<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
- ----- EXCHANGE ACT OF 1934
For the quarterly period ended September 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 0-28284
INFONAUTICS, INC.
(exact name of registrant as specified in its charter)
Pennsylvania 23-2702366
------------ ----------
(State of other jurisdiction (IRS Employer ID No.)
of incorporation of organization)
900 West Valley Road, Suite 1000, Wayne, Pa 19087
--------------------------------------------------
(Address of principal executive offices)
(610) 971-8840
--------------
(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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at September 30, 1996
----- -----------------------------
Class A Common Stock, no par value 9,386,834
Class B Common Stock, no par value 100,000
1
<PAGE>
INFONAUTICS, INC.
INDEX
Page Number
-----------
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited) as of September 30,
1996 and December 31, 1995 3,4
Consolidated Statements of Operations (unaudited) for the
three months and nine months ended September 30, 1996
and September 30, 1995 5
Consolidated Statements of Cash Flows (unaudited) for the
nine months ended September 30, 1996 and September 30, 1995 6
Notes to Consolidated Financial Statements 7,8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-11
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
2
<PAGE>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
INFONAUTICS, INC.
Consolidated Balance Sheets
(unaudited)
September 30, December 31,
1996 1995
------------ ------------
Assets
Current assets:
Cash and cash equivalents. . . . . . . . . . $ 14,438,936 $ 962,010
Short-term investments 17,533,744 --
Receivables:
Trade. . . . . . . . . . . . . . . . . . 246,540 125,345
Other. . . . . . . . . . . . . . . . . . 65,208 250,000
Prepaid expenses and other assets. . . . . . 419,066 92,210
------------ ------------
Total current assets. . . . . . . . 32,703,494 1,429,565
Property and equipment, net. . . . . . . . . . 1,423,746 816,261
Prepaid and other assets . . . . . . . . . . . 165,116 156,635
Deferred financing costs . . . . . . . . . . . -- 130,000
------------ ------------
Total assets. . . . . . . . . . . . . $ 34,292,356 $ 2,532,461
------------ ------------
------------ ------------
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Note payable - funding agreement . . . . . . $ -- $ 94,245
Accounts payable . . . . . . . . . . . . . . 721,012 756,169
Due to officer . . . . . . . . . . . . . . . -- 48,500
Accrued expenses . . . . . . . . . . . . . . 505,310 1,544,172
Deferred revenue . . . . . . . . . . . . . . 673,702 500,000
------------ ------------
Total current liabilities . . . . . . 1,900,024 2,943,086
Note payable - funding agreement . . . . . . . -- 138,192
------------ ------------
Total liabilities . . . . . . . . . . 1,900,024 3,081,278
------------ ------------
Commitments and contingencies
Shareholders' equity (deficit):
Preferred stock, no par value. . . . . . . . -- --
Class A common stock, no par value; 25,000,000
shares authorized; one vote per share;
9,386,834 and 5,935,748 shares issued and
outstanding at September 30, 1996
and December 31,1995 -- --
Class B common stock, no par value; 100,000
shares authorized, issued and outstanding;
50 votes per share . . . . . . . . . . . -- --
3
<PAGE>
Additional paid-in capital . . . . . . . . . 53,359,836 11,313,997
Deferred compensation. . . . . . . . . . . . (406,250) --
Accumulated deficit. . . . . . . . . . . . . (20,544,316) (11,505,336)
------------ ------------
32,409,270 (191,339)
------------ ------------
Less notes and stock subscription receivables. (16,938) (357,478)
------------ ------------
Total shareholders' equity (deficit). . . . 32,392,332 (548,817)
------------ ------------
Total liabilities and shareholders' equity. $ 34,292,356 $ 2,532,461
------------ ------------
------------ ------------
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
INFONAUTICS, INC.
Consolidated Statements Of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, 1996 September 30, 1996
---------------------------- ----------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues . . . . . . . . . . . . . . . . . $ 315,011 $ 114,772 $ 934,683 $ 267,164
------------- ------------- ------------- -------------
Costs and expenses:
Cost of revenues.. . . . . . . . . . . 174,190 60,255 487,428 140,261
Customer support expenses. . . . . . . 80,373 48,570 216,438 87,128
Development expenses . . . . . . . . . 1,386,972 984,419 3,921,080 2,144,063
Sales and marketing expenses . . . . . 1,495,838 537,687 3,548,589 1,030,202
General and administrative expenses. . 1,033,924 546,504 2,569,824 1,342,096
------------- ------------- ------------- -------------
Total costs and expenses. . . . . . 4,171,297 2,177,435 10,743,359 4,743,750
------------- ------------- ------------- -------------
Loss from operations. . . . . . . . . . . (3,856,286) (2,062,663) (9,808,676) (4,476,586)
Interest and investment
income (expense), net . . . . . . . . 434,726 2,635 769,696 (4,920)
------------- ------------- ------------- -------------
Net loss. . . . . . . . . . . . . $(3,421,560) $(2,060,028) $(9,038,980) $(4,481,506)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net loss per common equivalent share . . . $ (0.36) $ (0.34) $ (1.05) $ (0.74)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Weighted average number of common and
equivalent shares outstanding . . .. . . 9,486,834 6,062,289 8,638,402 6,062,289
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
INFONAUTICS, INC.
