<PAGE> 1
===============================================================================
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x Quarterly report pursuant to Section 13 or 15(d) of the Securities
----- Exchange Act of 1934.
For the quarterly period ended March 31, 1997.
----- 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)
Delaware 52-1579474
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
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 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 .
--- ---
As of April 30, 1997, the Registrant has outstanding 20,737,702 shares of Common
Stock, par value $.01.
===============================================================================
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FUISZ TECHNOLOGIES LTD. AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1997 1996
-------------- ----------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,336 $ 5,282
Marketable securities 52,978 55,218
Accounts receivable 1,984 1,997
Other current assets 610 250
-------------- ----------------
Total current assets 56,908 62,747
Buildings 1,030 -
Furniture, fixtures & equipment, net 5,631 4,958
Patents, net 113 116
Other assets 1,465 1,262
-------------- ----------------
Total assets $ 65,147 $ 69,083
============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of capital lease obligations $ 10 $ 12
Accounts payable 1,384 2,470
Accrued liabilities and other 765 1,039
Deferred revenue 1,180 1,371
-------------- ----------------
Total current liabilities 3,339 4,892
-------------- ----------------
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 20,695,529 and 20,684,529
shares at March 31, 1997 and December 31, 1996, respectively 207 207
Additional paid-in capital 93,440 93,419
Deficit accumulated during the development stage (31,839) (29,435)
-------------- ----------------
Total stockholders' equity 61,808 64,191
-------------- ----------------
Total liabilities and stockholders' equity $ 65,147 $ 69,083
============== ================
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 3
FUISZ TECHNOLOGIES LTD. AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS -- Unaudited
(in thousands)
<TABLE>
<CAPTION>
Cumulative
for the Period
Three Months Ended June 9, 1988
March 31, (Inception) to
---------------------------- March 31,
1997 1996 1997
------------ ----------- ------------------
<S> <C> <C> <C>
Operating revenues:
Research and development $ 1,571 $ 436 $ 7,833
Licensing fees 30 2,225 10,816
Royalties 250 - 742
Other, net - - 285
------------ ----------- ------------
Total operating revenues 1,851 2,661 19,676
------------ ----------- ------------
Operating expenses:
Research and development 3,008 1,334 25,159
General and administrative 1,779 957 27,177
Depreciation and amortization 248 116 2,264
------------ ----------- ------------
Total operating expenses 5,035 2,407 54,600
------------ ----------- ------------
Net operating (loss) income (3,184) 254 (34,924)
------------ ----------- ------------
Other income (expense):
Interest income 780 409 4,454
Interest expense - (3) (661)
------------ ----------- ------------
Total other income (expense) 780 406 3,793
------------ ----------- ------------
Net (loss) income, before cumulative effect of a change in (2,404) 660 (31,131)
accounting
Cumulative effect of change in accounting for patent
application costs - - (708)
------------ ----------- ------------
Net (loss) income $ (2,404) $ 660 $ (31,839)
============ =========== ============
Net (loss) income per common share $ (0.12) $ 0.03
============ ===========
Weighted average common shares and common
share equivalents outstanding 20,694 20,289
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
FUISZ TECHNOLOGIES LTD. AND SUBSIDIARIES
(A Development Stage Enterprise)
CONSOLIDATED STATEMENTS OF CASH FLOWS -- Unaudited
(in thousands)
<TABLE>
<CAPTION>
Cumulative
for the Period
Three Months Ended June 9, 1988
March 31, (Inception) to
------------------------- March 31,
1997 1996 1997
----------- ----------- -------------
<S> <C> <C> <C>
Operating activities:
Net (loss) income $ (2,404) $ 660 $ (31,839)
Adjustments to reconcile net (loss) income to net cash used by operating
activities:
Cumulative effect of change in accounting principle - - 708
Depreciation and amortization 248 116 2,264
Noncash compensation expense - 32 3,949
Loss on disposal of leasehold improvements - - 99
Noncash interest expense - - 314
Increase (decrease) in cash resulting
from changes in working capital items:
Accounts receivable and other currrent assets (347) (143) (2,735)
Accounts payable and other current liabilities (1,551) (242) 2,817
----------- ---------- ------------
Net cash provided by (used by) operating activities (4,054) 423 (24,423)
----------- ---------- ------------
Investing activities:
Decrease (increase) in marketable securities 2,240 (16,476) (52,978)
Additions to property and equipment, net (1,948) (513) (8,422)
Additions to patents - - (765)
Increase in other assets (203) (48) (1,324)
----------- ---------- ------------
Net cash provided by (used by) investing activities 89 (17,037) (63,489)
----------- ---------- ------------
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 - - 68,084
Purchases of treasury stock - - (775)
Proceeds from exercise of stock options 21 - 971
Proceeds from exercise of stock warrants - 130 130
Principal payments under long-term debt (2) (67) (1,075)
----------- ---------- ------------
Net cash provided by financing activities 19 63 89,248
----------- ---------- ------------
Net increase (decrease) in cash and cash equivalents (3,946) (16,551) 1,336
Cash and cash equivalents, beginning of period 5,282 22,554 -
----------- ---------- ------------
Cash and cash equivalents, end of period 1,336 6,003 1,336
Marketable securities, end of period 52,978 26,643 52,978
----------- ---------- ------------
Cash, cash equivalents and marketable securities, end of period $ 54,314 $ 32,646 $ 54,314
=========== ========== ============
</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 have been primarily 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 March 31, 1997 and for the three months ended March
31, 1997 and 1996, 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, 1996, included in the Company's 1996
Form 10-K.
