-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G3viIYQkY2wuJYUz95kFuOXnjolbb03dUUjqj2/7TqOxry2TFQ1ImRMmErTIqXBK UqFvUc8i9Rhy9jONuf2W1g== 0000912057-96-009822.txt : 19960517 0000912057-96-009822.hdr.sgml : 19960517 ACCESSION NUMBER: 0000912057-96-009822 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960515 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CIMA LABS INC CENTRAL INDEX KEY: 0000833298 STANDARD INDUSTRIAL CLASSIFICATION: PHARMACEUTICAL PREPARATIONS [2834] IRS NUMBER: 411569769 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-24424 FILM NUMBER: 96565847 BUSINESS ADDRESS: STREET 1: 10000 VALLEY VIEW ROAD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344-9361 BUSINESS PHONE: 6129478700 MAIL ADDRESS: STREET 1: 10000 VALLEY VIEW ROAD CITY: EDEN PRAIRIE STATE: MN ZIP: 55344-9361 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 EXCHANGE ACT OF 1934 For the transition period from to -------- -------- Commission File Number 0-24424 CIMA LABS INC. (Exact name of registrant as specified in its charter) Delaware 41-1569769 - -------------------------------------------------------------------------------- (State or other jurisdiction of incorporation (I.R.S. Employer Identification or organization) No.) 10000 Valley View Road, Eden Prairie, Minnesota 55344-9361 (Address of principal executive offices including zip code) (612) 947-8700 (Registrant's telephone number, including area code) - -------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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. Common Stock $.01 par value 7,847,599 shares ------------------------------- ------------------------------- (Class) (Outstanding at April 22, 1996) CIMA LABS INC. TABLE OF CONTENTS PAGE NUMBER ----------- COVER PAGE 1 TABLE OF CONTENTS 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. Condensed Balance Sheets as of March 31, 1996 and December 31, 1995 3 Condensed Statements of Operations for the three-month periods ended March 31, 1996 and 1995 and the period from December 12, 1986 (inception) to March 31, 1996 4 Condensed Statements of Cash Flows for the three-month periods ended March 31, 1996 and 1995 and the period from December 12, 1986 (inception) to March 31, 1996 5 Notes to Condensed Financial Statements 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. 7 PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. 11 ITEM 2. CHANGES IN SECURITIES. 11 ITEM 3. DEFAULTS UPON SENIOR SECURITIES. 11 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 11 ITEM 5. OTHER INFORMATION. 11 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 11 SIGNATURE 12 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CIMA LABS INC. (A Development Stage Company) Condensed Balance Sheets (Unaudited)
March 31, December 31, 1996 1995 --------------- --------------- (Note) ASSETS Current assets: Cash and cash equivalents $2,516,596 $3,558,743 Accounts receivable 373,622 212,971 Inventories--Note B 95,778 324,610 Prepaid expenses 262,631 287,279 --------------- --------------- Total current assets 3,248,627 4,383,603 Property, plant and equipment 13,173,595 13,061,836 Less accumulated depreciation (2,600,263) (2,479,688) --------------- --------------- 10,573,332 10,582,148 Other assets: Lease deposits 290,650 290,650 Patents and trademarks, net of amortization 251,361 262,244 --------------- --------------- 542,011 552,894 --------------- --------------- Total assets $14,363,970 $15,518,645 --------------- --------------- --------------- --------------- Liabilities and stockholders' equity Current liabilities: Accounts payable $566,006 $291,868 Accrued expenses 905,082 695,127 Advance royalties 250,000 250,000 --------------- --------------- Total current liabilities 1,721,088 1,236,995 Commitments and contingencies Stockholders' equity Convertible Preferred Stock, $.01 par value: Authorized shares - 5,000,000; issued and outstanding shares - none - - Common Stock, $.01 par value: Authorized shares - 20,000,000; issued and outstanding shares - 7,840,099 - March 31, 1996; 7,821,974 - December 31, 1995 78,401 78,201 Additional paid-in capital 43,557,737 43,462,921 Deficit accumulated during the development stage (30,993,256) (29,259,472) --------------- --------------- Total stockholders' equity 12,642,882 14,281,650 --------------- --------------- Total liabilities and stockholders' equity $14,363,970 $15,518,645 --------------- --------------- --------------- ---------------
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 financial statements. 3 CIMA LABS INC. (A Development Stage Company) Condensed Statements of Operations (Unaudited)
