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 PERIOD ENDED MARCH 31, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________
TO _____________
Commission File Number: 0-27088
- --------------------------------------------------------------------------------
SANO CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA 650263022
- ------------------------------------ -------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3250 COMMERCE PARKWAY
MIRAMAR, FLORIDA 33025
- ----------------------------------------- ------------------------------------
(Address of principal executive offices) (Zip Code)
(954) 430-3340
- --------------------------------------------------------------------------------
(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 1933 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 No X
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common Stock, $.01 par value 9,206,932 shares as of May 10, 1996.
<PAGE>
SANO CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets -- March 31, 1996 and December 31, 1995
Statements of Operations -- Three months ended March 31, 1996 and
1995 and for the cumulative period from
inception (May 16, 1991) through March
31, 1996
Statements of Cash Flows -- Three months ended March 31, 1996, and
1995 and for the cumulative period from
inception (May 16, 1991) through March
31, 1996
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
-1-
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL STATEMENTS
ITEM 1.
SANO CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
BALANCE SHEETS
<S>
March 31 December 31,
1996 1995
ASSETS (Unaudited)
<C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 265,828 $ 5,517,061
Marketable securities 23,949,834 22,782,221
Receivable 616,567 -
Other current assets 264,199 320,401
-------------------- -------------------
Total current assets 25,096,428 28,619,683
-------------------- -------------------
PROPERTY, PLANT AND EQUIPMENT, NET 6,141,751 5,304,167
-------------------- -------------------
OTHER ASSETS
Patents, net 276,389 236,815
Deposits and other 862,050 463,838
-------------------- -------------------
Total other assets 1,138,439 700,653
-------------------- -------------------
TOTAL ASSETS $ 32,376,618 $ 34,624,503
==================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 124,540 $ 213,816
Current obligation under capitalized leases 34,608 33,429
Accounts payable 841,652 696,015
Accrued expenses 626,970 647,871
-------------------- -------------------
Total current liabilities 1,627,770 1,591,131
-------------------- -------------------
LONG TERM LIABILITIES
Deferred revenue 2,068,222 1,451,655
Capitalized lease obligations, net of current portion 39,824 48,990
Notes payable 484,648 473,024
-------------------- -------------------
Total long term liabilities 2,592,694 1,973,669
-------------------- -------------------
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value, 5,000,000 authorized, none issued or - -
outstanding
Common stock $0.01 par value, 25,000,000 shares authorized, 9,206,932
issued and outstanding at March 31, 1996 and Deember 31, 1995 92,069 92,069
Additional paid-in-capital 45,354,225 45,354,225
Deficit accumulated during development stage (17,290,140) (14,386,591)
-------------------- -------------------
Total stockholders' equity 28,156,154 31,059,703
-------------------- -------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$ 32,376,618 $ 34,624,503
==================== ===================
</TABLE>
SEE ACCOMPANYING NOTES
-2-
<PAGE>
<TABLE>
<CAPTION>
SANO CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENTS OF OPERATIONS
(UNAUDITED)
CUMULATIVE PERIOD
FROM INCEPTION
(MAY 16, 1991)
THROUGH
THREE MONTHS ENDED MARCH 31, MARCH 31,
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
REVENUES $ - $ - $ -
--------------- --------------- ---------------
OPERATING EXPENSES
Research and development 2,758,378 1,497,098 15,541,819
General and administrative 444,229 178,671 2,476,497
----------------- ------------------ -------------------
Total operating expenses 3,202,607 1,675,769 18,018,316
----------------- ------------------ -------------------
OTHER INCOME (EXPENSE)
Development fees - - 228,025
Interest income 335,960 13,413 714,891
Interest expense (20,262) (19,127) (198,100)
Loss on sale of equipment (16,640) - (16,640)
----------------- ------------------ -------------------
Total other income (expense) 299,058 (5,714) 728,176
----------------- ------------------ -------------------
NET LOSS $ 2,903,549 $ 1,681,483 $ 17,290,140
================= ================== ===================
LOSS PER SHARE (NOTE 2) $ .32 $ .31 $ 3.83
================= ================== ===================
WEIGHTED AVERAGE SHARES 9,207,000 5,481,000 4,509,000
================= ================== ===================
</TABLE>
SEE ACCOMPANYING NOTES
-3-
<PAGE>
<TABLE>
<CAPTION>
SANO CORPORATION
(A DEVELOPMENT STAGE CORPORATION)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
CUMULATIVE PERIOD
FROM INCEPTION
(MAY 16, 1991)
THROUGH
THREE MONTHS ENDED MARCH 31, MARCH 31,
