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 June 30, 1997
( ) TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission File No. 1-12031
UNIVERSAL DISPLAY CORPORATION
-----------------------------
(Exact name of small business issuer as specified in its charter)
PENNSYLVANIA 23-2372688
- ------------ ----------
(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)
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 |_|
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of June 30, 1997, 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>
INDEX PAGE
- ----- ----
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations - Three months
ended June 30, 1997 and 1996, and inception to date 4
Consolidated Statements of Operations - Six months
ended June 30, 1997 and 1996, and inception to date 5
Consolidated Statements of Cash Flows - Six months
ended June 30, 1997 and 1996, 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
2
<PAGE>
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(a development-stage company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS June 30, 1997 December 31, 1996
------ ------------- -----------------
(Unaudited)
-----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (see Note 2) $ 777,461 $ 638,225
Short term investments (see Note 2) 948,000 2,430,000
Other current assets 57,497 59,091
----------- -----------
Total current assets 1,782,958 3,127,316
=========== ===========
PROPERTY AND EQUIPMENT, net of accumulated 57,259 61,512
depreciation of $16,198 and $11,955 (See Note 2)
DEPOSITS 76,073 93,419
----------- -----------
Total Assets $ 1,916,290 $ 3,282,247
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 148,554 $ 104,306
----------- -----------
Total current liabilities 148,554 104,306
=========== ===========
SHAREHOLDERS' EQUITY
Preferred Stock, par value $.01 per share,
5,000,000 shares authorized, 200,000
shares designated Series A Nonconvertible
Preferred, par value $.01 per share,
200,000 shares issues and outstanding
(liquidation value of $7.50 per share 2,000 2,000
or $1,500,000)
Common Stock, par value $.01 per share, 25,000,000
shares authorized, 8,937,268 shares issued and
outstanding (see Note 2) 89,373 89,373
Additional paid-in capital 7,939,345 7,939,345
Deficit accumulated during development-stage (6,262,982) (4,852,777)
----------- -----------
Total shareholders' equity 1,767,736 3,177,941
----------- -----------
Total liabilities and shareholders' equity $ 1,916,290 $ 3,282,247
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(a development-stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months
Ended June 30, Period From Inception
-------------- (June 17, 1994) to
1997 1996 June 30, 1997
---- ---- -------------
<S> <C> <C> <C>
OPERATING EXPENSES:
Research and development (See Note 3) $ 415,064 $ 182,513 $ 3,735,784
General and administrative 430,213 291,454 2,726,649
----------- ----------- -----------
Total operating expenses 845,277 473,967 6,462,433
OTHER INCOME AND EXPENSES:
Interest income $ 35,562 47,415 $ 199,451
----------- ----------- -----------
Total other income and expenses 35,562 47,415 199,451
----------- ----------- -----------
NET LOSS $ (809,715) $ (426,552) $(6,262,982)
----------- ----------- -----------
NET LOSS PER COMMON SHARE $ (0.09) $ (0.05)
----------- -----------
SHARES USED IN COMPUTING NET LOSS 8,937,268 8,794,411
----------- -----------
PER COMMON SHARE
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(a development-stage company)
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Period From
Ended June 30, Inception
-------------- (June 17, 1994) to
1997 1996 June 30, 1997
---- ---- -------------
<S> <C> <C> <C>
OPERATING EXPENSES:
Research and development (See Note 3) $ 713,477 $ 365,513 $ 3,735,784
General and administrative 777,865 444,962 2,726,649
----------- ----------- -----------
Total operating expenses 1,491,342 810,475 6,462,433
OTHER INCOME AND EXPENSES:
Interest income $ 81,137 47,415 $ 199,451
----------- ----------- -----------
Total other income and expenses $ 81,137 47,415 199,451
----------- ----------- -----------
NET LOSS $(1,410,205) $ (763,060) $(6,262,982)
----------- ----------- -----------
NET LOSS PER COMMON SHARE $ (0.16) $ (0.09)
----------- -----------
SHARES USED IN COMPUTING NET LOSS 8,937,268 8,541,537
----------- -----------
PER COMMON SHARE
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(a development-stage company)
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months
Ended March 31 Period From Inception
-------------- (June 17, 1994) to
1997 1996 June 30, 1997
---- ---- -------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($1,410,205) ($ 763,060) ($6,262,982)
Adjustments to reconcile net loss to
net cash
Depreciation 12,728 1,200 24,683
Issuance of Common Stock options -- -- 34,950
Acquired in-process technology -- -- 350,000
(Increase) decrease in assets:
Other current assets 1,594 -- (57,497)
Deposits 17,345 (160,033) (76,073)
Increase (decrease) in liabilities:
Accounts payable and accrued
expenses 44,248 (473,398) 104,393
Payable to related parties -- (105,476) 250,000
Payable to Princeton
University under Sponsored
Research Agreement -- -- --
----------- ----------- -----------
Net cash provided by (used in)
operating activities (1,334,290) (1,500,767) (5,632,526)
----------- ----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of equipment (8,474) (6,192) (81,941)
-----------
Sales (Purchases) of short term investments 1,482,000 (2,026,502) (948,000)
----------- ----------- -----------
Net cash provided by (used in)
investing activities 1,473,526 (2,032,694) (1,029,941)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of Common Stock -- 5,505,928 7,439,928
----------- ----------- -----------
Net cash provided by financing
activities -- 5,505,928 7,439,928
INCREASE IN CASH AND CASH EQUIVALENTS 139,236 1,972,467 777,461
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 638,225 40 --
----------- ----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 777,461 $ 1,972,507 $ 777,461
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
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, is
engaged in the research and development and commercialization of organic light
emitting diode ("OLED") technology for potential flat panel display
applications.