Consolidated Statements Of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
--------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net Loss . . . . . . . . . . . . . . . . . . . . . $ (9,038,980) $ (4,481,506)
Adjustments to reconcile net loss to cash provided
by (used in) operating activities:
Depreciation and amortization. . . . . . . . . 375,732 189,036
Amortization of deferred compensation. . . . . 93,750 --
Common stock issued for services -- 99,098
Changes in operating assets & liabilities:
Receivables:
Trade . . . . . . . . . . . . . . . . . . (121,195) (77,443)
Other . . . . . . . . . . . . . . . . . . 184,792 (58,130)
Prepaid expenses and other assets . . . . . (326,856) (134,210)
Prepaid and other assets . . . . . . . . . (8,481) (46,040)
Accounts payable. . . . . . . . . . . . . . (35,157) 13,960
Accrued expenses. . . . . . . . . . . . . . (1,038,862) 368,113
Deferred revenue. . . . . . . . . . . . . . 173,702 (14,000)
------------- -------------
Net cash used in operating activities . (9,741,555) (4,141,122)
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment. . . . . . . . (983,217) (478,091)
Purhase of investments, net . . . . . . . . . . . (17,533,744) --
------------- -------------
Net cash used in investing activities . (18,516,961) (478,091)
------------- -------------
Cash flows from financing activities:
Proceeds from issuance of common stock, net. . . . 42,016,379 6,453,838
Payments under note payable - funding agreement. . (232,437) (4,572)
Proceeds from long-term borrowings and note
payable. . . . . . . . . . . . . . . . . . . . . - 31,000
Repayment of loans to officer. . . . . . . . . . . (48,500) (36,375)
------------- -------------
Net cash provided by financing
activities . . . . . . . . . . . . . 41,735,442 6,443,891
------------- -------------
Net increase in cash and
cash equivalents . . . . . . . . . . 13,476,926 1,824,678
Cash and cash equivalents, beginning of period . . . 962,010 718,364
------------- -------------
Cash and cash equivalents, end of period . . . . . . $ 14,438,936 $ 2,543,042
------------- -------------
------------- -------------
Supplemental disclosure of cash flow information and noncash investing and financing activities:
Cash paid for interest expense . . . . . . . . 58,916 6,654
Noncash items:
Issuance of stock for note and
subscription receivable . . . . . . . . . -- 54,000
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
INFONAUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The unaudited financial statements of Infonautics, Inc. (the "Company")
presented herein have been prepared by the Company, without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission for
quarterly reports on Form 10-Q. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations. The Company believes, however, that the disclosures in
this Report are adequate to make the information presented not misleading. It
is suggested that these financial statements be read in conjunction with the
financial statements for the year ended December 31, 1995 and the notes thereto
included in the Company's Registration Statement on Form S-1 (No. 333-2428).
The financial information in this report reflects, in the opinion of
management, all adjustments of a normal recurring nature necessary to present
fairly the results for the interim period. Quarterly operating results may not
be indicative of results which would be expected for the full year.
2. Private Placement and Initial Public Offering
On February 26, 1996, the Company completed a private placement in which it
issued 1,201,086 shares of Class C Common Stock with proceeds to the Company of
approximately $12.9 million, which is net of approximately $0.8 million of
offering expenses.
In May 1996, the Company completed an initial public offering of 2,250,000
shares of its Class A Common Stock at $14.00 per share. The proceeds to the
Company, net of underwriting discounts, commissions and offering expenses were
approximately $28.7 million.
Concurrent with the closing of the initial public offering, all
outstanding shares of Class C Common Stock were converted into an equal number
shares of Class A Common Stock.
2. Cash and Cash equivalents
Cash equivalents are carried at cost, and consist primarily of highly
liquid money market instruments which approximate fair value.
