<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 MARCH 31, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the transition period from to
----- -----
Commission File Number 0-22686
INTERFILM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4078884
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
110 Greene Street, Suite 601, New York, New York 10012
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (212) 334-5900
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 periods as the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past ninety days.
Yes X No
--- ---
As of May 15, 1996 there were 4,327,500 shares of Common Stock, par value $0.01
per share, outstanding.
Total number of pages: 13
_____________________________________________________________
1
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INTERFILM, INC. AND SUBSIDIARIES
INDEX TO QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
Page
<S> <C>
Index 2
Part I -- Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets as of March 31, 1996 and
December 31, 1995 3
Consolidated Statements of Operations for the Three Months
Ended March 31, 1996 and 1995 4
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-12
Part II -- Other Information
Item 1. Legal Proceedings 12
Items 2 - 6. None 12
Signatures 13
</TABLE>
2
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INTERFILM, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996 AND DECEMBER 31, 1995
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
---- ----
(unaudited)
------------ ------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 113,000 $ 26,000
Short-term investments - 257,000
Prepaid expenses and other assets 63,000 20,000
------------ ------------
TOTAL $ 176,000 $ 303,000
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
LIABILITIES:
Accounts payable and accrued expenses $ 159,000 $ 130,000
Accrued compensation and related expenses 350,000 298,000
Contracts payable (note 4) 252,000 252,000
Notes payable - stockholders 264,000 264,000
Accrued interest 17,000 12,000
------------ ------------
Total liabilities 1,042,000 956,000
------------ ------------
STOCKHOLDERS' DEFICIT:
Preferred stock, $.01 par value, 2,000,000 shares
authorized; none issued or outstanding
Common stock, $.01 par value, 10,000,000 shares
authorized; 4,327,500 issued and outstanding 43,000 43,000
Additional paid-in capital 16,100,000 16,100,000
Accumulated deficit (17,009,000) (16,796,000)
------------ ------------
Total stockholders' deficit (866,000) (653,000)
------------ ------------
TOTAL $ 176,000 $ 303,000
============ ============
</TABLE>
See notes to consolidated financial statements
3
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INTERFILM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1996 and 1995 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
---- ----
<S> <C> <C>
REVENUES:
System sales $ - $ 1,236,000
Other - 7,000
---------- -----------
Total revenues - 1,243,000
---------- -----------
COSTS AND EXPENSES:
Cost of revenues - 935,000
Amortization of cinematic game costs - 1,704,000
Depreciation and Amortization - 93,000
Selling, general and administrative 209,000 945,000
---------- -----------
Total costs and expenses 209,000 3,677,000
---------- -----------
(209,000) (2,434,000)
---------- -----------
OTHER INCOME (EXPENSES):
Interest income 1,000 32,000
interest expense (5,000) (24,000)
Realized gains on sale of short-term inv's. - 33,000
---------- -----------
Total Other Income (Expenses) (4,000) 41,000
---------- -----------
LOSS FROM CONTINUING OPERATIONS
BEFORE PROVISION FOR INCOME TAXES (213,000) (2,393,000)
PROVISION FOR INCOME TAXES - 3,000
---------- -----------
LOSS FROM CONTINUING OPERATIONS (213,000) (2,396,000)
DISCONTINUED OPERATIONS: ---------- -----------
-----------------------
Income (Loss) from discontinued operations - 81,000
---------- -----------
Total loss from discontinued operations - 81,000
---------- -----------
NET LOSS $ (213,000) $(2,315,000)
========== ===========
PER SHARE INFORMATION:
Weighted average shares outstanding 4,327,500 4,327,500
========== ===========
Net (Loss) per share from continuing operations $ (0.05) $ (0.55)
Net (Loss) Income per share from discontinued operations - 0.02
---------- -----------
Net loss per share $ (0.05) $ (0.53)
========== ===========
</TABLE>
See notes to consolidated financial statements
4
<PAGE>
INTERFILM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1996 AND 1995 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (213,000) $ (2,315,000)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation - 66,000
Amortization of deferred compensation - 5,000
Amortization of purchased technology - 27,000
Amortization of cinematic games - 1,704,000
Realized gains on sale of short-term inv's - (33,000)
Short-term investments 257,000 1,699,000
Prepaid expenses and other assets (43,000) (73,000)
Inventories - 766,000
Accounts and notes receivable (179,000)
Accounts payable and accrued liabilities 29,000 246,000
Accrued compensation and related expenses 52,000 -
Accrued interest 5,000 -
Deferred revenue - (111,000)
Net assets of discontinued operations - 39,000
------------ ------------
Net cash provided by (used in) operating activities 87,000 1,841,000
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment - (233,000)
Expenditures for cinematic game costs - (1,756,000)
------------ ------------
Net cash used in investing activities - (1,989,000)
------------ ------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 87,000 (148,000)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 26,000 218,000
------------ ------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD
$ 113,000 $ 70,000
============ ============
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
INTERFILM, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIGNIFICANT ACCOUNTING POLICIES
FINANCIAL STATEMENT PRESENTATION:
NOTE 1
Interfilm, Inc. ("Interfilm" or the "Company"), formerly Ediflex Systems,
Inc., was incorporated in Delaware on November 26, 1986 to manufacture analog
video editing systems and to market the system to the professional television
and motion picture post-production industry. Interfilm Technologies, Inc.
