U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the 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 0-27436
Titan Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)
Delaware 94-3171940
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
400 Oyster Point, Suite 505, South San Francisco, California 94080
(Address of Principal Executive Offices including zip code)
(415) 244-4990
(Issuer'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 Exchange Act 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 _____
State the number of shares outstanding of each of the issuer's common equity as
of June 30, 1996: 10,766,179 shares of Common Stock outstanding, $.001 par
value.
Transitional Small Business Disclosure Format. Yes ______ No __X___
<PAGE>
Index
Titan Pharmaceuticals, Inc.
<TABLE>
<CAPTION>
Part I. Financial Information Page
----
<S> <C>
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets -
June 30, 1996 and December 31, 1995........................................... 2
Condensed Consolidated Statements of Operations Three months
and six months ended June 30, 1995 and 1996 and period
from commencement of operations (July 25, 1991) to June 30, 1996.............. 3
Condensed Consolidated Statements of Cash Flows Six months
ended June 30, 1995 and 1996 and period from commencement
of operations(July 25, 1991) to June 30, 1996................................. 4
Notes to Condensed Consolidated Financial
Statements - June 30, 1996.................................................... 6
Item 2. Management's Discussion and Analysis
or Plan of Operations......................................................... 9
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K.................................................. 11
SIGNATURES.......................................................................................... 12
</TABLE>
<PAGE>
Part I. Financial Information
TITAN PHARMACEUTICALS, INC.
(a development stage company)
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
------------ ------------
(Unaudited) (Note)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 67,032 $ 947,805
Short-term investments 6,311,501 --
Prepaid expenses and other current assets 78,973 40,071
Receivable from Ansan, Inc. 82,451 57,791
------------ ------------
Total current assets 6,539,957 1,045,667
Furniture and equipment, net 756,980 848,852
Investment in Ansan, Inc. 1,234,337 1,589,826
Deferred stock offering costs 27,483 522,299
Deferred financing costs 119,474 600,183
Other assets 153,452 125,344
------------ ------------
$ 8,831,683 $ 4,732,171
============ ============
Liabilities and Stockholders' Equity (Net Capital Deficiency)
Current liabilities:
Accounts payable $ 781,876 $ 714,896
Notes payable by Ingenex, Inc. - bridge financing -- 1,500,000
Notes payable by Titan Pharmaceuticals, Inc. - bridge financing -- 2,800,000
Accrued legal fees -- 691,368
Accrued sponsored research 59,065 304,202
Other accrued liabilities 357,911 546,057
Current portion of capital lease obligations 245,325 226,709
Current portion of technology financing - Ingenex, Inc. 531,030 494,107
------------ ------------
Total current liabilities 1,975,207 7,277,339
Noncurrent portion of capital lease obligation 619,639 747,142
Noncurrent portion of technology financing 1,014,235 1,289,313
Commitments -- --
Minority interest 1,241,032 1,241,032
Stockholders' Equity (net capital deficiency):
Preferred stock, at amounts paid in -- 18,907,772
Common stock, at amounts paid in 35,513,836 745,476
Additional paid-in capital 6,186,353 6,186,353
Deferred compensation (374,000) (418,000)
Deficit accumulated during the development stage (37,344,619) (31,244,256)
------------ ------------
Total stockholders' equity (net capital deficiency) 3,981,570 (5,822,655)
------------ ------------
$ 8,831,683 $ 4,732,171
============ ============
</TABLE>
Note: The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See Notes to Condensed Consolidated Financial Statements
-2-
<PAGE>
TITAN PHARMACEUTICALS, INC.
