<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
(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
----------------
or
( ) 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 0-6533
------
Boston Life Sciences, Inc.
(Exact name of registrant as specified in its charter)
Delaware 87-0277826
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
137 Newbury Street, 8th Floor, Boston, Massachusetts 02116
(Address of principal executive offices) (Zip code)
(617) 425-0200
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
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.
(X) Yes ( ) No
As of May 5, 2000 there were 18,982,081 shares of Common Stock outstanding.
<PAGE>
BOSTON LIFE SCIENCES, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page (s)
--------
<S> <C>
Part I - Financial Information
Item 1 - Financial Statements (Unaudited)
Consolidated Balance Sheets as of March 31, 2000
and December 31, 1999 1
Consolidated Statements of Operations for the three months
ended March 31, 2000 and 1999, and for the period from
inception (October 16, 1992) to March 31, 2000 2
Consolidated Statements of Cash Flows for the three months
ended March 31, 2000 and 1999, and for the period from
inception (October 16, 1992) to March 31, 2000 3
Notes to Consolidated Financial Statements 4 - 6
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 7 - 9
Item 3 - Quantitative and Qualitative Disclosures about Market Risk 9
Part II - Other Information
Item 1 - Legal Proceedings 10
Item 2 - Changes in Securities 10
Item 3 - Defaults Upon Senior Securities 10
Item 4 - Submission of Matters to a Vote of Security Holders 10
Item 5 - Other Information 10
Item 6 - Exhibits and Reports on Form 8-K 10
Signatures 11
</TABLE>
<PAGE>
Part I - Financial Information
Item 1 - Financial Statements
Boston Life Sciences, Inc.
(A Development Stage Enterprise)
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 567,936 $ 260,134
Short-term investments 15,125,884 14,690,308
Other current assets 427,803 599,943
------------ ------------
Total current assets 16,121,623 15,550,385
Fixed assets, net 42,054 10,796
Other assets 193,547 511,031
------------ ------------
Total assets $ 16,357,224 $ 16,072,212
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued expenses $ 2,356,693 $ 1,803,667
8% convertible redeemable debentures, due September 2003 - 4,647,192
Series C convertible redeemable preferred stock, $.01 par value;
475,000 shares authorized; 53,669 shares issued and outstanding at
December 31, 1999 - 1,046,546
Stockholders' equity:
Series A convertible preferred stock, $.01 par value; 15,000 shares
authorized; 4,983 shares issued and outstanding at December 31,
1999 - 50
Common stock, $.01 par value; 30,000,000 shares authorized;
18,826,466 and 16,280,473 shares issued and outstanding at March
31, 2000 and December 31, 1999, respectively 188,265 162,805
Additional paid-in capital 71,323,717 63,093,089
Accumulated other comprehensive loss (432,321) (553,157)
Deficit accumulated during development stage (57,079,130) (54,127,980)
------------ ------------
Total stockholders' equity 14,000,531 8,574,807
------------ ------------
Total liabilities and stockholders' equity $ 16,357,224 $ 16,072,212
============ ============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
1
<PAGE>
Boston Life Sciences, Inc.
(A Development Stage Enterprise)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
From Inception
Three Months Ended (October 16,
March 31, 1992) to
2000 1999 March 31, 2000
------------ ------------- --------------
<S> <C> <C> <C>
Revenues $ - $ - $ 900,000
Operating expenses:
Licensing fees 100,000 - 833,683
Research and development 1,851,249 933,463 24,388,684
Therafectin related - 577,684 8,781,458
General and administrative 766,104 696,968 13,682,773
Purchased in-process research and
development - - 12,146,544
------------ ------------- --------------
Total operating expenses 2,717,353 2,208,115 59,833,142
------------ ------------- --------------
Loss from operations (2,717,353) (2,208,115) (58,933,142)
Interest expense (344,870) - (2,252,457)
Interest income 111,073 128,830 4,106,469
------------ ------------- --------------
Net loss $(2,951,150) $(2,079,285) $(57,079,130)
============ ============= =============
Calculation of net loss available to common
shareholders:
Net loss $(2,951,150) $(2,079,285)
Preferred stock preferences - (4,240,000)
------------ -------------
Net loss available to common shareholders $(2,951,150) $(6,319,285)
============ =============
Calculation of basic and diluted net loss
per share available to common shareholders:
Net loss per share $ (0.17) $ (0.15)
Preferred stock preferences per share - $ (0.31)
------------ -------------
Basic and diluted net loss per share
available to common shareholders $ (0.17) $ (0.46)
============ =============
Weighted average shares outstanding 17,055,434 13,747,569
============ =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
Boston Life Sciences, Inc.
