<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------- --------
Commission File Number 0-24424
CIMA LABS INC.
(Exact name of registrant as specified in its charter)
Delaware 41-1569769
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification
or organization) No.)
10000 Valley View Road, Eden Prairie, Minnesota 55344-9361
(Address of principal executive offices including zip code)
(612) 947-8700
(Registrant's telephone number, including area code)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
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
1934 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 X No
--- ---
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 7,847,599 shares
------------------------------- -------------------------------
(Class) (Outstanding at April 22, 1996)
<PAGE>
CIMA LABS INC.
TABLE OF CONTENTS
PAGE NUMBER
-----------
COVER PAGE 1
TABLE OF CONTENTS 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Condensed Balance Sheets as of March 31, 1996
and December 31, 1995 3
Condensed Statements of Operations for the three-month
periods ended March 31, 1996 and 1995 and the period
from December 12, 1986 (inception) to March 31, 1996 4
Condensed Statements of Cash Flows for the three-month
periods ended March 31, 1996 and 1995 and the period
from December 12, 1986 (inception) to March 31, 1996 5
Notes to Condensed Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS. 7
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS. 11
ITEM 2. CHANGES IN SECURITIES. 11
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 11
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 11
ITEM 5. OTHER INFORMATION. 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 11
SIGNATURE 12
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CIMA LABS INC.
(A Development Stage Company)
Condensed Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------------- ---------------
(Note)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $2,516,596 $3,558,743
Accounts receivable 373,622 212,971
Inventories--Note B 95,778 324,610
Prepaid expenses 262,631 287,279
--------------- ---------------
Total current assets 3,248,627 4,383,603
Property, plant and equipment 13,173,595 13,061,836
Less accumulated depreciation (2,600,263) (2,479,688)
--------------- ---------------
10,573,332 10,582,148
Other assets:
Lease deposits 290,650 290,650
Patents and trademarks, net of amortization 251,361 262,244
--------------- ---------------
542,011 552,894
--------------- ---------------
Total assets $14,363,970 $15,518,645
--------------- ---------------
--------------- ---------------
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $566,006 $291,868
Accrued expenses 905,082 695,127
Advance royalties 250,000 250,000
--------------- ---------------
Total current liabilities 1,721,088 1,236,995
Commitments and contingencies
Stockholders' equity
Convertible Preferred Stock, $.01 par value:
Authorized shares - 5,000,000; issued and
outstanding shares - none - -
Common Stock, $.01 par value:
Authorized shares - 20,000,000; issued and
outstanding shares - 7,840,099 - March 31, 1996;
7,821,974 - December 31, 1995 78,401 78,201
Additional paid-in capital 43,557,737 43,462,921
Deficit accumulated during the development stage (30,993,256) (29,259,472)
--------------- ---------------
Total stockholders' equity 12,642,882 14,281,650
--------------- ---------------
Total liabilities and stockholders' equity $14,363,970 $15,518,645
--------------- ---------------
--------------- ---------------
</TABLE>
Note: The balance sheet at December 31, 1995 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements.
See notes to condensed financial statements.
3
<PAGE>
CIMA LABS INC.
(A Development Stage Company)
Condensed Statements of Operations (Unaudited)
<TABLE>
<CAPTION>
Period from
December 12,
Three Months Ended 1986
March 31, (Inception) to
------------------------------------- March 31,
1996 1995 1996
------------------------------------- -----------------
<S> <C> <C> <C>
Revenues:
Net sales $ - $11,297 $13,750,884
Research, development and
licensing revenues 391,858 214,808 4,266,589
------------------------------------- -----------------
Total Revenues 391,858 226,105 18,017,473
Costs and Expenses:
Cost of good sold - 59,104 17,831,415
Research and product development 1,375,946 2,292,490 16,496,237
Selling, general and administrative 783,702 1,018,684 15,518,736
------------------------------------- -----------------
Total costs and expenses 2,159,648 3,370,278 49,846,388
Other income (expense):
Interest income, net 39,385 169,589 661,251
Other income (expense) (5,379) (3,173) 268,389
------------------------------------- -----------------
Total other income 34,006 166,416 929,640
------------------------------------- -----------------
Net loss and deficit accumulated
during the development stage $(1,733,784) $(2,977,757) $(30,899,275)
------------------------------------- -----------------
------------------------------------- -----------------
Net loss per share:
Primary $ (0.22) $ (0.39) $ (13.94)
Fully diluted $ (0.22) $ (0.39) $ (8.02)
Weighted average number of
shares outstanding:
Primary 7,824,365 7,541,105 2,216,529
Fully diluted 7,824,365 7,541,105 3,852,849
</TABLE>
See notes to condensed financial statements.
