<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1995
Commission File Number 0-18044
PROCYTE CORPORATION
(Exact name of the registrant as specified in its charter)
WASHINGTON 91-1307460
(State of incorporation) (I.R.S. Employer Identification No.)
12040 115TH AVENUE N.E., SUITE 210, KIRKLAND, WA 98034-6900
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (206)820-4548
Securities registered pursuant to Section 12(b) of the Act: NONE
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 the filing
requirements for 90 days.
Yes {X} No { }
As of May 8, 1995, there were issued and outstanding 13,118,495 shares of common
stock, par value $.01 per share.
<PAGE>
PROCYTE CORPORATION
INDEX
PART I FINANCIAL INFORMATION PAGE NO.
Item 1. Financial Statements (unaudited)
Balance Sheet
Three months ended March 31, 1995 and 1994 - 3
Statements of Operations
Three months ended March 31, 1995 and 1994 - 4
Statements of Cash Flows
Three months ended March 31, 1995 and 1994 - 5
Statements of Stockholders' Equity - 6
Notes to Financial Statements - 7
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations - 9
PART II OTHER INFORMATION 12
Item 1. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
INDEX TO EXHIBITS 12
SIGNATURES 12
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PROCYTE CORPORATION
(a development stage company)
BALANCE SHEETS
<TABLE>
<CAPTION>
March 31,
1995 December 31,
(unaudited) 1994
--------------- ---------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash. . . . . . . . . . . . . . . . . . . . . . . . . . $ 16,873,511 $ 26,243,922
Securities available for sale. . . . . . . . . . . . . . . . . . 25,100,522 16,770,215
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 353,276 460,223
--------------- ---------------
Total current assets. . . . . . . . . . . . . . . . . . . . . 42,327,309 43,474,360
PROPERTY AND EQUIPMENT, at cost
Equipment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,334,412 3,328,829
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . 5,097,833 5,097,833
Less accumulated depreciation and amortization . . . . . . . . . (2,658,717) (2,463,354)
--------------- ---------------
Property and equipment, net . . . . . . . . . . . . . . . . . 5,773,528 5,963,308
PATENTS, at cost . . . . . . . . . . . . . . . . . . . . . . . . 531,718 527,329
Less accumulated amortization. . . . . . . . . . . . . . . . . . (126,310) (111,310)
--------------- ---------------
Patents, net. . . . . . . . . . . . . . . . . . . . . . . . . 405,408 416,019
OTHER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159,399 159,399
--------------- ---------------
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . $ 48,665,644 $ 50,013,086
--------------- ---------------
--------------- ---------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 430,480 $ 293,466
Accrued liabilities. . . . . . . . . . . . . . . . . . . . . . . 1,099,697 1,093,954
Deferred income. . . . . . . . . . . . . . . . . . . . . . . . . 368,420 340,344
--------------- ---------------
Total current liabilities . . . . . . . . . . . . . . . . . . 1,898,597 1,727,764
DEFERRED LEASE PAYMENTS. . . . . . . . . . . . . . . . . . . . . 81,027 83,003
DEFERRED STATE SALES TAXES . . . . . . . . . . . . . . . . . . . 52,544 52,544
COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock $.01 par value: 2,000,000 shares
authorized; no shares issued or outstanding . . . . . . . . .