("Interfilm Technologies") was organized in New York on July 6, 1992 to exploit
the rights related to its interactive motion picture process, including the
production and distribution of interactive motion pictures, which the Company
refers to as "Cinematic Games," for initial exhibition in theatres and
subsequently in enhanced versions for distribution to the home market.
Interfilm Technologies also developed its Interfilm Technology System (the "IT
System"). To date, Interfilm Technologies has devoted a majority of its
resources to the development and production of its Cinematic Games and research
and development activities directed toward its technology.
On November 4, 1993 the Company acquired (the "Acquisition") all of the
outstanding capital stock of Interfilm Technologies, in exchange for Common
Stock. The principal purpose of the Acquisition was to combine the rights to
the interactive motion picture concept and the IT System, and the development
and creative skills of the principals of Interfilm Technologies, with the motion
picture industry background and experience of the principals of Interfilm. The
Company's initial public offering was consummated on October 28, 1993. The
Acquisition has been reflected for accounting purposes as the acquisition of
Interfilm by Interfilm Technologies (a reverse acquisition) at historical cost.
The unaudited, consolidated financial statements of the Company have been
prepared in accordance with generally accepted accounting principles for interim
financial information, and accordingly, they do not include all information and
footnotes required by generally accepted accounting principles for complete
financial statements. The accompanying financial statements should be read in
conjunction with the more detailed financial statements and related footnotes
included in the company's Annual Report on Form 10-K for the year ended December
31, 1995 filed with the Securities and Exchange Commission on March 29, 1996.
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (which include only normal recurring
accruals) necessary to present fairly the financial position of the Company as
of March 31, 1996 and the results of its operations and its cash flows for the
three months ended March 31, 1996 and 1995, respectively. The results of
operations for the periods ended March 31, 1996 are not
6
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necessarily indicative of the results expected for the entire year ending
December 31, 1996.
NOTE 2
On May 10, 1995, the Board of Directors of the Company decided to
substantially curtail the operations of the Company and initiate legal
proceedings against the Sony Corporation of America ("Sony") for, among other
things, breach of contract, and other causes of action (see Item 2, Litigation
against Sony). Since that time the Company has conducted no on-going business
other than (a) liquidating its assets, (b) terminating existing contracts, (c)
negotiating the repayment terms for obligations to its primary creditors, and
(d) attempting to find acquisition or merger candidates (see Note 3).
The Company's assets are currently less than its liabilities. In order to
address this situation, the Company has, on an on-going basis, been negotiating
with its creditors to reduce such liabilities although there can be no assurance
that the Company will be able to reach agreement with all of its creditors (See
"Liquidity and Capital Resources").
NOTE 3
On April 12, 1996, the Company announced that it has entered into an
Agreement and Plan of Reorganization (the "Acquisition Agreement") with RhoMed
Incorporated ("RhoMed"). Pursuant to the Agreement and Plan, at the closing of
the transaction, RhoMed will become a wholly-owned subsidiary of Interfilm and
the shareholders of RhoMed will hold an approximately 90% interest in the equity
securities of Interfilm on a fully diluted basis, with the current stockholders
of Interfilm retaining an 8% interest and other parties holding approximately
2%. These percentages are calculated before taking into account shares issued
and to be issued in a private placement of RhoMed securities and certain shares
which may be issuable pursuant to stock options of RhoMed to be assumed by the
Company. The transaction is contingent on a number of conditions, including the
receipt of a permit from the California Department of Corporations for the
issuance of the Interfilm securities to the RhoMed shareholders. Further,
effective immediately following the closing of the transaction, the current
officers and directors of Interfilm will resign and will be replaced by the
current officers and directors of RhoMed.