3. Investments
The Company invests certain of its excess cash in debt instruments of the
U.S. Government, its agencies, and of high quality corporate issuers. All
highly liquid instruments with an original maturity of three months or less
are considered cash equivalents; those with original maturities greater than
three months are considered short-term investments. The Company has adopted
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (FAS 115) and, accordingly, has
classified all investments as available-for-sale.
At September 30, 1996, all investments were short-term and consisted primarily
of corporate debt securities and debt instruments of the U.S. Government and
U.S. Government agencies. At December 31, 1995, the Company did not hold any
short-term or long-term investments. Unrealized holding gains at September 30,
1996 were not significant.
7
<PAGE>
4. Shareholders' Equity
In February 1996, the Board of Directors of the Company authorized the
following, which were subsequently approved by the shareholders in April
1996: (i) an amendment to the Company's Articles of Incorporation, changing
the name of the Company from Infonautics Corporation to Infonautics, Inc.;
(ii) an increase in the number of authorized shares of Class A Common Stock
to 25,000,000; (iii) a 2-for-1 stock split in the form of a stock dividend;
(iv) a 500,000 increase in the number of shares of Class A Common Stock that
may be issued under the 1994 Omnibus Stock option plan and (v) the adoption
of the 1996 Equity Compensation plan, which provides for the issuance of a
maximum of 500,000 shares of Class A Common Stock pursuant to grants of stock
options, stock appreciation rights, restricted stock or performance units.
5. Net Loss Per Common Equivalent
Net loss per common equivalent share is computed based upon the weighted
average number of common shares outstanding during the periods presented.
Pursuant to Securities and Exchange Commission Staff Accounting Bulletin Topic
4-D, all common shares and common equivalent shares issued by the Company
during the twelve-month period prior to the Company's initial public offering
have been included in the calculation as if they were outstanding, using the
treasury stock method, for all periods presented, at the initial public
offering price of $14.00 per share. Outstanding common stock equivalents have
not been included in computation of common equivalent shares for the period
subsequent to the IPO.
6. Revenue Recognition
Through December 31, 1995, all the Company's revenues were derived from
licensing its service to Prodigy. Revenues are recorded at the amount received
from Prodigy, net of Prodigy's fees. Revenues through September 30, 1996
include Prodigy related subscriptions, subscription revenue from the sale of
the Company's services over the Internet and revenue from the licensing of the
Company's core technology, the Electronic Printing Press. Revenues from
subscriptions are recognized in the month the subscription service is provided
for subscriptions to the consumer market.
In the three months ended September 30, 1996, revenue from the sale of the
Company's service over the Internet included sales to the institutional market,
which include schools and libraries. These agreements have up to twelve month
terms. Deferred revenue from these subscription agreements are recorded and
recognized over the term of the contract, beginning with the month the service
is commenced. Costs incurred with the procurement of the subscriptions and the
delivery of the service are expensed as incurred.
License fees are recognized when delivery and services related to the
license agreement are complete. Payments received in advance of providing
services or for a long-term license are deferred until the period such services
are provided.
7. Commitments
The Company leases its facilities and certain other equipment under
operating agreements expiring through 2000. Future noncancelable minimum
payments as of September 30, 1996 under these leases, for each fiscal year
ended December 31 are as follows:
1997 $ 755,000
1998 667,000
1999 385,000
2000 183,000
----------
$1,990,000
----------
----------
8
<PAGE>
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
This Report contains, in addition to historical information, forward
looking statements by the Company with regard to its expectations as to
financial results and other aspects of its business that involve risks and
uncertainties and may constitute forward looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
include statements regarding the Company's accrued and mandatory
contributions to the royalty pool for content providers, changes in the
number of publications available on the services, anticipated increases in
data preparation costs, growth and expansion plans and the sufficiency of the
Company's liquidity and capital. Such statements are based on management's
current expectations and are subject to a number of uncertainties and risks
that could cause actual results to differ materially from those described in
the forward-looking statements. Factors that may cause such a difference
include, but are not limited to, those described under "Risk Factors" in the
Company's Prospectus dated April 29, 1996, issued in connection with the
Company's Registration Statement on Form S-1 (333-2428). Financial
information discussed in this report is rounded to the nearest thosuand.
Results of Operations
Revenues
Revenues were $315,000 for the three months ended September 30, 1996
compared to $115,000 for the three months ended September 30, 1995. For the
nine month period ended September 30, 1996, revenues were $935,000, compared to
$267,000 for the same period a year earlier. During the nine months ended
September 30, 1996, revenue was recognized from the Homework Helper service on
Prodigy, the Electric Library service available on the Internet and, for the
first time, from the licensing of the Company's core technology underlying
Homework Helper and Electric Library, which is known as the Electronic Printing
Press. All 1995 revenue is attributable to subscription and hourly usage fees
of the Homework Helper service on Prodigy, which was introduced by the Company
during the first quarter of 1995.