(a development stage company)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Incorporation
Three Months Ended June 30, Six Months Ended June 30, (July 25, 1991) to
1995 1996 1995 1996 June 30, 1996
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Grant revenue $ 89,881 $ -- $ 89,881 $ 49,705 $ 189,227
Costs and expenses:
Research and development 1,579,896 1,522,090 3,544,459 2,349,988 24,363,609
Acquired in-process research and development -- -- -- -- 686,000
General and administrative 1,453,808 1,054,793 2,130,920 1,975,986 8,540,368
------------ ------------ ------------ ------------ ------------
Total costs and expenses 3,033,704 2,576,883 5,675,379 4,325,974 33,589,977
------------ ------------ ------------ ------------ ------------
Loss from operations (2,943,823) (2,576,883) (5,585,498) (4,276,269) (33,400,750)
Other income (expense):
Equity in loss of Ansan, Inc. -- (176,813) -- (355,489) (812,603)
Interest income 17,483 263,326 34,010 339,748 794,506
Interest expense (211,665) (195,077) (326,452) (1,818,206) (3,970,544)
------------ ------------ ------------ ------------ ------------
Other expense - net (194,182) (108,564) (292,442) (1,833,947) (3,988,641)
------------ ------------ ------------ ------------ ------------
Loss before minority interest (3,138,005) (2,685,447) (5,877,940) (6,110,216) (37,389,391)
Minority interest in losses of subsidiaries -- -- -- 9,853 44,772
------------ ------------ ------------ ------------ ------------
Net loss $ (3,138,005) $ (2,685,447) $ (5,877,940) $ (6,100,363) $(37,344,619)
============ ============ ============ ============ ============
Net loss per share $ (1.36) $ (0.25) $ (2.55) $ (1.18)
============ ============ ============ ============
Shares used in computation 2,306,355 10,757,940 2,306,355 9,791,050
============ ============ ============ ============
Proforma net loss per share $ (0.42) $ (0.81)
============ ============
Shares used in computing pro forma net
loss per share 7,522,039 7,229,183
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
-3-
<PAGE>
TITAN PHARMACEUTICALS, INC.
(a development stage company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Period from
Commencement
of Operations
Six Months Ended June 30, (July 25, 1991) to
---------------------------------- June 30,
1995 1996 1996
--------------- --------------- -----------------
<S> <C> <C> <C>
Cash flows from operating activities
Net loss $ (5,877,940) $ (6,100,363) $(37,344,619)
Adjustments to reconcile net loss to net cash used
in operating activities
Amortization and depreciation 198,025 222,417 789,142
Loss on disposal of assets 6,212 227 9,174
Accretion of discount
on indebtedness 119,047 1,407,579 2,290,912
Equity in loss of Ansan, Inc. -- 355,489 812,603
Minority interest -- (9,853) (44,772)
Grant of common stock to employee -- -- 250
Issuance of common stock to acquire
minority interest of Theracell, Inc. -- -- 686,000
Changes in operating assets and liabilities:
Prepaid sponsored research 24,413 -- --
Prepaid expenses and other current assets 22,581 (38,902) (78,973)
Receivable - Ansan, Inc. -- (24,660) (82,451)
Other assets 14,323 (28,108) (158,417)
Accounts payable (123,627) 66,980 1,016,066
Accrued legal fees (26,977) (691,368) --
Accrued sponsored research (156,954) (245,137) 158,147
Other accrued liabilities 646,866 (188,146) 749,245
------------ ------------ ------------
Net cash used in operating activities (5,154,031) (5,273,845) (31,197,693)
------------ ------------ ------------
</TABLE>
See Notes to Condensed Consolidated Financial Statements
-4-
<PAGE>
TITAN PHARMACEUTICALS, INC.
(a development stage company)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Period from
Commencement
of Operations
(July 25, 1991) to
Six Months Ended June 30, June 30,
----------------------------------- ------------
1995 1996 1996
------------ ------------ ------------
<S> <C> <C> <C>
Cash flows from investing activities
Purchase of furniture and equipment (7,189) (63,641) (865,964)
Purchases of short-term investments -- (10,261,502) (34,193,995)
Proceeds from sales of short-term investments -- 3,950,000 27,882,493
Effect of deconsolidation of Ansan, Inc. -- -- (135,934)
------------ ------------ ------------
Net cash provided by (used in) investing activities (7,189) (6,375,143) (7,313,400)
------------ ------------ ------------
Cash flows from financing activities
Issuance of common stock -- 16,357,887 16,417,113
Offering costs (361,747) (2,483) (524,782)
Financing costs (96,303) -- (810,248)
Issuance of preferred stock 1,143,794 -- 17,601,443
Proceeds from notes payable -- -- 465,000
Repayment of notes payable -- -- (425,000)
Proceeds from notes and advances
payable to related parties -- -- 2,216,500
Repayment of notes payable to
related parties -- -- (1,016,500)
Proceeds for Ansan bridge financing 1,425,000 -- 1,425,000
Proceeds from Titan and Ingenex bridge financing 1,500,000 -- 5,250,000
Repayment of Titan and Ingenex bridge financing -- (5,250,000) (5,250,000)
Proceeds from capital lease -- -- 658,206
Payments of principal under capital lease obligation (109,016) (108,887) (388,478)
Proceeds from Ingenex, Inc. technology financing 2,000,000 -- 2,000,000
Principal payments on Ingenex, Inc.