Common stock $.01 par value: 30,000,000 shares
authorized; shares issued and outstanding
13,118,495 - March 31, 1995 and 12,920,296 - 1994 . . . . . . 131,185 129,203
Additional paid-in capital . . . . . . . . . . . . . . . . . . . 82,318,354 82,292,913
Deficit accumulated during the development stage . . . . . . . . (35,688,464) (34,118,285)
Unearned compensation. . . . . . . . . . . . . . . . . . . . . . (127,599) (154,056)
--------------- ---------------
Total stockholders' equity. . . . . . . . . . . . . . . . . . 46,633,476 48,149,775
--------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY . . . . . . . . . . . $ 48,665,644 $ 50,013,086
--------------- ---------------
--------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
PROCYTE CORPORATION
(a development stage company)
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
January 1,
1985
(predecessor
Three months ended March 31, inception) to
---------------------------------- March 31,
1995 1994 1995
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUES
Research and development
revenues under collaborative
agreements. . . . . . . . . . . . . . . . $ 576,655 $ 412,287 $ 6,795,050
License fees . . . . . . . . . . . . . . . . 600,000
Interest income. . . . . . . . . . . . . . . 711,387 279,565 5,115,284
Other. . . . . . . . . . . . . . . . . . . . 697,764
-------------- -------------- --------------
Total revenues . . . . . . . . . . . . . . . 1,288,042 691,852 13,208,098
-------------- -------------- --------------
COSTS AND EXPENSES
Research and
development . . . . . . . . . . . . . . . 1,891,556 2,723,353 37,796,616
General and
administrative. . . . . . . . . . . . . . 966,665 734,016 11,102,734
-------------- -------------- --------------
Total costs and expenses . . . . . . . . . . 2,858,221 3,457,369 48,899,350
-------------- -------------- --------------
NET LOSS . . . . . . . . . . . . . . . . . . $ (1,570,179) $ (2,765,517) $ (35,691,252)
-------------- -------------- --------------
-------------- -------------- --------------
NET LOSS PER
COMMON SHARE. . . . . . . . . . . . . . . $ (0.12) $ (0.24) $ (5.46)
-------------- -------------- --------------
-------------- -------------- --------------
Weighted average number of
common shares used in computing
net loss per common share . . . . . . . . 13,043,586 11,602,781 6,542,216
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
PROCYTE CORPORATION
(a development stage company)
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
January 1,
1985
(predecessor
inception) to
Three months ended March 31, March 31,
------------------------------------- ---------------
OPERATING ACTIVITIES 1995 1994 1995
------------------------------------- ---------------
<S> <C> <C> <C>
Net Loss $ (1,570,179) $ (2,765,517) $ (35,691,252)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . 195,363 117,091 2,909,387
Patent expense. . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000 6,000 572,571
Amortization of discount on marketable securities . . . . . . . . . (15,625)
Gain on sale of securities available for sale . . . . . . . . . . . (138,264) (1,354)
Stock grants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 41,087
Compensation expense on stock options . . . . . . . . . . . . . . . 26,457 44,567 612,539
Changes in assets and liabilities:
(Increase) decrease in other current assets . . . . . . . . . . . 106,947 (15,322) (353,280)
Decrease in deferred offering expenses. . . . . . . . . . . . . . 99,112
Increase in other assets. . . . . . . . . . . . . . . . . . . . . (9,399)
Increase in accounts payable. . . . . . . . . . . . . . . . . . . 137,014 439,129 345,361
Increase in accrued liabilities . . . . . . . . . . . . . . . . . 5,743 127,641 1,044,789
Increase in deferred income . . . . . . . . . . . . . . . . . . . 28,076 242,112 368,420
Increase (decrease) in deferred lease payments. . . . . . . . . . (1,976) 2,965 81,027
Decrease in deferred use tax. . . . . . . . . . . . . . . . . . . (42,169)
-------------- -------------- --------------
Net cash used in operating activities. . . . . . . . . . . . . . . . . (1,195,819) (1,702,222) (30,137,898)
-------------- -------------- --------------
FINANCING ACTIVITIES
Proceeds from issuance of stock - net. . . . . . . . . . . . . . . . 27,423 35,578,705 81,294,896
Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . 500,000
-------------- -------------- --------------
Net cash provided by financing activities. . . . . . . . . . . . . . . 27,423 35,578,705 81,794,896
-------------- -------------- --------------
INVESTING ACTIVITIES
Purchase of property and equipment . . . . . . . . . . . . . . . . . (5,583) (2,312,249) (8,586,984)
Interest-bearing lease deposit . . . . . . . . . . . . . . . . . . . (150,000)
Purchase of securities available-for-sale. . . . . . . . . . . . . . (29,272,464) (95,274,839)
Proceeds from sale or redemption of securities available for sale. . 21,080,421 70,191,296
Patents:
Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . (6,049) (54,566) (1,024,166)
Reimbursements . . . . . . . . . . . . . . . . . . . . . . . . . . 1,660 3,846 61,206
-------------- -------------- --------------