Revenues in the third quarter were $315,000 compared to $430,000 in the
second quarter 1996. Revenues in the third quarter were primarily from sales
in the consumer market (month to month Electric Library and Homework Helper
subscriptions) and the institutional market(long-term Electric Library
subscriptions). During the third quarter of 1996, Electric Library revenue
increased as the subscriber base grew from 3800, at June 30, 1996, to
approximately 5,900 at September 30, 1996, with over half the increase
occurring in the month of September, the beginning of the school year.
Homework Helper monthly subscribers decreased from approximately 8,300 at June
30, 1996, to 6,900 at September 30, 1996. Additionally, the Company recognized
institutional market revenues from subscriptions with terms up to twelve
months. Revenue from the long-term subscriptions is deferred and recognized
ratably over the term of the agreement, commencing with the month the service
begins.
Deferred revenue increased during the three months ended September 30,
1996 from approximately $500,000 to $674,000 as a result of institutional
market subscriptions described above.
Costs and Expenses
Cost of Revenues. Cost of revenues consists primarily of royalties and
license fees paid to providers of content, hardware and software, as well as
communication costs associated with the delivery of the online services. Cost
of revenues were $174,000 (or 55% of revenues) for the three months ended
September 30, 1996, as compared to $60,000 (or 53% of revenues) for the same
period in 1995. Cost of revenues for the nine months ended September 30, 1996
and 1995 were $487,000 (52% of revenues) and $140,000 (52% of revenues),
respectively. Cost of revenues in the second quarter, 1996 was 46% of revenues
compared to the third quarter cost of revenues which was 55% of revenues.
The increase in cost of revenues in the third quarter is primarily due to
second quarter 1996 revenues from licensing the Electronic Printing Press
which has a greater gross margin than the Company's subscription
services. In addition, in order to attract new content providers and retain
existing ones, the Company began offering content providers the option to
participate in a minimum royalty pool, payable at the end of the contract
period, June 1997. As a result, the Company accrued $25,000 for the three
months ended September 30, 1996 to supplement the royalty pool for those
providers participating in the minimum pool.
Beginning in 1997, and to a lesser extent during the fourth quarter of
1996, the Company expects to reduce its reliance on content aggregators and,
instead, attempt to contract directly with the publishers represented by such
aggregators. It is expected that this will result in changes in the number of
publications available on the services. In addition, the combination of
contracting directly with publishers, and the Company's overall effort to
increase the content available under its Electric Library and Homework Helper
services will result in an increase in data preparation costs, which to date
have not been material. However, although there can be no assurance, the
Company believes that any changes in the number of publications on the
services or the increase in data preparation costs will not have a material
adverse effect on the Company.
9
<PAGE>
Customer Support. Customer support expenses consist primarily of costs
associated with the staffing of professionals responsible for assisting users
with technical and product issues and monitoring customer feedback. Customer
support expenses were $80,000 for the three months ended September 30, 1996
compared to $49,000 for the same period in 1995. For the nine months ended
September 30, 1996 and 1995, customer support expenses were $216,000 and
$87,000, respectively. The increase corresponds with the increase in revenues
as the Company increased staff to support both the Homework Helper and Electric
Library internet consumer and institutional market services.
Development. Development expenses consist primarily of costs associated
with the design, programming, testing, documentation and support of the
Company's new and existing software and services. Development expenses were
$1,387,000 for the three months ended September 30, 1996, as compared to
$984,000 for the same period in 1995. For the nine months ended September 30,
1996 and 1995, development expenses were $3,921,000 and $2,144,000,
respectively. Development expenses for the three and nine months ended
September 30, 1996 were greater than the comparable periods last year due to
the growth of the development staff in order to support increased development
activities, and continued enhancements and improvements to the Company's
service. Development expense in the third quarter of 1996 was $200,000 greater
than the previous quarter, attributable to a full quarter of payroll costs for
staff added in the second quarter.
Sales and Marketing. Sales and marketing costs consist primarily of costs
related to compensation, attendance at conferences and trade shows,
advertising, promotion and other marketing programs. Sales and marketing
expenses were $1,496,000 for the three months ended September 30, 1996, as
compared to $538,000 for the same period in 1995. Sales and marketing expenses
were $3,549,000 for the nine months ended September 30, 1996, as compared to
$1,030,000 for the same period in 1995. The increase was a result of the
continued efforts to increase sales and expand distribution channels.