Period from December 12, Three Months Ended 1986 March 31, (Inception) to ------------------------------------- March 31, 1996 1995 1996 ------------------------------------- ----------------- Revenues: Net sales $ - $11,297 $13,750,884 Research, development and licensing revenues 391,858 214,808 4,266,589 ------------------------------------- ----------------- Total Revenues 391,858 226,105 18,017,473 Costs and Expenses: Cost of good sold - 59,104 17,831,415 Research and product development 1,375,946 2,292,490 16,496,237 Selling, general and administrative 783,702 1,018,684 15,518,736 ------------------------------------- ----------------- Total costs and expenses 2,159,648 3,370,278 49,846,388 Other income (expense): Interest income, net 39,385 169,589 661,251 Other income (expense) (5,379) (3,173) 268,389 ------------------------------------- ----------------- Total other income 34,006 166,416 929,640 ------------------------------------- ----------------- Net loss and deficit accumulated during the development stage $(1,733,784) $(2,977,757) $(30,899,275) ------------------------------------- ----------------- ------------------------------------- ----------------- Net loss per share: Primary $ (0.22) $ (0.39) $ (13.94) Fully diluted $ (0.22) $ (0.39) $ (8.02) Weighted average number of shares outstanding: Primary 7,824,365 7,541,105 2,216,529 Fully diluted 7,824,365 7,541,105 3,852,849
See notes to condensed financial statements. 4 CIMA LABS INC. (A Development Stage Company) Condensed Statements of Cash Flows (Unaudited)
Three Months Ended Period from March 31, December 12, 1986 (Inception) to ------------------------------------ March 31, 1996 1995 1996 ------------------------------------ ----------------- OPERATING ACTIVITIES Net loss $(1,733,784) $(2,977,757) $(30,899,275) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 147,030 135,957 3,561,254 Preferred stock issued for accrued interest - - 141,448 Gain on sale of property, plant and equipment - - (53,270) Changes in operating assets and liabilities: Accounts receivable (160,651) 266,356 (373,622) Inventories 228,832 (159,144) (95,778) Other current assets 24,648 (37,840) (262,631) Accounts payable 274,138 (503,890) 566,001 Accrued expenses 209,955 (237,872) 905,082 Advance royalties - - 250,000 ------------------------------------ ----------------- Net cash used in operating activities (1,009,832) (3,514,190) (26,260,791) Investing activities Purchase of and deposits on property, plant and equipment (111,759) (680,224) (14,257,819) Purchase of short-term investments - (5,360,001) (18,547,140) Proceeds from sale of property, plant and equipment - 471,883 Proceeds from maturities of short-term investments 10,743,182 18,547,140 Patents and trademarks (15,572) (13,334) (527,315) ------------------------------------ ----------------- Net cash provided by (used in) investing activities (127,331) 4,689,623 (14,313,251) Financing activities Proceeds from issuance of stock: Common Stock 95,016 57,241 17,841,768 Preferred Stock - - 25,458,690 Borrowing under line of credit - - 450,000 Payment on line of credit - - (450,000) Lease financing of equipment - - 2,441,650 Security deposits on leases - - (290,650) Proceeds from issuance of notes payable and warrants - - 1,923,950 Payments on notes payable - - (1,823,700) Payments on capital leases - - (2,441,650) Organization costs - - (19,420) ------------------------------------ ----------------- Net cash provided by financing activities 95,016 57,241 43,090,638 ------------------------------------ ----------------- Increase (decrease) in cash and cash equivalents (1,042,147) 1,232,674 2,516,596 Cash and cash equivalents at beginning of period 3,558,743 2,912,150 - ------------------------------------ ----------------- Cash and cash equivalents at end of period $2,516,596 $4,144,824 $2,516,596 ------------------------------------ ----------------- ------------------------------------ ----------------- Supplemental schedule of noncash investing and financing activities: Note payable exchanged for issuance of common stock - - $1,517,500 Common stock issued for note receivable - - 50,000
See notes to condensed financial statements. 5 CIMA LABS INC. (A DEVELOPMENT STAGE COMPANY) NOTES TO CONDENSED FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) NOTE A - BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q 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 three-month periods ended March 31, 1996 are not necessarily indicative of the results that may be expected for the year ended December 31, 1996. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended December 31, 1995. NOTE B - INVENTORIES
March 31, December 31, 1996 1995 -------- ------------ Raw materials $ 95,778 $ 324,610 Work in process -- -- Finished products -- -- -------- --------- $ 95,778 $ 324,610
NOTE C - INITIAL PUBLIC OFFERING The Company completed its initial public offering ("IPO") of its Common Stock in July 1994. The shares of Series A, B, C, D and E Preferred Stock were automatically converted on a one-for-one basis to shares of Common Stock on the closing date of August 4, 1994. NOTE D - LOSS PER SHARE The primary loss per share is based on the weighted average Common shares outstanding during the period. The fully diluted loss per share assumes the conversion of the preferred shares to common shares as of the beginning of the period, or from the date of issuance if later. The loss per share for periods prior to August 4, 1994, the closing date of the IPO, also gives effect to the requirements of Staff Accounting Bulletin No. 83 (SAB 83). 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE FOLLOWING DISCUSSION CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HEREIN. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THIS SECTION. GENERAL CIMA LABS INC. ("CIMA" or the "Company") was founded in 1986 to develop effervescent drug delivery technologies and focused initially on liquid effervescents. CIMA continues to be a development stage company. CIMA's business focus has evolved over the last several years with the development and patenting of OraSolv-Registered Trademark-, an oral dosage form which incorporates microencapsulated drug ingredients into a tablet that dissolves quickly in the mouth without chewing or water and which effectively masks the taste of the medication being delivered. In 1993, following issuance of the U.S. patent covering OraSolv-Registered Trademark-, the Company began to emphasize and focus on the development of OraSolv-Registered Trademark- products and currently focuses primarily on such products. At March 31, 1996, the Company had accumulated net losses of approximately $30,899,000. The Company's revenues have been from product sales using the Company's AutoLution-Registered Trademark- (a liquid effervescent) technology, license fees paid by corporate partners in consideration of the transfer of rights under collaboration agreements, and research and development fees paid by corporate partners to fund the Company's research and development efforts for products developed under such agreements. To date, such revenues have been derived primarily from manufacturing agreements with third parties for liquid effervescent and other products, and to a lesser extent from research and development fees and licensing arrangements, the latter generated primarily in the last five years. Revenues from manufacturing liquid effervescent products under agreements with third parties have decreased as a result of the Company's decision to discontinue manufacturing that product and focus on developing its OraSolv-Registered Trademark- technology. The last revenues for manufacturing liquid effervescent products were recognized in 1995. In addition to revenues from such manufacturing, research and development and licensing, the Company has funded operations from private sales of equity securities, realizing net proceeds of approximately $25,963,000. In July 1994, the Company completed an initial public offering of shares of its Common Stock, realizing net proceeds of approximately $16,379,000. The Company expects that losses will continue at least through 1997. Costs and expenses are expected to remain relatively stable as the majority of the necessary research and development personnel have already been hired. It is expected that additional manufacturing personnel will be added and operating expenses will increase at such time as the Company initiates the commercial production of OraSolv-Registered Trademark- products. The Company's ability to generate revenues is dependent upon its ability to enter into and be successful in collaborative arrangements with pharmaceutical and other healthcare companies for the development and manufacture of OraSolv-Registered Trademark- products to be marketed by these corporate partners. The 7 Company is highly dependent upon the efforts of the corporate partners to successfully market OraSolv-Registered Trademark- products. Although the Company believes these partners will have an economic motivation to market these products vigorously, the amount and timing of resources to be devoted to marketing are not within the control of the Company. These partners independently could make material marketing and other commercialization decisions which could adversely affect the Company's future revenues. Moreover, certain of the Company's products are seasonal in nature and the Company's revenues could vary materially from quarter to quarter depending on which of such products, if any, are then being marketed. Since the Company's initial public offering in 1994, the Company has put in place a substantially new management team. This new management team was responsible for the buildout, validation and FDA registration of the Company's Eden Prairie manufacturing facility as well as the signing of three new collaborative agreements. RESULTS OF OPERATIONS THREE MONTHS ENDED MARCH 31, 1996 AND 1995 The Company's results of operations for the quarter ended March 31, 1996 reflect increased emphasis on development of OraSolv-Registered Trademark-products. Product sales declined from $11,000 in the first quarter of 1995 to no product sales in the first quarter of 1996 as the Company ceased to contract manufacture liquid effervescent and other products. The Company does not intend to manufacture liquid effervescent products in the future. Research and development fees and licensing revenues were $392,000 and $215,000 in the first quarter of 1996 and 1995, respectively. These increased research and development fees and licensing revenues reflect the signing of license option and development agreements with multinational pharmaceutical companies that provide for licensing fees, milestone payments, royalties and manufacturing fees. Research and development fees and licensing revenues