<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 10-QSB
(Mark one)
[x] Quarterly report under section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarter ended September 30, 1996
[ ] Transition Report under section 13 or 15(d) of the Securities Exchange
Act of 1934
Commission File No. 0-27908
----------------------------------------
Semiconductor Laser International Corporation
----------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
New York 16-1446679
------------------------------ ------------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
421 East Main Street, Endicott, NY 13760
- --------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (607) 754-0112
---------------
Check whether the issuer (1) 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 shorted 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 November 14, 1996, there were outstanding 3,402,607 shares of the
issuer's common Stock, par value $.01 per share.
Transitional Small Business Disclosure Format
Yes [ ] No [x]
------ ------
1
<PAGE>
PART I. - FINANCIAL INFORMATION
Semiconductor Laser International Corporation
(A Development Stage Enterprise)
Balance Sheet
December 31, September 30, 1996
1995 (Unaudited)
------------ ------------------
Assets
Current Assets
Cash and cash equivalents $ 491,971 $ 5,604,740
Restricted cash 39,071 6,493
Accounts receivable 5,335 38,282
Inventory 2,600 6,316
Deferred expenses -- 42,708
----------- -----------
Total current assets 538,977 5,698,539
Deferred financing cost 134,431 --
Plant, Property and Equipment, net 162,175 1,312,795
Intangible assets, net 2,022 1,517
Deposits and other assets 4,130 441,980
----------- -----------
Total assets $ 841,735 $ 7,454,831
=========== ===========
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable $ 208,940 $ 617,265
Accrued expenses and other liabilities 134,331 216,958
Current portion of long-term debt 81,787 17,163
----------- -----------
Total current liabilities 425,058 851,386
Long-term debt 19,882 16,710
Accrued royalty payments 100,000 100,000
----------- -----------
Total liabilities 544,940 968,096
----------- -----------
Commitments and contingencies ( Note 7 )
Shareholder' Equity
Common stock, $.01 par value,
20,000,000 shares Authorized,
1,393,653 shares issued and
outstanding December 31,1995;
3,402,607 shares issued and
outstanding September 30,1996 13,936 34,026
Additional paid-in capital 2,035,065 9,875,447
Deficit accumulated during the
development stage (1,752,206) (3,422,738)
----------- -----------
Total shareholders' equity 296,795 6,486,735
----------- -----------
Total liabilities and shareholder'
equity $ 841,735 $ 7,454,831
=========== ===========
see accompanying notes to financial statements
2
<PAGE>
Semiconductor Laser International Corporation
(A Development Stage Enterprise)
Statement of Operations
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30, Cumulative
1995 1996 1995 1996 From Inception
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
------------- ------------- ------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Operating expenses:
Research and development expenses $ 90,049 $ 282,859 $ 128,547 $ 532,307 $ 898,729
General and administrative expenses 249,713 393,337 445,544 972,928 2,291,427
Royalties -- -- -- 43,188 143,188
----------- ----------- ----------- ----------- -----------
Loss from operations (339,762) (676,196) (574,091) (1,548,423) (3,333,344)
Interest income 15,173 79,339 18,706 183,192 215,907
----------- ----------- ----------- ----------- -----------
Loss before extraordinary item (324,589) (596,857) (555,385) (1,365,231) (3,117,437)
Extraordinary loss on early
extinguishment of debt -- -- -- (305,301) (305,301)
----------- ----------- ----------- ----------- -----------
Net loss after extraordinary item ($ 324,589) ($ 596,857) ($ 555,385) ($1,670,532) ($3,422,738)
=========== =========== =========== =========== ===========
Net loss per share:
Loss before extraordinary item ($ 0.26) ($ 0.18) ($ 0.45) ($ 0.48) ($ 1.10)
Extraordinary item $ 0.00 $ 0.00 $ 0.00 ($ 0.11) ($ 0.11)
----------- ----------- ----------- ----------- -----------
Net loss ($ 0.26) ($ 0.18) ($ 0.45) ($ 0.59) ($ 1.21)
=========== =========== =========== =========== ===========
Weighted average shares outstanding 1,242,397 3,387,238 1,227,763 2,834,753 2,834,753
</TABLE>
see accompanying notes to financial statements
3
<PAGE>
Semiconductor Laser International Corporation
(A Development Stage Enterprise)
Statement of Cash Flows
<TABLE>
<CAPTION>
Nine Months Ended
September 30, Cumulative
1995 1996 From Inception
(Unaudited) (Unaudited) (Unaudited)
------------ ------------ ---------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ($ 555,385) ($1,670,532) ($3,422,738)