1996 1995 1996
---- ---- ----
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (2,903,549) $ (1,681,483) $ (17,290,140)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 148,261 54,945 763,414
Loss on sale of equipment 16,640 - 16,640
Accretion of discount on marketable securities (230,445) - (393,693)
Interest accrued on notes payable 18,916 - 122,259
Changes in operating assets and liabilities:
Decrease (increase) in other current assets 56,202 178,709 (264,199)
Decrease (increase) in deposits and other (398,212) 16,758 (862,050)
Increase in accounts payable and accrued
expenses 124,736 76,672 1,468,622
----------------- ----------------- ------------------
Net cash used in operating activities (3,167,451) (1,354,399) (16,439,147)
----------------- ------------------ ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (1,001,922) (988,952) (6,817,922)
Sale of equipment 2,200 - 2,200
Expenditures for patents (42,337) (47,247) (287,076)
------------------ ------------------ -----------------
Net cash used in investing activities (1,042,059) (1,036,199) (7,102,798)
----------------- ------------------ -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Fractional share payoff - - (707)
Repayment of notes payable (104,555) (10,267) (1,820,528)
Sale and maturities of marketable securities 3,827,858 - 3,827,858
Purchase of marketable securities (4,765,026) - (27,383,999)
Proceeds from notes payable - - 2,511,960
Advances from distributor - - 1,451,655
Proceeds from issuance of common stock, net of - - 31,671,037
expenses
Proceeds from issuance of preferred stock series A - - 400,000
Proceeds from issuance of preferred stock series B - - 553,997
Proceeds from issuance of preferred stock series C - - 1,499,989
Proceeds from issuance of preferred stock series D - - 6,000,000
Proceeds from issuance of preferred stock series E - - 5,096,511
----------------- ------------------ ------------------
Net cash (used in) provided by financing
activities (1,041,723) (10,267) 23,807,773
------------------ ------------------ ------------------
Net increase (decrease) in cash and cash equivalents (5,251,233) (2,400,866) 265,828
Cash and cash equivalents at beginning of period 5,517,061 2,585,918 -
================= ================== ==================
Cash and cash equivalents at end of period $ 265,828 $ 185,052 $ 265,828
================= ================== ==================
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:
Deferred revenue receivable $ 616,567 $ - $ 616,567
================= ================== ==================
Capitalized leases $ - $ - $ 95,396
================= ================== ==================
</TABLE>
In November 1995, in conjunction with the initial public offering, the Company
had a 5 for 6 reverse stock split of its common stock and all preferred stock
was converted into 3,797,213 shares of common stock.
SEE ACCOMPANYING NOTES
-4-
<PAGE>
SANO CORPORATION
(A Development Stage Corporation)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
(1) BASIS OF PRESENTATION:
The information at March 31, 1996 and for the three months ended March 31, 1996
and 1995 is unaudited. However, such information includes all adjustments
(consisting of normal recurring adjustments) which management of Sano
Corporation (the "Company") believes are necessary for a fair financial
presentation of the results for the periods presented. The results of operations
and cash flows for the three month period ended March 31, 1996 are not
necessarily indicative of results of operations and cash flows which may be
reported for a full year. These financial statements should be read in
conjunction with the audited financial statements for the year ended December
31, 1995.
(2) RECEIVABLE:
Receivable represents amount due from a distribution company. The monies due to
the Company are to be repaid only from future gross profits of certain products
developed by the Company and distributed by the distribution company.
Accordingly, these amounts are also recorded as deferred revenue.
(3) DEFERRED REVENUE:
In 1994, the Company entered into an agreement with a distribution company
pursuant to which such distribution company would pay certain product
development fees in exchange for the right to distribute certain products in
development by the Company. Any monies received by the Company would be repaid
out of future gross profits of certain products developed by the Company and
distributed by the distribution company. Such amounts are classified as deferred
revenue and would be recognized as income through future sales.
(4) LOSS PER SHARE:
Loss per share is determined by dividing the net loss attributable to holders of
Company's common stock by the weighted average number of shares of common stock
and dilutive common stock equivalents outstanding, after applying the treasury
stock method and after giving effect to the reverse stock split and the
recapitalization referred to below.
Common stock equivalents do not include the issuance of stock options and
warrants because of their antidilutive effect.