Net cash used in investing activities. . . . . . . . . . . . . . . . . (8,202,015) (2,362,969) (34,783,487)
-------------- -------------- --------------
NET INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . . . . . (9,370,411) 31,513,514 16,873,511
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD . . . . . . . . . . . . . . . . . . . . . 26,243,922 22,653,578
-------------- --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD . . . . . . . . . . . . . . $ 16,873,511 $ 54,167,092 $ 16,873,511
-------------- -------------- --------------
-------------- -------------- --------------
SUPPLEMENTAL SCHEDULE OF NON-CASH
FINANCING AND INVESTING ACTIVITIES
Conversion of debt to common stock. . . . . . . . . . . . . . . . . $ 500,000
--------------
--------------
Issuance of stock for patents . . . . . . . . . . . . . . . . . . . $ 27,790
--------------
--------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
PROCYTE CORPORATION
(a development stage company)
STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
<TABLE>
<CAPTION>
Deficit
Accumulated
Common Stock Additional During the
------------------------ Paid-in Development Unearned
Shares Par Value Capital Stage Compensation Total
---------- ---------- ------------ ------------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 . . . . . . . . . 12,920,296 129,203 82,292,913 (34,118,285) (154,056) 48,149,775
Exercise of stock options:
($2.16 per share) January 23 . . . . . . . 9,000 90 19,350 19,440
($.09 per share) in exchange for
5,681 issued shares February 3 . . . . . . 179,919 1,799 (1,797) 2
($0.86 per share) February 14. . . . . . . 9,280 93 7,888 7,981
Amortization of unearned compensation. . . . 26,457 26,457
Net loss . . . . . . . . . . . . . . . . . . (1,570,179) (1,570,179)
---------- ---------- ------------ ------------- ---------- ------------
Balance, March 31, 1995. . . . . . . . . . . 13,118,495 $131,185 $82,318,354 $(35,688,464) $(127,599) $46,633,476
---------- ---------- ------------ ------------- ---------- ------------
---------- ---------- ------------ ------------- ---------- ------------
</TABLE>
6
<PAGE>
PROCYTE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited Financial Statements of ProCyte Corporation (the
"Company") for the three-month periods ended March 31, 1995 and 1994, have been
prepared by the Company 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. Pursuant to such rules and regulations,
the Financial Statements do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. Accordingly, this financial information should be read in
conjunction with the complete Financial Statements, including the notes thereto
and the auditors' opinion, which are included in the Company's Annual Report,
incorporated by reference on Form 10-K, for the year ended December 31, 1994.
In the opinion of management, all material adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Interim results are not necessarily indicative of the results that
may be expected for the year ending December 31, 1995.
2. INVESTMENTS
At March 31, 1995, the Company's investments consist primarily of U.S.
Treasury bills and notes and are classified as "available for sale." The
amortized cost and estimated market value for investments maturing in one year
or less is $18,699,987, and those maturing in one through five years is
$6,400,535. Unrealized gains or losses at March 31, 1995 were insignificant,
and realized gains from sales of investments in the three-month period ended
March 31, 1995 were $138,264.
3. COLLABORATIVE AGREEMENTS
KISSEI PHARMACEUTICAL CO., LTD.
For the three-month period ended March 31, 1995 the Company earned revenue
of $251,704 under the agreement with Kissei Pharmaceutical Co, Ltd.
KAKEN PHARMACEUTICAL CO., LTD.
The Company earned revenue under the agreement with Kaken Pharmaceutical
Co, Ltd. for the three-period ended March 31, 1995 of $324,951. Deferred
revenue at March 31, 1995 represents the remainder of cash advanced by Kaken for
research to be performed under the terms of the agreement. At quarter end,
unearned revenue from Kaken's funding was $368,420.
7
<PAGE>
PROCYTE CORPORATION
(a development stage company)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) - CONTINUED
4. STOCKHOLDERS' EQUITY
Information relating to stock options granted, exercised, canceled and
currently exercisable is as follows:
<TABLE>
<CAPTION>
Shares subject Option price
to option range
--------- -----
<S> <C> <C>
Balance, January 1, 1994 1,019,808 $.09 - $16.56
Granted 52,000 $13.18 - $13.88
Exercised 2,456 $2.16 - $5.00
Canceled 1,160 $2.16
Balance, March 31, 1994 1,068,192 $ 0.09 - $16.56
Balance, January 1, 1995 1,412,710 $0.09 - $11.88
Granted 428,500 $2.94
Exercised 194,880 $0.09 - $0.86
Canceled 89,600 $2.53 - $10.79
Balance, March 31, 1995 1,556,730 $2.16 - $11.88
Currently exercisable 511,716
</TABLE>
During the three months ended March 31, 1995, the Compensation Committee of
the Board of Directors approved grants of incentive stock options to purchase
428,500 shares of common stock to employees of the Company, of which three
grants were to officers of the Company. All options are subject to vesting
schedules.