Adjustments to reconcile net loss to cash used
In operating activities:
Depreciation and amortization 6,296 53,985 82,901
Expenses settled through the issuance of
Common shares and options -- 30,730 431,148
Amortization of debt discount -- 51,585 51,585
Change in assets and liabilities:
(Increase) in accounts receivable (2,515) (32,947) (38,282)
Decrease (increase) in inventory 60 (3,716) (6,316)
(Increase) in deferred expenses -- (42,708) (42,708)
(Increase) in deposits and other assets (80) (437,850) (441,980)
(Increase)decrease in deferred financing cost (17,020) 134,431 --
Increase in accounts payable 55,506 111,953 320,893
Increase (decrease) in accrued expenses and
other liabilities 63,575 (11,811) 122,520
Increase in accrued royalty payments -- -- 100,000
----------- ----------- -----------
Net cash used in operating activities (449,563) (1,816,880) (2,842,977)
----------- ----------- -----------
Cash flows from investing activities:
Purchase of plant, property and equipment (26,496) (844,020) (1,020,762)
Increase in intangible assets -- -- (3,370)
----------- ----------- -----------
Net cash used in investing activities (26,496) (844,020) (1,024,132)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from long term debt -- 455,000 556,669
Payments on long-term debt -- (574,381) (574,381)
Issuance of stock, net of expenses 1,073,676 7,860,472 9,496,054
----------- ----------- -----------
Net cash provided by financing activities 1,073,676 7,741,091 9,478,342
----------- ----------- -----------
Net (decrease) increase in cash, cash equivalents,
and restricted cash 597,617 5,080,191 5,611,233
Cash, cash equivalents, and restricted cash at
beginning of period 170,138 531,042 --
----------- ----------- -----------
Cash, cash equivalents, and restricted cash at
end of period $ 767,755 $ 5,611,233 $ 5,611,233
=========== =========== ===========
</TABLE>
see accompanying notes to financial statements
4
<PAGE>
Semiconductor Laser International Corporation
(A Development Stage Enterprise)
Notes to Financial Statements
September 30, 1996
1. Organization
Semiconductor Laser International Corporation (the "Company") was
incorporated in New York on September 21, 1993 (inception) to produce
high power semiconductor diode laser wafers and bars ("HPDL's"), and to
market products worldwide through major sales representative firms. The
Company's fiscal year end is December 31.
Until recently, the Company's primary activities since incorporation have
been research and development, business and financial planning and
raising capital. Presently, the Company has built a strong management
team with specific expertise in the HPDL technology and has completed the
design of certain products developed through a Cooperative Research and
Development Agreement (CRDA) with the U.S.Air Force which was
successfully concluded on September 1, 1996. Having developed and tested
prototypes, the Company has qualified commercial subcontractors to supply
products to its required exacting specifications. The Company has
qualified all of the necessary subcontract suppliers in order to
reproduce products developed under the CRDA for commercial sales and has
begun an aggressive sales campaign to market these new products. The
Company expects to continue to produce and sell products in this manner
on a limited basis until its manufacturing facility (currently under
construction) is completed late in the fourth quarter of 1996. The
Company expects to begin full production of HPDLs before the end of 1996.
At the time of the completion of construction and the commencement of
full production, the development stage will end. The Company anticipates
that it will continue to incur significant and increasing losses as it
finances the final stages of product development and the establishment of
its own independent manufacturing facility. This will continue until the
Company generates sales levels sufficient to support operations.
The Company has raised sufficient funds through an initial public
offering of the Company's common stock to fund the construction and
capitalization of its independent manufacturing facility. Also the
Company is negotiating a master leasing program to fund most of the
initial purchases of production equipment needed for this facility.
However, there is no assurance that the Company will be able to produce
and sell sufficient quantities of HPDLs in the near future to support
operations. As a result of the foregoing, there remains a certain doubt
as to the Company's ability to continue as a going concern. The
accompanying financial statements do not include any adjustments that
might result from the outcome of any aforementioned uncertainties.