technology financing (29,624) (238,155) (454,735)
Increase in minority interest from issuances of
preferred stock by Ingenex, Inc. -- -- 1,241,032
Issuance of common stock by subsidiaries -- 9,853 173,574
------------ ------------ ------------
Net cash provided by financing activities 5,472,104 10,768,215 38,578,125
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents 310,884 (880,773) 67,032
Cash and cash equivalents, beginning of period 1,346,444 947,805 --
------------ ------------ ------------
Cash and cash equivalents, end of period $ 1,657,328 $ 67,032 $ 67,032
============ ============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
-5-
<PAGE>
1. Organization and Summary of Significant Accounting Policies
The Company and its Several Development Stage Subsidiaries
Titan Pharmaceuticals, Inc. (the "Company") was incorporated in
February 1992 in the State of Delaware. It is the holding company for several
development stage biotechnology companies ("the Operating Companies"). The
development stage companies, which rely significantly on third parties to
conduct sponsored research, are Ansan, Inc. ("Ansan"), Ingenex, Inc.
("Ingenex"), Theracell, Inc. ("Theracell"), ProNeura, Inc. ("ProNeura"), and
Ascalon, Inc. ("Ascalon").
Ansan, Inc.
Ansan was incorporated in November 1992 to engage in the development of
novel analogs of butyric acid for the treatment of cancer and other disorders
characterized by abnormal cellular growth and differentiation. It was a
majority-owned consolidated subsidiary until August 1995. In August 1995, Ansan
completed an initial public offering of its securities. Such offering reduced
the Company's ownership in Ansan from approximately 95% to approximately 44%.
From August 1995, the Company has accounted for its investment in Ansan using
the equity method. Concurrent with the Ansan public offering, Ansan granted the
Company a one-year option to purchase up to 400,000 shares of Ansan common stock
with an exercise price of $6.00 per share. In July 1996, Ansan extended the
option through September 8, 1996, in order to allow the Company and Ansan an
opportunity to renegotiate the terms of the option. Should the Company exercise
its option in full, it may again hold a majority interest in Ansan.
Ingenex, Inc.
Ingenex, a majority-owned consolidated subsidiary, was incorporated in
July 1991 and reincorporated in June 1992. It is engaged in the development of
gene-based therapeutics and the discovery of medically important genes for the
treatment of cancer and viral diseases. In June 1996, Ingenex issued 981,818
shares of common stock to the Company converting $5,400,000 of debt to the
Company to equity. At June 30, 1996, the Company owned 81% of Ingenex.
Theracell, Inc.
Theracell was incorporated in November 1992 to engage in the
development of novel treatments for various neurologic disorders through the
transplantation of neural cells and neuron-like cells directly into the brain.
At June 30, 1996, the Company owned 100% of Theracell.
-6-
<PAGE>
ProNeura, Inc.
ProNeura was incorporated in October 1995 to engage in the development
of cost effective, long term treatment solutions to neurological and psychiatric
disorders through an implantive drug delivery system. At June 30, 1996, the
Company owned 79% of ProNeura.
Ascalon, Inc.
Ascalon was incorporated in May 1996 to engage in research and
development of cancer therapeutic vaccines utilizing anti-idiotypic antibody
technology. At June 30, 1996, the Company owned 100% of Ascalon.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended June 30, 1996
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1996. These financials should be read in conjunction with the
audited consolidated financial statements and footnotes thereto included in the
Titan Pharmaceuticals, Inc. annual report on Form 10-KSB for the year ended
December 31, 1995.