(5) STOCKHOLDERS' EQUITY:
On November 10, 1995 the Company completed an initial public offering of
2,600,000 shares of its common stock. Simultaneously with the completion of the
offering, (i) all outstanding shares of preferred stock (consisting of 1,066,664
shares of Series A redeemable preferred stock, 984,884 shares of Series B
redeemable preferred stock, 430,108 shares of Series C redeemable preferred
stock, 1,200,000 shares of Series D redeemable preferred stock and 875,000
shares of Series E redeemable preferred stock) were automatically converted into
an aggregate of 3,797,213 shares of common stock and (ii) the Company's
certificate of incorporation was amended and restated to provide that the
authorized capital stock of the Company consists of 25,000,000 shares of common
stock, $0.01 par value, and 5,000,000 shares of preferred stock, $0.01 par
value.
In connection with the initial public offering, the Board of Directors of the
Company approved a 5-for-6 reverse stock split of its common stock effective
coincident with the date of the initial public offering.
On December 11, 1995, the Company completed the sale of an additional 390,000
shares of its common stock in connection with the exercise by the Underwriters
of their over-allotment option.
-5-
<PAGE>
SANO CORPORATION
(A Development Stage Corporation)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
CONTINUED
(6) STOCK OPTION PLAN:
In May 1993, the Board of Directors of the Company adopted the Sano Corporation
1993 Nonqualified Stock Option Plan (the "Plan") which has been approved by the
Company's stockholders. All directors, officers, employees and certain related
parties of the Company designated by the Board are eligible to receive options
under the Plan. The Plan provides for the granting of stock options for the
purchase of up to 1,224,083 shares of the Company's common stock. The Plan which
is administered by the Board of Directors of the Company, terminates on May 4,
2003. The purchase price per share of stock purchased under an option pursuant
to the Plan is determined by the Board, but in no event may such price be below
the fair market value of such stock. The maximum term of any option is ten years
from the date of grant. All options terminate within 120 days of termination of
employment.
In September 1995, the Company adopted the 1995 Stock Option Plan (the "1995
Plan") which provides for the granting of stock options to key employees,
officers, directors and independent contractors for the purchase of up to
500,000 shares of the Company's common stock. Options granted under the Plan may
be incentive stock options or nonqualified options. Additionally, under the 1995
Plan, each non-employee director receives on the date of his appointment as
director an option to purchase 5,000 shares of common stock, and upon the
release of prior year earnings in each subsequent year an option to purchase
5,000 shares of common stock.
Options typically vest over a period of years. However, each Plan provides for
immediate vesting for certain key officers, if control of the Company is
changed.
The following is a summary of stock option activity:
Number of Shares Option Price Per
Share
-------------- ----------------
Outstanding at December 31, 1995 1,272,500 $ .67 - 11.50
Granted 46,000 11.88 - 14.38
Exercised -- --
Canceled (15) .67 - 3.60
------------- ----------------
Outstanding at March 31, 1996 1,318,485 .67 - 14.38
============== ================
Options exercisable at March 31, 1996 870,769 $ .67 - 14.38
============== ================
Shares of common stock available for
future grants at March 31, 1996 405,598
==============
-6-
<PAGE>
SANO CORPORATION
(A Development Stage Corporation)
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
CONTINUED
(7) LEGAL PROCEEDINGS:
On March 6, 1996, Key Pharmaceuticals, Inc. ("Key") filed a complaint
in the United States District Court of Florida alleging that one of the
Company's transdermal nitroglycerin patches, a generic version of Nitro Dur(R),
for which the Company has filed an Abbreviated New Drug Application with the
U.S. Food and Drug Administration, infringed certain patents owned by Key. The
Company has invited Key to review samples of and certain information about the
Company's generic version of Nitro Dur(R) under appropriate confidentiality
arrangements. Key has not yet responded. The Company had previously obtained
non-infringement opinions with regard to its product and believes that there is
no merit to the allegations in the complaint. The Company has filed an answer
and counter claims to the complaint and intends to vigorously defend this
lawsuit. If however, the Company is found in violation of Key's patents, it may
not be able to market its generic version of Nitro Dur(R) on a commercially
acceptable basis or at all.
-7-
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
GENERAL
Since its commencement of operations in October 1992, the Company has devoted
substantially all of its resources to drug delivery research and development
programs and now has nine proprietary products and eight generic products in
various stages of development. The Company has not yet commenced its planned
principal operations and is therefore classified as a development stage company.
The Company has been unprofitable since inception and expects to incur
significant additional losses in the near future. For the period from inception
through March 31, 1996, the Company incurred a cumulative net loss of
$17,290,000. The Company's sources of working capital have been an initial
public offering (the "Offering"), equity financing prior to the Offering and, to
a far lesser extent, interest earned on investment of cash. The Company has also
received certain product development advances from Pharmaceutical Resources,
Inc. ("PRI") in connection with its distribution agreement.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED MARCH 31, 1995.