4
<PAGE>
CIMA LABS INC.
(A Development Stage Company)
Condensed Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Period from
March 31, December 12, 1986
(Inception) to
------------------------------------ March 31,
1996 1995 1996
------------------------------------ -----------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss $(1,733,784) $(2,977,757) $(30,899,275)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 147,030 135,957 3,561,254
Preferred stock issued for accrued interest - - 141,448
Gain on sale of property, plant and equipment - - (53,270)
Changes in operating assets and liabilities:
Accounts receivable (160,651) 266,356 (373,622)
Inventories 228,832 (159,144) (95,778)
Other current assets 24,648 (37,840) (262,631)
Accounts payable 274,138 (503,890) 566,001
Accrued expenses 209,955 (237,872) 905,082
Advance royalties - - 250,000
------------------------------------ -----------------
Net cash used in operating activities (1,009,832) (3,514,190) (26,260,791)
Investing activities
Purchase of and deposits on property,
plant and equipment (111,759) (680,224) (14,257,819)
Purchase of short-term investments - (5,360,001) (18,547,140)
Proceeds from sale of property, plant and equipment - 471,883
Proceeds from maturities of short-term investments 10,743,182 18,547,140
Patents and trademarks (15,572) (13,334) (527,315)
------------------------------------ -----------------
Net cash provided by (used in) investing activities (127,331) 4,689,623 (14,313,251)
Financing activities
Proceeds from issuance of stock:
Common Stock 95,016 57,241 17,841,768
Preferred Stock - - 25,458,690
Borrowing under line of credit - - 450,000
Payment on line of credit - - (450,000)
Lease financing of equipment - - 2,441,650
Security deposits on leases - - (290,650)
Proceeds from issuance of notes
payable and warrants - - 1,923,950
Payments on notes payable - - (1,823,700)
Payments on capital leases - - (2,441,650)
Organization costs - - (19,420)
------------------------------------ -----------------
Net cash provided by financing activities 95,016 57,241 43,090,638
------------------------------------ -----------------
Increase (decrease) in cash and cash equivalents (1,042,147) 1,232,674 2,516,596
Cash and cash equivalents at beginning of period 3,558,743 2,912,150 -
------------------------------------ -----------------
Cash and cash equivalents at end of period $2,516,596 $4,144,824 $2,516,596
------------------------------------ -----------------
------------------------------------ -----------------
Supplemental schedule of noncash investing
and financing activities:
Note payable exchanged for issuance
of common stock - - $1,517,500
Common stock issued for note receivable - - 50,000
</TABLE>
See notes to condensed financial statements.
5
<PAGE>
CIMA LABS INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS
MARCH 31, 1996 (UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three-month periods ended March 31, 1996
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1996. For further information, refer to the financial
statements and footnotes thereto included in the Company's annual report on Form
10-K for the year ended December 31, 1995.
NOTE B - INVENTORIES
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
-------- ------------
<S> <C> <C>
Raw materials $ 95,778 $ 324,610
Work in process -- --
Finished products -- --
-------- ---------
$ 95,778 $ 324,610
</TABLE>
NOTE C - INITIAL PUBLIC OFFERING
The Company completed its initial public offering ("IPO") of its Common Stock in
July 1994. The shares of Series A, B, C, D and E Preferred Stock were
automatically converted on a one-for-one basis to shares of Common Stock on the
closing date of August 4, 1994.
NOTE D - LOSS PER SHARE
The primary loss per share is based on the weighted average Common shares
outstanding during the period. The fully diluted loss per share assumes the
conversion of the preferred shares to common shares as of the beginning of the
period, or from the date of issuance if later. The loss per share for periods
prior to August 4, 1994, the closing date of the IPO, also gives effect to the
requirements of Staff Accounting Bulletin No. 83 (SAB 83).
