<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 0-21926
--------------------------------------------------------
AER ENERGY RESOURCES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 34-1621925
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4600 Highlands Parkway, Suite G, Smyrna, Georgia 30082
---------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(770) 433-2127
---------------------------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(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
---- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
There were 22,435,181 shares of Common Stock outstanding as of April 30, 1996.
<PAGE> 2
AER ENERGY RESOURCES, INC.
FORM 10-Q
FOR THE QUARTER ENDED MARCH 31, 1996
INDEX
<TABLE>
<CAPTION>
Page
----
PART I - FINANCIAL INFORMATION
<S> <C> <C>
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Condensed Balance Sheets - March 31, 1996 and December 31, 1995. 3
Condensed Statements of Operations - Three Months Ended March 31, 4
1996 and 1995, and Period From July 17, 1989 (Date of Inception)
to March 31, 1996.
Condensed Statements of Cash Flows - Three Months Ended March 31, 5
1996 and 1995 and Period From July 17, 1989 (Date of Inception)
to March 31, 1996.
Notes to Condensed Financial Statements - March 31, 1996. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 9
RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 13
</TABLE>
Page 2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
----------- ------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents....................................... $14,548,794 $16,417,152
Trade accounts receivable (less allowances of $631 at March 31,
1996 and $19,790 at December 31, 1995)......................... 12,324 8,025
Inventories..................................................... 275,551 254,008
Prepaid expenses................................................ 153,856 141,132
----------- -----------
Total current assets.............................................. 14,990,525 16,820,317
Equipment and improvements:
Machinery and equipment......................................... 2,899,937 2,874,394
Office equipment................................................ 423,644 427,905
Leasehold improvements.......................................... 253,474 252,299
----------- -----------
3,577,055 3,554,598
Less accumulated depreciation................................... 1,627,678 1,496,406
----------- -----------
1,949,377 2,058,192
Other long term assets............................................ 16,841 16,841
----------- -----------
Total assets $16,956,743 $18,895,350
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................ $ 94,606 $ 331,435
Accrued royalties - related party............................... 70,000 60,000
Accrued compensation............................................ 24,547 18,550
Other accrued expenses.......................................... 285,007 285,765
----------- -----------
Total current liabilities......................................... 474,160 695,750
Deferred rental expense........................................... 5,143 7,056
Stockholders' equity:
Convertible debentures..........................................
Preferred stock, no par value: 1,062,278 9,924,073
Authorized - 10,000,000 shares; no shares issued and outstanding -- --
Common Stock, no par value:
Authorized - 100,000,000 shares: issued and outstanding -
22,275,183 shares at March 31, 1996 and 17,269,180 shares at
December 31, 1995.............................................. 55,911,706 46,905,677
Notes receivable from common stock sales........................ (71,875) (71,875)
Unearned stock compensation..................................... (306,000) (342,000)
Deficit accumulated during the development stage................ (40,118,669) (38,223,331)
----------- -----------
Total stockholders' equity........................................ 16,477,440 18,192,544
----------- -----------
Total liabilities and stockholders' equity........................ $16,956,743 $18,895,350
=========== ===========
</TABLE>
Note: The condensed balance sheet at December 31, 1995 has been derived from
the audited financial statements of AER Energy Resources, Inc. 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.
Page 3
<PAGE> 4
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
PERIOD FROM
JULY 17, 1989
(DATE OF
THREE MONTHS ENDED MARCH 31, INCEPTION) TO
---------------------------- MARCH 31,
1996 1995 1996
----------- ----------- --------------
<S> <C> <C> <C>
Revenues.................. $ 14,728 $ 29,333 $ 221,870
Cost of sales............. 553,672 542,006 3,327,199
------------ ------------ -------------
Gross margin.............. (538,944) (512,673) (3,105,329)
Costs and expenses:
Research and development
- related party.......... -- -- 1,145,913
- other.................. 656,436 1,798,998 21,995,752
Marketing, general and
administrative
- related party.......... 49,558 74,120 1,043,342
- other.................. 741,539 1,159,499 14,192,679
------------ ------------ -------------
Total costs and expenses.. 1,447,533 3,032,617 38,377,686
------------ ------------ -------------
Operating loss............ (1,986,477) (3,545,290) (41,483,015)
Interest income........... 235,374 214,420 1,862,599
Interest expense
- related parties........ -- -- (264,445)
------------ ------------ -------------
Net loss.................. $ (1,751,103) $ (3,330,870) $ (39,884,861)
============ ============ =============
Net loss per share........ $ (0.09) $ (0.19) $ (3.49)
============ ============ =============
Weighted average shares
outstanding.............. 19,303,197 17,226,580 11,438,896
</TABLE>
See notes to condensed financial statements.
