<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File No. 0-28146
UNIVERSAL DISPLAY CORPORATION
-------------------------------
(Exact name of small business issuer as specified in its charter)
<TABLE>
<CAPTION>
PENNSYLVANIA 23-2372688
- ------------ ----------
<S> <C>
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
THREE BALA PLAZA EAST
SUITE 104
BALA CYNWYD, PA 19004
- --------------- -----
(Address of principal executive offices) (Zip Code)
(610) 617-4010
- --------------
(Issuer's telephone number, including area code)
</TABLE>
1221 CENTENNIAL ROAD, PENN VALLEY, PA 19072
-------------------------------------------
(Former name, former address and former fiscal year if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: As of September 30, 1996,
the registrant had outstanding 8,937,268 shares of common stock, par value $.01
per share.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
1
<PAGE> 2
<TABLE>
<CAPTION>
INDEX PAGE
- ----- ----
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations - Three months
ended September 30, 1996 and 1995, and inception to date 4
Consolidated Statements of Operations - Nine months
ended September 30, 1996 and 1995, and inception to date 5
Consolidated Statements of Cash Flows - Nine months
ended September 30, 1996 and 1995, and inception to date 6
Notes to Consolidated Financial Statements 7-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K. 11
</TABLE>
2
<PAGE> 3
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 DECEMBER 31, 1995
------------------ -----------------
ASSETS (UNAUDITED
------ ----------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (see note 2) $1,100,067 $40
Short term investments (see note 2) 2,449,000 --
Other current assets 59,503 --
------------- -------------
Total current assets 3,608,570 40
============= =============
Deposits 93,419
------------- -------------
Equipment, net of accumulated depreciation of $5,966
and $1,029 60,353 5,144
------------- -------------
Total Assets $3,762,342 $5,184
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $90,819 $483,700
Payable to related parties -- 105,476
------------- -------------
Total current liabilities 90,819 589,176
============= =============
SHAREHOLDERS' DEFICIT:
Preferred Stock, par value $.01 per share,
5,000,000 shares authorized, 200,000 shares
designated - Series A Nonconvertible Preferred
Stock, par value $.01 per share, 200,000 shares
issued and outstanding (liquidation value of $7.50
per share or $1,500,000) 2,000 2,000
Common Stock, par value $.01 per share, 25,000,000
shares authorized, 8,937,268 shares issued and
outstanding in 1996 and 7,637,268 shares issued and
outstanding in 1995 89,373 76,373
Additional paid-in capital 7,914,345 2,421,417
Deficit accumulated during development-stage (4,334,195) (3,083,782)
------------- -------------
Total shareholders' equity (deficit) 3,671,523 (583,992)
------------- -------------
Total liabilities and shareholders' equity (deficit) $3,762,342 $5,184
============= =============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Period From Inception
------------ ---------------------
Ended September 30, (June 17, 1994 to
------------------- -----------------
1996 1995 September 30, 1996)
---- ---- -------------------
<S> <C> <C> <C>
OPERATING EXPENSES:
Research and development (see note 3) $243,152 $183,000 $2,822,950
General and administrative 278,883 52,359 1,593,342
---------- ---------- ------------
Total operating expenses 522,035 235,359 4,416,292
---------- ---------- ------------
INTEREST INCOME 34,682 --- 82,097
---------- ---------- ------------
NET LOSS ($487,353) ($235,359) ($4,334,195)
========== ========== ============
NET LOSS PER COMMON SHARE ($0.05) ($0.03)
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES USED IN COMPUTING NET
LOSS PER COMMON SHARE 8,937,268 8,145,806
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Period From Inception
----------- ---------------------
Ended September 30, June 17, 1994 to
------------------- ----------------
1996 1995 September 30, 1996
---- ---- ------------------
<S> <C> <C> <C>
OPERATING EXPENSES:
Research and development (see note 3) $749,211 $1,890,739 $2,822,950
General and administrative 583,299 644,639 1,593,342
------------ ------------ ------------
Total operating expenses 1,332,510 2,535,378 4,416,292
------------ ------------ ------------
INTEREST INCOME 82,097 -- 82,097
------------ ------------ ------------
NET LOSS ($1,250,413) ($2,535,378) ($4,334,195)
============ ============ ============
NET LOSS PER COMMON SHARE ($0.14) ($0.31)
============ ============
WEIGHTED AVERAGE NUMBER OF SHARES
USED IN COMPUTING LOSS PER COMMON
SHARE 8,675,029 8,145,806
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Period From Inception
----------- ---------------------
Ended September 30 (June 17, 1994 to
------------------ -----------------
1996 1995 September 30, 1996