Per Share Data
For purposes of computing net share data in the six months ended June
30, 1996, the net loss has been increased by a $5,431,871 deemed dividend (see
Note 2). Except as noted below, per share data is computed using the weighted
average number of common shares outstanding. Common equivalent shares are
excluded from the computation as their effect is antidilutive, except that,
pursuant to the Securities and Exchange Commission ("SEC") Staff Accounting
Bulletins, common and common equivalent shares (stock options, warrants and
preferred stock) issued during the period commencing 12 months prior to the
initial filing of an initial public offering at prices below the assumed public
offering price have been included in the calculation as if they were outstanding
for all periods presented (using the treasury stock method for stock options and
warrants and the if converted method for preferred stock).
Pro forma loss per share has been computed as described above and also
gives effect, pursuant to SEC policy, to common equivalent shares from
convertible preferred stock issued more than 12 months from the proposed initial
public offering that automatically converted upon completion of the Company's
initial public offering (using the if-converted method) from the original date
of issuance.
-7-
<PAGE>
2. Stockholders' Equity
Unit Offering
In January 1996, the Company issued 3,200,000 units at $5.00 per unit
in its initial public offering ("IPO"). Each unit consisted of one share of
common stock and one redeemable Class A warrant. The net proceeds (after
underwriter's discount and expenses, and other costs associated with the IPO)
totaled $13,955,079. At the closing of the offering, all of the Company's
outstanding preferred stock automatically converted into common stock. Each
share of Series A and Series B preferred stock was converted into 1.4310444107
and 1.8993878755 shares of common stock, respectively.
In January 1996, the Company repaid the $3,750,000 principal and
accrued interest of $105,083 related to a bridge financing with a portion of the
proceeds of the IPO. The Company also repaid $1,500,000 of principal and accrued
interest of $87,898 of notes issued by Ingenex in a bridge financing.
In February 1996, the Company issued an additional 480,000 units, at
$5.00 per share, in accordance with the underwriter's over-allotment option. The
net proceeds of the underwriter's over-allotment option totaled $2,160,000.
Deemed Dividend
The holders of Series A and Series B preferred stock received common
stock in January 1996 with an aggregate fair value (at the $5.00 per share value
of the IPO) which exceeded by $5,431,871 the cost of their initial investment of
Series A and Series B preferred stock. This amount has been deemed to be the
equivalent of a preferred stock dividend. The Company recorded the deemed
dividend at the time of the conversion by offsetting charges and credits to
additional paid in capital, without any effect on total stockholders' equity
(net capital deficiency). There was no effect on net loss from the mandatory
conversion. However, the amount did increase the loss applicable to common
stock, in the calculation of net loss per share in the 1996 period.
3. Subsequent Events
On July 3, 1996, Ingenex filed an amendment to a registration statement
for an initial public offering for 1,850,000 shares of its common stock. It is
currently anticipated that the initial public offering price of the common stock
will be between $8.50 and $9.50 per share. The Company has expressed an interest
in purchasing approximately 222,222 of the shares of common stock offered in the
initial public offering. In addition, in consideration of a payment to Ingenex
of $100,000, Ingenex will issue to the Company an option to purchase
approximately an additional 333,333 shares of common stock at an exercise price
per share equal to the initial public offering price and an additional option
and a right of first refusal with respect to future
-8-
<PAGE>
issuances of common stock in order for the Company to maintain ownership of a
majority of the outstanding common stock.
On July 31, 1996, the Company granted options to purchase an aggregate
of 693,135 shares of common stock, at an exercise price of $10.75 per share, to
certain executives of the Company under the 1995 Stock Option Plan ("Plan")
subject to approval by the shareholders of an increase in the number of shares
reserved for issuance under the Plan at the next annual meeting of the
shareholders scheduled for October 18, 1996. As of June 30, 1996, 20,500 shares
remained available for option grants under the Plan.
On July 31, 1996 and August 2, 1996, the Company completed a private
placement of 1,536,000 units, each unit consisting of one share of common stock
and one redeemable Class A warrant, for total gross proceeds of $16,000,000.