Page 4
<PAGE> 5
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
PERIOD FROM
JULY 17, 1989
(DATE OF
THREE MONTHS ENDED MARCH 31, INCEPTION) TO
----------------------------- MARCH 31,
1996 1995 1996
------------- ------------ --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES:
Net loss.............................................. $ (1,751,103) $ (3,330,870) $ (39,884,861)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization........................ 143,730 183,605 2,025,599
Amortization of unearned stock compensation.......... 36,000 36,000 396,000
Loss on disposal of equipment........................ 7,890 -- 39,091
Deferred rental expense.............................. (1,913) (2,123) 5,143
Accretion of discount on marketable securities....... -- -- (187,407)
Changes in operating assets and liabilities:
Trade accounts receivable........................... (4,299) (3,127) (12,324)
Inventories......................................... (21,543) (4,288) (275,551)
Prepaid expenses and other current assets........... (12,724) 22,332 (154,166)
Accounts payable.................................... (236,829) (29,161) 94,606
Accrued royalties payable-related party............. 10,000 15,325 70,000
Other current liabilities........................... 5,239 159,493 468,488
----------- ----------- ------------
Net cash used in operating activities................. (1,825,552) (2,952,814) (37,415,382)
INVESTING ACTIVITIES:
Purchases of equipment and improvements............... (42,806) (146,210) (3,640,395)
Purchase of marketable securities..................... -- -- (11,512,296)
Purchase of license agreement......................... -- -- (250,000)
Proceeds from marketable securities................... -- -- 11,700,000
Changes in other assets............................... -- -- (140,501)
----------- ----------- ------------
Net cash used in investing activities................. (42,806) (146,210) (3,843,192)
FINANCING ACTIVITIES:
Proceeds from revolving credit note to related parties -- -- 5,430,000
Issuance of convertible debentures, net of issuance
costs................................................. -- -- 9,834,500
Payments on notes payable to related parties.......... -- -- (1,150,000)
Payments received on promissory notes................. -- 4,000 57,425
Issuance of Common Stock, exercise of stock options... -- 10,013 121,105
Issuance of Common Stock, net of issuance costs....... -- -- 41,514,338
----------- ----------- ------------
Net cash provided by financing activities............. -- 14,013 55,807,368
----------- ----------- ------------
(Decrease) increase in cash and cash equivalents...... (1,868,358) (3,085,011) 14,548,794
Cash and cash equivalents at beginning of period...... 16,417,152 16,029,787 --
----------- ----------- ------------
Cash and cash equivalents at end of period............ $14,548,794 $12,944,776 $ 14,548,794
=========== =========== ============
</TABLE>
See notes to condensed financial statements.
Page 5
<PAGE> 6
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1996
1. 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. These financial statements should be
read in conjunction with the Company's audited financial statements included in
the Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 1995. Operating results for the
three month period ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended December 31, 1996 or any
interim period.
2. SIGNIFICANT ACCOUNTING POLICIES
Description of Business
AER Energy Resources, Inc. was incorporated on July 17, 1989 and since
inception has engaged in the development and commercialization of high energy
density, rechargeable zinc-air batteries. The Company's operations to date
have primarily been focused on developing and updating the technology, setting
up the manufacturing process, testing and selling zinc-air batteries,
recruiting personnel and similar activities. The Company began selling its
first product in August 1994. Sales from August 1994 through March 31, 1996
have been minimal. Until significant product sales occur, the Company is
considered to be a development stage company for financial reporting purposes.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash, bank deposits and highly liquid
investments with maturities of three months or less when purchased and are
stated at cost, which approximates market.
Page 6
<PAGE> 7
Inventories
The Company's inventory has been valued at the lower of cost or market,
using the first in, first out method. The components of inventory are listed
below.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
--------- ------------
<S> <C> <C>
Raw material $216,453 $238,101
Work in process 57,908 13,893
Finished products 1,190 2,014
-------- --------
Total $275,551 $254,008
======== ========
</TABLE>
Net Loss Per Share
Net loss per share is based on the weighted average number of common
shares outstanding during the period, including, for all periods presented,
shares and Common Stock equivalents issued during the twelve months immediately
preceding the effective date (June 30, 1993) of the Company's initial public
offering of its Common Stock. Common Stock equivalents issued and outstanding
prior or subsequent to such twelve month period have not been included since
their effect would be anti-dilutive.