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. See
Note 2.
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, expired 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. The Company's Chairman and Chief Executive Officer 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, obtaining financing and administrative activities. The
developmental nature of the activities is such that significant inherent risks
exist in the Company's operations. 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 can be no assurance that such
financing will be available to the Company when needed, on commercially
reasonable terms or at all. The Company anticipates, based on management's
internal forecasts and assumptions relating to its operations, that it has
sufficient cash to meet its obligations for at least the current fiscal year. 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 in the 1994 Sponsored Research Agreement and the 1994 License Agreement,
Princeton University may terminate these agreements. Also, while the Company
funds the OLED technology research, the scope of and technical aspects of the
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. Although the
1994 Sponsored Research Agreement expired in July 1997 the Company believes that
the agreement will be extended beyond that date. However, there can be no
assurance that the agreement will be extended or that it will be extended on
terms as or more favorable than currently in the agreement.
7
<PAGE>
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 June 30,
1997, the results of operations for the three months and six months ended June
30, 1997 and 1996, and the cash flows for the six months ended June 30, 1997 and
1996.
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
the Company's Annual Report Form 10-KSB for the year ended December 31, 1996.
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).
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.
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. Investments
are carried at market value, and at June 30, 1997 and December 31, 1996, are
classified as short-term investments. At June 30, 1997 and December 31, 1996,
all of the Company's investments are classified as available for sale pursuant
to Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," (SFAS 115). Therefore, any
unrealized holding gains or losses should be presented as a separate component
of shareholders' equity. At June 30, 1997 and December 31, 1996, unrealized
holding gains or losses were not material.
EQUIPMENT
Equipment is stated at cost and depreciated on a straight-line basis over 3
years.
8
<PAGE>
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
public offering, as discussed above, 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.
Statement of Financial Accounting Standards No. 128 (SFAS 128), "Earnings per
Share", which supersedes APB Opinion No. 15, "Earnings per Share", was issued in
February, 1997. SFAS 128 requires dual presentation of basic and diluted
earnings per share (EPS) for complex capital structures on the face of the
income statement. Basic EPS is computed by dividing income by the
weighted-average number of common shares outstanding for the period. Diluted EPS
reflects the potential dilution from the exercise or conversion of securities
into common stock, such as stock options. SFAS 128 is required to be adopted for
year-end 1997; earlier application is not permitted. The Company does not expect
the basic net loss per share measure under SFAS 128 to be materially different
than the net loss per share currently presented under APB No. 15.
Statement of Financial Accounting Standards No. 129, "Disclosure of
Information about Capital Structure," was issued in February, 1997. The Company
does not expect it to result in any substantive change in the disclosure.
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 Company believes
this Agreement will be extended and is currently negotiating with Princeton
University. Although the 1994 Sponsored Research Agreement expires in July 1997
the Company believes that the agreement will be extended beyond that date.
9
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This document contains certain forward-looking statements that are
subject to risks and uncertainties. Forward-looking statements include certain
information relating to forecasts regarding the Company's future working capital
needs and the extension of agreements relating to the Company's intellectual
property, as well as information contained elsewhere in this Report where
statements are preceded by, followed by or include the words "believes",
"expects", "anticipates", "potential" or similar expressions. For such
statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995. Actual events or results may differ materially from those discussed
in forward-looking statements as a result of various factors, including without
limitation, those discussed elsewhere herein.