Under the Acquisition Agreement, certain assets and liabilities of
Interfilm (consisting principally of certain intellectual property and
litigation claims against Sony) will be transferred to a separate entity for the
benefit of the stockholders of Interfilm as of a record date immediately prior
to closing.
RhoMed is a development stage biopharmaceutical company focused on the
development of a platform technology for the design and synthesis of receptor-
specific metallopeptide mimics of native peptides, as well as other types of
molecules, such as steroids and hormones. RhoMed believes that this technology
may represent an advantageous pathway to drug design and development for a broad
range of diagnostic and therapeutic applications. Following the closing of the
transaction, the business of RhoMed shall represent the on-going business of the
combined entity.
7
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NOTE 4
On April 18, 1996 the Company entered into a settlement agreement with
General Cinema Theatres ("General Cinema") whereby General Cinema accepted
$35,000 as payment in full against a contractual obligation that was accrued on
the Company's books for $252,000. Accordingly, during the second quarter of
1996, the Company will recognize income of $217,000 for the difference between
the amount accrued and the actual amount paid.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS.
RECENT DEVELOPMENTS:
CURTAILMENT OF COMPANY'S OPERATIONS:
On May 10, 1995, the Board of Directors of the Company decided to
substantially curtail the operations of the Company and initiate legal
proceedings against Sony for, among other things, breach of contract, and other
causes of action. The decision to materially curtail operations was made after
taking into account a number of factors, although it was substantially the
result of Sony's failure, through its subsidiary AEC, to meet its contractual
obligations to the Company to produce additional Cinematic Games for release.
Since curtailment, the Company has terminated all but two of its employees,
canceled all of its property leases, and has been largely dormant other than
pursuing its litigation claims against Sony and seeking a merger with (or
reverse acquisition of) a third party. (See "Liquidity and Capital Resources").
The Company's assets are currently less than its liabilities. In order to
address this situation, the Company has, on an on-going basis, been negotiating
with its creditors to reduce such liabilities although there can be no assurance
that the Company will be able to reach agreement with all of its creditors (See
"Liquidity and Capital Resources").
THE COMPANY'S CURRENT PLANS:
During the past few months, the Company has reviewed a number of reverse
acquisition proposals. In this connection, the Company entered into the
Acquisition Agreement with RhoMed and a newly formed wholly owned subsidiary of
the Company, InSub ("InSub"), whereby InSub will merge with and into RhoMed
(the "Merger"). Pursuant to the Merger, each share of RhoMed Preferred Stock
outstanding immediately prior to the effective date of the Merger (the
"Effective Time") will be converted into .01 shares of the Series A Convertible
Preferred Stock of Interfilm (the Interfilm Series A Preferred"), and each share
of RhoMed Common Stock outstanding immediately prior to the Effective Time will
be converted into .01 shares of Series B Convertible Preferred Stock of
Interfilm (the "Interfilm Series B Preferred"). Additionally, all warrants and
options to purchase common stock of RhoMed outstanding immediately prior to the
Effective Time (the "RhoMed Derivative Securities"), including without
limitation, any
8
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rights underlying RhoMed's qualified or non-qualified stock option plans, will
be automatically converted into rights upon exercise to receive Interfilm
capital stock in the same manner in which the shares of RhoMed Common Stock are
to be converted at the Effective Time.
Holders of each class of Preferred Stock will be entitled to vote on
matters submitted to a vote of stockholders of Interfilm as if the applicable
shares of Preferred Stock were converted into shares of Common Stock. Each
share of the Interfilm Series A Preferred Stock will automatically convert into
466.95404349 shares of Interfilm Common Stock and each share of Interfilm Series
B Preferred Stock will automatically convert into 184.332593 shares of Interfilm
Common Stock upon the filing of an amendment to Interfilm's Certificate of
Incorporation increasing the number of authorized shares of Common Stock.
In connection with the Merger, the holders of the RhoMed Preferred Stock
and RhoMed Common Stock (including the holders of RhoMed Derivative Securities)
will be receive an aggregate of approximately 90% of the outstanding capital
stock of Interfilm (on a fully diluted basis) after giving effect to the (a)
shares of Interfilm Series A Preferred Stock and Interfilm Series B Preferred
issuable pursuant to the merger, and (b) shares of the capital stock of
Interfilm issuable pursuant to the exercise or conversion of the RhoMed
Derivative Securities. The current stockholders of Interfilm will retain
approximately an 8% interest and other parties will hold approximately 2%.
These percentages are calculated before taking into account shares issued and to
be issued in a private placement of RhoMed securities up to an amount of
$10,750,000 and certain shares which may be issuable pursuant to stock options
of RhoMed to be assumed by the Company.