2. Basis of Presentation
The accompanying consolidated financial statements have been prepared by
the Company. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. In the
opinion of the Company's management, the disclosures made are adequate
5
<PAGE>
to make the information presented not misleading, and the consolidated
financial statements contain all adjustments necessary to present fairly
the financial position as of September 30, 1996, and the results of
operations and cash flows for the nine months ended September 30, 1996
and 1995. The results of operations for the three months and nine months
ended September 30, 1996 are not necessarily indicative of the results to
be expected for the full year.
3. Summary of Significant Accounting Policies
Net Loss Per Share
Net loss per share is computed using the weighted average number of
common shares outstanding and dilutive common share equivalents. Common
shares issued and options and warrants granted, by the Company during the
twelve months preceding the initial public offering date, have been
included in the calculation of common and common equivalent shares
outstanding as if they were outstanding for all periods presented in the
offering ( or periods related thereto ) using the treasury stock method
and the public offering price of $5.00 per share. Options and warrants
granted prior to the aforementioned twelve-month period and for the three
months ended September 30, 1996, have been included in the calculation of
common and common equivalent shares outstanding when dilutive.
4. Inventories
Inventories at September 30, 1996 and December 31, 1995, consist solely
of raw materials and supplies. Since the Company is in the development
stage and has not commenced commercial production, the cost of
prototypes, including the cost of raw materials and subcontracted labor
costs, has been charged to research and development expenses.
5. Plant Property and Equipment
The Company purchased approximately 8 acres of land on June 3, 1996 for
approximately $175,000 in the Town of Kirkwood, New York in an existing
Industrial Park to build its manufacturing facility. The Company has
ordered and has been receiving the bulk of the manufacturing equipment
for this facility. A deposit of approximately $342,000 on the DMS MBE
wafer growing machine (which is the single most expensive, as well as
most important, piece of equipment) has been made and is classified as
part of the "Deposits and other assets."
6. Common Stock
On January 18, 1996, the Company completed a private offering of fifteen
units (the "Bridge Financing"), each unit consisting of a note (bearing
interest at 9%) in the principal amount of $50,000 and 10,000 shares of
common stock, at a price of $50,000 per unit. The principal amount of the
notes was due and payable on the earlier of the consummation of a public
offering or January 18, 1997. The Company realized net proceeds from the
Bridge Financing of approximately $625,000, which net proceeds were
allocated between the notes and shares included in the Bridge Financing
based on their relative fair values at the date of such Bridge Financing.
The $295,000 portion of the Bridge Financing's gross proceeds which were
allocated to the shares (the "loan discount") and the $75,000 portion of
the Bridge Financing's offering costs which were allocated to the notes
(the "deferred financing costs") are being amortized commencing on
6
<PAGE>
January 18, 1996. Upon early repayment of the notes, the Company
recognized an extraordinary loss of $305,301 representing the unamortized
loan discount and deferred financing costs.
On March 19, 1996, the Company sold 1,700,000 shares of common stock at
$5.00 per share and 1,700,000 warrants to purchase 1,700,000 shares of
common stock at $.10 per warrant through an initial public offering (the
"offering") and realized net proceeds from the offering of $7,078,985, a
portion of which were used to repay the notes from the Bridge Financing.
On April 3, 1996, the underwriter of the Company's initial public
offering notified the Company of its intent to exercise, in part, its
over-allotment option to purchase shares of the Company's common stock.
As a result, the Company issued and sold an additional 55,000 shares of
its common stock at the initial public offering price of $5.00 per share.
The net proceeds to the Company, after expenses and underwriting
discounts and commissions, were approximately $234,800. The option lapsed
as to its unexercised portion.
On June 13, 1996, the Company notified holders of warrants issued in a
private placement of the Company's common stock and warrants in December
1994 ( the "private placement " ), of its intent to exercise its right to
redeem warrants issued in that private placement if such warrants were
not exercised prior to July 15, 1996. As a result holders of 2,957
Warrants exercised their right to purchase a like amount of shares of the
Company's common stock at an exercise price of $ 2.94 per share on June
29, 1996. Holders of 99,026 warrants exercised their right to purchase a
like amount of shares of the Company's common stock at $ 2.94 per share
on July 15, 1996. The Company redeemed the remaining 13,844 warrants at a
redemption price of $0.26 per warrant. Also in July 1996 options were
exercised by an employee covering 1,971 shares of common stock.
