<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number: 0-21130
ENERGY BIOSYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 04-3078857
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
4200 Research Forest Drive
The Woodlands, Texas 77381
(Address of principal executive offices) (zip code)
(713) 364-6100
(Registrant's telephone number, including area code)
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
----- -----
As of August 1, 1996 there were outstanding 11,318,210 shares of Common Stock,
par value $.01 per share, of the registrant.
1
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ENERGY BIOSYSTEMS CORPORATION
Form 10-Q for the Quarter Ended June 30, 1996
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
--------------------- ----
<S> <C>
Item 1. Financial Statements 3
Balance Sheets as of June 30, 1996
(Unaudited) and December 31, 1995 4
Statements of Operations for the Three and Six
Months Ended June 30, 1996 and 1995
(Unaudited) 5
Statements of Cash Flows for the Six
Months Ended June 30, 1996 and 1995
(Unaudited) 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
PART II. OTHER INFORMATION
-----------------
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
- ----------
</TABLE>
2
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
Part I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following unaudited financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Company believes that the disclosures made herein are adequate to make the
information presented not misleading. These financial statements should be read
in conjunction with the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995.
The information presented in the accompanying financial statements is
unaudited, but in the opinion of management, reflects all adjustments (which
include only normal recurring adjustments) necessary to present fairly such
information.
3
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ENERGY BIOSYSTEMS CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
ASSETS ------------ ------------
------ (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,351,827 $ 6,172,400
Short term investments 8,442,424 10,431,444
Prepaid expenses and other current assets 547,459 687,530
------------ ------------
Total current assets $ 13,341,710 $ 17,291,374
Long term investments 1,989,917 2,492,874
Notes receivable 26,401 45,633
Furniture, equipment and leasehold improvements, net 3,227,128 3,322,609
Intangible and other assets, net 729,217 656,961
------------ ------------
Total assets $ 19,314,373 $ 23,809,451
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current liabilities:
Accounts payable $ 299,175 $ 494,307
Accrued liabilities 1,052 97,227
Current portion of deferred revenue 760,500 1,314,000
Current portion of obligations under capital lease 7,657 7,256
Note payable 164,564 294,713
------------ ------------
Total current liabilities $ 1,232,948 $ 2,207,503
------------ ------------
Long term liabilities:
Capital lease obligations 7,700 11,632
Deferred revenue -- 13,500
------------ ------------
Total long term liabilities $ 7,700 $ 25,132
------------ ------------
Stockholders' equity:
Series A Convertible Preferred Stock, $0.01 par value
(liquidation value $24,000,000; 508,800 shares
authorized, 480,000 shares issued and
outstanding) 23,128,199 22,968,152
Common Stock, $0.01 par value (30,000,000 shares
authorized, 11,309,355 and 10,584,269 issued
and outstanding, respectively) 113,094 105,843
Additional paid-in capital 31,056,936 29,823,343
Accumulated deficit (36,224,504) (31,320,522)
------------ ------------
Total stockholders' equity $ 18,073,725 $ 21,576,816
------------ ------------
Total liabilities and stockholders' equity $ 19,314,373 $ 23,809,451
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
REVENUES:
Sponsored research revenues $ 381,035 $ 445,221 $ 881,507 $ 728,721
Interest and investment income 223,472 372,351 476,042 735,229
----------- ----------- ----------- -----------
Total revenues 604,507 817,572 1,357,549 1,463,950
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Research and development 1,839,293 1,617,635 3,855,062 3,418,655
General and administrative 705,246 708,959 1,326,471 1,533,816
----------- ----------- ----------- -----------
Total costs and expenses 2,544,539 2,326,594 5,181,533 4,952,471
----------- ----------- ----------- -----------
NET LOSS $(1,940,032) $(1,509,022) (3,823,984) $(3,488,521)
----------- ----------- ----------- -----------
NET LOSS PER COMMON SHARE $ (0.23) $ (0.21) $ (0.46) $ (0.47)
=========== =========== =========== ===========
SHARES USED IN COMPUTING NET