After deducting placement agent fees and other expenses of the private
placement, the net proceeds to the Company were $13,867,990.
Item 2. Management's Discussion and Analysis or Plan of Operation
Statements in this report that are not descriptions of historical facts
may be forward-looking statements that are subject to risks and uncertainties.
Actual results could differ materially from those currently anticipated.
Results of Operations
The Company is a development stage company which currently conducts its
operations through five operating companies: Ansan, Inc., Ingenex, Inc.,
Theracell, Inc., ProNeura, Inc. and Ascalon, Inc. (collectively, the "Operating
Companies"). Since its inception, the Company's efforts have been principally
devoted to acquiring licenses and technologies, research and development,
securing patent protection and raising capital. The Company has had no
significant revenue and has incurred an accumulated deficit through June 30,
1996 of approximately $37,345,000. These losses have resulted from expenditures
for research and development and general and administrative activities including
legal and professional activities, and are expected to continue for the
foreseeable future.
There were no revenues for the three months ended June 30, 1996 ("1996
quarter") and approximately $50,000 for the six months ended June 30, 1996
("1996 six months") from an NIH grant. There were approximately $90,000 in
revenues for the three months ended June 30, 1995 ("1995 quarter") and the six
months ended June 30, 1995 ("1995 six months").
Research and development expenses for the 1996 quarter were $1,522,000,
a decrease of $58,000 or 4% from the 1995 quarter. For the 1996 six months,
research and development expenses were $2,350,000 as compared to $3,544,000 for
the 1995 six months, a decrease of 34%. The decrease reflects the
deconsolidation of Ansan, Inc. effective August 1995, the cessation of
operations of Geneic Sciences, Inc. in September 1995 and the completion of
certain sponsored research for Ingenex, Inc. in 1995.
-9-
<PAGE>
General and administrative expenses for the 1996 quarter were
approximately $1,055,000 compared with $1,454,000 for the 1995 quarter, a
decrease of 27%. For the 1996 six months, general and administrative expenses
were $1,976,000 as compared to $2,131,000 for the 1995 six months, a decrease of
7%. The decrease was due primarily to the cessation of operations of Geneic
Sciences, Inc. and a decrease in general and administrative personnel.
As a result of the foregoing expenses, the Company incurred an
operating loss of approximately $2,577,000 during the 1996 quarter compared with
$2,944,000 for the 1995 quarter. For the 1996 six months, the operating loss was
approximately $4,276,000 compared with $5,585,000 for the 1995 six months. The
Company expects to continue to incur substantial research and development costs
in the future as a result of funding (i) ongoing research and development
programs at the Operating Companies, (ii) manufacturing of products for use in
clinical trials, (iii) patent and regulatory related expenses, and (iv)
preclinical and clinical testing of the Operating Companies' products. The
Company also expects that general and administrative costs necessary to support
such research and development activities will increase. The Company will also
seek to identify new technologies for possible in-licensing or acquisition.
Accordingly, the Company expects to incur increasing operating losses for the
foreseeable future.
Other income includes interest income which was approximately $263,000
during the 1996 quarter as compared to $17,000 during the 1995 quarter. For the
1996 six months, interest income was $340,000 compared with $34,000 for the 1995
six months. This was a result of a substantial increase in the amount of cash
from the IPO. Interest expense increased to approximately $1,818,000 during the
1996 six months from $326,000 for the 1995 six months. Approximately $950,000 of
the increase for the 1996 period reflects a non-recurring charge due to the
repayment in January 1996 of notes issued in a bridge financing ("Bridge
Notes"). This non-recurring charge represents the unamortized portion of the
$1,200,000 debt discount and $458,000 of debt issuance costs relating to the
Bridge Notes. Interest expense for the 1996 quarter was approximately $195,000
as compared to $212,000 for the 1995 quarter.
Other income for the 1996 six months also includes approximately
$ 355,000 of losses which reflects the Company's share of Ansan's losses and
$177,000 of loss for the 1996 quarter.