will tend to fluctuate on a quarter to quarter basis. Cost of goods sold decreased to zero in the first quarter of 1996 from $59,000 in the first quarter of 1995. Costs of goods sold will increase when the Company begins commercial production and sales of OraSolv-Registered Trademark-products. Research and product development expenses decreased to $1,376,000 in the first quarter of 1996 from $2,292,000 in the first quarter of 1995. This decrease was the result of a product development/ optimization charge in the first quarter of 1995 of $1,068,000 from an independent consultant for improving product taste and packaging of OraSolv-Registered Trademark- products. Selling, general and administrative expenses decreased due to downsizing to $784,000 in the first quarter of 1996 from $1,019,000 in the first quarter of 1995. Net interest income decreased to $39,000 in the first quarter of 1996 from $170,000 in the first quarter of 1995 due to lower cash balances. LIQUIDITY AND CAPITAL RESOURCES The Company has financed its operations to date primarily through private and public sales of its equity securities and revenues from manufacturing agreements. Through March 31, 1996, CIMA had received net offering proceeds from such private and public sales of approximately $43,300,000 and had net sales from contract manufacturing agreements of approximately $13,800,000. Among other things, these funds were used to purchase approximately $14,300,000 of capital equipment, including approximately $7,500,000 in the last two quarters of 1994 in connection with completing 8 the Company's new Eden Prairie manufacturing facility. In July 1994, the Company completed an initial public offering of shares of its Common Stock, realizing net proceeds of approximately $16,400,000. The funds raised in CIMA's initial public offering have been used to buildout the manufacturing facility, purchase and validate the appropriate production equipment, complete and staff the research and development facilities and purchase the necessary equipment for that facility. The Company's long-term capital requirements will depend upon numerous factors, including the status of the Company's collaborative arrangements, the progress of the Company's research and development programs and receipt of revenues from sales of the Company's products. Cash and cash equivalents, were $2,517,000 at March 31, 1996. The Company completed a public offering of its Common Stock in May 1996. The Company believes that the net proceeds to the Company from this public offering, combined with its currently available funds and excluding any license fees that may be received in the future, will meet its needs at least through the first quarter of 1997. The Company will need to raise additional funds through public or private financings, including equity financing which may be dilutive to stockholders. There can be no assurance that the Company will be able to raise additional funds if its capital resources are exhausted, or that funds will be available on terms attractive to the Company. The Company has not generated taxable income through March 1996. At March 31, 1996, the net operating losses available to offset future taxable income were approximately $31,397,000. Because the Company has experienced ownership changes, pursuant to Internal Revenue Code regulations, future utilization of the operating loss carryforwards will be limited in any one fiscal year. The carryforwards expire beginning in 2001. As a result of the annual limitation, a portion of these carryforwards may expire before ultimately becoming available to reduce potential federal income tax liabilities. BUSINESS RISKS The Company is a development stage company and must be evaluated in light of the uncertainties and complications present for any such company and, in particular, a company in the pharmaceutical industry. The Company has accumulated aggregate net losses from inception in December 1986 through March 31, 1996 of approximately $30,899,000. Losses have resulted principally from costs incurred in research and development of the Company's technologies and from general and administrative costs. These costs have exceeded the Company's revenues, which have been derived primarily from the manufacturing of AutoLution-Registered Trademark- (a liquid effervescent) and other non-OraSolv-Registered Trademark- products under agreements with third parties. The Company no longer manufactures such products and no longer derives revenues from their manufacture. The Company expects to continue to incur losses at least through 1997. Many of the Company's expenditures to date have been non-recurring costs for plant, equipment and product optimization and validation. There can be no assurance, however, that the Company will ever generate substantial revenues or achieve profitability. 