<PAGE>
FORM 1O-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(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, 1997
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 0-19732
-------
CORVAS INTERNATIONAL, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 33-0238812
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3030 SCIENCE PARK ROAD
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices and zip code)
(619) 455-9800
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001 par value
(Title of class)
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
--- ---
At May 1, 1997, there were 13,830,432 shares of Common Stock, $0.001 par
value, of the Registrant issued and outstanding.
<PAGE>
CORVAS INTERNATIONAL, INC.
INDEX
Page
----
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
Condensed Balance Sheets as of March 31, 1997 and
December 31, 1996 1
Condensed Statements of Operations for the Three Months
Ended March 31, 1997 and 1996 2
Condensed Statements of Cash Flows for the Three Months
Ended March 31, 1997 and 1996 3
Notes to Condensed Financial Statements 4
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
Item 3 Quantitative and Qualitative Disclosures About Market Risk 7
PART II OTHER INFORMATION
Item 1 Legal Proceedings 8
Item 2 Changes in Securities 8
None
Item 3 Defaults Upon Senior Securities 8
None
Item 4 Submission of Matters to a Vote of Security Holders 8
None
Item 5 Other Information 8
None
Item 6 Exhibits and Reports on Form 8-K
(a) Exhibits 8
(b) Reports on Form 8-K 8
None
SIGNATURES 9
<PAGE>
PART I -- FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CORVAS INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
(unaudited)
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents $ 393 $ 2,202
Short-term debt securities held to maturity
and time deposits, partially restricted 28,245 26,394
Receivables 1,212 438
Notes receivable from related parties 200 200
Other current assets 876 312
--------- ---------
Total current assets 30,926 29,546
Property and equipment, net 1,109 1,093
--------- ---------
$ 32,035 $ 30,639
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 269 $ 358
Accrued expenses 847 713
Accrued vacation 212 194
Current portion of capital lease obligation 7 27
Deferred revenue 4,000 4,000
--------- ---------
Total current liabilities 5,335 5,292
--------- ---------
Deferred revenue 0 1,000
Stockholders' equity:
Preferred stock - Series A 1 1
Preferred stock - Series B 0 0
Common stock 14 14
Additional paid-in capital 91,824 91,629
Accumulated deficit (65,139) (67,297)
--------- ---------
Total stockholders' equity 26,700 24,347
Commitments and contingencies
--------- ---------
$ 32,035 $ 30,639
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to condensed financial statements.
1
<PAGE>
CORVAS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
In thousands, except per share amounts (unaudited)
Three Months Ended
March 31,
-------------------------
1997 1996
----------- ----------
REVENUES:
Revenue from collaborative agreements $ 1,075 $ 2,085
License fees & milestones 3,850 0
Net product sales 10 21
Royalties 36 81
----------- ----------
Total revenues 4,971 2,187
----------- ----------
COSTS AND EXPENSES:
Research and development 2,349 2,299
General and administrative 848 793
Cost of products sold 4 24
----------- ----------
Total costs and expenses 3,201 3,116
----------- ----------
Income (loss) from operations 1,770 (929)
----------- ----------
OTHER INCOME:
Interest income, net 388 268
Other income 0 30
----------- ----------
388 298
----------- ----------
Net income (loss) $ 2,158 $ (631)
----------- ----------
----------- ----------
Net income (loss) per common and
common equivalent share - primary $ 0.15 $ (0.05)
----------- ----------
----------- ----------
Shares used in calculation of net income
(loss) per common and common equivalent
share - primary 14,147 11,507
----------- ----------
----------- ----------
Net income (loss) per common and
common equivalent share - fully diluted $ 0.14 $ (0.05)
----------- ----------
----------- ----------
Shares used in calculation of net income
(loss) per common and common equivalent
share - fully diluted 15,397 11,507
----------- ----------
----------- ----------
See accompanying notes to condensed financial statements.