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 $6,262,982 at June 30, 1997.
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 June 30, 1997 Compared to Quarter Ending June 30, 1996
The Company had a net loss of $809,715 (or $0.09 per share) for the quarter
ending June 30, 1997 compared to a loss of $426,552 (or $0.05 per share) for the
same period in 1996. The increase of $383,163 in the net loss was attributed to
increased research and development and general and administrative expenses.
Research and development costs were $415,064 for the quarter ended June 30,
1997, compared to $182,513 for the same period in 1996. The increase of $232,551
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 $430,213 for the quarter ended June 30,
1997, compared to $291,454 for the same period in 1996. The increase of $138,759
was associated with the leasing of office space for the Company's headquarters,
hiring of executives and support staff.
Six Months Eneded June 30, 1997 Compared to Six Months Ended June 30, 1996
The Company had a net loss of $1,410,205 (or $0.16 per share) for the six months
ending June 30, 1997 compared to a loss of $763,060 (or $0.09 per share) for the
same period in 1996. The increase of $647,145 was attributed to increase of
research and development and general and administrative expenses.
Research and development costs were $713,477 for the six months ending June 30,
1997 compared to $365,513 for the same period in 1996. The increase of $374,964
is attributable to patent expenses in connection with the development of the
OLED technology.
General and administrative expenses were $777,865 for the six months ending June
30, 1997 compared to $444,962 for the same period in 1996. The increase of
$332,903 were primarily associated with the hiring of executives, support staff,
and the leasing of office space for the Company's headquarters in 1996.
10
<PAGE>
Liquidity and Capital Resources
As of June 30, 1997, the Company had cash of $777,461 and short-term investments
of $948,000 compared to cash of $638,255 and short-term investment of $2,430,000
at December 31, 1996. 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 of the offering expenses previously charged to general and
administrative expenses). Net working capital decreased to $1,634,404 at June
30, 1997 from $3,023,010 at December 31, 1996 as a result of operating expenses
for the six months ended June 30, 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 it has sufficient cash
to meet its obligations for at least the current fiscal year. Substantial
additional funds will be required thereafter for the research, development and
commercialization of OLED technology, obtaining and maintaining intellectual
property rights, working capital and other purposes, the timing and amount of
which is difficult to ascertain. There are no assurances that additional funds
will be available when needed, or if available, on commercially reasonable
terms.
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:
Exhibit
Number
- ------
11 Net loss per common share calculation
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K:
None to report.
11
<PAGE>
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: August 14, 1997 -------------------------------
Sidney D. Rosenblatt
(Executive Vice President, Chief
Financial Officer, Treasurer and
Secretary)
12
<PAGE>
EXHIBIT INDEX
Exhibit Sequential
Number Description Page No.
- ------ ----------- --------
11 Net loss per common share calculation 14
27 Financial Data Schedule 15
13
UNIVERSAL DISPLAY CORPORATION
(a development-stage company)
NET LOSS PER COMMON SHARE CALCULATION (A)
EXHIBIT 11
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, June 30,
-------------- --------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net loss per common share:
Net Loss ($ 809,715) ($ 426,552) ($1,410,205) ($ 763,060)
Weighted average number of shares outstanding 8,937,268 8,794,411 8,937,268 8,287,268
Incremental number of shares related to Common Stock
issuances within 12 months of the initial public offering -- -- -- --
Incremental number of shares related to Common
Stock options and warrants
granted within 12 months of
the initial public offering -- -- -- 254,269
Adjusted weighted average number of shares outstanding 8,937,268 8,794,411 8,937,268 8,541,537
=========== =========== =========== ===========
Net loss per common share ($ 0.09) $ (0.05) $ (0.16) $ (0.09)
=========== =========== =========== ===========
</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).
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 777,461
<SECURITIES> 948,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,782,958
<PP&E> 57,259
<DEPRECIATION> 12,728
<TOTAL-ASSETS> 1,916,290
<CURRENT-LIABILITIES> 148,554
<BONDS> 0
0
2,000
<COMMON> 89,373
<OTHER-SE> 1,676,363
<TOTAL-LIABILITY-AND-EQUITY> 1,916,290
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 415,064
<OTHER-EXPENSES> 430,213
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (809,715)
<INCOME-TAX> 0
<INCOME-CONTINUING> (809,715)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (809,715)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