7. Commitments, Contingencies and other matters
Accrued Litigation Expenses
The Company was engaged in separate litigations with two companies which
were retained to assist the company in raising equity. These litigations
were settled for an aggregate amount of $60,000.
The Company is currently party to an arbitration proceeding which was
recently instituted by a former employee who was employed under an
employment agreement dated October 1, 1995 (the "Agreement"). The
termination by the Company was based upon alleged violations of Section 6
(ii) of the Agreement. The dispute as to whether or not such termination
was justified will be arbitrated under the rules of the American
Arbitration Association in Syracuse, New York. Under the agreement, the
employee was entitled to a base salary of $85,000 per year plus bonuses,
if earned and certain fringe benefits. At this time the Company has not
reserved any amount for possible liability since the Company believes
that the termination was justified.
Agreements
License agreement
The Company entered into a license agreement (the "Northwestern
7
<PAGE>
License") with Northwestern University ("Northwestern") on September
1,1996. The Northwestern license is for exclusive rights (the "rights")
to produce, market and sell Aluminum free HPDLs worldwide using certain
patents and know how, as defined in the Northwestern License
(collectively the 'technology'), owned by Northwestern. Under the terms
of the Northwestern License, the rights expire upon the expiration of the
patents or 10 years from the date of the first commercial sale in
countries where no patent rights exist. The Company also has the right to
terminate the Northwestern License after three years. Northwestern has
the right to terminate the Northwestern License after three years if the
Company does not have products, based on the technology, available for
sale.
In consideration for the Northwestern License, the Company has committed
to pay Northwestern a non-refundable license fee of $21,000 plus $10,000
of the Company's unregistered common stock (1,231 shares). In addition
the Company will issue an additional 1,500 shares of unregistered common
stock one year from the date of the agreement valued at $12,188 as of the
date of the Northwestern License. These amounts have been accrued for the
nine-month period and three-month period ending September 30,1996.
Royalties are also required for sales derived from this technology.
Royalty payments are based on net sales and are on a sliding scale from
4% to 1% depending on the sales volume.
On November 5, 1996 the Company entered into an agreement with Professor
Manijeh Razeghi at Northwestern University for consulting services as an
advisor to transfer the Aluminum free technology to the Company for
commercial production. The term of the agreement coincides with the
Northwestern License. In consideration for the services to be provided
under the Agreement, the Company will issue 120,000 shares of the
Company's unregistered common stock.
Other agreements
The Company has entered into a one year agreement dated August 5,1996
with a public relation firm to provide services (the 'services') for a
monthly fee of $3,000 plus expenses. In connection with this agreement,
the company has also committed to provide 10,000 shares of the Company's
restricted common stock as additional consideration for the services and
has accrued the value of such restricted stock ($51,250) as of the period
ended September 30,1996. The Company is amortizing such additional
consideration over the term of the agreement.
8
<PAGE>
Item 2. MANAGEMENT DISCUSSION AND ANALYSIS
The following information should be read in conjunction with the
unaudited financial statements included herein. See Item 1.
OVERVIEW
The Company's future results of operations and the other forward looking
statements contained in this discussion involve a number of risk and
uncertainties. In addition to the factors discussed below are other factors that
could cause actual results to differ materially such as business conditions,
growth in the industry and the general economy.
The Company is in the development stage and has not, until recently
commenced the commercialization of any of its proposed products. Products have
been produced and shipped to customers for the purpose of test and evaluation.
During the quarter ending September 30,1996 the Company had achieved an orders
backlog of $538,789. However, production in substantial quantities is not
expected until the Company's proposed manufacturing facility is completed in the
last quarter of 1996. The Company has qualified a number of subcontractors in
all of the areas required to produce and sell products commercially and expects
to increase the number of units available for sale substantially over the next
few months through the use of these subcontractors. Until the facility is
operational and the Company generates sufficient revenue, it expects to operate
at losses to support the hiring and training of personnel and funding the
building of the manufacturing facility and its associated capital equipment.
On September 1,1996 the Company entered into an exclusive licensing
agreement with Northwestern University whereby the Company has been granted the
exclusive right to produce, market and sell Aluminum free HPDLs worldwide. The
Company believes that this technology will give the Company both a significant
technological advantage over the competition as well as a significantly broader
market base within which the Company can sell its products. The Company believes
that it will take 6 to 9 months to bring this new technology to market and there
can be no guarantee that the Company will be able to commercially produce this
product or to be able to do it in 6 to 9 months. Researchers at Northwestern
University have demonstrated vastimprovements over the last three years with
devices produced in their laboratory using this technology.