Earnings (loss) 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 (loss) per share has not
been made because the differences are insignificant.
2. RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings Per Share" ("Statement 128"), which specifies the
computation, presentation, and disclosure requirements for earnings per share.
Statement 128 is effective for financial statements ending after December 15,
1997. The Company does not believe the adoption of Statement 128 will have a
material effect on the financial statements.
-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 1996 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 technologies for a wide range of 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 near
term, primarily due to the continuation of its research and development
activities and the start-up of its manufacturing operations. From its inception
in 1988 through December 31, 1996, the Company has incurred net losses in each
year, including net losses of approximately $6.8 million during the year ended
December 31, 1996 and a net loss of approximately $2.4 million during the fiscal
quarter ended March 31, 1997. These losses have resulted in an accumulated
deficit of approximately $29.4 million at December 31, 1996 and $31.8 million at
March 31, 1997.
RESULTS OF OPERATIONS
Operating revenues were $1,851,000 for the quarter ended March 31,
1997, compared to $2,661,000 for the quarter ended March 31, 1996. The decrease
is primarily due to non-recurring license fees recognized during the 1996 first
quarter and not in the corresponding 1997 period. This decrease was partially
offset by an increase in development fees due to the Company's additional
development agreements.
Research and development expenses were $3,008,000 for the quarter ended
March 31, 1997, compared to $1,334,000 for the quarter ended March 31, 1996.
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 $1,779,000 for the quarter
ended March 31, 1997, compared to $957,000 for the quarter ended March 31,
1996. The increases were primarily due to increases in personnel and expanded
administrative activities.
Net interest income was $780,000 for the quarter ended March 31, 1997,
compared to net interest income of $406,000 for the quarter ended March 31,
1996. The increases in net interest income were primarily due to funds
generated from a second registered public offering (the "Secondary Offering")
of the Company's common stock in April 1996 which were available for investment
in 1997.
-6-
<PAGE> 7
As a result of the foregoing, the net loss was $2,404,000 for the
quarter ended March 31, 1997, compared to net income of $660,000 for the quarter
ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
Until December 1995, the Company financed its operations primarily
through private sales of its equity securities, issuances of convertible debt,
and license and development fees. On December 20, 1995, the Company completed
its initial public offering of 4,125,000 shares of common stock (the "IPO") at a
price of $8.00 per share. The Company received net proceeds from the IPO of
approximately $30.2 million. On May 3, 1996, the Company completed a registered
public offering of 3,900,000 shares of common stock (the "Secondary Offering")
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. The Company received
net proceeds from the Secondary Offering of approximately $35.8 million.
As of March 31, 1997, the Company's portfolio of cash and marketable
securities totaled $54.3 million, compared to $60.5 million as of December 31,
1996. Major uses of cash during the three months ended March 31, 1997, included
$3.0 million of research and development expenses, $1.0 million for the purchase
of an administrative office facility in Dublin, Ireland and $900,000 for the
purchase of furniture, fixtures and equipment.
On April 9, 1997, the Company's Fuisz International Holdings Limited
("FIHL") subsidiary completed an acquisition of 100% of the outstanding common
stock of Laboratories Murat, a pharmaceutical sales and distribution company
based in Paris, France. This acquisition did not trigger the disclosure
requirements for a significant subsidiary acquisition. During the next several
years, the Company will periodically evaluate additional acquisitions of
businesses, products and technologies that extend or enhance the Company's
current business and line of products.
