================================================================================
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, 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 September 30, 1997, the
registrant had outstanding 10,066,268 shares of common stock, par value $.01 per
share.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
================================================================================
<PAGE>
INDEX PAGE
- ----- ----
Part I - Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1997 and December 31, 1996 3
Consolidated Statements of Operations - Three months
ended September 30, 1997 and 1996, and inception to date 4
Consolidated Statements of Operations - Nine months
ended September 30, 1997 and 1996, and inception to date 5
Consolidated Statements of Cash Flows - Nine months
ended September 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
<PAGE>
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
UNIVERSAL DISPLAY CORPORATION AND SUBSIDIARY
(a development-stage company)
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS September 30, December 31,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents (see Note 2) $ 3,896,354 $ 638,225
Short term investments (see Note 2) 1,149,000 2,430,000
Other current assets 32,108 59,091
------------ -----------
Total current assets 5,077,462 3,127,316
------------ -----------
PROPERTY AND EQUIPMENT, net of accumulated depreciation of $35,910 46,032 61,512
and $11,955 (see Note 2)
DEPOSITS 76,073 93,419
------------ -----------
Total assets $ 5,199,567 $ 3,282,247
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 124,719 $ 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 issued and outstanding (liquidation value of 2,000 2,000
$7.50 per share or $1,500,000)
Common Stock, par value $.01 per share, 25,000,000 shares authorized,
10,066,268 at September 30, 1997 and 8,937,268 at
December 31, 1996 issued and outstanding (see Note 2) 100,663 89,373
Additional paid-in capital 11,931,405 7,939,345
Deficit accumulated during development-stage (6,959,220) (4,852,777)
------------ -----------
Total shareholders' equity 5,074,848 3,177,941
------------ -----------
Total liabilities and shareholders' equity $ 5,199,567 $ 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 September 30, Period From Inception
------------------------- (June 17, 1994) to
1997 1996 September 30, 1997
---- ---- -------------------
<S> <C> <C> <C>
OPERATING EXPENSES:
Research and development (See Note 3) $ 210,598 $ 243,152 $ 3,946,382
General and administrative 511,652 $ 278,883 3,237,769
---------- ----------- -----------
Total operating expenses 722,250 522,035 7,184,151
INTEREST INCOME 25,480 34,682 224,931
---------- ----------- -----------
Total other income and expenses 25,480 34,682 224,931
---------- ----------- -----------
NET LOSS $ (696,770) $ (487,353) $(6,959,220)
---------- ----------- -----------
NET LOSS PER COMMON SHARE (0.08) $ (0.05)
---------- -----------
SHARES USED IN COMPUTING NET LOSS $9,150,689 8,937,268
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>
Nine Months
Ended September 30, Period From Inception
------------------------- (June 17, 1994) to
1997 1996 September 30, 1997
---- ---- -------------------
<S> <C> <C> <C>
OPERATING EXPENSES:
Research and development (See Note 3) $ 924,075 $ 749,211 $ 3,946,382
General and administrative 1,288,985 583,299 3,237,769
----------- ----------- -----------
Total operating expenses 2,213,060 1,332,510 7,184,151
INTEREST INCOME $ 106,617 82,097 $ 224,931
----------- ----------- -----------
Total other income and expenses 106,617 82,097 224,931
----------- ----------- -----------
NET LOSS $(2,106,443) $(1,250,413) $(6,959,220)
----------- ----------- -----------
NET LOSS PER COMMON SHARE $ (0.23) $ (0.14)
----------- -----------
SHARES USED IN COMPUTING NET LOSS 9,009,190 8,675,029
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>
Nine Months Period From Inception
Ended September 30, June 17, 1994) to
-------------------------- September 30,
1997 1996 1997
----------- ----------- ------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($2,106,443) ($1,250,413) ($ 6,959,220)
Adjustments to reconcile net loss to net cash
Depreciation 23,955 4,937 35,910
Issuance of Common Stock options/warrants 100,000 -- 134,950
Acquired in-process technology -- -- 350,000
(Increase) decrease in assets:
Other current assets 26,983 (59,503) (32,108)
Deposits 17,346 (93,419) (76,073)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses 20,413 (392,881) 80,559
Payable to related parties -- (105,476) 250,000
Net cash used in operating activities (1,917,746) (1,896,755) (6,215,982)
----------- ----------- ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of equipment (8,475) (60,146) (81,942)
Sales (Purchases) of short term investments 1,281,000 (2,449,000) (1,149,000)
----------- ----------- ------------
Net cash provided by (used in) investing activities 1,272,525 (2,509,146) (1,230,942)
----------- ----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of Common Stock options/warrants 3,903,350 5,505,928 11,343,278
----------- ----------- ------------
Net cash provided by financing activities 3,903,350 5,505,928 11,343,278
----------- ----------- ------------
INCREASE IN CASH AND CASH EQUIVALENTS 3,258,129 1,100,027 3,896,354
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 638,225 40 --
----------- ----------- ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,896,354 $ 1,100,067 $ 3,896,354
=========== =========== ============
</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.
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. In October 1997, The
Company entered into a new 5-year Sponsored Research Agreement (the "1997
Sponsored Research Agreement") for OLED technology (see Note 3). 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 and to sublicense such
rights. In October 1997, the Company amended the 1994 license agreement (the
"1997 Amended License Agreement") in which certain terms were modified (see Note
3). 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 substatially greater than the Company
currently has available. 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 next twelve months. 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. 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 1997 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 otherwise, and a successor acceptable to both the
Company and Princeton University is not available, the 1997 Sponsored Research
Agreement will terminate.