LIQUIDITY AND CAPITAL RESOURCES
Nine months ended September 30, 1996
The Company's cash, cash equivalents and restricted cash were $531,042
and $5,611,233 on December 31, 1995 and September 30, 1996, respectively, a net
increase of $5,080,191 (a $7,741,091 increase from financing activities
partially offset by a decrease of $1,816,880 from operations and $844,020 from
investing activities for the purchase of land and equipment) for the nine-month
period.
The $7,741,091 of proceeds provided by financing activities were derived
from net proceeds of $7,078,985 realized from the Company's initial public
offering, net proceeds of $245,000 from the private placement of bridge shares,
net proceeds of $234,763 from the issuance of additional shares purchased by the
Company's underwriter through the over-allotment option, net proceeds of
$301,724 from Warrants exercised from the private placement of December 1994 and
options exercised by an employee (for a total of $7,860,472 in stock sales) and
proceeds of $455,000 from the unamortized sale of the bridge notes. These cash
inflows were partially offset by the early repayment of the principal amount of
the bridge notes ($455,000) together with a loan discount of $51,585 associated
with the private placement of such notes and repayment of $67,796 for other long
term notes.
The net cash used in operating activities for the nine months ended
September 30, 1996 ($1,816,880) was utilized to fund the operating loss of
$1,670,532 and net changes in other working capital of $282,648 partially offset
by non cash expenses of $136,300.
9
<PAGE>
RESULTS OF OPERATIONS
Nine months ended September 30, 1996, compared to nine months ended September
30, 1995.
The Company's operations show no sales or revenues during this period of
development stage operations. Any revenues realized from product shipments are
offset against research and development expenses.
Research and development expenses were $532,307 compared to $128,547 for
the nine-month periods ended September 30, 1996 and 1995, respectively. This
increase of $403,760 was due to increased spending on salaries, materials and
subcontracting cost reflecting increased activity in the development of the
Company's products.
General and administrative expenses were $972,928 and $445,544 for the
nine-month periods ending September 30, 1996 and 1995, respectively. The
increase of approximately $527,400 is due to an increase in manning levels
(salary and payroll tax expenses increased by approximately $123,200); interest
expenses incurred in payments on the bridge notes and other notes of
approximately $81,900; increases in legal, accounting, and other professional
fees of approximately $50,100; increases in advertising and marketing expenses
of approximately $47,200; increases in travel expenses of approximately $31,500;
increases in depreciation and amortization of approximately $47,100; increases
in office expenses of approximately $70,900; increases in recruiting expenses of
approximately $22,100; increases in rent, insurance and other expenses of
approximately $53,400.
Royalty expenses were $43,188 for the nine-month period ending September
30, 1996 compared to none for the nine-month period ending September 30, 1995.
The royalty expense was the result of the recognition of these expenses from the
license agreement signed September 1, 1996 with Northwestern University (see
footnote 7 to the financial statements).
Interest income of $183,192 and $18,706 was recognized for the nine-month
periods ending September 30,1996 and 1995, respectively.The increase of $164,486
was due to the investment of the cash received from the bridge financing, the
Company's initial public offering and private offering Warrants which were
exercised.
The extraordinary loss of $305,301 recognized for the nine-month period
ending September 30, 1996, resulted from the early retirement of debt from the
notes of the bridge financing and represents the unamortized loan discount and
deferred financing cost of these notes.
Three months ended September 30, 1996, compared to three months ended
September 30, 1995.
The Company's operations show no sales or revenues during this period of
development stage operations. Any revenues realized from product shipments are
offset against research and development expenses.
Research and development expenses were $282,859 compared to $90,049 for
the three-month periods ended September 30,1996 and 1995, respectively. This
increase of $192,810 was due to increased spending on salaries, materials and
subcontracting costs reflecting increased activity in the development of the
Company's products.
10
<PAGE>
General and administrative expenses were $393,337 and $249,713 for the
three-month periods ending September 30,1996 and 1995 respectively. The increase
of approximately $143,600 is due to an increase in manning levels (raising the
salary and payroll tax expenses by approximately $57,900); interest expenses
incurred in payments on other notes of approximately $1,400; increases in
depreciation and amortization of approximately $24,800; increases in rent,
insurance, office expenses, professional fees, marketing and other expenses of
approximately $59,500.