2
<PAGE>
CORVAS INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
IN THOUSANDS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 2,158 $ (631)
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 157 211
Amortization of premiums and discounts on investments (159) 68
Change in assets and liabilities:
(Increase) decrease in receivables (774) 37
Increase in other current assets (564) (236)
Increase (decrease) in accounts payable, accrued
expenses and accrued vacation 63 (298)
Decrease in deferred rent 0 (11)
Decrease in deferred revenue (1,000) (1,115)
--------- ---------
Net cash used in operating activities (119) (1,975)
--------- ---------
Cash flows from investing activities:
Purchases of investments held to maturity (22,677) (15,927)
Proceeds from maturity of investments held to maturity 20,985 3,200
Purchases of property and equipment (173) (164)
Loans to related parties 0 (300)
--------- ---------
Net cash used in investing activities (1,865) (13,191)
--------- ---------
Cash flows from financing activities:
Principal payments under capital lease obligation (20) (19)
Net proceeds from issuance of common stock 195 14,872
--------- ---------
Net cash provided by financing activities 175 14,853
--------- ---------
Net decrease in cash and cash equivalents (1,809) (313)
Cash and cash equivalents at beginning of period 2,202 1,427
--------- ---------
Cash and cash equivalents at end of period $ 393 $ 1,114
--------- ---------
--------- ---------
Supplemental disclosures:
Interest paid $ 0 $ 2
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
CORVAS INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) THE COMPANY
Corvas International, Inc. (the "Company") was incorporated on March 27,
1987 under the laws of the State of California. In July 1993, the Company
reincorporated in the State of Delaware. The Company is engaged in the design
and development of a new generation of therapeutic agents for the prevention and
treatment of major cardiovascular, inflammatory and other diseases.
(2) BASIS OF PRESENTATION
The interim financial information contained herein is unaudited but, in
management's opinion, includes all adjustments, consisting only of normal
recurring adjustments, necessary for a fair presentation. The financial
statements should be read in conjunction with the Company's audited financial
statements and notes thereto for the year ended December 31, 1996.
Results for the interim periods are not necessarily indicative of results
for other interim periods or for the full year.
(3) NET INCOME (LOSS) PER SHARE
Primary net income (loss) per share is computed using the weighted average
common stock outstanding during the period and common stock assumed to be
outstanding to reflect the dilutive nature of common stock equivalents. Common
stock equivalents have been calculated under the treasury stock method and are
not included in the per share calculations where the effect of their inclusion
would be anti-dilutive. Fully diluted net income (loss) per share additionally
assumes the conversion of preferred stock to common stock unless the effect of
the conversion would be anti-dilutive.
4
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING
DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
PROJECTED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT COULD CAUSE OR
CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED
IN THIS SECTION AND THOSE DISCUSSED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K.
OVERVIEW
Formed in 1987, Corvas International, Inc. (the "Company") is a
biopharmaceutical firm engaged in the design and development of a new generation
of therapeutic agents for the prevention and treatment of major cardiovascular,
inflammatory and other diseases. To date, the Company has not generated
significant revenues from product sales. The Company has not been profitable on
an annual basis since inception and expects to incur substantial additional
operating losses on an annual basis over the next several years as the Company
attempts to sustain, and possibly expand, its research and development and
clinical trial efforts. No assurance can be given that the Company will
generate sufficient revenues to become profitable on a sustained basis or at
all. At March 31, 1997, the Company had an accumulated deficit of $65,139,000.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Operating revenues increased from $2,187,000 in the quarter ended
March 31, 1996 to $4,971,000 in the corresponding quarter of 1997. The major
factor contributing to this increase was the payment of a $3,000,000 milestone
by Schering Corporation ("Schering-Plough") upon selection of a clinical
development candidate pursuant to the companies' strategic alliance agreement
for the prevention and treatment of chronic cardiovascular disorders. In
addition, license fees of $850,000 and collaborative revenues of $75,000 were
recognized pursuant to the Company's license and development agreement recently
executed with Pfizer Inc. ("Pfizer") to collaborate on the development of
neutrophil inhibitory factor ("NIF"), an anti-inflammatory agent.
Total costs and expenses incurred in the first quarter increased
slightly, from $3,116,000 in 1996 to $3,201,000 in 1997. Both research and
development and general and administrative expenditures increased approximately
$50,000 over the comparable period one year earlier. Increases in legal fees
and headcount were the primary contributing factors.
Comparing the first quarters of 1996 and 1997, total other income
increased from $298,000 to $388,000. Increased interest income resulting from
higher cash and investment balances accounted for this change.
Differences in the timing and composition of revenues earned and
expenses incurred may contribute to quarter-to-quarter variations in operating
results. The net income reported for the quarter ended March 31, 1997 is not
indicative of results expected in future quarters or years. Subject to the
availability of additional capital, the Company expects all expenses to increase
over the next several years as the Company's research and development programs
progress. Interest income in future periods will depend primarily on the level
of the Company's investments and the rates of return obtained on such
investments.
