<PAGE> 1
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- ---------- Exchange Act of 1934 For the quarterly period ended September
30, 1996.
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 0-27082
FUISZ TECHNOLOGIES, LTD.
(Exact name of registrant as specified in charter)
<TABLE>
<S> <C>
Delaware 52-1579474
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
</TABLE>
3810 Concorde Parkway, Suite 100
Chantilly, Virginia 20151
(Address of Principal Executive Offices)
Registrant's telephone number including area code: (703) 803-3260
Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Acts 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 .
--- --
As of October 31, 1996, the Registrant has outstanding 20,358,577 shares of
Common Stock, par value $.01.
= = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = = =
<PAGE> 2
FUISZ TECHNOLOGIES LTD.
(A Development Stage Enterprise)
BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 22,554 $ 10,699
Marketable securities 10,167 54,585
Accounts receivable and other 197 611
--------- ---------
Total current assets 32,918 65,895
Property and equipment, net 1,200 4,221
Patents, net 128 119
Other assets 148 595
--------- ---------
Total assets $ 34,394 $ 70,830
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligations $ 58 $ 13
Accounts payable 1,177 1,574
Accrued liabilities and other 718 753
Deferred revenue 527 909
--------- ---------
Total current liabilities 2,480 3,249
--------- ---------
Long-term debt:
Capital lease obligations 12 6
--------- ---------
Total long-term debt 12 6
--------- ---------
Total liabilities 2,492 3,255
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01 per share; authorized 1,000,000
shares; none issued or outstanding - -
Common stock, par value $.01 per share; authorized 50,000,000
shares; issued and outstanding 18,038,987 and 20,282,077 180 203
shares at December 31, 1995 and September 30, 1996, repectively
Additional paid-in capital 54,452 90,909
Deficit accumulated during the development stage (22,629) (23,537)
Deferred compensation on stock options granted (101) -
--------- ---------
Total stockholders' equity 31,902 67,575
--------- ---------
Total liabilities and stockholders' equity $ 34,394 $ 70,830
========= =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
FUISZ TECHNOLOGIES LTD.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
(in thousands)
<TABLE>
<CAPTION>
Cumulative
for the period
THREE MONTHS ENDED NINE MONTHS ENDED June 9, 1988
SEPTEMBER 30, SEPTEMBER 30, (INCEPTION) TO
----------------------- ------------------------- SEPTEMBER 30,
1995 1996 1995 1996 1996
----------- ----------- ----------- ----------- ------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating revenues:
Research and development $ 492 $ 477 $ 1,466 $ 1,648 $ 5,484
Licensing fees - 265 400 4,990 10,016
Royalties - 125 200 167 367
Other, net 22 - 38 24 261
----------- ----------- ----------- ------------ -----------
Total operating revenues 514 867 2,104 6,829 16,128
----------- ----------- ----------- ------------ -----------
Operating expenses:
Research and development 1,190 2,566 3,182 5,850 19,261
General and administrative 947 1,246 2,640 3,528 20,064
Depreciation and amortization 102 166 282 412 1,725
----------- ----------- ----------- ------------ -----------
Total operating expenses 2,239 3,978 6,104 9,790 41,050
----------- ----------- ----------- ------------ -----------
Net operating loss (1,725) (3,111) (4,000) (2,961) (24,922)
----------- ----------- ----------- ------------ -----------
Other income (expense):
Interest income 19 910 113 2,057 2,754
Interest expense (71) (1) (216) (4) (661)
----------- ----------- ----------- ------------ -----------
Total other income (expense) (52) 909 (103) 2,053 2,093
----------- ----------- ----------- ------------ -----------
Net loss, before cumulative effect of a change in
accounting (1,777) (2,202) (4,103) (908) (22,829)
Cumulative effect of change in accounting for patent
application costs - - - - (708)
----------- ----------- ----------- ------------ -----------
Net loss $ (1,777) $ (2,202) $ (4,103) $ (908) $ (23,537)
=========== =========== =========== ============ ===========
Net loss per common share $ (0.18) $ (0.11) $ (0.43) $ (0.05) $ (2.38)
=========== =========== =========== ============ ===========
Weighted average common shares and common
share equivalents outstanding 9,624 20,205 9,624 19,211 9,874
=========== =========== =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
FUISZ TECHNOLOGIES LTD.