---- ---- ------------------
OPERATING ACTIVITIES:
- ---------------------
<S> <C> <C> <C>
Net Loss ($1,250,413) ($2,535,378) ($4,334,195)
Adjustments to reconcile net loss to
net cash used in operating activities
Depreciation 4,937 -- 5,966
Issuance of Common Stock options -- 9,950 9,950
Acquired in-process technology -- 350,000 350,000
Changes in current assets and liabilities
(Increase) in other current assets (59,503) (4,000) (59,503)
Increases (decreases) in - Accounts
payable and accrued expenses (392,881) 197,940 (58,817)
Increase (decrease) in Payable to related
parties (105,476) 284,383 355,476
----------- ----------- -----------
Net cash used in operating activities (1,803,336) (1,697,105) (3,731,123)
----------- ----------- -----------
INVESTING ACTIVITIES:
- ---------------------
Deposits (93,419) -- (93,419)
Purchases of equipment (60,146) (6,173) (66,319)
Purchases of short term investments (2,449,000) -- (2,449,000)
----------- ----------- -----------
Net cash used in investing activities (2,602,565) (6,173) (2,608,738)
----------- ----------- -----------
FINANCING ACTIVITIES:
- ---------------------
Proceeds from issuance of common stock 5,505,928 1,928,000 7,439,928
----------- ----------- -----------
Net cash provided by financing activities 5,505,928 1,928,000 7,439,928
----------- ----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 1,100,027 224,722 1,100,067
CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 40 -- --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS END OF PERIOD $1,100,067 $224,722 $1,100,067
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 7
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(A DEVELOPMENT-STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. - BACKGROUND
Universal Display Corporation (the "Company"), a development-stage company, was
organized to fund the research and development of organic light emitting diode
("OLED") technology for potential commercial applications in full color, flat
panel, emissive light displays.
The Company, formerly known as Enzymatics, Inc. ("Enzymatics"), was
incorporated under the laws of the Commonwealth of Pennsylvania on April 24,
1985 and commenced its current business activities on August 1, 1994. The New
Jersey corporation formerly known as Universal Display Corporation ("UDC") was
incorporated under the laws of the State of New Jersey on June 17, 1994. On
June 22, 1995, a wholly-owned subsidiary of the Company consummated an
Agreement and Plan of Reorganization with UDC (the "Merger"). At the time of
the Merger, UDC was engaged in the business which is currently being conducted
by the Company. Prior to the Merger, the Company was known as Enzymatics, an
inactive Pennsylvania corporation that was, at one time, engaged in a business
separate from and unrelated to that of UDC.
The Merger was treated, for accounting purposes, as a recapitalization of UDC
whereby UDC issued 523,268 shares of Common Stock to the Enzymatics
shareholders and assumed Enzymatics shareholders deficit of $184,160. The
assets and liabilities of both companies have been recorded at their historical
book values in these financial statements. The assets of Enzymatics consisted
of cash and its liabilities consisted of payables related to the Merger and
other professional fees.
UDC was the surviving corporation in the Merger, changed its name to UDC, Inc.
and, as a result of the Merger, became a wholly-owned subsidiary of Enzymatics.
At the effective time of the Merger, Enzymatics changed its name to Universal
Display Corporation.
Research and development of the OLED technology is being conducted at the
Advanced Technology Center for Photonics and Optoelectronic Materials at
Princeton University and at the University of Southern California ("USC") (on a
subcontract basis with Princeton University), pursuant to a Sponsored Research
Agreement dated August 1, 1994, as amended (the "1994 Sponsored Research
Agreement"), originally between the Trustees of Princeton University
("Princeton University") and American Biomimetics Corporation ("ABC"), a
privately held Pennsylvania corporation and affiliate of the Company. The 1994
Sponsored Research Agreement, assigned to the Company by ABC in November 1995,
expires on July 31, 1997. Pursuant to a license agreement dated August 1, 1994
(the "1994 License Agreement") between Princeton University and ABC, assigned
to the Company by ABC in June 1995, the Company has a worldwide exclusive
license to manufacture and market products based on Princeton University's
pending patent application relating to the OLED technology and the right to
obtain a similar license to inventions conceived or discovered under the 1994
Sponsored Research Agreement. Sherwin I. Seligsohn, Chairman and Chief
Executive Officer of the Company, holds similar positions in ABC, a company
which is controlled by members of his family.