LOSS PER COMMON SHARE 11,239,483 10,176,995 11,117,242 10,101,444
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(3,823,984) $(3,488,521)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 530,460 437,846
Compensation expense related to stock options and
stock issued for services rendered -- 62,500
Changes in assets and liabilities:
Decrease (increase) in trading securities 2,952,105 (10,269,404)
Decrease in prepaid expenses and other
current assets 140,071 156,915
Increase in intangible and other assets
and notes receivable (60,044) (173,164)
Decrease in accounts payable and
accrued liabilities (291,305) (481,791)
Decrease in deferred revenues (567,000) (567,000)
----------- -----------
Net cash used in operating activities (1,119,697) (14,322,619)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (427,959) (1,235,565)
Net purchase of investments (460,128) (7,746,550)
----------- -----------
Net cash provided (used) in investing activities (888,087) (8,982,115)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on capital lease obligations (3,531) (5,811)
Payment on notes payable (206,349) (225,842)
Issuance of notes payable 76,200 85,522
Issuance of stock, net 320,891 94,281
----------- -----------
Net cash provided by financing activities 187,211 (51,850)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (1,820,573) (23,356,584)
CASH AND CASH EQUIVALENTS AT BEGINNING OF
PERIOD 6,172,400 28,283,809
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,351,827 $ 4,927,225
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(Unaudited)
Note 1. - Basis of Presentation and Significant Accounting Policies
Energy BioSystems Corporation (the "Company"), formerly Environmental
BioScience Corporation, was incorporated in the State of Delaware on December
20, 1989. Since inception, the Company has devoted substantially all of its
efforts to research and development. The Company's revenues consist of
sponsored research revenues and interest income. Management of the Company
anticipates continued operating losses for at least the next several years. The
accompanying unaudited interim financial statements reflect all adjustments
which, in the opinion of management, are necessary for a fair presentation of
the results for the interim periods presented. These financial statements
should be read in conjunction with the Company's Annual Report on Form 10-K, as
filed with the Securities and Exchange Commission, for the fiscal year ended
December 31, 1995.
Net Loss Per Common Share
Net loss per share has been computed by dividing the net loss, which has been
increased for periodic accretion and accrued dividends on the Series A
Convertible Preferred Stock issued in October 1994, by the weighted average
number of shares of common stock outstanding during the period. In all
applicable periods, common stock equivalents were antidilutive and, accordingly,
were not included in the computation.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the reported amounts of expenses during the reporting
period. Actual results could differ from those estimates.
Note 2. - Series A Convertible Preferred Stock
In October 1994, the Company offered and sold 480,000 shares of Series A
Convertible Preferred Stock ("Preferred Stock") at $50.00 per share in a private
placement. The net proceeds from the offering were approximately $22.2 million.
The placement agents for the Preferred Stock received warrants to purchase an
aggregate of 28,800 shares of Preferred Stock at an exercise price of $50.00 per
share of Preferred Stock in addition to customary commissions.
Dividends on the Preferred Stock are cumulative and payable semi-annually
from October 27, 1994, at an annual rate equal to $4.00 per share if paid in
cash and $4.50 per share if paid in common stock. During the second quarter of
1996, the Company paid $1,080,000 in dividends by issuing 153,907 shares of
common stock. The shares of Preferred Stock are convertible into shares of the
Company's common stock at the option
7
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
of the holder at a conversion price equal to $8.25 per share of common stock,
subject to adjustment in certain circumstances. The Preferred Stock, if not
redeemed earlier, must be redeemed on November 7, 1999 at the redemption price.
The redemption price, which is equal to $50.00 per share plus accrued and unpaid
dividends, may be paid in shares of common stock or cash or in a combination of
common stock and cash, at the Company's option. It is the Company's intent,
however, to redeem the Preferred Stock for common stock. Accordingly, the
Preferred Stock is included in stockholders' equity.