In accordance with APB Opinion No. 15, supplemental loss per share data is
presented for comparability purposes. The following loss per share is
calculated excluding the effects of Common Stock equivalents issued during the
twelve months immediately preceding the effective date of the Company's initial
public offering of its Common Stock:
<TABLE>
<CAPTION>
PERIOD FROM
JULY 17, 1989
(DATE OF
THREE MONTHS ENDED MARCH 31, INCEPTION) TO
---------------------------- MARCH 31,
1996 1995 1996
--------- ------- -------------
<S> <C> <C> <C>
Net loss per share $(0.09) $(0.19) $(4.07)
======= ======= =======
</TABLE>
Use of Estimates
In accordance with FASB Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, the Company
records impairment losses on long-lived assets used in operations when events
and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amounts of those assets. Based on the Company's estimate of
future undiscounted cash flows, the Company expects to recover the carrying
amounts of its
Page 7
<PAGE> 8
fixed assets. Nonetheless, it is reasonably possible that the estimate of
undiscounted cash flows may change in the near term resulting in the need to
write-down those assets to fair value. During the three months ended March 31,
1996, the Company recorded a write-off of obsolete equipment with a net book
value of $7,891 which has been included in marketing, general and
administrative expenses.
Page 8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Since its inception, the Company has been a development stage company
primarily engaged in developing rechargeable zinc-air battery technology,
establishing the manufacturing process, defining and developing market
opportunities, testing and selling rechargeable zinc-air batteries and
recruiting and training personnel. During 1995, the Company began shipping two
customized zinc-air accessory batteries designed for computer original
equipment manufacturers ("OEMs"); the AER Energy PowerPro(TM), a zinc- air
battery designed for certain 1995 models of Toshiba portable computers, and the
AER Energy PowerSlice LX(TM), a zinc-air battery designed for the
Hewlett-Packard OmniBook 600 portable computer. The Company has recorded
limited revenue from the sales of these products for the three month period
ended March 31, 1996. The Company has incurred cumulative losses of $39.9
million since inception to March 31, 1996. The Company expects to continue to
incur operating losses through at least the end of 1996.
The Company was formed to develop and commercialize rechargeable zinc-air
batteries for portable electronic products using technology licensed from
Dreisbach Electromotive, Inc. ("DEMI"). DEMI was formed in 1982 to conduct
research and development on electric vehicles and battery systems utilizing,
among others, zinc-air technology. DEMI's zinc-air development programs
included applications for electric vehicles and portable products. The Company
has licensed, through DEMI (the "DEMI License"), the rights to use certain DEMI
technology including zinc-air, in non-motor vehicle applications, while DEMI
has retained the rights to zinc-air technology for motor vehicle applications
and to its other technologies for motor vehicle applications and batteries
producing over 500 watts continuous power output. Effective October 15, 1993,
the DEMI License was amended so that, under certain circumstances, some or all
of the royalties due under the DEMI License are payable to the shareholders of
DEMI rather than to DEMI.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1996 and 1995
The Company generated net revenues of $15,000 for the three months ended
March 31, 1996, compared to $29,000 for the three months ended March 31, 1995.
The Company's cost of sales for the three months ended March 31, 1996 was
$554,000 as compared to $542,000 for the three months ended March 31, 1995.
The high cost of sales is primarily due to the manufacturing inefficiencies and
high material costs resulting from low production volumes.
Page 9
<PAGE> 10
Research and development expenses decreased to $656,000 for the three
months ended March 31, 1996, from $1,799,000 for the same period in 1995. This
decrease was primarily due to a $1,023,000 reduction in material, design and
tooling costs, an $83,000 reduction in personnel costs, and a $13,000 reduction
in travel costs. The higher costs in 1995 were due to the development of the
AER Energy PowerPro and the AER Energy PowerSlice LX batteries. The Company
also experienced an $18,000 reduction in legal costs pertaining to patent
activity for the three months ended March 31, 1996 as compared to the same
period during 1995.