Royalty expenses were $43,188 for the three-month period ending September
30, 1996 compared to none for the three-month period ending September 30, 1995.
The royalty expense was the result of the recognition of these expenses from the
license agreement signed September 1, 1996 with Northwestern University (see
footnote 7 to the financial statements).
Interest income of $79,339 and $15,173 was recognized for the three-month
periods ending September 30,1996 and 1995 respectively. The increase of $64,166
was due to the investment of the cash received from the bridge financing and the
Company's initial public offering and private offering warrants which were
exercised.
11
<PAGE>
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings.
The company is involved in litigation described in footnote 7 in the
financial statements. This litigation however does not involve more than 10%
of the Company's assets.
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
11 Statement re: Computation of weighted average shares
outstanding
27 Financial Data Schedule
(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 thereto duly authorized.
Semiconductory Laser Intenational Corporation
(Registrant)
Date: By: /s/ Geoffrey T. Burnham
November 14, 1996 -----------------------------------------
Geoffrey T. Burnham
Chairman, President and
Chief Executive Officer
Date: By: /s/ Allen W. Johnson Jr.
November 14, 1996 -----------------------------------------
Allen W. Johnson Jr.
Controller, Principal Financial Officer,
Principal Accounting Officer
13
Exhibit 11
SEMICONDUCTOR LASER INTERNATIONAL CORPORATION
CALCULATION OF WEIGHTED AVERAGE SHARES OUTSTANDING
PERIOD ENDED SEPTEMBER 30, 1995
"CHEAP STOCK" METHOD
<TABLE>
<CAPTION>
Shares redeemed using Nine months ended Three months ended
Shares issued or proceeds from shares September 30 September 30
warrants and options issued deemed exercise weighted average shares weighted average shares
deemed exercised of warrants and options outstanding outstanding
<S> <C> <C> <C> <C>
1993 Shares outstanding (Note 1) 729,003 0 729,003 729,003
1994 Shares outstanding (Note 1) 192,344 0 192,344 192,344
Shares issued in 1995 (Note 1) 22,178 (812) 21,366 22,178
1995 'cheap stock' 411,789 (207,200) 204,589 218,410
1993 Options 75,895 (89,693) (13,798) (13,798)
1994 Warrants 22,178 (26,210) (4,032) (4,032)
1995 'cheap stock' 17,732 (10,440) 7,292 7,292
1996 'cheap stock' 150,000 (59,000) 91,000 91,000
Weighted average shares outstanding 1,227,763 1,242,397
</TABLE>
PERIOD ENDED SEPTEMBER 30, 1996
"CHEAP STOCK" METHOD
<TABLE>
<CAPTION>
Shares redeemed using Nine months ended Three months ended
Shares issued or proceeds from shares September 30 September 30
warrants and options issued deemed exercise weighted average shares weighted average shares
deemed exercised of warrants and options outstanding outstanding
<S> <C> <C> <C> <C>
1993 Shares outstanding (Note 1) 729,003 0 729,003 729,003
1994 Shares outstanding (Note 1) 192,344 0 192,344 192,344
1995 Shares outstanding (Note 1) 472,306 0 472,306 472,306
1995 Options 88,659 (887) 87,772 83,957
1996 'cheap stock' 150,000 (59,000) 91,000 150,000
1996 Weighted shares issued in
IPO (Note 2) 1,197,445 0 1,197,445 1,700,000
1996 Shares 158,954 (94,072) 64,882 59,628
Weighted average shares outstanding 2,834,753 3,387,238
Note 1 : Shares and warrants issued in 1995, more than one year prior to IPO
Note 2 : Computed using the weighted average method
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 5,611,233
<SECURITIES> 0
<RECEIVABLES> 38,282
<ALLOWANCES> 0
<INVENTORY> 6,316
<CURRENT-ASSETS> 5,698,539
<PP&E> 1,393,843
<DEPRECIATION> 81,048
<TOTAL-ASSETS> 7,454,831
<CURRENT-LIABILITIES> 851,386
<BONDS> 0
0
0
<COMMON> 34,026
<OTHER-SE> 6,452,709
<TOTAL-LIABILITY-AND-EQUITY> 7,454,831
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 532,307
<LOSS-PROVISION> 0
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