5
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Since inception, the Company's operations have been funded primarily
through public offerings and private placements of equity securities, revenues
from collaborative agreements, license fees, milestone payments and research
grants, and interest income earned on cash and investment balances. The
Company's principal sources of liquidity are its cash and cash equivalents, time
deposits and debt securities which, net of a restricted time deposit, totaled
$28,578,000 as of March 31, 1997. Working capital at March 31, 1997 was
$25,591,000. Available cash is invested in accordance with an investment policy
set by the Board of Directors, which has objectives to preserve principal,
maintain adequate liquidity and maximize income. The policy provides guidelines
concerning the quality, term and liquidity of investments. The Company
presently invests its excess cash in U.S. government securities.
Strategic collaborations with Schering-Plough and Pfizer provide for
payments to the Company if and when certain milestones are met. However, there
can be no assurance that any of these milestones will be achieved. A
development compound has been selected by Schering-Plough in the thrombin
inhibitor program which triggered a $3,000,000 milestone payment; the next
milestone in this program, if achieved, is $1,000,000 to be paid upon filing by
Schering-Plough of an Investigational New Drug Application or its equivalent for
initiating clinical trials in the U.S. or any corresponding foreign application,
registration or certification. The next milestone in the collaboration with
Pfizer, if achieved, is to be a $1,000,000 payment for NIF upon notification to
a regulatory authority, such as the U.S. Food and Drug Administration, of a plan
for clinical trials. In addition to these and certain other
contractually-required payments, the Company may also receive capital resources
through additional milestone payments and royalties on sales of products in
connection with its alliances. However, there can be no assurance that the
Company will successfully develop and commercialize such products or that the
Company will receive any additional amounts under these or future alliances.
The Company expects to incur substantial additional costs in the
foreseeable future, including costs related to sustaining, and possibly
expanding, research and development activities and preclinical and clinical
testing. The Company expects such costs to continue to increase and, as a
result, expects to experience substantial additional operating losses over the
next several years. The Company believes its existing capital resources and
interest earned thereon will satisfy its funding requirements through mid-1999.
The Company's future capital requirements will depend on many factors,
including, but not limited to, the following: continued scientific progress in
its drug discovery programs; the magnitude of these programs; progress of
preclinical testing and clinical trials; the time and costs involved in
obtaining regulatory approvals; the costs involved in filing, prosecuting,
maintaining and enforcing patent claims; competing technological and market
developments; changes in its existing research relationships; the ability of the
Company to establish and to maintain collaborative and licensing agreements; the
cost of manufacturing scale-up; and effectiveness of activities and arrangements
to commercialize existing and potential products. The Company leases its
laboratory and office facilities and certain equipment under operating and
capital leases. The Company expects to acquire additional property and
equipment as research and development activities progress. In addition, the
Company anticipates that it will need to expand its laboratory and office
facilities over the next several years.
6
<PAGE>
The Company's business is subject to significant risks, including, but
not limited to, the risks associated with its research and development efforts,
obtaining and enforcing patents, the lengthy and expensive regulatory approval
process, product reimbursement levels, competition from other products,
dependence on collaborative partners and other third parties, the possibility of
early termination of corporate collaborations, and the availability of capital.
Even if the Company's products appear promising at an early stage of
development, they may not reach the market for a number of reasons, including
the possibility that such potential products will be ineffective or found to be
unsafe during clinical trials, will not receive necessary regulatory approvals,
will be difficult to manufacture on a large scale, will be uneconomical to
market or will be precluded from commercialization by proprietary rights of
third parties.
Uncertainties associated with the duration and expense of preclinical
and clinical testing of any of the Company's products make it difficult to
predict the Company's capital requirements, and unexpected developments and/or
regulatory requirements could greatly increase the cost of development of such
products and affect the timing of anticipated product revenues. Failure by the
Company to obtain regulatory approval for any product will preclude the sale of
such product. In addition, failure by the Company to obtain patent protection
may make certain of its products commercially unattractive.
To continue its product development efforts, the Company must raise
substantial additional funds through public or private sales of securities,
collaborative arrangements or other methods of financing. The Company's ability
to raise additional funds through sales of securities depends in part on
investors' perceptions of the biotechnology industry, in general, and of the
Company, in particular. The market for biotechnology company stocks has
historically been highly volatile and, accordingly, there can be no assurance
that additional funding will be available, or, if available, that it will be
available on acceptable terms. The Company may enter into additional
collaborative relationships to develop and commercialize certain of its
technologies or products. There can be no assurance that the Company will be
able to establish such relationships on satisfactory terms, if at all, or that
agreements with collaborators will successfully reduce the Company's funding
requirements. In addition, the Company has no established bank financing
arrangements, and there can be no assurance that it will be able to establish
such arrangements on satisfactory terms, if at all. If adequate funds are not
available, the Company may be required to significantly delay, scale back or
eliminate one or more of its drug discovery programs or obtain funds through
arrangements with collaborative partners or others that may require the Company
to relinquish rights to certain of its technologies, product candidates or
products that the Company would not otherwise relinquish.