STATEMENTS OF CASH FLOWS
(A Development Stage Enterprise)
(in thousands)
<TABLE>
<CAPTION>
CUMULATIVE
FOR THE PERIOD
NINE MONTHS ENDED JUNE 9, 1988
SEPTEMBER 30, (INCEPTION) TO
------------------------- SEPTEMBER 30,
1995 1996 1996
---------- ------------- --------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Operating activities:
Net loss $ (4,103) $ (908) $ (23,537)
Adjustments to reconcile net loss to net
cash used by operating activities:
Cumulative effect of change in accounting principle - - 708
Depreciation and amortization 282 412 1,725
Noncash compensation expense 170 68 1,001
Loss on disposal of leasehold improvements - - 99
Noncash interest expense - - 314
Changes in working capital items:
Decrease (increase) in accounts receivable
and other assets 1 (414) (752)
Increase (decrease) in accounts payable
and other current liabilities 227 761 2,672
--------- --------- --------------
Net cash used by operating activities (3,423) (81) (17,770)
--------- --------- --------------
Investing activities:
Purchases of marketable securities - (44,418) (56,736)
Sales and maturities of marketable securities - - 2,151
Additions to property and equipment, net (283) (3,424) (5,450)
Additions to patents - - (765)
--------- --------- --------------
Net cash used by investing activities (283) (47,842) (60,800)
--------- --------- --------------
Financing activities:
Net proceeds from sale of Preferred Stock - - 17,253
Proceeds from issuance of debt - - 4,660
Net proceeds from sale of Common Stock - 35,823 68,084
Proceeds from exercise of stock options - 613 662
Proceeds from exercise of stock warrants - 130 130
Principal payments under long-term debt (59) (51) (1,066)
Increase in deposits and escrow funds (20) (447) (454)
--------- --------- --------------
Net cash provided by (used by) financing activities (79) 36,068 89,269
--------- --------- --------------
Net increase (decrease) in cash and cash equivalents (3,785) (11,855) 10,699
Cash and cash equivalents, beginning of period 4,288 22,554 -
--------- --------- --------------
Cash and cash equivalents, end of period 503 10,699 10,699
Marketable securities, end of period - 54,585 54,585
--------- --------- --------------
Cash, cash equivalents and marketable securities, end of
period $ 503 $ 65,284 $ 65,284
========= ========= ==============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION
The Company's activities to date principally have been the planning
and organization of the Company, initiation and execution of research and
development programs, and securing capital for growth and operations.
Accordingly, the Company is complying with Statement of Financial Accounting
Standards No. 7, "Accounting and Reporting by Development Stage Enterprises,"
which prescribes requirements in reporting for development stage enterprises.
The information at September 30, 1996 and for the three and nine
months ended September 30, 1996 and 1995 is unaudited, but includes all
adjustments (consisting only of normal recurring adjustments) which the
management of the Company believes necessary for fair presentation of the
results for the periods presented. Interim results are not necessarily
indicative of results for a full year. The financial statements should be read
in conjunction with the audited financial statements for the year ended
December 31, 1995, included in the Company's 1995 Form 10-K.
Earnings per common and common equivalent share as presented on the
face of the statements of operations represent primary earnings per share.
Dual presentation of primary and fully diluted earnings per share has not been
made because the differences are insignificant.
5
<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
NOTICE CONCERNING FORWARD-LOOKING STATEMENTS
This Form 10-Q contains forward-looking statements that involve risks
and uncertainties. The actual future results of Fuisz Technologies, Ltd. may
differ materially due to a number of factors, including those discussed below
under risk factors. These and other factors are more fully discussed in the
Company's 1995 annual report on Form 10-K.
OVERVIEW
Since its inception in June 1988, the Company has been in the
development stage, engaged in the development and commercialization of its
proprietary Shearform Matrix and other technologies for oral drug delivery and
food applications. Substantially all revenues to date have been research and
development fees and license fees. The Company has not been profitable to
date, on a full fiscal year basis, and expects to incur additional losses in
the foreseeable future, primarily due to the continuation of its research and
development activities and the start-up of its production facilities. From its
inception in 1988 through December 31, 1995, the Company has incurred net
losses in each year, including net losses of approximately $3.3 million during
the year ended December 31, 1995. These losses have resulted in an accumulated
deficit of approximately $23.5 million at September 30, 1996.