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS SECTION.
GENERAL
CIMA LABS INC. ("CIMA" or the "Company") was founded in 1986 to develop
effervescent drug delivery technologies and focused initially on liquid
effervescents. CIMA continues to be a development stage company. CIMA's
business focus has evolved over the last several years with the development and
patenting of OraSolv-Registered Trademark-, an oral dosage form which
incorporates microencapsulated drug ingredients into a tablet that dissolves
quickly in the mouth without chewing or water and which effectively masks the
taste of the medication being delivered. In 1993, following issuance of the
U.S. patent covering OraSolv-Registered Trademark-, the Company began to
emphasize and focus on the development of OraSolv-Registered Trademark- products
and currently focuses primarily on such products.
At March 31, 1996, the Company had accumulated net losses of
approximately $30,899,000. The Company's revenues have been from product sales
using the Company's AutoLution-Registered Trademark- (a liquid effervescent)
technology, license fees paid by corporate partners in consideration of the
transfer of rights under collaboration agreements, and research and development
fees paid by corporate partners to fund the Company's research and development
efforts for products developed under such agreements. To date, such revenues
have been derived primarily from manufacturing agreements with third parties for
liquid effervescent and other products, and to a lesser extent from research and
development fees and licensing arrangements, the latter generated primarily in
the last five years. Revenues from manufacturing liquid effervescent products
under agreements with third parties have decreased as a result of the Company's
decision to discontinue manufacturing that product and focus on developing its
OraSolv-Registered Trademark- technology. The last revenues for manufacturing
liquid effervescent products were recognized in 1995. In addition to revenues
from such manufacturing, research and development and licensing, the Company has
funded operations from private sales of equity securities, realizing net
proceeds of approximately $25,963,000. In July 1994, the Company completed an
initial public offering of shares of its Common Stock, realizing net proceeds of
approximately $16,379,000.
The Company expects that losses will continue at least through 1997.
Costs and expenses are expected to remain relatively stable as the majority of
the necessary research and development personnel have already been hired. It is
expected that additional manufacturing personnel will be added and operating
expenses will increase at such time as the Company initiates the commercial
production of OraSolv-Registered Trademark- products.
The Company's ability to generate revenues is dependent upon its ability
to enter into and be successful in collaborative arrangements with
pharmaceutical and other healthcare companies for the development and
manufacture of OraSolv-Registered Trademark- products to be marketed by these
corporate partners. The
7
<PAGE>
Company is highly dependent upon the efforts of the corporate partners to
successfully market OraSolv-Registered Trademark- products. Although the Company
believes these partners will have an economic motivation to market these
products vigorously, the amount and timing of resources to be devoted to
marketing are not within the control of the Company. These partners
independently could make material marketing and other commercialization
decisions which could adversely affect the Company's future revenues. Moreover,
certain of the Company's products are seasonal in nature and the Company's
revenues could vary materially from quarter to quarter depending on which of
such products, if any, are then being marketed.
Since the Company's initial public offering in 1994, the Company has
put in place a substantially new management team. This new management team
was responsible for the buildout, validation and FDA registration of the
Company's Eden Prairie manufacturing facility as well as the signing of three
new collaborative agreements.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995
The Company's results of operations for the quarter ended March 31,
1996 reflect increased emphasis on development of OraSolv-Registered
Trademark-products. Product sales declined from $11,000 in the first quarter
of 1995 to no product sales in the first quarter of 1996 as the Company
ceased to contract manufacture liquid effervescent and other products. The
Company does not intend to manufacture liquid effervescent products in the
future. Research and development fees and licensing revenues were $392,000
and $215,000 in the first quarter of 1996 and 1995, respectively. These
increased research and development fees and licensing revenues reflect the
signing of license option and development agreements with multinational
pharmaceutical companies that provide for licensing fees, milestone payments,
royalties and manufacturing fees. Research and development fees and licensing
revenues will tend to fluctuate on a quarter to quarter basis.
