<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1996
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO ______________.
Commission file number 0-27286
HELISYS, INC.
(exact name of small business issuer as specified in its charter)
Delaware 95-4552813
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
24015 Garnier Street, Torrance, California 90505
(Address of principal executive offices)
(310) 891-0600
(Issuer's telephone number)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 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 classes of common
equity as of the latest practicable date.
Class Outstanding at October 31, 1996
----- -------------------------------
Common Stock, $.001 par value 3,991,654
Page 1 of 12 Pages
Exhibit Index on Page 12
<PAGE>
HELISYS, INC.
INDEX TO FORM 10-QSB
<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION Page Number
<C> <S> <C>
Item 1. Financial Statements
Balance Sheets as of July 31, 1996 (audited),
and October 31, 1996 (unaudited)..................... 3
Statements of Operations (unaudited) for the three
months ended October 31, 1995 and 1996............... 5
Statements of Cash Flows (unaudited) for the three
months ended October 31, 1995 and 1996............... 6
Notes to Financial Statements........................ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............... 7
Part II. OTHER INFORMATION
Item 1. Legal Proceedings................................. 10
Item 6. Exhibits and Reports on Form 8-K.................. 10
SIGNATURES......................................................... 11
</TABLE>
-2-
<PAGE>
HELISYS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
July 31, October 31,
1996 1996
----------- -----------
(audited) (unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.............................................. $ 2,600,249 $ 1,571,728
Accounts receivable, net of allowance for doubtful accounts of $120,000
as of July 31, 1996, and $203,000 as of October 31, 1996.............. 2,408,315 1,607,947
Inventories............................................................ 2,287,197 2,655,315
Income taxes receivable................................................ 894,670 1,275,367
Prepaid expenses....................................................... 146,061 227,676
Deferred income taxes.................................................. 545,553 388,553
----------- -----------
Total current assets.................................................. 8,882,045 7,726,586
----------- -----------
Property, plant and equipment
Land................................................................... 838,000 838,000
Building and improvements.............................................. 1,344,122 1,344,122
Office furniture and equipment......................................... 471,130 538,285
Machinery and equipment................................................ 695,693 701,675
----------- -----------
3,348,945 3,422,082
Less-Accumulated depreciation.......................................... (460,233) (549,571)
----------- -----------
2,888,712 2,872,511
----------- -----------
Other assets............................................................. 31,101 26,972
----------- -----------
$11,801,858 $10,626,069
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-3-
<PAGE>
HELISYS INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
July 31, October 31,
1996 1996
---------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY (audited) (unaudited)
<S> <C> <C>
Current liabilities:
Current portion of long-term debt and capital lease obligation................ $ 41,892 $ 55,437
Accounts payable.............................................................. 1,402,571 1,528,056
Accrued liabilities........................................................... 903,367 974,170
Customer deposits............................................................. 50,000 50,000
Deferred gross profits........................................................ 446,158 308,860
Deferred maintenance revenues................................................. 699,699 559,240
---------- -----------
Total current liabilities................................................... 3,543,687 3,475,763
---------- -----------
Long-term debt and capital lease obligation, net of current portion............. 1,887,882 1,874,228
Stockholders' equity:
Preferred stock, $.001 par value
1,000,000 shares authorized, none issued or outstanding..................... -- --
Common stock, $.001 par value
20,000,000 shares authorized, 3,991,654 shares issued
and outstanding as of July 31, 1996 and
October 31, 1996............................................................ 3,992 3,992
Advance to stockholder........................................................ (40,536) (40,536)
Deferred compensation......................................................... (50,479) (50,479)
Additional paid-in capital.................................................... 5,871,083 5,871,083
Retained earnings (deficit)................................................... 586,229 (507,982)
----------- -----------
Total stockholders' equity.................................................. 6,370,289 5,276,078
----------- -----------
$11,801,858 $10,626,069
=========== ===========
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
HELISYS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the
Three Months Ended
October 31,
--------------------------
1995 1996
----------- ------------
<S> <C> <C>
Net sales..................................................... $4,176,005 $ 1,942,721
Cost of sales................................................. 2,226,307 1,437,211
---------- -----------
Gross profit................................................ 1,949,698 505,510