RESULTS OF OPERATIONS
Operating revenues were $867,000 for the quarter ended September 30,
1996, and $6,829,000 for the nine months ended September 30, 1996, compared to
$514,000 for the quarter ended September 30, 1995 and $2,104,000 for the nine
months ended September 30, 1995. The increases were primarily due to licensing
fees attributable to additional licensing agreements entered into by the
Company.
Research and development expenses were $2,566,000 for the quarter
ended September 30, 1996, and $5,850,000 for the nine months ended September
30, 1996, compared to $1,190,000 for the quarter ended September 30, 1995 and
$3,182,000 for the nine months ended September 30, 1995. The increases were
primarily due to increases in research personnel and facility expansion to
support the Company's additional development and license agreements and the
Company's continued emphasis on developing its technologies.
General and administrative expenses were $1,246,000 for the quarter
ended September 30, 1996, and $3,528,000 for the nine months ended September
30, 1996 compared to $947,000 for the quarter ended September 30, 1995 and
$2,640,000 for the nine months ended September 30, 1995. The increases were
primarily due to increases in personnel and expanded administrative activities.
Net interest income was $909,000 for the quarter ended September 30,
1996, and $2,053,000 for the nine months ended September 30, 1996, compared to
net interest expense of $52,000 for the quarter ended September 30, 1995 and
$103,000 for the nine months ended September 30, 1995. The increases in net
interest income were primarily due to funds generated from the initial public
offering (the "IPO") of the Company's common stock in December 1995 and a
second registered public offering (the "Secondary Offering") of the Company's
6
<PAGE> 7
common stock in April 1996 which were available for investment in 1996.
As a result of the foregoing, the net loss was $2,202,000 for the
quarter ended September 30, 1996, and $908,000 for the nine months ended
September 30, 1996 compared to a net loss of $1,777,000 for the quarter ended
September 30, 1995 and $4,103,000 for the nine months ended September 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
On December 20, 1995, the Company completed its IPO of 4,125,000
shares of common stock at a price of $8.00 per share. The Company received net
proceeds from the IPO of approximately $30.2 million.
In January 1996, the Company received approximately $130,000 from the
exercise of stock warrants.
On May 3, 1996, the Company completed the Secondary Offering of
3,900,000 shares of common stock at a price of $25.00 per share. Of the
3,900,000 shares of common stock offered in the Secondary Offering, 1,125,000
shares were sold by the Company and 2,775,000 shares were sold by certain
selling stockholders. Pursuant to the underwriters' over-allotment option for
the Secondary Offering, on May 9, 1996, the Company sold an additional 368,000
shares of common stock and certain selling stockholders sold an additional
217,000 shares of common stock at a price of $25.00 per share. The Company did
not receive any proceeds from the sale of shares by the selling stockholders,
except for $1.1 million relating to the exercise of 401,550 stock options. The
Company received net proceeds from the Secondary Offering (including the $1.1
million relating to the exercise of stock options and the sale of the
additional shares pursuant to the underwriters' over-allotment option) of
approximately $35.8 million.
During the nine months ended September 30, 1996, the Company received
approximately $ 613,000 from the exercise of stock options.
Prior to the IPO and the Secondary Offering, the Company financed its
operations primarily through private sales of its equity securities, issuances
of convertible debt, and license and development fees. Through September 30,
1996, the Company had received net offering proceeds from private sales of
equity securities and issuance of convertible notes of approximately $24.0
million and had generated license and development fees of approximately $15.5
million.
As of September 30, 1996, the Company's portfolio of cash and
marketable securities totaled $65.3 million. Major uses of cash during the
nine months ended September 30, 1996, included research and development
expenses of $5.8 million and capital expenditures of $3.4 million for property
and equipment.