As a result of the Merger, RhoMed will become a wholly owned subsidiary of
Interfilm. The merger will not affect any of the rights of the existing
security holders of Interfilm except that, upon the merger, such holders will
indirectly receive their pro rata share of certain assets of Interfilm existing
immediately prior to the closing.
Immediately prior to the Effective Time, all of the then remaining assets
of Interfilm (the "Interfilm Assets") will be transferred to a separate entity
for the benefit of the stockholders of Interfilm as of a record date immediately
prior or the Effective Time. It is expected that such entity will either be a
liquidating trust or limited partnership. The Interfilm Assets consist
principally of funds which may be recoverable from a lawsuit filed against Sony
Corporation of America ("Sony") and certain intellectual property rights of
Interfilm. The Interfilm Assets will be available to secure the indemnification
obligations of Interfilm pursuant to the Reorganization Agreement, including any
tax (including interest and penalties) imposed on Interfilm arising from the
transfer of the Interfilm Assets.
9
<PAGE>
LITIGATION AGAINST SONY:
On May 10, 1995, the Company initiated legal proceedings against Sony for,
among other things, breach of contract and other causes of action related to the
actions or inactions of Sony under the Sony New Technologies Agreement entered
into by and between the Company on the one hand, and Advanced Exhibition
Corporation ("AEC"), an indirect subsidiary of Sony, and Sony Theatres, on the
other hand, in April 1993 and which was subsequently amended as of November 19,
1993 and October 19, 1994, (collectively, the "Sony New Technologies
Agreement"). Pursuant to the original terms of the Sony New Technologies
Agreement, Sony was obligated, among other things, to develop, produce, market,
distribute and exhibit three Cinematic Games ("Sony-financed Cinematic Games").
Subsequently, at Sony's request, the Sony New Technologies agreement was amended
so that Sony's commitment to produce Cinematic Games was reduced to two
Cinematic Games in exchange for, among other things, an increased financial
marketing commitment by Sony. The first Sony-financed Cinematic Game was
initially slated for a first half 1994 release, although the release date was
delayed until February 1995, when "Mr. Payback", the first Sony-financed
Cinematic Game, was released. Among other things, the Company alleges that the
delay in the opening of the first Cinematic Game, which delay the Company
alleges was primarily a result of Sony's failure to abide by the terms of the
Sony New Technologies Agreement, seriously harmed the Company. Under the terms
of the revised Sony New Technologies Agreement, Sony was obligated to begin
principal photography of the next Sony-financed Cinematic Game by May 15, 1995.
Because Sony advised the Company that Sony had no intention of producing,
distributing and marketing additional Sony-financed Cinematic Games, the Company
decided initiated litigation against Sony.
On July 7, 1995, Sony filed a motion to dismiss or stay the action on
grounds of Forum Non Conviens arguing that New York rather than California was
the appropriate venue for the action. A hearing on the motion was held on
September 13, 1995, at which time, the California Court ruled in favor of the
Sony motion. The Company has elected not to pursue an appeal of the California
Court's ruling and has instead engaged counsel in New York to file the lawsuit
and pursue its claims in New York. In April 1996 the Company refiled the cause
of action in New York.
The Company believes it has legitimate claims against Sony and has asked
for significant monetary damages. There are many uncertainties associated in
any litigation proceeding which the Company cannot foresee, including the
ultimate financial cost to the Company of pursuing the litigation to a final
judgment. Additionally, it should be noted that Sony has far greater resources
than the Company and could prevail in the litigation if the Company's financial
resources are depleted (see "Liquidity and Capital Resources'), regardless of
the merits of the Company's claims. The Company has retained New York
litigation counsel on a fee arrangement that is contingent upon the results of
the litigation. There can be no assurance as to the outcome of the litigation,
or even if the Company ultimately obtains a judgment against Sony, whether the
Company will be awarded an amount sufficient to cover its losses suffered as a
result of the aforesaid breaches. Although the Sony litigation is being pursued
on a contingency fee basis, the Company is
10
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responsible to pay all out-of-pocket costs for which the Company has already
deposited $25,000 into escrow with its New York litigation attorneys. The
Company will place additional funds into escrow as needed. The Company believes
it has sufficient funds to cover such out-of-pocket costs although there can be
no assurance that the Company will be able to pay all such costs. In the event
the Company does not have sufficient funds to cover such expenses it may have to
look to an outside third party to fund such expenses or cause the litigation to
be dismissed.
SOURCES OF REVENUE
With the curtailment of its operations, the Company has no reasonable
expectations of any revenue in the foreseeable future.
