-DILUTED> (0.68)
</TABLE>