(A Development Stage Enterprise)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
From Inception
Three Months Ended (October 16,
March 31, 1992) to
2000 1999 March 31, 2000
------------ ------------ --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(2,951,150) $(2,079,285) $(57,079,130)
Adjustments to reconcile net loss to net cash used
for operating activities:
Purchased in-process research and development - - 12,146,544
Debenture interest expense 142,861 - 142,861
Compensation charge related to options and warrants - 6,000 1,815,170
Write-off of acquired technology - - 3,500,000
Accretion of discount on convertible debentures 189,632 - 436,824
Amortization and depreciation 14,967 5,500 1,506,349
Changes in current assets and liabilities:
Decrease in other current assets 172,140 363,049 236,022
Increase (decrease) in accounts payable and
accrued expenses 622,015 (77,930) 1,478,017
------------ ------------ -------------
Net cash used for operating activities (1,809,535) (1,782,666) (35,817,343)
------------ ------------ -------------
Cash flows from investing activities:
Cash acquired through merger - - 1,758,037
Purchases of fixed assets (33,848) - (302,928)
Increase in other assets (2,158) - (352,044)
Short term investments:
Purchases (3,542,333) (2,952,298) (61,268,753)
Sales and maturities 3,227,593 1,560,728 45,710,548
------------ ------------ -------------
Net cash used for investing activities (350,746) (1,391,570) (14,455,140)
------------ ------------ -------------
Cash flows from financing activities:
Proceeds from issuance of common stock 2,468,083 3,042,684 19,240,340
Proceeds from issuance of preferred stock - 6,150,000 27,022,170
Preferred stock conversion inducement - - (600,564)
Proceeds from issuance of notes payable - - 2,585,000
Proceeds from issuance of convertible debentures - - 9,000,000
Principal payments of notes payable - - (2,796,467)
Payment of note issuance costs - - (399,702)
Payment of convertible debenture issuance costs - - (343,208)
Payment of stock issuance and merger transaction
costs - (512,852) (2,867,150)
------------ ------------ -------------
Net cash provided by financing activities 2,468,083 8,679,832 50,840,419
------------ ------------ -------------
Net increase in cash and cash equivalents 307,802 5,505,596 567,936
Cash and cash equivalents, beginning of period 260,134 71,834 -
------------ ------------ -------------
Cash and cash equivalents, end of period $ 567,936 $ 5,577,430 $ 567,936
============ ============ =============
Supplemental cash flow disclosures:
Non cash transactions (see note 3)
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
Boston Life Sciences, Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (Unaudited)
March 31, 2000
1. Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, these financial
statements do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements.
The interim unaudited consolidated financial statements contained herein
include, in management's opinion, all adjustments (consisting of normal
recurring adjustments) 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 interim period shown on this report are not
necessarily indicative of results for a full year. These financial
statements should be read in conjunction with the Company's consolidated
financial statements and notes for the year ended December 31, 1999 included
in the Company's Annual Report on Form 10-K.
2. Net Loss Per Share
Basic and diluted net loss per share available to common stockholders has
been calculated by dividing net loss, adjusted for preferred stock
preferences, by the weighted average number of common shares outstanding
during the period. All potential common shares have been excluded from the
calculation of weighted average common shares outstanding since their
inclusion would be anti-dilutive.
Stock options and warrants to purchase approximately 6.4 million and
approximately 4.5 million shares of common stock were outstanding at March
31, 2000 and 1999, respectively, but were not included in the computation of
diluted net loss per common share because they were anti-dilutive. Also
excluded were approximately 1.8 million shares of common stock issuable upon
the conversion of Series A and Series C preferred stock outstanding at March
31, 1999. The exercise of these stock options and warrants, or the
conversion of the preferred stock, could potentially dilute earnings per
share in the future.