8
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company relies primarily on equity financings and corporate
partnerships to fund its operations and capital expenditures. At March 31,
1995, the Company had cash, cash equivalents and short-term investments of
approximately $42.0 million, and working capital of approximately $40.4 million.
The Company believes that its present capital resources and expected
revenues from existing license agreements should be sufficient to fund the
Company's currently planned operations and capital needs for up to two years.
The Company's future cash requirements, however, may vary materially from those
now expected because of a number of factors. The Company may be required to
raise additional capital through equity offerings, strategic alliances or other
sources. There can be no assurance that such funds will be available to the
Company on acceptable terms, if at all.
The Company is presently pursuing a three-fold corporate strategy in an
effort to build long-term shareholder value. This strategy involves: (1)
continuing to develop the Company's family of proprietary copper-based
therapeutics; (2) actively seeking a suitable technology-rich merger or
acquisition candidate that could enhance the Company's ability to provide
nearer-term product introductions; and (3) fully utilizing the Company's
existing manufacturing facility by providing contract manufacturing services.
The Company made progress during the quarter with regard to clinical
development of the Company's compounds, including a Phase I/II study of
investigational Iamin-IB-TM- solution for potential treatment of ulcerative
colitis, a common form of inflammatory bowel disease. In April, the Company
initiated a Phase I clinical trial of PC1358, tradenamed Tricomin-TM- solution,
for potential treatment of hair loss conditions. Also in April, the Company
supplied Kissei Pharmaceutical Co., Ltd, with drug supplies for Kissei's use in
a Phase I Iamin-Registered Trademark- gel wound healing study in Japan. ProCyte
continues to focus efforts on Iamin-Registered Trademark- gel and on other
early-stage research compounds.
The Company cannot predict the outcome of its research, development or
clinical trials for drug candidates which it intends to pursue. The Company
presently intends to focus the majority of its efforts in the near-term on
programs which are at a significantly earlier stage of research and development,
and may never become commercially viable if research and development studies are
inconclusive or if clinical endpoints are not achieved at any stage of clinical
testing.
ProCyte's activities and the drug candidates it is developing are subject
to significant government regulation. Pharmaceuticals are subject to stringent
testing and pre-marketing
9
<PAGE>
approval by the FDA and comparable health authorities in other countries.
Whether or not FDA approval has been obtained, approval of a drug by comparable
regulatory authorities in other countries must be obtained prior to marketing
the product in those countries. There can be no assurance that clinical testing
will provide sufficient evidence of safety and efficacy in humans, or that FDA-
designated clinical results criteria will be satisfied, or that regulatory
approvals will be granted. Delays in obtaining regulatory approval could
adversely affect the manufacturing and marketing of the Company's products, the
Company's financial position and the Company's ability to generate sales
revenues or royalties. When and if regulatory approvals are granted, the
Company's products will be subjected to continuing regulatory review. Adverse
governmental regulation which might arise from future legislative or
administrative action cannot be predicted.
The Company cannot predict what healthcare reform legislation, if any, will
be enacted. Significant changes in the U.S. or foreign healthcare systems are
likely to have a substantial impact over time on the manner in which the Company
conducts its business and could have a material adverse effect on the Company's,
and its present or future partners' or collaborators', results of operations.
The Company continues to seek a suitable merger, acquisition or technology
licensing opportunity. These discussions are ongoing. The Company cannot
predict what, if any outcome will result from the Company's extensive efforts in
this regard or what impact, if any, the outcome of such discussions may have on
the Company's existing product pipeline and current overall strategy.
During the quarter ended March 31, 1995, ProCyte implemented a business
development program to inform potential industry clients of the Company's
ability to provide contract manufacturing services under current good
manufacturing practices guidelines. The Company believes that it will take some
time to build its contract manufacturing reputation and client base, and that
there can be no assurance that it will be successful in this regard. At
present, the Company has several proposals in process for potential clients and
is performing some contract manufacturing.
OPERATING LOSSES
The Company is engaged in the research and development of human
pharmaceuticals utilizing copper-based compounds. Such research and development
has been funded from the Company's equity-derived working capital and through
corporate partnerships. The Company has incurred operating losses since its
inception due to financial and regulatory requirements required to support
research, development and clinical studies of its proprietary technology. In
particular, the Company has supported and continues to finance research and
development of investigational Iamin-Registered Trademark- gel for potential
treatment of wounds, investigational Iamin-IB-TM- solution for potential
treatment of inflammatory bowel disease, investigational Tricomin-TM- solution
for potential treatment of hair loss conditions, and PC1250 for antiviral
indications.