The carrying amount of the Preferred Stock is increased for accrued and
unpaid dividends plus periodic accretion, using the effective interest method,
such that the carrying amount will equal the redemption amount on November 7,
1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Overview
Since its inception in December 1989, the Company has devoted substantially
all resources to its research and development. To date, all of the Company's
revenues have resulted from interest income and sponsored research payments from
collaborative agreements. The Company has incurred cumulative net losses since
inception and expects to incur substantial losses for at least the next several
years, due primarily to the increase in its research and development activities
and acceleration of the development of its biocatalyst, fermentation and
bioreactor programs. The Company expects that losses will fluctuate from
quarter to quarter and that such fluctuations may be substantial. As of June
30, 1996, the Company's accumulated deficit was $36,224,504.
Results of Operations
The Company had total revenues for the six months ended June 30, 1996 and
1995 of $1,357,549 and $1,463,950, respectively. The decrease resulted primarily
from a decrease in interest and investment income, partially offset by an
increase in sponsored research revenues. The Company had sponsored research
revenues of $881,507 during the first six months of 1996 as compared to $728,721
during the first six months of 1995. The Company recognized revenues of $567,000
under its research collaboration agreement with Petrolite Corporation
("Petrolite") for each of the six month periods ended June 30, 1996 and 1995.
Payments under the Petrolite agreement were initiated on April 1, 1992 and the
final payment was received in March 1994. Revenue attributable to the Petrolite
agreement, however, is recognized ratably over the period for which research and
development costs are to be incurred under the terms of the agreement. As of
June 30, 1996, an aggregate of $580,500 of the payments received under the
Petrolite agreement was classified as deferred revenue and will be recognized as
revenue in future periods. The Company recognized sponsored research revenues
from the National Institute of Standards and Technology ("NIST") grant of
$164,507 and $161,721, respectively, for the six months ended June 30, 1996 and
1995. In the six months ended June 30, 1996 the Company received the increase
resulted from the Company's receipt of sponsored research revenue of $150,000
from an agreement with Carbide/Graphite Group, Inc. ("Carbide/Graphite") during
the first six months of 1996.
8
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
Interest and other investment income and other revenues decreased by $259,187
for the first six months of 1996 compared to the first six months of 1995
primarily as a result of the decrease in the available cash from which interest
and investment income and capital gains are generated.
The Company had total revenues for the three months ended June 30, 1996 and
1995 of $604,507 and $817,572, respectively. The Company had sponsored research
revenues of $381,035 during the second quarter of 1996 as compared to $445,221
during the second quarter of 1995. The decrease in sponsored research revenues
of $64,186 for the second quarter of 1996 compared to the second quarter of 1995
is attributable to the decrease difference in capital expenditures reimbursable
expenses from a National Institutes of Science and Technology ("NIST") grant.
The Company had interest and other investment income decrease by $148,879 for
the three months ended June 30, 1996 compare to the second quarter of 1995 as a
result of the decrease in available cash from which interest and other
investment incomes are generated.
The Company had research and development expenses for the three months ended
June 30, 1996 and 1995 of $1,839,293 and $1,617,635, respectively, and for the
six months ended June 30, 1996 and 1995 of $3,855,062 and $3,418,655,
respectively. The increase in research and development expenses of $221,658 and
$436,407, respectively for the three and six months ended June 30, 1996 as
compared to the corresponding prior year periods resulted primarily from the
addition of 16 research and development personnel and laboratory expansion. The
Company expects its research and development expenses to increase during the
remainder of 1996, reflecting increased expenditures related to hiring
additional personnel and an approximate 4,500 square foot expansion of the
Company's laboratory facilities completed at the end of the first quarter of
1996.
The Company had general and administrative expenses for the three months
ended June 30, 1996 and 1995 of $705,246 and $708,959, respectively, and for the
six months ended June 30, 1996 and 1995 of $1,326,471 and $1,533,816,
respectively. The decreases of $3,713 and $207,345, respectively for the three
months and six months ended June 30, 1996 as compared to the corresponding prior
year periods resulted primarily from a decrease in professional fees related to
the adoption of the stock rights plan in the prior year. The Company expects a
slight increase in its general and administrative expenses during the remainder
of 1996 in support of its expanded research activities and corporate development
activities.