In 1993, the U.S. Patent and Trademark Office (the "USPTO") declared
an interference to determine the priority of invention between a patent for
which some rights are licensed to the Company (the "Licensed Patent") and a
patent application for which rights are held by other parties (the "First Patent
Application"). During the third quarter of 1996, the USPTO added a second
patent application to the proceeding (the "Second Patent Application") and
redeclared the interference. Rights to the Second Patent Application are held
by other parties, at least some of which also hold rights in the First Patent
Application. The subject matter of the patent and these applications is
recombinant tissue factor, which is used by Ortho Diagnostic Systems, Inc.
("Ortho"), a Johnson & Johnson company, to determine the blood clotting
abilities of patients. The Company is contesting the other parties' claims of
prior invention; however, there can be no assurance that the Licensed Patent
will be upheld.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
7
<PAGE>
PART II -- OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
In 1993, the U.S. Patent and Trademark Office (the "USPTO") declared
an interference to determine the priority of invention between a patent for
which some rights are licensed to the Company (the "Licensed Patent") and a
patent application for which rights are held by other parties (the "First Patent
Application"). During the third quarter of 1996, the USPTO added a second
patent application to the proceeding (the "Second Patent Application") and
redeclared the interference. Rights to the Second Patent Application are held
by other parties, at least some of which also hold rights in the First Patent
Application. The subject matter of the patent and these applications is
recombinant tissue factor, which is used by Ortho Diagnostic Systems, Inc.
("Ortho"), a Johnson & Johnson company, to determine the blood clotting
abilities of patients. The Company is contesting the other parties' claims of
prior invention; however, there can be no assurance that the Licensed Patent
will be upheld.
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
Exhibit Number Description
-------------- -----------
10.57 Tenth Amendment to Lease
11.1 Statement regarding calculation of net income
(loss) per share
27.1 Financial Data Schedule
b. Reports on Form 8-K
There were no reports on Form 8-K filed for the quarter ended March
31, 1997.
8
<PAGE>
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.
CORVAS INTERNATIONAL, INC.
Date: May 12, 1997 By: /s/ RANDALL E. WOODS
----------------------------------------
Randall E. Woods
President and Chief Executive Officer
Date: May 12, 1997 By: /s/ JOHN E. CRAWFORD
----------------------------------------
John E. Crawford
Executive Vice President
and Chief Financial Officer
9
<PAGE>
TENTH AMENDMENT TO LEASE
This Tenth Amendment to that certain Lease (this "TENTH AMENDMENT") dated
as of the 12th day of May, 1997, between Hub Properties Trust, a Maryland
real estate investment trust ("LANDLORD") and Corvas International, Inc., a
Delaware corporation ("TENANT").
WHEREAS, Hartford Accident and Indemnity Company (the "ORIGINAL
LANDLORD") and Corvas, Inc. (the "ORIGINAL TENANT) entered into a certain
lease dated March 28, 1989 of a portion of the premises located at 3030
Science Park Road, San Diego, California, as amended by certain Lease
Amendments dated March 23, 1990 and May 18, 1990; and
WHEREAS, Corvas International, Inc., a California corporation ("CORVAS")
succeeded to the interests of Original Tenant as set forth in Consent to
Assignment of Lease dated March 13 1991; and
WHEREAS, Original Landlord and Corvas entered into a Third Lease
Amendment dated May 16, 1991; Fourth Lease Amendment dated January 21, 1992;
Fifth Lease Amendment dated April 15, 1992; Sixth Lease Amendment dated July
16, 1992; and Seventh Lease Amendment dated January 18, 1993; and
WHEREAS, Corvas International, Inc., a Delaware corporation ("TENANT")
succeeded to the interests of Corvas as set forth in Consent to Assignment of
Lease dated September 14, 1993; and
WHEREAS, Talcott Realty I Limited Partnership succeeded to the interests
of Original Landlord; and
WHEREAS, Talcott and Tenant entered into an Eighth Lease Amendment dated
July 7, 1995 and a Ninth Lease Amendment dated March 15, 1996; and
WHEREAS, Landlord succeeded to the interests of Talcott as set forth in
Assignment and Assumption of Leases, Contracts and Other Property Interests
dated December 5, 1996; and
WHEREAS, for purposes of this Tenth Amendment, the above-referenced lease
dated March 28, 1989 as amended on March 23, 1990; May 18, 1990; May 16,
1991; January 21, 1992; April 15, 1992; July 16,
<PAGE>
1992; January 18, 1993; July 7, 1995; and March 15, 1996 shall be hereinafter
defined collectively as "the LEASE"; and
WHEREAS, Tenant wishes to exercise its option to extend the term of the
Lease and Landlord is willing to agree to such extension upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and for other
consideration, the receipt and sufficiency of which are hereby mutually
acknowledged, Landlord and Tenant agree that the Lease is hereby amended as
follows:
1. The definition of "Termination Date" as set forth in Section II.E.
of the Lease shall be amended by deleting the date "September 30, 1997"
therefrom and inserting the date of "September 30, 1998" in its place.