The Company expects to incur additional losses in the foreseeable
future. The Company expects that, at least for the foreseeable future, its
revenues will be derived principally from development fees, license fees and,
to a lesser extent, royalties from collaborative partners. In addition,
pending disbursement for capital expenditures and working capital, the Company
expects to realize income from the investment of the funds generated in its
public offerings. The Company believes that the currently available funds
7
<PAGE> 8
and internally generated cash flow, will be adequate to meet the Company's cash
needs through fiscal year 1997. The Company's capital needs, however, will
depend on many factors, including continued progress in the research and
development of the Company's technologies, the ability of the Company to
establish and maintain additional collaborative agreements with others and the
terms thereof, payment received from collaborative partners under research and
development agreements, the cost involved in filing and enforcing patent
claims, the status of competitive products and other factors. If the Company's
currently available funds and internally generated cash flow are not sufficient
to satisfy its financing needs, the Company would be required to seek
additional funding through other arrangements with collaborative partners,
through bank borrowings and through public or private sales of its securities,
including equity securities. There can be no assurance that additional funds,
if required, will be available to the Company on favorable terms.
RISK FACTORS
The Company wishes to caution readers that the following important
factors, among others, in some cases have affected, and in the future could
effect, the Company's actual results and could cause the Company's actual
results for the fourth quarter of 1996, and beyond, to differ materially from
those expressed in any forward-looking statements made by, or on behalf of, the
Company.
History Of Operating Losses And Accumulated Deficit
The Company has incurred net losses in each year since its inception,
including net losses of approximately $3.3 million during the year ended
December 31, 1995. These losses have resulted in an accumulated deficit of
$23.5 million at September 30, 1996. The Company expects to incur additional
losses in the foreseeable future. The Company's ability to generate
significant revenue and become profitable will be dependent in large part on
the ability of the Company to enter into additional collaborative agreements
and on the ability of the Company and its collaborators to successfully
commercialize products incorporating the Company's technologies. No assurance
can be given that the Company will ever generate significant revenue or become
profitable.
Products In Development Stage
To date, only the Company's chewing gum flavoring systems have been
incorporated in commercially available consumer products, and the Company has
not realized significant revenues from product sales or royalties. Most of the
Company's potential product applications are in the research or development
stage. The Company's operating revenue from inception through September 30,
1996 of approximately $16.1 million has consisted principally of research and
development fees and license fees. To achieve profitable operations, the
Company, alone or with others, must successfully complete development of its
products, obtain necessary regulatory approvals, complete manufacturing
scale-up and introduce and market its products.
Product Commercialization
A major component of the Company's strategy is to leverage its
proprietary technology to develop and commercialize its own products. Such
products include those that are subject to existing development and license
agreements where the Company has retained co-exclusive manufacturing and
marketing rights to the end-user products. The Company intends initially to
formulate and pursue manufacturing and marketing of OTC and prescription
pharmaceutical products. The development of commercial scale manufacturing
facilities and marketing efforts by the Company will require significant
commitments of capital by the Company. The Company has no manufacturing
experience and has no experience with marketing products commercially. There
can be no assurance that the Company can successfully develop such experience,
or that the Company's products will be accepted in the marketplace.
Commercialization efforts by the Company may compete with activities of the
Company's collaborative partners, most of whom have greater financial resources
than the Company. Moreover, there can be no assurance that the Company's
active pursuit of its own efforts to commercialize products using the Company's
proprietary technology will not otherwise adversely affect the Company's
relations with its existing and potential collaborative partners.
8
<PAGE> 9
Limited Manufacturing Experience; Risk Of Manufacturing Scale-Up
Products incorporating the Company's technology have not been
manufactured by the Company or by its collaborative partners on a commercial
scale, except for the Company's chewing gum flavoring systems which utilizes the
Company's Shearform Matrix technology. The Company currently plans to retain
rights to manufacture commercial quantities of pharmaceutical compounds
processed using the Company's microsphere technology. The Company has no
experience manufacturing products for commercial purposes. The Company is
currently developing the facilities required for such manufacturing activities
and the Company will be required to substantially increase its manufacturing
capabilities. There can be no assurance that the Company or its collaborative
partners will be able to successfully develop commercial-scale manufacturing
facilities and develop or design in a timely manner or at a commercially
reasonable cost the equipment necessary to manufacture products utilizing the
Company's technology. Moreover, in connection with the manufacture of
pharmaceuticals and food ingredient products, the Company and its collaborative
partners will be required to adhere to current Good Manufacturing Practice
("GMP") regulations enforced by the U.S. Food and Drug Administration ("FDA")
through its facilities inspection program. The Company and its collaborative
partners also will be required to comply with manufacturing standards prescribed
by various federal, state and local regulatory agencies in the United States and
other countries. There can be no assurance that manufacturing and control
problems will not arise as the Company or its collaborative partners begin to
scale up manufacturing facilities or that manufacturing can be scaled up in a
timely manner or at a commercially reasonable cost to enable production in
sufficient quantities.