The Company is a development-stage entity with no significant operating
activity to date. Expenses incurred have primarily been in connection with
research and development funding, business planning, obtaining financing and
administrative activities. The developmental nature of the activities is such
that significant inherent risks exist in the Company's operations. To the
extent that Princeton University's research efforts do not result in the
development of commercially viable applications for the OLED technology, the
Company will not have any meaningful operations. Even if a product
incorporating the OLED technology is developed and introduced into the
marketplace, additional time and funding may be necessary before significant
revenues are realized. In addition, if a commercial sale is not made in the
required time period, as defined, Princeton University may terminate the 1994
Sponsored Research and License Agreements. Completion of the commercialization
of the Company's technology will require funds substantially greater than the
proceeds of the April 11, 1996 public offering. There is no assurance that
such financing will be available to the Company when needed, on commercially
reasonable terms or at all. Also, while the Company funds the OLED technology
research, the scope of and technical aspects of the
7
<PAGE> 8
research and the resources and efforts directed to such research is subject to
the control of Princeton University and the principal investigators.
Accordingly, the Company's success is dependent on the efforts of Princeton
University and the principal investigators. The 1994 Sponsored Research
Agreement provides that if certain of the principal investigators are
unavailable to continue to serve as a principal investigator, because such
person is no longer associated with Princeton University or USC or otherwise,
and a successor acceptable to both the Company and Princeton University is not
available, the 1994 Sponsored Research Agreement will terminate. Further, the
1994 Sponsored Research Agreement expires in July 1997.
NOTE 2. - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY FINANCIAL INFORMATION AND RESULTS OF OPERATIONS
INTERIM FINANCIAL INFORMATION
In the opinion of the Company, the accompanying unaudited Consolidated
Financial Statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the financial position as of
September 30, 1996, the results of operations for the three and nine months
ended September 30, 1996 and 1995, and the cash flows for the nine months ended
September 30, 1996 and 1995.
While the Company believes that the disclosures presented are adequate to make
the information not misleading, these Consolidated Financial Statements should
be read in conjunction with the Consolidated Financial Statements and the notes
in the Company's latest year end financial statements, which were included in a
registration statement filed on Form SB-2.
PUBLIC OFFERING
On April 11, 1996, the Company consummated a public offering of 1,300,000
shares of common stock at a price of $5.00 per share and redeemable warrants to
purchase 1,495,000 shares of common stock at an exercise price of $3.50 per
share, at a price of $.10 per warrant. The Company received net cash proceeds
of $5,282,665 from the public offering (excluding $223,263 representing a
portion of the offering expenses previously charged to general and
administration expenses). Subsequent to the public offering, Arthur Andersen
LLP reissued their report of independent public accountants and removed its
going concern explanatory paragraph.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Universal Display
Corporation and its wholly-owned subsidiary, UDC, Inc. All significant
intercompany transactions and accounts have been eliminated.
MANAGEMENT'S 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 amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
STATEMENTS OF CASH FLOWS
For purposes of the Consolidated Statements of Cash Flows, the Company
considers all highly liquid debt instruments consisting of money market
accounts with original maturities of three months or less to be cash
equivalents. Included in short term investments are certificate of deposits
whose maturities are less than one year.
EQUIPMENT
Equipment is stated at cost and depreciated on a straight-line basis over 3
years.
8
<PAGE> 9
NET LOSS PER COMMON SHARE
Net loss per Common share was calculated by dividing the net loss by the
weighted average number of Common shares outstanding for the respective
periods. Pursuant to the requirements of the Securities and Exchange
Commission, Common stock issued by the Company during the twelve months
immediately preceding the initial public offering has been included in the
calculation of shares used in computing net loss per Common share as if they
were outstanding for all periods presented up to the April 1996 public
offering. In addition, options and warrants to purchase Common stock issued by
the Company during the twelve months immediately preceding the public offering
have been included in the calculation of shares used in computing net loss per
Common share as if they were outstanding for all periods presented up to the
April 1996 public offering (using the treasury stock method and an initial
offering price of $5.00 per share).
RESEARCH AND DEVELOPMENT
Expenditures for research and development expense are charged to operations as
incurred.