Cost of goods sold decreased to zero in the first quarter of 1996 from
$59,000 in the first quarter of 1995. Costs of goods sold will increase when
the Company begins commercial production and sales of OraSolv-Registered
Trademark-products. Research and product development expenses decreased to
$1,376,000 in the first quarter of 1996 from $2,292,000 in the first quarter
of 1995. This decrease was the result of a product development/ optimization
charge in the first quarter of 1995 of $1,068,000 from an independent
consultant for improving product taste and packaging of OraSolv-Registered
Trademark- products. Selling, general and administrative expenses decreased
due to downsizing to $784,000 in the first quarter of 1996 from $1,019,000 in
the first quarter of 1995. Net interest income decreased to $39,000 in the
first quarter of 1996 from $170,000 in the first quarter of 1995 due to lower
cash balances.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations to date primarily through
private and public sales of its equity securities and revenues from
manufacturing agreements. Through March 31, 1996, CIMA had received net
offering proceeds from such private and public sales of approximately
$43,300,000 and had net sales from contract manufacturing agreements of
approximately $13,800,000. Among other things, these funds were used to
purchase approximately $14,300,000 of capital equipment, including
approximately $7,500,000 in the last two quarters of 1994 in connection with
completing
8
<PAGE>
the Company's new Eden Prairie manufacturing facility. In July 1994, the
Company completed an initial public offering of shares of its Common Stock,
realizing net proceeds of approximately $16,400,000. The funds raised in
CIMA's initial public offering have been used to buildout the manufacturing
facility, purchase and validate the appropriate production equipment,
complete and staff the research and development facilities and purchase the
necessary equipment for that facility.
The Company's long-term capital requirements will depend upon numerous
factors, including the status of the Company's collaborative arrangements,
the progress of the Company's research and development programs and receipt
of revenues from sales of the Company's products. Cash and cash equivalents,
were $2,517,000 at March 31, 1996. The Company completed a public offering of
its Common Stock in May 1996. The Company believes that the net proceeds to
the Company from this public offering, combined with its currently available
funds and excluding any license fees that may be received in the future, will
meet its needs at least through the first quarter of 1997. The Company will
need to raise additional funds through public or private financings,
including equity financing which may be dilutive to stockholders. There can
be no assurance that the Company will be able to raise additional funds if
its capital resources are exhausted, or that funds will be available on terms
attractive to the Company.
The Company has not generated taxable income through March 1996. At March
31, 1996, the net operating losses available to offset future taxable income
were approximately $31,397,000. Because the Company has experienced ownership
changes, pursuant to Internal Revenue Code regulations, future utilization of
the operating loss carryforwards will be limited in any one fiscal year. The
carryforwards expire beginning in 2001. As a result of the annual limitation, a
portion of these carryforwards may expire before ultimately becoming available
to reduce potential federal income tax liabilities.
BUSINESS RISKS
The Company is a development stage company and must be evaluated in light
of the uncertainties and complications present for any such company and, in
particular, a company in the pharmaceutical industry. The Company has
accumulated aggregate net losses from inception in December 1986 through March
31, 1996 of approximately $30,899,000. Losses have resulted principally from
costs incurred in research and development of the Company's technologies and
from general and administrative costs. These costs have exceeded the Company's
revenues, which have been derived primarily from the manufacturing of
AutoLution-Registered Trademark- (a liquid effervescent) and other
non-OraSolv-Registered Trademark- products under agreements with third parties.
The Company no longer manufactures such products and no longer derives revenues
from their manufacture. The Company expects to continue to incur losses at
least through 1997. Many of the Company's expenditures to date have been
non-recurring costs for plant, equipment and product optimization and
validation. There can be no assurance, however, that the Company will ever
generate substantial revenues or achieve profitability.
9
<PAGE>
The Company will need to raise additional funds to operate in 1997, and
is subject to the risks inherent in raising such additional funds. See
"-Liquidity and Capital Resources." In addition, the Company is dependent
upon its ability to enter into and perform under collaborative arrangements
with pharmaceutical companies for the development and commercialization of
its products. See "-General."
The success of the Company and of its business strategy is also dependent
in large part on the ability of the Company to attract and retain key management
and operating personnel. Such individuals are in high demand and are often
subject to competing offers. In particular, the Company's success will depend,
in part, on its ability to attract and retain the services of its executive
officers and scientific and technical personnel. The loss of the services of
one or more members of management or key employees or the inability to hire
additional personnel as needed or replace personnel who have left the Company
may have a material adverse affect on the Company. The Company currently has no
full-time chief financial officer, but is actively recruiting to fill this
position.
