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8, to 9,631,000 from 6,793,000 for the comparable period in 1998. The increase primarily relates to wages, advertising and other costs incurred on marketing and media campaigns to (i) launch the introduction of Inholtra, (ii) launch our new products, Cholestaid and Veromax, for the fourth quarter 1999 and fiscal 2000, (iii) media and advertising campaigns to support certain of our other products, and (iv) continual repackaging and redesign of our core product lines. GENERAL AND ADMINISTRATIVE. General and administrative expenses for the year ended December 31, 1999, increased by 2,328,000, or 31.

The Preferred Stock is convertible into common stock on the following basis: The number of shares of common stock to be issued is equal to the stated value of the number of shares of Preferred Stock being converted, together with any accrued dividends (the quot;Additional Amountquot;) thereon, divided by the quot;Conversion Pricequot. The Conversion Price is equal to the lesser of (i) 115 of the average of the two lowest bid prices quoted on the exchange where the Company's common stock is traded during the ten days preceding the closing or, (ii) 80 of the average of the two lowest bid prices of the common stock. Related to this issuance of the Company's preferred stock, the Company recorded an imputed, preferred dividend, which represented the difference between the trading price of the Company's common stock and the conversion rate most beneficial to the preferred stock holder, at the date the preferred stock was issued. The dividend amounted to 3,168,000, which is reflected as an increase in the net loss available to common shareholders on the accompanying statement of operations. The preferred stock may be redeemed by the Company at any time after closing, at a price per share equal to the greater of (a) 1,400 plus an additional amount defined as 6 of the face amount of the stock being redeemed, multiplied by the number of days since closing, divided by 365; or (b) the market price of the common stock into which the preferred stock could be converted, as of the date of the redemption. On the fourth anniversary of the issue date, any existing preferred stock must be redeemed or converted into common stock, subject to certain provisions.

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