4
<PAGE>
Boston Life Sciences, Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (Unaudited)
3. Supplemental Disclosure of Non-cash Investing and Financing Activities
During the three months ended March 31, 2000, the Company issued 87,121 and
300,614 shares of common stock resulting from the conversion of 4,983 and
53,669 shares of Series A and Series C preferred stock, respectively. During
the three months ended March 31, 2000, the Company also issued 1,573,956
shares of common stock resulting from the conversion of convertible
debentures with a face value of $8 million plus accrued interest of
approximately $212,000. The carrying value of the debentures plus the
accrued interest net of deferred financing costs of approximately $307,000
was reclassified to additional paid-in capital upon conversion of the
debentures. During the three months ended March 31, 1999, the Company issued
57,874 shares of common stock resulting from the conversion of 3,300 shares
of Series A preferred stock.
4. Comprehensive Loss
The Company had total comprehensive loss of $2,830,314 and $2,209,579 for the
three months ended March 31, 2000 and 1999, respectively, and included
unrealized gains on investments.
5. Stockholders' Equity
In February 1999, the Company completed a private placement of Series C
convertible preferred stock, $.01 par value, which raised approximately $5.6
million in net proceeds.
In February 1999, the Company completed a private placement of 647,668 shares
of common stock which raised approximately $2.3 million in net proceeds.
6. Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), which was
amended by SFAS No. 137 and is effective for all fiscal quarters of fiscal
years beginning after June 15, 2000. The statement requires that all
derivative investments be recorded in the balance sheet at fair value.
Changes in the fair value of derivatives are recorded each period in current
earnings or comprehensive income depending on whether a derivative is
designated as part of a hedge transaction, and the type of hedge transaction.
The Company does not expect the adoption of the statement to have a material
effect on its financial statements.
In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"), which is effective for the Company's quarter ending June 30,
2000 and all future quarters. SAB 101 clarifies the SEC's views related to
revenue recognition and disclosure. The Company does not expect the
provisions of SAB 101 to have a material effect on the Company's prior period
results.
5
<PAGE>
Boston Life Sciences, Inc.
(A Development Stage Enterprise)
Notes to Consolidated Financial Statements (Unaudited)
In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - an interpretation of APB
Opinion No. 25" ("FIN 44"). FIN 44 clarifies the application of APB Opinion
No. 25 to certain issues including: the definition of an employee for
purposes of applying APB Opinion No. 25; the criteria for determining whether
a plan qualifies as a noncompensatory plan; the accounting consequence of
various modifications to the terms of previously fixed stock options or
awards; and the accounting for the exchange of stock compensation awards in a
business combination. FIN 44 is effective July 1, 2000, but certain
conclusions in FIN 44 are applicable retroactively to specific events
occurring after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.
6
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
(March 31, 2000)
This Quarterly Report on Form 10-Q contains forward-looking statements.
Specifically, 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.
There are a number of meaningful factors that could cause the Company's actual
results to differ materially from those indicated by any such forward-looking
statements. These factors include, without limitation, the duration and results
of clinical trials and their effect on the Food & Drug Administration ("FDA")
regulatory process, uncertainties regarding receipt of approvals for any
possible products and any commercial acceptance of such products, possible
difficulties with obtaining necessary patent protection, and uncertainties
regarding the outcome of any of the Company's collaborations or alliances with
third parties. Other factors include those set forth under the caption
"Forward-Looking Statements" in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 and the documents referred to under such caption.
Results of Operations
Overview
The Company is a biotechnology company engaged in the research and
development of novel therapeutic and diagnostic products to treat chronic
debilitating diseases such as cancer, central nervous system disorders and
autoimmune diseases. The Company expects that its research and development
costs will continue to increase as the Company attempts to gain regulatory
approval for commercial introduction of its proposed products. At March 31,
2000, the Company is considered a "development stage enterprise" as defined in
Statement of Financial Accounting Standards No. 7.