Liquidity and Capital Resources
The Company completed its initial public offering in March 1993 resulting in
net cash proceeds of approximately $14.9 million. In October 1994 the Company
privately placed 480,000 shares of its Series A Convertible Preferred Stock
resulting in net cash proceeds of approximately $22.2 million. Dividends on the
Preferred Stock are cumulative from the date of the initial closing, October 27,
1994, and are payable in cash or common stock of the Company, or a combination
thereof, at an annual rate equal to $4.00 per share if paid in cash and $4.50
per share if paid in common stock. The shares of Preferred Stock are convertible
into shares of the Company's common stock at the option of the holder at a
conversion price equal to $8.25 per share of common stock, subject to adjustment
in
9
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
certain circumstances. During the second quarter of 1996 the Company paid
$1,080,000 in dividends by issuing 153,907 shares of common stock.
Prior to its initial public offering, the Company had financed its operations
through private placements of equity securities, revenues from collaborative
research agreements and interest income earned on the net proceeds from these
private placements.
For the six months ended June 30, 1996, the Company used $4,071,802 of net
cash in operating activities (excluding the net sales and purchases of trading
securities), incurred $888,087 in capital expenditures and received $187,211
from financing activities. At June 30, 1996, the Company had cash, cash
equivalents, and short term investments totaling $12,794,251 and working capital
of $12,108,762.
The Company intends to spend approximately $400,000 during the remainder of
1996 for the purchase of laboratory and analytical instrumentation. The Company
also expects to incur substantial additional research and development expenses,
including expenses associated with biocatalyst, fermentation and bioreactor
development. The Company has funding commitments through 1996 requiring the
Company to spend approximately $37,400 under research and development
agreements. The Company also expects its general and administrative expenses to
increase as its adds marketing, sales and other personnel and prepares for the
commercialization of its proprietary biocatalytic desulfurization ("BDS")
technology.
To supplement its research and development budgets, the Company intends to
seek additional collaborative research and development agreements with corporate
partners. In this regard, the Company has entered into collaborative agreements
with The Petrolite Corporation, the Exploration and Production Technology
Division of Texaco, Inc., Total Raffinage Distribution S.A., The M. W. Kellogg
Company, Koch Refining Company and Carbide/Graphite Group, Inc., among others,
as more fully described in the Company's Annual Report on Form 10-K for the year
ended December 31, 1995.
The Company believes that its available cash, investments and interest income
will be adequate to satisfy its funding needs through late 1997 to early 1998.
The Company's future funding requirements will depend on many factors, including
the progress of the Company's research and development, timing of environmental
regulations, the rate of technological advances, determinations as to the
commercial potential of the Company's technology under development, the status
of competitive technology, the establishment of biocatalyst manufacturing
capacity or third-party manufacturing arrangements and the establishment of
collaborative relationships. The Company may seek additional funding through
public or private financings, including equity financings, and through
collaborative arrangements.
Forward Looking Statements
This Form 10-Q includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical facts included in this Form 10-Q are forward-looking
statements. The expectations reflected in the forward-looking statements are
based on the Company's current views
10
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
with respect to future events as well as assumptions made by and information
currently available to management. Important factors that could cause actual
results to differ materially from expectations ("Cautionary Statements") are
disclosed in this Form 10-Q and in the Company's Annual Report on Form 10-K for
the year ended December 31, 1995 (the "Form 10-K"), including without limitation
under the caption "Liquidity and Capital Resources" included in this Form 10-Q
and under the caption "Item 1. Business - Risk Factors" in the Form 10-K". All
subsequent written and oral forward-looking statements attributable to the
Company or persons acting on its behalf are expressly qualified in their
entirety by the Cautionary Statements.