2. The definition of "Base Rent" as set forth in Section II.G of the
Lease shall be amended by (i) deleting the phrase "Commencing on October 1,
1996" and inserting the phrase "10/01/96-9/30/97," in its place; and (ii)
inserting the following at the end thereof: "10/01/97-09/30/98, $957,961.00."
3. The definition of "Monthly Installments of Base Rent" as set forth
in Section II.H. of the Lease shall be amended by (i) inserting the following
in front of the number "$76,033.44": "10/01/96-09/30/97," and (ii) inserting
the following at the end thereof: "10/01/97-09/30/98, $79,830.00."
4. The definition of "Landlord's Mailing Address" as set forth in
Section II.M. of the Lease shall be deleted in its entirety and the following
inserted in its place: "c/o M&P Partners Limited Partnership, 400 Centre
Street, Newton, MA 02158 with a copy to Sullivan & Worcester LLP, One Post
Office Square, Boston, MA 02109 Attn: Warren M. Heilbronner, Esq.".
5. Section II.B.1. and Section II.B.2 of the Lease shall be deleted in
their entirety.
6. Section II.F.1. and Section II.F.2 of the Lease shall be deleted in
their entirety and shall be deemed exercised for the purposes of the first
line of Section II.F.3.
<PAGE>
7. Section II.W. (a) of the Lease shall be amended by inserting the
following at the end thereof:
"10/01/96-09/30/97 $30.24;
10/01/97-09/30/98 31.75"
8. Except as herein specifically amended, this Lease is hereby ratified
and confirmed.
IN WITNESS WHEREOF, the parties have hereto executed this Tenth Amendment
the date first above written.
LANDLORD:
HUB PROPERTIES TRUST,
a Maryland real estate investment trust
by: /s/ DAVID J. HEGARTY
------------------------
David J. Hegarty
Its: President
TENANT:
CORVAS INTERNATIONAL, INC.,
a Delaware corporation
By: /s/ JOHN E. CRAWFORD
------------------------
Name: John E. Crawford
Its: Executive Vice President
& Chief Financial Officer
<PAGE>
EXHIBIT 11.1
CORVAS INTERNATIONAL, INC.
STATEMENT REGARDING CALCULATION OF NET INCOME (LOSS) PER SHARE
In thousands, except per share amounts
Three Months Ended
March 31,
-------------------
1997 1996
---- ----
Common and common equivalent shares:
Weighted average shares of common stock 13,817 11,507
Dilutive effect of common stock equivalents 330 0
------- -------
Shares used in calculation of net income (loss) per
common and common equivalent share - primary 14,147 11,507
------- -------
Dilutive effect of conversion of preferred shares 1,250 0
------- -------
Shares used in calculation of net income (loss) per
common and common equivalent share - fully diluted 15,397 11,507
------- -------
Net income (loss) $ 2,158 $ (631)
------- -------
------- -------
Net income (loss) per common and common equivalent
share - primary $ 0.15 $ (0.05)
------- -------
------- -------
Net income (loss) per common and common equivalent
share - fully diluted $ 0.14 $ (0.05)
------- -------
------- -------
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 393
<SECURITIES> 28,245
<RECEIVABLES> 1,412
<ALLOWANCES> 0
<INVENTORY> 85
<CURRENT-ASSETS> 30,926
<PP&E> 4,333
<DEPRECIATION> 3,224
<TOTAL-ASSETS> 32,035
<CURRENT-LIABILITIES> 5,335
<BONDS> 0
0
1
<COMMON> 14
<OTHER-SE> 26,685
<TOTAL-LIABILITY-AND-EQUITY> 32,035
<SALES> 10
<TOTAL-REVENUES> 4,971
<CGS> 4
<TOTAL-COSTS> 3,201
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 2,158
<INCOME-TAX> 0
<INCOME-CONTINUING> 2,158
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,158
<EPS-PRIMARY> .15
<EPS-DILUTED> .14
</TABLE>