Dependence Upon Collaborative Partners
Although the Company is undertaking development and commercialization
of its own products, an element of the Company's strategy is to enter into
collaborative arrangements with other companies which will market and
manufacture products incorporating the Company's technology. The Company
expects that, at least for the foreseeable future, its revenues will be derived
principally from development fees, license fees and royalties from collaborative
partners. The Company's prospects are, therefore, in part dependent upon the
Company's ability to attract and retain collaborative partners and to develop
technologies and products that meet the requirements of such collaborative
partners. There can be no assurance that the Company's existing or future
collaborative arrangements will result in successful product commercialization.
The Company will also be dependent upon the marketing efforts, manufacturing
capabilities and regulatory approval efforts of its collaborative partners. The
Company anticipates that most licensees will be given the exclusive or
co-exclusive right to market products incorporating the Company's technology for
a particular class of products for a particular territory, and the amount and
timing of resources to be devoted by them to marketing are not within the
control of the Company.
No Assurance Of Product Licenses; Other Risks Associated With Collaborative
Agreements
The Company has entered into development agreements with collaborative
partners for products using the Company's technologies. Pursuant to these
agreements, the Company typically agrees to develop product prototypes for the
collaborative partner's evaluation. In many cases, the Company expects that a
definitive license agreement for the manufacture and marketing of a product or
products will be entered into at the same time as the development agreements
relating to such product. In other cases the collaborative partner may be
9
<PAGE> 10
granted an option to enter into a license agreement at a later date, and, in
such cases, the collaborative partner will not be obligated to enter into a
license agreement with the Company. In any event, a collaborative partner will
generally have the right to abandon a product, and consequently to terminate
funding, at any time and for any reason without penalty. Collaborative
partners will also generally be free to market products using drug delivery or
other technologies that are competitive with those of the Company. A decision
by a collaborative partner to abandon one or more of its products incorporating
the Company's technology or to adopt a competing technology could adversely
affect the Company's financial condition and results of operations. The
Company's license agreements currently in effect generally provide, and it is
expected that future license agreements will provide, for the Company to
receive a payment at the time of execution of the agreement, additional
scheduled payments or payments upon attainment of certain milestones and
royalty payments based on net sales of products by the licensee. The timing
and amount of such payments will fluctuate, and such fluctuations could have a
material adverse effect on the Company's cash position and results of
operations. In addition, royalty rates for licenses of the Company's
technology for OTC products are expected, consistent with industry practices,
to be lower than royalty rates for licenses relating to prescription products.
Patents And Proprietary Rights
The Company's success depends in large part on its ability to obtain
patents, maintain trade secret protection and operate without infringing on the
proprietary rights of third parties. The Company has been granted 42 U.S.
patents and has filed a substantial number of applications for additional U.S.
patents, as well as corresponding patent applications outside the United
States, relating to the Company's technology. There can be no assurance that
any of the pending patent applications will be approved, that the Company will
develop additional proprietary products that are patentable, that any patents
issued to the Company will provide the Company with competitive advantages or
will not be challenged by any third parties or that the patents of others will
not prevent the commercialization of products incorporating the Company's
technology. Furthermore, there can be no assurance that others will not
independently develop similar products, duplicate any of the Company's products
or, if patents are issued to the Company, design around the Company's patents.
Any of the foregoing results could have a material adverse effect on the
Company.
Government Regulation and Product Approval
Manufacturing and sales of products and potential products by the
Company and its collaborative partners may be subject to extensive regulation
by the FDA and by comparable agencies in foreign countries. Although the
nature and extent of regulation varies by type of product, in general, products
must meet standards regarding safety and efficacy, manufacturing practices,
labeling and purity. In addition, certain products must receive FDA approval
prior to marketing. The FDA has extensive enforcement powers, including the
power to withhold approvals of new products, to initiate product recalls, to
seize products, to delay or prevent product sales and to halt operations.