Marketing, general and administrative expenses decreased to $791,000 for
the three months ended March 31, 1996 from $1,234,000 for the same period in
1995. This decrease was largely due to a $173,000 reduction in marketing,
advertising and public relations costs, a $143,000 reduction in professional
fees and expenses and investor relations expenses, a $56,000 reduction in
consulting fees, a $32,000 reduction in amortization expense, a $30,000
reduction in bad debt expense and a $25,000 reduction in the minimum royalty
expense pursuant to the DEMI License. The Company also experienced a $19,000
reduction in the write-off of obsolete inventory and a $12,000 reduction in
travel related expenses. These reductions in marketing, general and
administrative expenses for the three months ended March 31, 1996 as compared
to the same period in 1995 were partially offset by a $28,000 increase in
warranty expense and an $18,000 filing fee for the listing of additional shares
on the Nasdaq Stock Market in connection with the Company's issuance of
convertible debentures.
In accordance with FASB Statement No. 121, Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, the Company
records impairment losses on long-lived assets used in operations when events
and circumstances indicate that the assets might be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
the carrying amounts of those assets. Based on the Company's estimate of
future undiscounted cash flows, the Company expects to recover the carrying
amounts of its fixed assets. Nonetheless, it is reasonably possible that the
estimate of undiscounted cash flows may change in the near term resulting in
the need to write-down those assets to fair value. During the three months
ended March 31, 1996, the Company recorded a write-off of obsolete equipment
with a net book value of $7,891 which has been included in marketing, general
and administrative expenses.
LIQUIDITY, CAPITAL RESOURCES AND FINANCIAL CONDITION
As of March 31, 1996, the Company had cash and cash equivalents of $14.5
million. The Company anticipates using these funds as needed to fund capital
equipment purchases, research and development efforts, sales and marketing
activities, production of commercial and prototype zinc-air battery products,
development of OEM relationships, working capital and general corporate
purposes as determined by management. In the interim, the Company invests any
excess funds in government securities and other short-term, investment grade,
interest-bearing instruments.
Page 10
<PAGE> 11
Net cash used in operating activities decreased to $1.8 million for the
three months ended March 31, 1996 from $3.0 million for the same period in
1995, primarily due to the decreases in costs and expenses discussed above in
"Results of Operations".
For the three months ended March 31, 1996, the Company used net cash of
$43,000 for equipment purchases as compared to $146,000 for equipment purchases
and leasehold improvements for the same period in 1995.
In January 1996, the restricted period for conversion of the $10,675,000
principal 8% convertible debentures issued by the Company in November 1995
expired. During the three months ended March 31, 1996, $8.8 million in
principal of these debentures plus accrued interest were converted into
5,006,003 shares of the Company's common stock at an average conversion price
of $1.76 per share.
Pursuant to the DEMI License, the Company has agreed to pay DEMI royalties
of 4% of net sales, subject to certain minimum amounts and to possible
increases or decreases to a maximum of 4% and a minimum of 2%, as specified in
the DEMI License. Starting in July 1994, the percentage of royalties dropped
to 3% of net sales but may return to 4% in the event certain patents are
obtained by DEMI. The Company recorded royalty expense for the three month
periods ended March 31, 1996 and 1995 of $50,000 and $75,000, respectively.
Minimum royalty expenses are included in marketing, general and administrative
expenses in the statements of operations. Actual royalties due as a percentage
of sales under the DEMI License are recorded in cost of sales. As of March 31,
1996 and December 31, 1995, $10,000 and $70,000, respectively, of these royalty
payments remained unpaid. The future minimum royalty payments specified by the
DEMI License consist of the following:
Year Ending December 31,
1996............................................ $ 150,000
1997............................................ 100,000
1998............................................ 100,000
1999............................................ 50,000
On March 1, 1996, the Compensation Committee of the Company's Board of
Directors approved a plan to reprice certain options to purchase shares of
common stock granted to employees pursuant to the 1992 Stock Option Plan.
Options originally priced from $4.63 to $8.00 per share were repriced at $3.19
per share, the closing market price of the common stock on March 22, 1996.
Each of the repriced options, whether or not vested, may not be exercised for a
period of one year ending February 28, 1997. At March 31, 1996, options to
purchase a total of 795,000 shares of common stock were repriced, of which
71,000 were fully vested prior to repricing.