During the next several years, the Company expects to commit a
significant amount of its cash flow to capital expenditures and for research and
development activities at both its present Virginia facilities and its new
international facilities in Ireland. The Company estimates that capital
expenditures totaling approximately $18-20 million will be required in 1997.
Such expenditures will be used to continue to upgrade and significantly expand
its research facilities to comply with pharmaceutical Good Manufacturing
Practices ("GMP") standards. Such expenditures will also include the continued
development of GMP pilot-scale and production-scale tablet production lines and
a pilot-scale GMP facility for producing and coating microspheres. These
research and production facilities will be used in connection with the Company's
OTC and controlled release activities. In addition, the Company expects to
utilize capital expenditures to develop a production-scale facility for
producing food products incorporating the Company's technology.
The Company expects to continue to incur substantial expenses related
to further research and development of its technologies and products, increased
staffing levels, acquisition and support of patent rights, additional capital
equipment for research and development activities and facility expansion.
-7-
<PAGE> 8
In November 1996, the Company's Board of Directors authorized a stock
repurchase program under which the Company is authorized to repurchase up to
1,000,000 shares of the Company's common stock for reissuance upon the exercise
of employee stock options and for other compensation programs utilizing the
Company's stock.
The Company expects to incur additional losses in the near term. The Company
expects that, at least for the near term, its revenues will be derived
principally from development and 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 and internally generated cash flow will be
adequate to meet the Company's cash needs through fiscal year 1998. 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, and 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 remainder of 1997, 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 $6.8 million during the year ended
December 31, 1996 and a net loss of approximately $2.4 million during the fiscal
quarter ended March 31, 1997. These losses have resulted in an accumulated
deficit of $29.4 million at December 31, 1996 and $31.8 million at March 31,
1997. The Company expects to incur additional losses in the near term. 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.
-8-
<PAGE> 9
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 March 31, 1997 of
approximately $19.7 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.
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. 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.
-9-
<PAGE> 10
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
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.
-10-
<PAGE> 11
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 56 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.
PART II
OTHER INFORMATION
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 results of
operations. See the Company's Form 10-Q for the quarter ended March 31, 1996 for
additional detail.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
-11-
<PAGE> 12
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
Current report on Form 8-K, dated April 25, 1997,
regarding Acquisition of Laboratories Murat and
Appointment of Kenneth W. McVey as President and
Chief Executive Officer.
-12-
<PAGE> 13
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.
FUISZ TECHNOLOGIES LTD.
Date: By: /S/ Patrick D. Scrivens
------------------- -----------------------------
Patrick D. Scrivens
Executive Vice President and
Chief Financial Officer
Date: By: /S/ Lars G. Okeson
------------------- -----------------------------
Lars G. Okeson
Controller
(Principal Accounting Officer)
-13-
<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
----------------------------------
QUARTER ENDED MARCH 31,
----------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Net income (loss) $ (2,404) $ 660
============ ============
Weighted average common shares
outstanding 20,694 18,069
Add shares issuable from assumed - 2,220
exercise of options and warrants
------------ ------------
Total weighted average shares 20,694 20,289
============ ============
Net income (loss) per common share $ (0.12) $ 0.03
============ ============
</TABLE>
<TABLE>
<CAPTION>
FULLY DILUTED (1)
----------------------------------
QUARTER ENDED MARCH 31,
----------------------------------
1997 1996
------------ ------------
<S> <C> <C>
Net income (loss) $ (2,404) $ 660
============ ============
Weighted average common shares
outstanding 20,694 18,069
Add shares issuable from assumed - 2,421
exercise of options and warrants
------------ ------------
Total weighted average shares 20,694 20,490
============ ============
Net income (loss) per common share $ (0.12) $ 0.03
============ ============
</TABLE>
(1) Earnings per common and common equivalent share as presented on the face of
the consolidated 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 consolidated statements of operations
because the differences are insignificant.
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,336,000
<SECURITIES> 52,978,000
<RECEIVABLES> 1,984,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 56,908,000
<PP&E> 8,759,000
<DEPRECIATION> (2,098,000)
<TOTAL-ASSETS> 65,147,000
<CURRENT-LIABILITIES> 3,339,000
<BONDS> 0
0
0
<COMMON> 207,000
<OTHER-SE> 61,601,000
<TOTAL-LIABILITY-AND-EQUITY> 65,147,000
<SALES> 0
<TOTAL-REVENUES> 1,851,000
<CGS> 0
<TOTAL-COSTS> 5,035,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,404,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,404,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,404,000)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