ITEM 1. LEGAL PROCEEDINGS
The Company is currently not a party to any legal proceedings, and
does not know of any threatened legal proceedings, that the Company believes
will have a material adverse effect on the Company's financial position or
10
<PAGE> 11
results of operations. See the Company's Form 10-Q for the quarter ended
March 31, 1996 for description of other litigation.
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
11.1 Statements Regarding Weighted Average Common and
Common Equivalent Shares Used in Computation of
Earnings (Loss) Per Share
27.0 Financial Data Schedule
(b) Reports on Form 8-K
None
11
<PAGE> 12
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.
FUISZ TECHNOLOGIES, LTD.
Date: By: /S/
------------------- -----------------------------
Patrick D. Scrivens
Executive Vice President and
Chief Financial Officer
Date: By: /S/
------------------- -----------------------------
Lars G. Okeson
Controller
(Principal Accounting Officer)
12
<PAGE> 1
Exhibit 11.1
Statement Regarding Weighted Average Common and Common Equivalent
Shares Used in Computation of Earnings (Loss) Per Share
<TABLE>
<CAPTION>
Primary
------------------------------------------------------------------------------------------
Cumulative
for the Period
Quarter Ended September 30, Nine Months Ended September 30, June 30, 1988
---------------------------- ------------------------------- (inception)
1995 1996 1995 1996 to September 30, 1996
------------- ------------ ------------ ------------ ---------------------
<S> <C> <C> <C> <C> <C>
Net loss $ (1,777) $ (2,202) $ (4,103) $ (908) $ (23,537)
========== =========== =========== =========== ===========
Weighted average common shares
outstanding 8,794 20,205 8,794 19,211 9,145
Add shares issuable upon the exercise
of outstanding options and warrants
issued within one year of initial
public offering 830 - 830 - 729
---------- ----------- ----------- ----------- -----------
Total weighted average shares 9,624 20,205 9,624 19,211 9,874
========== =========== =========== =========== ==========
Net loss per common share $ (0.18) $ (0.11) $ (0.43) $ (0.05) $ (2.38)
========== =========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
Fully Diluted (1)
------------------------------------------------------------------------------------------
Cumulative
for the Period
Quarter Ended September 30, Nine Months Ended September 30, June 30, 1988
---------------------------- ------------------------------- (inception)
1995 1996 1995 1996 to September 30, 1996
------------- ------------ ------------ ------------ ---------------------
<S> <C> <C> <C> <C> <C>
Net loss $ (1,777) $ (2,202) $ (4,103) $ (908) $ (23,537)
=========== =========== =========== =========== =============
Weighted average common shares
outstanding 8,794 20,205 8,794 19,211 9,145
Add shares issuable upon the exercise
of outstanding options and warrants
issued within one year of initial
public offering 830 - 830 - 729
----------- ----------- ----------- ----------- -----------
Total weighted average shares 9,624 20,205 9,624 19,211 9,874
=========== =========== =========== =========== ===========
Net loss per common share $ (0.18) $ (0.11) $ (0.43) $ (0.05) $ (2.38)
=========== =========== ============ =========== ===========
</TABLE>
(1) Earnings per common and common equivalent share as presented on the face of
the statements of operations represent primary earnings per share. Dual
presentation of primary and fully diluted earnings per share has not been
made on the face of the statements of operations because the differences
are insignificant.
All share and per share amounts have been restated to reflect the effects of a
three-for-two split of the outstanding shares of the Company's common stock,
effected in the form of a stock dividend , to be effective as of April 16,
1996 to all holders of record as of April 2, 1996.
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 10,699,000
<SECURITIES> 54,585,000
<RECEIVABLES> 611,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 65,895,000
<PP&E> 5,786,000
<DEPRECIATION> (1,565,000)
<TOTAL-ASSETS> 70,830,000
<CURRENT-LIABILITIES> 3,249,000
<BONDS> 0
0
0
<COMMON> 203,000
<OTHER-SE> 67,372,000
<TOTAL-LIABILITY-AND-EQUITY> 70,830,000
<SALES> 0
<TOTAL-REVENUES> 867,000
<CGS> 0
<TOTAL-COSTS> 3,978,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
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