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 September 30,
1997, the results of operations for the three months and nine months ended
September 30, 1997 and 1996, and the cash flows for the nine months ended
September 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 September 30, 1997 and December 31, 1996,
are classified as short-term investments. At September 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 September 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 October 9, 1997, the Company entered into a new 5-year Sponsored Research
Agreement (the "1997 Sponsored Research Agreement"), with Princeton University
and entered into an Amended License Agreement with Princeton University and USC
amending its 1994 License Agreement with Princeton University (the "1997 Amended
License Agreement"). The 1997 Sponsored Research Agreement continues and expands
the sponsored research which commenced in 1994 (the "1994 Sponsored Research
Agreement") underwhich the Company funds additional research and development
work at Princeton University (and at USC under a subcontract with Princeton
University) in OLED technology. The 1997 Sponsored Research Agreement requires
the Company to pay up to $4.4 million commencing on July 31, 1998 through July
31, 2002, which period is subject to extension. The amounts due to Princeton
University will be expensed when paid by the Company. Under the 1997 License
Agreement, the Company has the exclusive worldwide license to manufacture and
market products, and to sublicense those rights, based on Princeton University's
and USC's pending patent applications relating to the OLED technology and
conceived under the 1994 Sponsored Research Agreement, and to inventions
conceived or discovered under the 1997 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 circumstances
where the Company sublicenses the OLED technology (except to affiliates), the
royalty required to be paid by the Company was reduced from 50% to 3%. These
royalty rates are subject to upward adjustments under certain conditions. In
connection with the 1997 License Agreement and Sponsored Research Agreement, in
October 1997, the Company has issued 140,000 common shares and 175,000 warrants
to purchase common stock to Princeton University as well as 60,000 common shares
and 75,000 warrants to puchase common stock to the University of Southern
California.
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 variou 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 $6,959,220 at September 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 September 30, 1997 Compared to Quarter Ended September 30, 1996
The Company had a net loss of $696,770 (or $0.08 per share) for the quarter
ended September 30, 1997 compared to a loss of $487,353 (or $0.05 per share)
for the same period in 1996. The increase of $209,417 in the net loss was
attributed to increased patent expenses and general and administrative expenses.
The research and development costs were $210,598 for the quarter ended September
30, 1997, compared to $243,152 for the same period in 1996. The research and
development expenses for the quarter ended September 30, 1997 was attributable
to patent expenses in connection with the development of the OLED technology,
for which the Company has an exclusive license. The research and development
expenses for the same period in 1996 was attributed to Sponsored Research
payments and patent expenses for the OLED technology
General and administrative expenses were $511,652 for the quarter ended
September 30, 1997, compared to $278,883 for the same period in 1996. The
increase of $232,769 was associated in part with a consulting agreement entered
into with the Company's underwriter for a 3-year period in which the underwriter
received warrants and an expense in the amount of $100,000 was charged in
connection with such warrants. In addition, the increase was also associated
with the hiring of additional technical staff for OLED research and development.
Nine Months Ended September 30, 1997 Compared to Nine Months Ended September 30,
1996
The Company had a net loss of $2,106,443 (or $0.23 per share) for the nine
months ended September 30, 1997 compared to a loss of $1,250,413 (or $0.14 per
share) for the same period in 1996. The increase of $856,027 was attributed to
an increase in research, development, general and administrative expenses.
Research and development costs were $924,025 for the nine months ended
September 30, 1997 compared to $749,211 for the same period in 1996. The
increase of $174,814 is attributable to patent expenses in connection with the
development of the OLED technology.
General and administrative expenses were $1,288,985 for the nine months ended
September 30, 1997 compared to $583,299 for the same period in 1996. The
increase of $705,686 is primarily associated with the hiring of executives,
support staff, and the leasing of office space for the Company's headquarters
for the full 1997 period, and for the consulting agreement noted above.
10
<PAGE>
Liquidity and Capital Resources
As of September 30, 1997, the Company had cash of $3,896,354 and short-term
investments of $1,149,000 compared to cash of $638,255 and short-term
investments of $2,430,000 at December 31, 1996. During the quarter ended
September 30, 1997, the Company received $3,903,350 from the exercise of
warrants which expired on September 30, 1997. Those warrants allowed a holder to
purchase common stock at $3.50 per share and were part of a private placement of
securities issued by the Company in June 1995. Net working capital increased to
$4,952,743 from $3,023,010 at December 31, 1996 as a result of the exercise of
the warrants during the quarter ended September 30, 1997. 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).
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 next 12 months. 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:
Form 8-K filed with the Securities and Exchange Commission on September 29,
1997.
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: November 14, 1997 /s/ Sidney D. Rosenblatt
-------------------------------
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
<PAGE>
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,
-------------------------- --------------------------
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net loss per common share:
Net Loss ($ 696,770) ($ 487,353) ($2,106,443) ($1,250,413)
Weighted average number of shares outstanding 9,150,689 8,937,268 9,009,190 8,505,516
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 -- -- -- 169,513
Adjusted weighted average number of shares outstanding 9,150,689 8,937,268 9,009,190 8,675,029
=========== =========== =========== ===========
Net loss per common share $ (0.08) $ (0.05) $ (0.23) $ (0.14)
=========== =========== =========== ===========
</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
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 3,896,354
<SECURITIES> 1,149,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 5,077,462
<PP&E> 46,032
<DEPRECIATION> 35,910
<TOTAL-ASSETS> 5,199,567
<CURRENT-LIABILITIES> 124,719
<BONDS> 0
0
2,000
<COMMON> 100,663
<OTHER-SE> 4,973,698
<TOTAL-LIABILITY-AND-EQUITY> 5,199,567
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 210,598
<OTHER-EXPENSES> 511,652
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (696,770)
<INCOME-TAX> 0
<INCOME-CONTINUING> (696,770)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (696,770)
<EPS-PRIMARY> (0.08)
<EPS-DILUTED> (0.08)
</TABLE>