Three Months Ended March 31, 2000 and 1999
The Company's net loss was $2,951,150 during the three months ended March
31, 2000 as compared with $2,079,285 during the three months ended March 31,
1999. Net loss per common share, excluding preferred stock preferences, equaled
$0.17 per share for the 2000 period as compared to $0.15 per share for the 1999
period. The higher net loss in the 2000 period was primarily due to higher
research and development costs and interest expense incurred on the convertible
debentures issued in September 1999. These items were partially offset by lower
Therafectin related expenses.
The net loss available to common stockholders for the 1999 period,
including preferred stock preferences of $4,240,000, totaled $6,319,285. Net
loss per common share for the 1999 period, including $0.31 attributable to
preferred stock preferences, totaled $0.46. In February 1999, the Company
completed a private placement of Series C convertible preferred stock and
warrants. Based on the market price of the Company's stock on the date of
issuance, the preferred stock had a beneficial conversion feature with an
intrinsic value of approximately $1.9 million and the warrants had a fair value
of approximately $1.8 million, which amounts are included in the preferred stock
preferences.
Research and development expenses were $1,851,249 during the three months
ended March 31, 2000 as compared with $933,463 during the three months ended
March 31, 1999. The increase was primarily attributable to expenditures related
to the Phase III clinical trial for Altropane which was initiated in March 1999
and which completed trial enrollment in March 2000, and to the development of a
good manufacturing process ("GMP") in preparation for the filing of a new drug
application.
7
<PAGE>
Licensing fees expense was $100,000 during the three months ended March 31,
2000 as compared with zero during the three months ended March 31, 1999. The
licensing fee incurred during the 2000 period is related to the expanded use,
for a new medical indication, of a technology previously licensed by the
Company. In addition to an initial licensing fee payment, the Company is
obligated to pay additional amounts upon the attainment of development
milestones, as defined in each respective licensing agreement, as well as
royalties upon the sales of any resulting products. The Company expects to pay
future licensing fees, the timing and amounts of which will depend upon the
progress attained in developing existing technologies and the terms of
agreements which may be executed for technologies currently being developed or
which may be developed in the future. There can be no assurance regarding the
likelihood or materiality of any such future licensing agreements.
Therafectin related expenses were zero during the three months ended March
31, 2000 as compared with $933,463 during the three months ended March 31, 1999.
The Company is presently evaluating its future plans but does not plan to commit
substantial additional financial resources on the development of Therafectin.
Expenses during the 1999 period primarily related to manufacturing costs related
to the production of three lots of GMP material as required under applicable law
and regulations for the Company's amended New Drug Application filing with the
FDA.
General and administrative expenses were $766,104 during the three months
ended March 31, 2000 as compared with $696,968 during the three months ended
March 31, 1999. This increase was primarily due to higher compensation
expenses, partially associated with increased headcount.
Interest income was $111,073 during the three months ended March 31, 2000
as compared with $128,830 during the three months ended March 31, 1999. This
decrease reflects the inclusion of approximately $118,000 of realized losses on
the Company's investment portfolio during the 2000 period. The effect of these
losses was partially offset by a higher level of interest income during the 2000
period primarily related to higher average short-term investments, cash and cash
equivalent balances as compared to the 1999 period. Interest expense was
$344,870 during the three months ended March 31, 2000 as compared with zero
during the three months ended March 31, 1999. In September 1999, the Company
issued $8 million of 8% convertible debentures, and incurred $142,861 in non-
cash interest on the 8% coupon and $189,632 in non-cash interest associated with
the accretion of the discounted carrying value of the debentures in the 2000
period.
Liquidity and Capital Resources
Since its inception, the Company has primarily satisfied its working
capital requirements from the sale of the Company's securities through private
placements. These private placements have included the sale of preferred stock
and common stock, as well as notes payable and convertible debentures. Each
private placement has included the issuance of warrants to purchase common
stock. A summary of financings completed during the three years ended March 31,
2000 is as follows:
<TABLE>
<CAPTION>
Date Net Proceeds Raised Securities Issued
- ---- ------------------- -----------------
<S> <C> <C>
September 1999 $7.4 million Convertible debentures
February 1999 $2.3 million Common stock
February 1999 $5.6 million Preferred stock
</TABLE>
In the future, the Company's working capital and capital requirements will
depend on numerous factors, including the progress of the Company's research and
development activities, the level of resources that the Company devotes to the
developmental, clinical, and regulatory aspects of its products, and the
8
<PAGE>
extent to which the Company enters into collaborative relationships with
pharmaceutical and biotechnology companies.