NOTE 3. - SPONSORED RESEARCH AGREEMENT WITH PRINCETON UNIVERSITY
On August 1, 1994, ABC entered into the 1994 Sponsored Research Agreement with
Princeton University which was transferred to the Company in 1995, to fund and
develop the OLED technology over a three-year period. Research is also being
performed at USC on a subcontract basis with Princeton University. The Company
has an exclusive worldwide license to manufacture and market products based on
Princeton University's pending patent application relating to the OLED
technology and the right to obtain a similar license to inventions conceived or
discovered under the 1994 Sponsored Research Agreement. The Company is required
to pay Princeton University a royalty in the amount of 3% of the Company's net
sales of products utilizing the OLED technology. In certain circumstances
where the Company sublicenses the OLED technology (except to affiliates), the
Company must pay Princeton University one-half of all amounts received by the
Company. These royalty rates are subject to upward adjustments under certain
conditions. In connection with the 1994 Sponsored Research Agreement, the
Company is obligated to make certain payments to Princeton University. The
minimum payments under this agreement as of September 30, 1996 are as follows:
<TABLE>
<S> <C>
November 1, 1996 $173,687
February 1, 1997 173,687
May 1, 1997 173,687
--------
$521,061
========
</TABLE>
On February 2, 1996, the Company received a deferral from Princeton University
of the February 1, 1996 required payment until the contemplated public offering
was completed or March 30, 1996, whichever was earlier. On March 20, 1996, the
deferral from Princeton University was amended to state that the payment was
due immediately upon consummation of the contemplated public offering. On
April 11, 1996, the Company consummated its public offering and the February 1,
1996 payment of $183,000 was made to Princeton University.
9
<PAGE> 10
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Since inception, the Company has been engaged, and for the foreseeable future
expects to continue to be engaged, exclusively in funding research and
development activities related to the OLED technology and attempting to
commercialize such technology. To date, the Company has not generated any
revenues and does not expect to generate any meaningful revenues for the
foreseeable future and until such time, if ever, as it successfully
demonstrates that the OLED technology is commercially viable for one or more
flat panel display applications and enters into license agreements with third
parties with respect to the technology. The Company has incurred significant
losses since its inception, resulting in an accumulated deficit of $4,334,195
at September 30, 1996. The rate of loss is expected to increase as the
Company's activities increase and losses are expected to continue for the
foreseeable future and until such time, if ever, as the Company is able to
achieve sufficient levels of revenue from the commercial exploitation of the
OLED technology to support its operations.
RESULTS OF OPERATIONS
QUARTER ENDED SEPTEMBER 30, 1996 COMPARED TO QUARTER ENDING SEPTEMBER 30, 1995
The Company had a net loss of $487,353 (or $0.05 per share) for the quarter
ending September 30, 1996 compared to a loss of $235,359 (or $0.03 per share)
for the same period in 1995. The increase of $251,994 in the net loss was
attrributed to increased research and development and general and
administrative expenses.
Research and development costs were $243,152 for the quarter ended September
30, 1996 compared to $183,000 for same period in 1995. The increase was
attributable to patent expenses in connection with the development of the
OLED technology, for which the Company has an exclusive license.
General and administrative expenses were $278,883 for the quarter ended
September 30, 1996, compared to $52,359 for the same period in 1995.
The increase of $226,524 was associated with the leasing of office space
for the Company's headquarters, hiring of executives and support staff.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995
The Company had a net loss of $1,250,413 (or $0.14 per share) for the nine
months ended September 30, 1996 compared to $2,535,378 (or $0.31 per share)
for the same period in 1995. The reduction in the net loss was primarily
attributable to research and development expenses for 1994 and 1995 being
expensed and paid in 1995, and a non-recurring payment for the sublicense
of certain technology in 1995.
Research and development costs were $749,211 for the nine months ending
September 30, 1996 compared to $1,890,739 for the same period in 1995.
In 1996, the research and development expenses were attributed to payments
under the Sponsored Research Agreement with Princeton University and patent
expenses. The 1995 research and development expenses were attributed to the
Company making payments to Princeton University under the Sponsored Research
Agreement and to ABC for prior payments paid to Princeton University for
research and development conducted during 1994 and 1995, and for the sublicense
of certain technology from ABC.
General and administrative expenses were $583,299 for the nine months ending
September 30, 1996 compared to $644,639 for the same period in 1995. The 1996
expenses were primarily associated with the hiring of executives, support
staff, and the leasing of office space for the Company's headquarters compared
to 1995 which were primarily professional fees and fees associated with
financing activities.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996, the Company had cash of $1,100,067 and short-term
investments of $2,449,000 compared to cash of $40 at December 31, 1995. On
April 11, 1996, the Company completed a public offering of 1,300,000 shares
of common stock at a price of $5.00 per share and redeemable warrants to
purchase 1,495,000 shares of common stock at an exercise price of $3.50 per
share, at a price of $.10 per warrant. The Company received net cash proceeds
of $5,282,665 from the public offering (excluding $223,263 representing a
portion of the offering expenses previously charged to general and
administrative expenses). Net working capital increased to $3,517,751 at
September 30, 1996 from a working capital deficit of $589,136 at December 31,
1995, as a result of the April 11, 1996 public offering.