The Company reported net loss of $2,904,000 for the three months ended March 31,
1996, compared to a net loss of $1,681,000 for the same period in 1995. The
increase in net loss of $1,223,000 reflects the Company's increasing clinical,
facilities, research and development and personnel expenditures. The Company
employed 64 individuals during the quarter ended March 31, 1996 compared to 33
individuals for the same period in the prior year.
The Company incurred research and development expenses of $2,758,000 during the
three month period ended March 31, 1996 compared to $1,497,000 for the same
period in the prior year, an increase of $1,261,000 or 84%. Of the $1,261,000
increase, $699,000 is a result of increases in the Company's clinical trial
programs for its Proprietary and Generic products and increases in its research
program; $377,000 of the increase is due to increased personnel and related
expenditures necessary to undertake increased research and development
activities; and $185,000 of the increase relates to increases in operating
overhead allocations due to facilities expansion including rent, common area
maintenance, taxes and utilities. As of March 31, 1996, the Company had 17
products in various stages of development compared to 12 products in the
comparable period of 1995.
General and administrative expenses were $444,000 and $179,000, respectively,
for the three month period ended March 31, 1996 and 1995. The $265,000 increase
is due to personnel and related expenditures associated with the expansion of
facilities and administrative support for the Company's research and development
efforts as well as increases in facilities operation expenses, depreciation and
insurance expenses.
Interest income for the three month period ended March 31, 1996 increased to
$336,000 compared to $13,000 for the same prior year period. This $323,000
increase in interest income is attributable to the investment of the remaining
proceeds of the Offering. Interest expense is principally the interest expense
amortization associated with a discounted promissory note payable to PRI.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $3,167,000 for the three months ended
March 31, 1996, compared to $1,354,000 the same prior year period. This increase
reflects increased cash outlays for clinical trials, payroll and overhead.
The Company had capital expenditures of $1,042,000 for plant and equipment
acquisitions, additions to patents and licensing agreements during the three
months ended March 31, 1996, compared to $1,036,000 for the same period the
prior year.
-8-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES CONTINUED
Net cash used in financing activities totaled $1,042,000 for the three months
ended March 31, 1996 compared to $10,000 for the same period in 1995. The
increase is a result of the net purchase of marketable securities of $937,000
and the repayment of notes payable of $105,000.
At March 31, 1996, the Company had working capital of $23,469,000 compared to
working capital of $27,029,000 at December 31, 1995. Cash and cash equivalents
and marketable securities were $24,216,000 and $28,299,000 at March 31, 1996 and
December 31, 1995, respectively.
Based on its current expectations of product development, the Company expects to
use approximately $5,000,000 in 1996 on capital improvements and purchases of
machinery and equipment. Based on its current expectations of product
development, the Company also anticipates using $5,000,000 to fund clinical
trials in 1996. The Company believes that assuming it does not incur any
unanticipated material expenses it has enough working capital to fund current
operations and capital requirements through early 1997.
On April 19, 1996 the FDA's, Nonprescription Advisory Committee voted
unanimously to recommend that two of the four branded transdermal nicotine
patches be switched from prescription to over-the-counter (OTC) status (an "OTC
Switch"). The Company has filed an Abbreviated New Drug Application for approval
of a generic version of Habitrol(R), which was not one of the nicotine patches
approved for the OTC Switch. The Company believes, however, if there is an OTC
Switch based on prior actions of the FDA with other products that it is likely
Habitrol(R) will be approved for an OTC Switch at or about the same time as the
other nicotine patches. The final approval for the OTC Switch is subject to
approval by the FDA. In addition, the FDA must determine whether any one, or
all, of the nicotine patches will receive a period of marketing exclusivity. At
this time management is unable to predict whether there will be an OTC Switch,
or which manufacturers, if any, will receive a period of marketing exclusivity
if there is an OTC Switch, and what effect if any, the OTC Switch will have on
the Company. In the event that Habitrol(R) is approved for the OTC Switch, any
period of exclusivity granted by the FDA for the OTC version of Habitrol(R)
would serve to delay the launch of the Company's generic nicotine patch, delay
the Company's receipt of revenue from this product and could have a negative
impact of the ultimate marketability on the product.