At March 31, 2000, the Company had available cash, cash equivalents and
short term investments of approximately $15.7 million and working capital of
approximately $13.8 million. The Company believes that the level of financial
resources available at March 31, 2000 will provide sufficient working capital to
meet its anticipated expenditures for more than the next twelve months. The
Company may raise additional capital in the future through collaborative
agreements with other pharmaceutical or biotechnology companies, debt financings
and equity offerings. There can be no assurance, however, that the Company will
be successful or that additional funds will be available on acceptable terms, if
at all.
Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), which was amended by SFAS No.
137 and is effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. The statement requires that all derivative investments be
recorded in the balance sheet at fair value. Changes in the fair value of
derivatives are recorded each period in current earnings or comprehensive income
depending on whether a derivative is designated as part of a hedge transaction,
and the type of hedge transaction. The Company does not expect the adoption of
the statement to have a material effect on its financial statements.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"), which is effective for the Company's quarter ending June 30, 2000
and all future quarters. SAB 101 clarifies the SEC's views related to revenue
recognition and disclosure. The Company does not expect the provisions of SAB
101 to have a material effect on the Company's prior period results.
In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation - an interpretation of APB
Opinion No. 25" ("FIN 44"). FIN 44 clarifies the application of APB Opinion No.
25 to certain issues including: the definition of an employee for purposes of
applying APB Opinion No. 25; the criteria for determining whether a plan
qualifies as a noncompensatory plan; the accounting consequence of various
modifications to the terms of previously fixed stock options or awards; and the
accounting for the exchange of stock compensation awards in a business
combination. FIN 44 is effective July 1, 2000, but certain conclusions in FIN
44 are applicable retroactively to specific events occurring after either
December 15, 1998 or January 12, 2000. The Company does not expect the
application of FIN 44 to have a material impact on the Company's financial
position or results of operations.
Item 3 - Quantitative and Qualitative Disclosures about Market Risk
There have been no material changes in the reported market risks since December
31, 1999.
9
<PAGE>
PART II -- OTHER INFORMATION
----------------------------
ITEM 1: LEGAL PROCEEDINGS.
-----------------
None.
ITEM 2: CHANGES IN SECURITIES.
---------------------
None.
ITEM 3: DEFAULTS UPON SENIOR SECURITIES.
-------------------------------
None.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
---------------------------------------------------
None.
ITEM 5: OTHER INFORMATION.
-----------------
(a) Exhibits.
None.
Item 6: EXHIBITS AND REPORTS ON FORM 8-K.
--------------------------------
(a) Exhibits.
27.1 Financial Data Schedule
(b) Reports on Form 8-K: The Registrant filed the following reports
on Form 8-K during the quarter ended March 31, 2000.
Date of Report Item Reported
-------------- -------------
January 11, 2000 5, 7
January 21, 2000 5, 7
February 1, 2000 5, 7
10
<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.
BOSTON LIFE SCIENCES, INC.
--------------------------
(Registrant)
DATE: May 15, 2000 /s/ S. David Hillson
--------------------------------------
S. David Hillson
President and Chief Executive Officer
(Principal Executive Officer)
/s/ Joseph Hernon
--------------------------------------
Joseph Hernon
Chief Financial Officer
(Principal Financial and Accounting
Officer)
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from financial statements
as reported on Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 567,936
<SECURITIES> 15,125,884
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 16,121,623
<PP&E> 249,762
<DEPRECIATION> 207,708
<TOTAL-ASSETS> 16,357,224
<CURRENT-LIABILITIES> 2,356,693
<BONDS> 0
0
0
<COMMON> 188,265
<OTHER-SE> 13,812,266
<TOTAL-LIABILITY-AND-EQUITY> 16,357,224
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 2,717,353
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 344,870
<INCOME-PRETAX> (2,951,150)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,951,150)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,951,150)
<EPS-BASIC> (0.17)
<EPS-DILUTED> (0.17)
</TABLE>