9 The Company will need to raise additional funds to operate in 1997, and is subject to the risks inherent in raising such additional funds. See "-Liquidity and Capital Resources." In addition, the Company is dependent upon its ability to enter into and perform under collaborative arrangements with pharmaceutical companies for the development and commercialization of its products. See "-General." The success of the Company and of its business strategy is also dependent in large part on the ability of the Company to attract and retain key management and operating personnel. Such individuals are in high demand and are often subject to competing offers. In particular, the Company's success will depend, in part, on its ability to attract and retain the services of its executive officers and scientific and technical personnel. The loss of the services of one or more members of management or key employees or the inability to hire additional personnel as needed or replace personnel who have left the Company may have a material adverse affect on the Company. The Company currently has no full-time chief financial officer, but is actively recruiting to fill this position. To date no commercial sales of OraSolv-Registered Trademark- products have been made, and the Company has not derived any revenues from sales of OraSolv-Registered Trademark- products. Further, the Company does not expect to derive any such revenues until at least 1997. The Company has not yet manufactured OraSolv-Registered Trademark- products in commercial quantities. To achieve desired levels of production, the Company will be required to increase substantially its manufacturing capabilities. There can be no assurance that manufacturing can be scaled-up in a timely manner to allow production in sufficient quantities to meet the needs of the Company's corporate partners. The foregoing risks reflect the Company's stage of development and the nature of the Company's industry and products. Also inherent in the Company's stage of development is a range of additional risks, including competition, uncertainties regarding the effects of health care reform on the pharmaceutical industry, including pressures exerted on the prices charged for pharmaceutical products, uncertainties regarding protection of patents and proprietary rights, uncertainties relating to government regulation and risks associated with having only one manufacturing facility. 10 CIMA LABS INC. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. None 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 Item Description 3.1 Fifth Restated Certificate of Incorporation of the Company. (1) 3.2 Second Restated Bylaws of the Company. (1) 11.1 Statement re Computation of Net Loss Per Share ----------- (1) Incorporated by reference to the correspondingly numbered exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994. (b) REPORTS ON FORM 8-K The Company filed no reports on Form 8-K during the quarter ended March 31, 1996. 11 CIMA LABS INC. SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed in its behalf by the undersigned thereunto duly authorized. CIMA LABS INC. Date: May 14, 1996 By: /s/ John M. Siebert ------------- ---------------------------------------------- John M. Siebert President, Chief Executiv Officer and Chief Financial Officer (Principal Financial and Accounting Officer) 12 EXHIBIT INDEX SEQUENTIALLY NO. OF EXHIBIT DESCRIPTION NUMBERED PAGE 3.1 Fifth Restated Certificate of Incorporation of the Company. (1) 3.2 Second Restated Bylaws of the Company. (1) 11.1 Statement re Computation of Net Loss Per Share - ----------- (1) Incorporated by reference to the correspondingly numbered exhibit to the Registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 1994. 13 EX-11.1 2 EX-11.1 Exhibit 11.1-Statement Re: Computation of Net Loss Per Share
Period from December 12, 1986 Three Months Ended (Inception) to March 31, March 31, -------------------------- -------------- 1996 1995 1996 -------------------------- -------------- Primary: Average shares outstanding 7,824,365 7,541,105 1,747,005 Net effect of dilutive stock options--based on the treasury stock method using average market price (See Note A Below) - - 469,524 -------------------------- ------------ Totals 7,824,365 7,541,105 2,216,529 -------------------------- ------------ -------------------------- ------------ Net loss $(1,733,784) $(2,977,757) $(30,899,275) -------------------------- ------------ -------------------------- ------------ Per share amount $(0.22) $(0.39) $(13.94) -------------------------- ------------ -------------------------- ------------ Fully diluted: Average shares outstanding 7,824,365 7,541,105 3,383,325 Net effect of dilutive stock options--based on the treasury stock method using average market price or the ending market price if higher (See Note A Below) - - 469,524 -------------------------- ------------ Totals 7,824,365 7,541,105 3,852,849 -------------------------- ------------ -------------------------- ------------ Net loss $(1,733,784) $(2,977,757) $(30,899,275) -------------------------- ------------ -------------------------- ------------ Per share amount $(0.22) $(0.39) $(8.02) -------------------------- ------------ -------------------------- ------------
NOTE A: Represents shares required by the provisions of Staff Accounting Bulletin No. 83 for "cheap stock" issued prior to the Company's initial public offering in August 1994. -----END PRIVACY-ENHANCED MESSAGE-----