The Company currently anticipates that its existing cash balances will
fund operations and continue technology development at the current level of
activity into 1997. However, it may be necessary for the Company to increase
its research and development and marketing expenses
Page 11
<PAGE> 12
as it continues to work to improve its zinc-air technology and to expand its
relationships with portable computer OEMs. It may also be necessary for the
Company to expand its manufacturing capacity in late 1996 in order to meet
anticipated 1997 sales requirements. The Company will continue to need working
capital beyond that generated by its recent debenture placement, and depending
on the Company's results of operations, the Company may find it necessary to
obtain additional working capital on an accelerated basis or in amounts greater
than currently anticipated. There can be no assurance that additional equity
or debt financing will be available when needed or on terms acceptable to the
Company. To date, both costs and development times have substantially exceeded
the Company's forecasts. In addition, the battery business is a chemical
processing business and, as such, the Company will require specialized
equipment to manufacture its zinc-air batteries. Future equipment additions
could exceed current Company estimates in cost, complexity and development
time.
The market price of the Company's common stock has fluctuated
significantly since it began to be publicly traded on July 1, 1993 and may
continue to be highly volatile. Factors such as delays by the Company in
achieving development goals, inability of the Company to commercialize or
manufacture its products, fluctuation in the Company's operating results,
changes in earning estimates by analysts, announcements of technological
innovations or new products by the Company or its competitors, perceived
changes in the markets for various OEM applications incorporating the
Company's products, the announcement or termination of relationships with OEMs,
and general market conditions may cause significant fluctuations in the market
price of the Company's common stock. The market prices of the stock of many
high technology companies have fluctuated substantially, often unrelated to the
operating or research and development performance of the specific companies.
Such market fluctuations could adversely affect the market price for the
Company's common stock.
Page 12
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS:
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------------------------------
11 Statement of Computation of Earnings per Share.
27 Financial Data Schedule (for SEC use only).
(B) REPORTS ON FORM 8-K:
The registrant did not file any reports on Form 8-K during the three
months ended March 31, 1996.
Page 13
<PAGE> 14
SIGNATURES
Pursuant to the requirements 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.
AER ENERGY RESOURCES, INC.
Date: May 13, 1996 By: /s/ David W. Dorheim
-----------------------------------
David W. Dorheim, President and
Chief Executive Officer
Date: May 13, 1996 By: /s/ M. Beth Donley
-----------------------------------
M. Beth Donley, Vice President,
Chief Financial Officer, Secretary
and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
Page 14
<PAGE> 15
INDEX TO EXHIBITS
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
- ------- ----------- -------------
11 Statement of Computation of Earnings per Share. 16
27 Financial Data Schedule (for SEC use only).
Page 15
<PAGE> 1
EXHIBIT 11
AER ENERGY RESOURCES, INC.
(A DEVELOPMENT STAGE COMPANY)
COMPUTATION OF EARNINGS PER SHARE (UNAUDITED)
<TABLE>
PERIOD FROM
JULY 17, 1989
THREE MONTHS ENDED (DATE OF
MARCH 31, INCEPTION) TO
-------------------------- MARCH 31,
1996 1995 1996
------------ ----------- --------------
<S> <C> <C> <C>
Weighted average
Common Stock
outstanding......... 19,303,197 17,226,580 9,803,244
Common Stock issued
and stock options
granted in
accordance with SAB
No. 83.............. -- -- 1,635,652
------------ ----------- -------------
Total............... 19,303,197 17,226,580 11,438,896
============ =========== =============
Net loss............ $ (1,751,103) $(3,330,870) $ (39,884,861)
============ =========== =============
Per share amount.... $ (0.09) $ (0.19) $ (3.49)
============ =========== =============
</TABLE>
Page 16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AER ENERGY
RESOURCES, INC.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 14,548,794
<SECURITIES> 0
<RECEIVABLES> 12,955
<ALLOWANCES> 631
<INVENTORY> 275,551
<CURRENT-ASSETS> 153,856
<PP&E> 3,577,055
<DEPRECIATION> 1,627,678
<TOTAL-ASSETS> 16,956,743
<CURRENT-LIABILITIES> 474,160
<BONDS> 0
0
0
<COMMON> 55,911,706
<OTHER-SE> 684,403
<TOTAL-LIABILITY-AND-EQUITY> 16,956,743
<SALES> 14,728
<TOTAL-REVENUES> 14,728
<CGS> 553,672
<TOTAL-COSTS> 553,672
<OTHER-EXPENSES> 1,447,533
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,751,103)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,751,103)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,751,103)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
</TABLE>