---------- -----------
Operating expenses:
Selling, general and administrative......................... 966,602 1,286,592
Research and development.................................... 410,324 809,158
---------- -----------
1,376,926 2,095,750
---------- -----------
Income (loss) from operations............................... 572,772 (1,590,240)
---------- -----------
Other income (expense):
Interest income............................................. 8,463 33,209
Interest expense............................................ (44,367) (65,180)
---------- -----------
Income (loss) before (provision) benefit for income taxes. 536,868 (1,622,211)
(Provision) benefit for income taxes.......................... (215,000) 528,000
---------- -----------
Net income (loss)......................................... $ 321,868 $(1,094,211)
========== ===========
Earnings (loss) per common and equivalent share:
Net income (loss) per common and equivalent share
outstanding............................................... $ 0.12 $ (0.27)
========== ===========
Weighted average number of common and equivalent shares
outstanding............................................... 2,700,000 4,000,000
========== ===========
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE>
HELISYS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the
Three Months Ended
October 31,
-------------------------
1995 1996
---------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss).................................................................. $ 321,868 $(1,094,211)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation..................................................................... 50,881 107,338
Changes in operating assets and liabilities:
Accounts receivable............................................................. (96,487) 800,368
Inventories..................................................................... (131,816) (368,118)
Income taxes receivable......................................................... -- (380,697)
Prepaid expenses................................................................ (135,340) (81,615)
Deferred income taxes........................................................... (71,993) 157,000
Other assets.................................................................... -- 4,129
Accounts payable................................................................ 49,249 125,485
Accrued liabilities............................................................. 180,080 70,803
Income taxes payable............................................................ 209,571 --
Customer deposits............................................................... (421,620) --
Deferred gross profits.......................................................... -- (137,298)
Deferred maintenance revenues................................................... 114,715 (140,459)
--------- -----------
Net cash provided by (used in) operating activities........................... 69,108 (937,275)
--------- -----------
Cash flows from investing activities:
Purchases of property, plant and equipment...................................... (7,470) (73,137)
--------- -----------
Net cash used in investing activities.............................................. (7,470) (73,137)
--------- -----------
Cash flows from financing activities:
Payments on long term debt...................................................... (17,634) (13,654)
Payments on capital lease obligation............................................ (4,683) (4,455)
--------- -----------
Net cash used in financing activities.............................................. (22,317) (18,109)
--------- -----------
Net increase (decrease) in cash.................................................... 39,321 (1,028,521)
Cash, beginning of period.......................................................... 44,835 2,600,249
--------- -----------
Cash, end of period................................................................ $ 84,156 $ 1,571,728
========= ===========
Supplemental disclosures of cash flow information
Cash paid during the period for interest........................................ $ 44,367 $ 65,180
Cash paid (received) during the period for income taxes......................... 76,000 (304,303)
</TABLE>
See accompanying notes to financial statements.
-6-
<PAGE>
HELISYS, INC.
NOTES TO FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The unaudited financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles to be presented for complete financial statements. The accompanying
financial statements include all adjustments (consisting only of normal
recurring accruals) which are, in the opinion of management, necessary for a
fair presentation of the results for the interim periods presented. Operating
results for the three month period ended October 31, 1996, are not necessarily
indicative of the results that may be expected for the year ended July 31, 1997.
The financial statements and related disclosures have been prepared with
the presumption that users of the interim financial information have read or
have access to the audited financial statements for the preceding fiscal year.
Accordingly, these financial statements should be read in conjunction with the
audited financial statements and the related notes thereto included in the
Registrant's Form 10-KSB for the fiscal year ended July 31, 1996, filed with the
Securities and Exchange Commission (the "Commission"), the Registrant's
Registration Statement on Form SB-2 as filed with the Commission on March 7,
1996 (SEC File No. 33-99344 LA, effective March, 12, 1996), and the Prospectus
filed pursuant to Rule 424(b)(3) with the Securities and Exchange Commission on
March 8, 1996.