To date no commercial sales of OraSolv-Registered Trademark- products
have been made, and the Company has not derived any revenues from sales of
OraSolv-Registered Trademark- products. Further, the Company does not expect to
derive any such revenues until at least 1997. The Company has not yet
manufactured OraSolv-Registered Trademark- products in commercial quantities.
To achieve desired levels of production, the Company will be required to
increase substantially its manufacturing capabilities. There can be no
assurance that manufacturing can be scaled-up in a timely manner to allow
production in sufficient quantities to meet the needs of the Company's corporate
partners.
The foregoing risks reflect the Company's stage of development and the
nature of the Company's industry and products. Also inherent in the Company's
stage of development is a range of additional risks, including competition,
uncertainties regarding the effects of health care reform on the pharmaceutical
industry, including pressures exerted on the prices charged for pharmaceutical
products, uncertainties regarding protection of patents and proprietary rights,
uncertainties relating to government regulation and risks associated with having
only one manufacturing facility.
10
<PAGE>
CIMA LABS INC.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
Item Description
3.1 Fifth Restated Certificate of Incorporation
of the Company. (1)
3.2 Second Restated Bylaws of the Company. (1)
11.1 Statement re Computation of Net Loss Per
Share
-----------
(1) Incorporated by reference to the correspondingly
numbered exhibit to the Registrant's Annual Report on
Form 10-K for the fiscal year ended December 31,
1994.
(b) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the quarter
ended March 31, 1996.
11
<PAGE>
CIMA LABS INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
CIMA LABS INC.
Date: May 14, 1996 By: /s/ John M. Siebert
------------- ----------------------------------------------
John M. Siebert
President, Chief Executiv Officer
and Chief Financial Officer
(Principal Financial and Accounting Officer)
12
<PAGE>
EXHIBIT INDEX
SEQUENTIALLY
NO. OF EXHIBIT DESCRIPTION NUMBERED PAGE
3.1 Fifth Restated Certificate of Incorporation
of the Company. (1)
3.2 Second Restated Bylaws of the Company. (1)
11.1 Statement re Computation of Net Loss Per
Share
- -----------
(1) Incorporated by reference to the correspondingly numbered exhibit to the
Registrant's Annual Report on Form 10-K for the fiscal year ended December
31, 1994.
13
<PAGE>
Exhibit 11.1-Statement Re: Computation of Net Loss Per Share
<TABLE>
<CAPTION>
Period from
December 12,
1986
Three Months Ended (Inception) to
March 31, March 31,
-------------------------- --------------
1996 1995 1996
-------------------------- --------------
<S> <C> <C> <C>
Primary:
Average shares outstanding 7,824,365 7,541,105 1,747,005
Net effect of dilutive stock
options--based on the treasury
stock method using average
market price (See Note A Below) - - 469,524
-------------------------- ------------
Totals 7,824,365 7,541,105 2,216,529
-------------------------- ------------
-------------------------- ------------
Net loss $(1,733,784) $(2,977,757) $(30,899,275)
-------------------------- ------------
-------------------------- ------------
Per share amount $(0.22) $(0.39) $(13.94)
-------------------------- ------------
-------------------------- ------------
Fully diluted:
Average shares outstanding 7,824,365 7,541,105 3,383,325
Net effect of dilutive stock
options--based on the treasury
stock method using average
market price or the ending market
price if higher (See Note A Below) - - 469,524
-------------------------- ------------
Totals 7,824,365 7,541,105 3,852,849
-------------------------- ------------
-------------------------- ------------
Net loss $(1,733,784) $(2,977,757) $(30,899,275)
-------------------------- ------------
-------------------------- ------------
Per share amount $(0.22) $(0.39) $(8.02)
-------------------------- ------------
-------------------------- ------------
</TABLE>
NOTE A:
Represents shares required by the provisions of Staff Accounting Bulletin No.
83 for "cheap stock" issued prior to the Company's initial public offering in
August 1994.