Part II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Proposal 1: The Election of Directors
At the Company's 1996 Annual Meeting of Stockholders held June 5, 1996 the
following individuals were elected as directors to hold office until the next
annual meeting of the stockholders of the Company or until their successors have
been duly elected and qualified.
<TABLE>
<CAPTION>
For Withheld
<S> <C> <C>
William M. Gottwald, M.D. 11,708,468 8,500
Bernard S. Lee, Ph.D. 11,708,468 8,500
Ramon Lopez 11,705,968 11,000
Edward B. Lurier 11,708,468 8,500
Thomas E. Messmore 11,708,468 8,500
Daniel J. Monticello, Ph.D. 11,708,468 8,500
William E. Nasser 11,706,468 10,500
John T. Preston 11,706,468 10,500
John H. Webb 11,705,148 11,820
William D. Young 11,706,368 10,600
Proposal 2: The approval of the appointment of Arthur Andersen LLP
as the Company's independent public accounts for 1996.
For Against Abstain
11,702,068 6,900 8,000
</TABLE>
11
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ENERGY BIOSYSTEMS CORPORATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
10.1 Extension and Assignment of Research Collaboration
Agreement, dated July 3, 1996, between the Company and
Texaco Group, Inc.
11.1 Statement regarding Computation of Per Share Earnings.
27.1 Financial Data Schedule
b. Reports on Form 8-K
None.
12
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ENERGY BIOSYSTEMS CORPORATION
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.
ENERGY BIOSYSTEMS CORPORATION
Date: August 13, 1996 By: /s/ John H. Webb
----------------
John H. Webb
President and Chief Executive Officer
Date: August 13, 1996 By: /s/ Paul G. Brown III
---------------------
Paul G. Brown III
Vice President, Finance and Administration
13
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ENERGY BIOSYSTEMS CORPORATION
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibits Number
- ------- ----------------------- ------
<S> <C> <C>
10.1 Extension and Assignment of Research Collaboration
Agreement, dated July 3, 1996, between the Company
and Texaco Group, Inc. 15
11.1 Statement regarding Computation of Per Share Earnings. 16
27.1 Financial Data Schedule 21
</TABLE>
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
EXHIBIT 10.1
EXTENSION OF
RESEARCH COLLABORATION AGREEMENT
The parties to the Research Collaboration Agreement dated July 8, 1993,
Energy Biosystems Corporation and Texaco Group Inc. (by assignment from Texaco
Inc.), hereby agree to extend this Agreement for one year until July 8, 1997
under the same terms and conditions.
ENERGY BIOSYSTEMS CORPORATION
By: /s/ MARK W. JOHN
----------------
Name: Mark W. John
Title: Vice President - Sales & Marketing
Date: 07/18/96
TEXACO GROUP INC.
By: /s/ P.L. SIGWARDT
-----------------
Name: P.L. Sigwardt
Title: General Manager
Date: 07/03/96
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
EXHIBIT 11.1
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
The following schedules reflect the information used in calculating the
number of shares in the computation of net loss per share for each of the
periods set forth in the Statements of Operations.