Liquidity and Sources of Capital
In January 1996, the Company completed the IPO which resulted in net
proceeds to the Company of approximately $8,622,000 after payment of
underwriting discounts, a non-accountable expense allowance to the underwriter
and other expenses of the offering and the repayment of the Bridge Notes and
notes issued by Ingenex. In February 1996, the underwriter of the Company's IPO
exercised its overallotment option, resulting in net proceeds to the Company,
after discounts and commissions to the underwriter, of $2,160,000.
Upon completion of the IPO, the Company's previously outstanding shares
of preferred stock were converted automatically into shares of common stock at
adjusted conversion prices
-10-
<PAGE>
per common share less than the public offering price per common share. The
deemed benefit to the preferred stockholders approximated $5,400,000 which
deemed benefit was recorded by offsetting charges and credits to additional
paid-in capital at the time of conversion. There will be no effect on net income
(loss) per share from the mandatory conversion. However, the amount would reduce
the income allocable to common stock, or increase the loss allocable to common
stock, in the calculation of net income (loss) per share in the period of the
conversion.
On July 31 and August 2, 1996, the Company completed a private
placement of its securities which resulted in net proceeds to the Company of
approximately $13,867,990 after payment of placement agent fees and other
expenses of the private placement.
The Company expects to continue to incur substantial additional
operating losses from costs related to continuation and expansion of research
and development, clinical trials, and increased administrative and fund raising
activities over at least the next several years. While the Company believes that
the proceeds of the IPO and the private placement will be sufficient to sustain
its planned operations for the near term, the Company will be required to seek
additional financing to continue its activities beyond the near term, but there
but there can be no assurance that the Company will be able to obtain additional
funds.
-11-
<PAGE>
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 11
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months
ended June 30, 1996.
-12-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TITAN PHARMACEUTICALS, INC.
August 14, 1996 By: /s/Louis R. Bucalo
-------------------------------------
Louis R. Bucalo, President
August 14, 1996 By: /s/Carol Darby
-------------------------------------
Carol Darby, Chief Accounting Officer
-13-
Exhibit 11
<TABLE>
<CAPTION>
TITAN PHARMACEUTICALS, INC.
(a development stage company)
STATEMENT OF COMPUTATION OF NET LOSS PER SHARE
Three Months Ended Six Months Ended
June 30, June 31,
-------------------------------- --------------------------------
1995 1996 1995 1996
------------ ------------ ------------ ------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net loss $ (3,138,005) $ (2,685,447) $ (5,877,940) $ (6,100,363)
Deemed dividend upon
conversion of preferred stock 0 0 -- (5,431,871)
------------ ------------ ------------ ------------
Net loss applicable to
common stock (3,138,005) (2,685,447) (5,877,940) (11,532,234)
============ ============ ============ ============
Weighted average shares of
common stock outstanding 1,408,519 10,757,940 1,408,519 9,791,050
Shares related to Staff Accounting
Bulletin topic 4D:
Stock options and warrants 897,836 -- 897,836 --
============ ============ ============ ============
Shares used in computing net loss 2,306,355 10,757,940 2,306,355 8,824,159
============ ============ ============ ============
Net loss per share $ (1.36) $ (.025) $ (2.25) $ (1.18)
============ ============ ============ ============
Pro Forma
Net Loss applicable to
common stock $ (3,138,005) $ (5,877,940)
============ ============
Calculation of shares outstanding
for computing pro forma net loss
per share:
Shares used used in computing
net loss per share 2,306,355 2,306,355
Adjusted to reflect the effect
of assumed conversion of
preferred stock 5,215,684 4,922,183
------------ ------------
Shares used in computing pro
forma loss per share 7,522,039 7,229,183
============ ============
Pro forma net loss per share $ (0.42) $ (.81)
============ ============
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-END> Jun-30-1996
<CASH> 67,032
<SECURITIES> 6,311,501
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,539,957
<PP&E> 1,450,117
<DEPRECIATION> 693,137
<TOTAL-ASSETS> 8,831,683
<CURRENT-LIABILITIES> 1,975,207
<BONDS> 0
0
0
<COMMON> 35,513,836
<OTHER-SE> (31,532,266)
<TOTAL-LIABILITY-AND-EQUITY> 8,831,683
<SALES> 0
<TOTAL-REVENUES> 49,705
<CGS> 0
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</TABLE>