Pursuant to the Company's Sponsored Research Agreement with Princeton
University, the Company is required to pay Princeton University approximately
$521,001 in 3 equal installments ending May 1, 1997. The Company anticipates,
based on management's internal forecasts and assumptions relating to its
operations (including assumptions regarding working capital requirements of the
Company, the progress of research and development, the availability and amount
of other sources of funding available to Princeton University for research
relating to the OLED technology and the timing and costs associated with the
preparation, filing and prosecution of patent applications and the enforcement
of intellectual property rights), that the proceeds of April 11, 1996 offering
will be sufficient to satisfy the Company's contemplated cash requirements for
a minimum of twelve months from April 11, 1996.
This Quarterly Report contains forward-looking statements which involve risks
and uncertainties. The Company's actual results may differ significantly from
the results discussed in forward-looking statements.
10
<PAGE> 11
PART II. - OTHER INFORMATION
ITEM 1. NONE
ITEM 2. NONE
ITEM 3. NONE
ITEM 4. NONE
ITEM 5. NONE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
<TABLE>
<S> <C>
Exhibit
Number
- ------
11 Net loss per common share calculation
27 Financial Data Schedule
</TABLE>
(B) REPORTS ON FORM 8-K:
None to report.
11
<PAGE> 12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
UNIVERSAL DISPLAY CORPORATION
Date: November 14, 1996 /s/ Sidney D. Rosenblatt
-------------------------------
Sidney D. Rosenblatt
(Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary)
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Sequential
Number Description Page No.
- ------ ----------- --------
<S> <C> <C>
11 Net loss per common share calculation 14
27 Financial Data Schedule 16
</TABLE>
13
<PAGE> 1
UNIVERSAL DISPLAY CORPORATION
(A DEVELOPMENT-STAGE COMPANY)
NET LOSS PER COMMON SHARE CALCULATION (A)
EXHIBIT 11
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
------------ -----------
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------- -------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss per common share:
Net Loss ($487,353) ($235,359) ($1,250,413) ($2,535,378)
Weighted average number of shares
outstanding 8,937,268 6,000,000 8,505,516 6,000,000
Incremental number of shares related
to Common Stock issuances within
12 months of the initial public
offering -- 1,637,268 -- 1,637,268
Incremental number of shares related to
Common Stock options and warrants
granted within 12 months of the
initial public offering -- 508,538 169,513 508,538
---------- ---------- ------------ ------------
Adjusted weighted average
number of shares outstanding 8,937,268 8,145,806 8,675,029 8,145,806
========== ========== ============ ============
Net loss per common share ($0.05) $(0.03) ($0.14) ($0.31)
========== ========== ============ ============
</TABLE>
(A) Net loss per Common share was calculated by dividing the net loss by the
weighted average number of Common shares outstanding for the respective
periods. Pursuant to the requirements of the Securities and Exchange
Commission, Common stock issued by the Company during the twelve months
immediately preceding the initial public offering has been included in the
calculation of shares used in computing net loss per Common share as if they
were outstanding for all periods presented up to the April 1996 public
offering. In addition, options and warrants to purchase Common stock issued by
the Company during the 12 months immediately preceding the public offering have
been included in the calculation of shares used in computing net loss per
Common share as if they were outstanding for all periods presented up to the
April 1996 public offering (using the treasury stock method and an initial
public offering price of $5.00 per share.)
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,100,067
<SECURITIES> 2,449,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,608,570
<PP&E> 60,353
<DEPRECIATION> 5,966
<TOTAL-ASSETS> 3,762,342
<CURRENT-LIABILITIES> 90,819
<BONDS> 0
0
2,000
<COMMON> 89,373
<OTHER-SE> 3,580,150
<TOTAL-LIABILITY-AND-EQUITY> 3,762,342
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 749,211
<OTHER-EXPENSES> 583,299
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,332,510)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,332,510)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,250,413)
<EPS-PRIMARY> (0.14)
<EPS-DILUTED> (0.14)
</TABLE>