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
<TABLE>
<CAPTION>
COMPUTATION OF PER SHARE EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
WEIGHTED AVERAGE SHARES OUTSTANDING:
TOTAL # DAYS
SHARES OUTSTANDING
- ------------------------------------------
<S> <C> <C> <C> <C>
10,584,268 x 23 = 243,438,164
11,107,568 x 14 = 155,505,952
11,139,268 x 27 = 300,760,236
11,140,768 x 8 = 89,126,144
11,142,868 x 55 = 612,857,740
11,301,975 x 28 = 316,455,300
11,302,025 x 16 = 180,832,400
11,303,525 x 7 = 79,124,675
11,309,295 x 1 = 11,309,295
11,309,355 x 3 = 33,928,065
-------- ---------------
91 2,023,337,971 / 91= 11,117,242
==========
FOR THE SIX MONTHS ENDED JUNE 30, 1996
LOSS PER SHARE:
Net Loss plus dividend accrual
plus accretion of offering costs ($5,064,031)= ($0.46)
------------ ==========
Weighted Avg. Shares 11,117,242
</TABLE>
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
<TABLE>
<CAPTION>
COMPUTATION OF PER SHARE EARNINGS
FOR THE QUARTER ENDED JUNE 30, 1996
WEIGHTED AVERAGE SHARES OUTSTANDING:
TOTAL # DAYS
SHARES OUTSTANDING
- ------------------------------------
<S> <C> <C> <C> <C>
11,142,868 x 36 = 401,143,248
11,301,975 x 28 = 316,455,300
11,302,025 x 16 = 180,832,400
11,303,525 x 7 = 79,124,675
11,309,295 x 1 = 11,309,295
11,309,355 x 3 = 33,928,065
---------- ------------
90 902,254,710 / 91 = 11,239,483
==========
FOR THE QUARTER ENDED JUNE 30, 1996
LOSS PER SHARE:
Net Loss plus dividend accrual
plus accretion of offering costs ($2,560,952)= ($0.23)
----------- ==========
Weighted Avg. Shares 11,239,483
</TABLE>
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
<TABLE>
<CAPTION>
COMPUTATION OF PER SHARE EARNINGS
FOR THE SIX MONTHS ENDED JUNE 30, 1995
WEIGHTED AVERAGE SHARES OUTSTANDING:
TOTAL # DAYS
SHARES OUTSTANDING
- --------------------------------------
<S> <C> <C> <C> <C>
9,988,409 x 2 = 19,976,818
9,998,409 x 28 = 279,955,452
9,999,404 x 4 = 39,997,616
10,000,604 x 4 = 40,002,416
10,040,604 x 16 = 160,649,664
10,041,604 x 1 = 10,041,604
10,046,604 x 62 = 622,889,448
10,228,645 x 21 = 214,801,545
10,233,645 x 43 = 440,046,735
-------- -------------
181 1,828,361,298 / 91 = 10,101,444
==========
FOR THE SIX MONTHS ENDED JUNE 30, 1995
LOSS PER SHARE:
Net Loss plus dividend accrual
plus accretion of offering costs ($4,720,843)= ($0.47
----------- ==========
Weighted Avg. Shares 10,101,444
</TABLE>
<PAGE>
ENERGY BIOSYSTEMS CORPORATION
<TABLE>
<CAPTION>
COMPUTATION OF PER SHARE EARNINGS
FOR THE THREE MONTHS ENDED JUNE 30, 1995
WEIGHTED AVERAGE SHARES OUTSTANDING:
TOTAL # DAYS
SHARES OUTSTANDING
- --------------------------------------
<S> <C> <C> <C> <C>
10,046,604 x 27 = 271,258,308
10,228,645 x 21 = 214,801,545
10,233,645 x 43 = 440,046,735
-------- ------------
91 926,106,588 / 91 = 10,176,995
==========
FOR THE THREE MONTHS ENDED JUNE 30, 1995
LOSS PER SHARE:
Net Loss plus dividend accrual
plus accretion of offering costs ($2,129,003) = ($0.21)
------------ ==========
Weighted Avg. Shares 10,176,995
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS INCLUDED IN THE REGISTRANTS QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,351,827
<SECURITIES> 10,432,341
<RECEIVABLES> 110,847
<ALLOWANCES> 0
<INVENTORY> 15,144
<CURRENT-ASSETS> 15,331,627
<PP&E> 5,641,802
<DEPRECIATION> 2,414,674
<TOTAL-ASSETS> 19,314,373
<CURRENT-LIABILITIES> 1,232,948
<BONDS> 0
0
23,128,199
<COMMON> 113,094
<OTHER-SE> 31,056,936
<TOTAL-LIABILITY-AND-EQUITY> 19,314,373
<SALES> 0
<TOTAL-REVENUES> 881,507
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 5,181,537
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,823,984)
<INCOME-TAX> 0
<INCOME-CONTINUING> (3,823,984)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,823,984)
<EPS-PRIMARY> (0.46)
<EPS-DILUTED> 0
</TABLE>