10
<PAGE>
The Company expects to incur additional operating losses for a number of
years until its proposed products may be approved for commercial use. At March
31, 1995, the Company's accumulated deficit was approximately $35.7 million.
REVENUES
For the three-month period ended March 31, 1995, ProCyte earned revenues
from collaborative agreements and interest income of $576,655, and $711,387,
respectively. This compares to collaborative agreement revenues of $412,287 and
interest income of $279,565 earned in the first three months of 1994. The
increase in revenues is primarily due to the continuing investment of funds
raised in the Company's February 1994 equity offering, and to higher interest
rates available for the Company's short-term investments in 1995 compared to
interest rates in early 1994.
The final research and development funding due under the agreement with
Kaken Pharmaceutical Co., Ltd., ProCyte's partner in Asia for development of the
hair loss technology, was received during the first quarter of 1995. At quarter
end, unearned revenue from Kaken's funding was $368,420.
Kaken may terminate the agreement at any time by giving ProCyte sixty days'
prior written notice after December 14, 1993. Currently, the parties are
discussing their relationship with respect to development of the compound in
Japan as a pharmaceutical product. There can be no assurance that the parties
will reach a mutually satisfactory decision regarding the compound's development
in Japan or that the agreement between the parties will not be terminated.
EXPENSES
Research and development expenses for the three-month period ended March
31, 1995 were $1,891,556, compared to $2,723,353 for the same period in 1994.
Expenditures during the period conform with the Company's planned decrease in
expenses for the quarter, primarily due to the early-stage of drug candidates in
development. Currently, the Company expects its research and development
expenses to remain substantially below expenditures for the comparable periods
in the prior year primarily for this reason.
General and administrative expenses for the three-month period ended March
31, 1995 were $966,665, compared to $734,016 for the same three-month period in
1994. The increase was primarily related to legal and other fees incurred as a
result of the Company's defense of the class action lawsuit and review of and
response to the Scherer/Derma takeover attempt, and to the Company's
investigation of merger, acquisition and technology licensing opportunities.
The Company expects its general and administrative expenses to remain relatively
high compared to the prior year due to the shareholder lawsuit and the Company's
pursuit of merger, acquisition or technology licensing opportunities.
11
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and certain of its officers have been named as defendants in a
number of purported class action lawsuits filed in the United States District
Court for the Western District of Washington. The filing of the lawsuits
followed the Company's October 17, 1994 announcement regarding the preliminary
analysis of its Phase II Iamin-Registered Trademark- gel clinical trial.
Pursuant to court order, the lawsuits have been consolidated and all previous
complaints have been replaced by an Amended Consolidated Complaint. Plaintiffs
in these lawsuits, who purport to represent a class of purchasers of the
Company's securities between February 2, 1994 and October 17, 1994, allege that
the defendants misrepresented and/or omitted material information in public
statements concerning the Company's investigational Iamin-Registered Trademark-
gel. Plaintiffs allege violation of federal securities laws and other laws and
seek recovery of monetary damages in an unspecified amount. The Company
believes the claims to be without merit and intends to defend the lawsuits
vigorously. There can be no assurance, however, that the Company's defense will
be successful, or that the lawsuits will not have an adverse affect on the
Company or its financial condition.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - None.
(b) Reports on Form 8-K - None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
PROCYTE CORPORATION
(REGISTRANT)
Date: May 8, 1995 By /s/Joseph Ashley
------------------------------
Joseph Ashley
Chairman, President and C.E.O.
Date: May 8, 1995 By: /s/ David H. Fulle
------------------------------
David H. Fulle
Principal Accounting Officer
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 16,873,511
<SECURITIES> 25,100,522
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 42,327,309
<PP&E> 8,432,245
<DEPRECIATION> (2,658,717)
<TOTAL-ASSETS> 48,665,644
<CURRENT-LIABILITIES> 1,898,597
<BONDS> 0
<COMMON> 82,449,539
0
0
<OTHER-SE> (35,816,063)<F1>
<TOTAL-LIABILITY-AND-EQUITY> 48,665,644
<SALES> 0
<TOTAL-REVENUES> 1,288,042
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,858,221
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,570,179)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,570,179)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,570,179)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> 13,043,586
<FN>
<F1>This represents deficit accumulated during development stage and unearned
compensation.
</FN>
</TABLE>