The foregoing Management's Discussion and Analysis contains various "forward
looking statements" within the meaning of Section 27A of the Securities Act of
1933 which represent the Company's expectations or beliefs concerning future
events, including, but not limited to statements regarding management's
expectations of FDA approval and the commencement of sales; and the sufficiency
of the Company's cash flow for the Company's future liquidity and capital
resource needs. These forward looking statements are further qualified by
important factors that could cause actual results to differ materially from
those in the forward looking statements. These factors include, without
limitation, the Company's ability to continue to complete development and
clinical trials of its products and, ultimately, to obtain approval for the sale
of such products from the FDA, neither of which is assured. Results actually
achieved may differ materially from expected results included in these
statements as a result of these or other factors.
-9-
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Incorporated by reference to "Notes to Financial Statements - Legal
Proceeding" in Part I of this Quarterly Report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
EXHIBIT DESCRIPTION
10.1 1993 Non-Qualified Stock Option Plan of Registrant (1)
10.2 1995 Stock Option Plan of Registrant (1)
10.3 Form of Indemnification Agreement between the Registrant and
each of its directors and executive officers (1)
10.4 Employment Agreement, dated as of September 20, 1995, between
the Registrant and Marc M. Watson (2)
10.5 Employment Agreement, dated as of September 20, 1995, between
the Registrant and Reginald L. Hardy (2)
10.6 Employment Agreement, dated as of May 31, 1993, between the
Registrant and Charles Betlach (1)
10.7 Employment Agreement, dated as of September 30, 1993, between
the Registrant and Cheryl Gentile, as amended (2)
10.8 Employment Agreement, dated as of May 28, 1993, between the
Registrant and Jesus Miranda, as amended (2)
10.9 Employment Agreement, dated as of September 30, 1993, between
the Registrant and Joseph Gentile (1)
10.10 Distribution Agreement, dated February 24, 1994, between
the Registrant and Pharmaceutical Resources, Inc. (1) (4)
10.11 Lease Agreement, dated May 6, 1994, between the Registrant and
Sunbeam Properties, Inc. (3250 Commerce Parkway, Miramar,
Florida property) (1)
10.12 Lease Agreement, dated June 10, 1994, between the Registrant and
Sunbeam Properties, Inc.(3251 Corporate Way, Miramar, Florida
property) (1)
10.13 Consulting Agreement dated January 7, 1994 between the
Registrant and Dr. Donald Robinson (2)
10.14 License Agreement dated October 28, 1994 by and between Dr. Jed
E. Rose, Dr. Edward D. Levin and Robert J. Schaap and the
Registrant (3)
23.1 Consent of Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel,
P.A. (included in its opinion filed as Exhibit 5.1) (2)
23.2 Consent of Arthur Andersen LLP (3)
- -----------------------------------------
(1) Exhibit is incorporated by reference to an identically numbered
exhibit to the Company's Registration Statement on Form S-1, file
number 33-97194.
(2) Exhibit is incorporated by reference to an identically numbered
exhibit to the Company's Amendment No. 1 to
Registration Statement on Form S-1, file number 33-97194.
(3) Exhibit is incorporated by reference to an identically numbered
exhibit to the Company's Amendment No. 2 to Registration Statement on
Form S-1, file number 33-97194.
-10-
<PAGE>
(4) Certain marked portions of this Agreement have been redacted and
filed separately with the Commission pursuant to Rule 406 of the
Securities Act of 1933.
(b) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the first quarter of 1996.
-11-
<PAGE>
SIGNATURES
In accordance with 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 thereunto duly authorized.
By: /s/ Reginald L. Hardy
-----------------------------------------
Dated: May 10, 1996 Reginald L. Hardy
PRESIDENT
(PRINCIPAL EXECUTIVE OFFICER)
By: /s/ Gerald S. Coombs
-----------------------------------------
Dated: May 10, 1996 Gerald S. Coombs
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 265,829
<SECURITIES> 23,949,834
<RECEIVABLES> 616,567
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 264,199
<PP&E> 6,887,647
<DEPRECIATION> 745,896
<TOTAL-ASSETS> 32,376,618
<CURRENT-LIABILITIES> 1,627,770
<BONDS> 0
0
0
<COMMON> 92,069
<OTHER-SE> 28,064,085
<TOTAL-LIABILITY-AND-EQUITY> 32,376,618
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 3,202,607
<OTHER-EXPENSES> 16,640
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,262
<INCOME-PRETAX> (2,903,549)
<INCOME-TAX> (2,903,549)
<INCOME-CONTINUING> (2,903,549)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,903,549)
<EPS-PRIMARY> (.32)
<EPS-DILUTED> (.32)
</TABLE>