RESULTS OF OPERATIONS
On May 10, 1995, the Board of Directors decided to substantially curtail
the operations of the Company. The consequences of such curtailment included
the write down of substantially all of the Company's remaining assets associated
with its Cinematic Game business and other selected assets to net realizable
value, as well as the accrual of certain liabilities.
System sales for the three months ended March 31, 1996 and 1995 were $0 and
$1,236,000 respectively and represent sales of the Company's IT System to
theatre operators. Costs of revenues for same periods were $0 and
$935,000 respectively, and represent the costs of goods associated with the
Company's IT System.
Other revenues were $0 and $7,000for the three months ended March 31, 1996
and 1995 respectively and represent programming and technology fees charged by
the Company to theater exhibitors.
Selling, general and administrative expenses for the three months ended
March 31, 1996 were $209,000, and consist primarily of legal fees associated
with the Company's litigation claims against Sony and other general and
administrative expenses associated with pursuing a merger or acquisition
candidate. For the same three month period ending March 31, 1995, Selling,
general and administrative expenses were $945,000 and represented the Company's
effort to build public awareness and product identity for its Cinematic Games,
expenses associated with technical advancements of the IT System, as well as,
other expenditures include salaries and employee benefits, professional fees,
and other general and administrative expenses such as rent and telephone
expenses.
Depreciation and amortization expense for the three months ended March 31,
1996 and 1995 were $0 and $93,000 respectively, and represents depreciation and
amortization of the Company's property and equipment, and purchased technology.
On October 7, 1994, the Company elected to discontinue its editing division
due to its inability to establish profitability, and the Company's desire to
fully focus its efforts in
11
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the interactive motion picture business. Gains from the discontinued division
totaled $0 and $81,000for the three months ended March 31, 1996 and 1995,
respectively.
Other (expenses) and income for the three months ended March 31, 1996 and
1995 were ($4,000 and $41,000 respectively, and represent the combination of
interest and dividend income earned on the Company's marketable securities,
interest expense from the Company's bank line of credit and, gains and losses
from the sale of the Company's marketable securities.
LIQUIDITY AND CAPITAL RESOURCES
On May 10, 1995, the Board of Directors of the Company decided to
substantially curtail the operations of the Company and initiate legal
proceedings in Superior Court of the State of California against the Sony
Corporation of America ("Sony") for, among other things, breach of contract, and
other causes of action (see Litigation against Sony). Since that time the
Company has conducted no on-going business other than (a) liquidating its
assets, (b) terminating existing contracts, (c) negotiating the repayment terms
for obligations to its primary creditors, and (d) attempting to find acquisition
or merger candidates (see Note 3 and Item 2 "the Company's Current Plans").
The Company's assets are currently less than its liabilities. In order to
address this situation, the Company has, on an on-going basis, been negotiating
with its creditors to reduce such liabilities although there can be no assurance
that the Company will be able to reach agreement with all of its creditors.
For the three month period ended March 31, 1996, net cash provided by
operating activities was $87,000and resulted primarily from the net of the
proceeds from the sales of marketable securities, and a net loss of $213,000.
INFLATION AND SEASONALITY AND VARIATION IN QUARTERLY RESULTS
As the Company's operations will be largely dormant, neither inflation nor
seasonality and variation in quarterly results should have any effect on the
Company
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On May 10, 1995 the Company initiated legal proceedings against Sony in
Superior Court of the State of California for, among other things, breach of
contract, fraud and other causes of action. (See "Item 2. Litigation against
Sony".) In April 1996, the Company refiled the action in the Supreme Court of
the State of New York. Except for the above mentioned litigation, the Company
is not involved in any other material legal proceedings, other than ordinary
routine litigation incidental to the Company's business.
ITEMS 2. - 5. NONE.
ITEM 6.
(A) Exhibit 27 - FDS
12
<PAGE>
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.
INTERFILM, INC.
-----------------
(Registrant)
May 14, 1996 /s/ William Franzblau
------------------ --------------------------
(Date) William Franzblau
Chief Operating Officer, and
Principal Executive Officer
May 14, 1996 /s/ Brian Cooper
------------------- ------------------------
(Date) Brian Cooper
Vice President of Finance
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 113,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 63,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 176,000
<CURRENT-LIABILITIES> 1,043,000
<BONDS> 0
0
0
<COMMON> 43,000
<OTHER-SE> (866,000)
<TOTAL-LIABILITY-AND-EQUITY> 176,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 209,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,000
<INCOME-PRETAX> (213,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (213,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (213,000)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