Promotional marketing programs increased, mainly to support the introduction
of Electric Library, and the number of sales and marketing personnel grew.
The Company anticipates further increasing the size of its sales and marketing
staff and expects to incur significant increased expenditures for promotional
and advertising activities.
General and Administrative. General and administrative expenses consist
primarily of expenses for administration, office operations, finance and
general management activities, including legal, accounting and other
professional fees. General and administrative expenses were $1,034,000 for the
three months ended September 30, 1996, as compared to $547,000 for the same
period in 1995, or an 89% increase. For the nine months ended September 30,
1996 and 1995, general and administrative expenses were $2,570,000 and
$1,342,000, respectively. The increases in general and administrative expense
were due to the expansion of internal staffing, increased costs relating to the
licensing of additional content and the maintenance of existing content, and
increases in professional service fees to support the Company's expanded
operations.
10
<PAGE>
Interest and Investment Income (Expense), net. Interest and investment
income (expense), net consists of interest earned on cash, cash equivalents
and investments, offset by interest expense on equipment financing, debt and
a loan from an officer. Interest income (expense), net increased to $435,000
from less than $3,000 for the three months ended September 30, 1996 compared
to the same period in 1995. Significant increases in interest income
resulted from earnings on the proceeds of the private placement (first
quarter 1996) and initial public offering funds (second quarter 1996). In
addition, during the first quarter of 1996, the Company paid off its loan
from an officer and debt.
Liquidity and Capital Resources
The Company's cash, cash equivalents and short-term investment balance was
$31,973,000 at September 30, 1996, as compared to $962,000 at December 31, 1995.
Net cash used in operations was $9,742,000 for the nine months ended
September 30, 1996, as compared to $4,141,000 used for operations for the
same period in 1995. The increase in net cash used in operations was
primarily attributable to the increased net loss.
Net cash used in investing activities was $18,517,000 for the nine
months ended September 30, 1996, as compared to $478,000 for the same period
in 1995. Investing activities consisted primarily of purchases of investments
and, additionally, purchases of property and equipment.
Net cash provided by financing activities was $41,735,000 for the nine
months ended September 30, 1996, as compared to $6,444,000 for the same
period in 1995. This increase resulted from the sale of Class C Common Stock
in a private placement which generated proceeds of $12.9 million, net of
offering expenses, and the completion of an initial public offering in May
1996 with proceeds totaling $28.7 million.
The Company believes that cash-flow from operations together with existing
cash balances and proceeds from the initial public offering will be sufficient
to meet its working capital requirements for at least the next twelve months.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits & Reports on Form 8-K
(a) Exhibits:
11.1 Computation of net income (loss) per common share for the
three months ended September 30, 1996 and 1995.
(b) Reports on Form 8-K:
None.
12
<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.
INFONAUTICS, INC.
Date: November 13, 1996 /s/ Marvin I. Weinberger
----------------------------
Marvin I. Weinberger
Chief Executive Officer
Date: November 13, 1996 /s/ Ronald A. Berg
----------------------------
Ronald A. Berg
Vice President-Finance and
Administration, Chief Financial Officer
(Principal Financial
and Accounting Officer)
13
<PAGE>
EXHIBIT 11.1
INFONAUTICS, INC.
Computation of Earnings Per Share
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Net loss applicable to
common shares ($3,421,560) ($2,060,028) ($9,038,980) ($4,481,506)
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
Weighted average number
of shares outstanding
during the period 9,486,834 3,963,466 7,705,592 3,963,466
Incremental shares
calculated per
SAB Topic 4:D - 2,098,823 932,810 2,098,823
----------- ----------- ---------- ----------
Total weighted average
number of common and
equivalent shares
outstanding 9,486,834 6,062,289 8,638,402 6,062,289
----------- ---------- ----------- ---------
----------- ---------- ----------- ---------
Net loss per common
equivalent share ($0.36) ($0.34) ($1.05) ($0.74)
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
</TABLE>
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ITEM 1
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 14438936
<SECURITIES> 17533744
<RECEIVABLES> 311748
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 32703494
<PP&E> 2150419
<DEPRECIATION> 726673
<TOTAL-ASSETS> 34292356
<CURRENT-LIABILITIES> 1900024
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 32392332
<TOTAL-LIABILITY-AND-EQUITY> 34292356
<SALES> 934683
<TOTAL-REVENUES> 934683
<CGS> 0
<TOTAL-COSTS> 10743359
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9038980)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9038980)
<EPS-PRIMARY> (1.05)
<EPS-DILUTED> (1.05)
</TABLE>