(2) EARNINGS (LOSS) PER COMMON SHARE
Primary earnings (loss) per common share for the three months ended
October 31, 1995 and 1996, is based on the weighted average number of shares
outstanding, without inclusion of common stock equivalents, as such inclusion
would be anti-dilutive or dilution would be less than 3%.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
During its early years, the Company obtained government funding to conduct
research and development activities relating to its Laminated Object
Manufacturing ("LOM") technology process. Commencing in 1991, commercial
operations were funded through the receipt of advance deposits from customers to
cover the costs of manufacturing the LOM systems. More recently, the Company
has funded its cash requirements primarily from cash flow from operations, short
term borrowings on its revolving credit facility and the proceeds of its public
offering.
The future growth of the Company is dependent upon market acceptance of its
latest-generation rapid prototyping machines, as well as continued sales of
materials and services. In fiscal 1996, the Company significantly increased its
selling and research and development expenditures in preparation for the
introduction of its latest-generation LOM systems. The Company also
restructured its sales department and increased sales and administrative
expenditures in order to more effectively service its existing customers and to
broaden its sales efforts. These increased expenditure levels are anticipated
to continue through fiscal 1997. The Company commenced commercial shipments of
its latest-generation LOM system, the LOM-2030H, in October 1996. There can be
no assurance that the Company will achieve market acceptance of the LOM-2030H or
that sales revenue generated by the LOM-2030H and existing products will be
commensurate with current or future levels of the Company's operating expenses.
The Company has experienced significant losses from operations in the most
recent fiscal year and anticipates experiencing further losses in fiscal 1997.
Although the Company anticipates achieving profitable operations in the future,
there can be no assurance that profitable operations will ever be achieved. The
Company's ability to achieve profitable operations in the future will depend in
large part on achieving significant sales of its latest-generation LOM system
machines. Moreover, there can be no assurance tht even if the Company generates
anticipated product and service sales, the Company will not continue to incur
losses from operations. The likelihood of the long-term success of the Company
must be considered in light of the expenses, difficulties and delays frequently
encountered in the development and commercialization of new products and
competitive factors in the marketplace. Additionally, the Company used cash of
approximately $.9 million in operations during the three months ended
October 31, 1996. While the Company expects sales of its existing products and
its latest-generation LOM systems to support current and future levels of
research and development and other expenses, there can be no assurance that the
Company will achieve such sales levels. In November 1996, the Company's lender
withdrew the Company's line of credit. Although the Company obtained a
subsequent $1.5 million line of credit from Cruttenden Roth Incorporated, if the
Company is unable to generate sufficient sales or to reduce expenses to match
its sales levels, the Company will require additional debt or equity financing
to continue operations. There can be no assurance that the Company will be able
to obtain such financing or obtain such financing on terms acceptable to the
Company.
Because of these other factors affecting the Company's operating results,
past financial performance should not be considered a reliable indicator of
future performance, and investors should not use historical trends to anticipate
results or trends in future periods.
The Company has experienced significant quarterly fluctuations in operating
results and it expects that these fluctuations in revenue and expenses will
continue.
-7-
<PAGE>
RESULTS OF OPERATIONS
Net Sales. The Company's gross sales include sales of LOM systems,
materials used in the LOM process, and services, which consist primarily of
contracts for the repair and maintenance of installed LOM systems. Net sales
consist of gross sales less the amount of discounts, returns and allowances,
plus any income in excess of costs incurred on research and development grants.
Net sales for the three months ended October 31, 1996 were approximately
$1,943,000, a decrease of approximately $2,233,000, 53.5%, compared to net sales
of approximately $4,176,000 for the three months ended October 31, 1995. This
decrease was primarily due to additional testing of the Company's LOM-2030H
prototype which resulted in a delay in shipment of the latest-generation
LOM-2030H until October 1996. All of the six (6) LOM-2030s sold during the three
months ended October 31, 1996, were LOM-2030H systems. Sales of materials and
service for the three months ended October 31, 1996, increased by approximately
$35,000, or 5.0%, from sales of materials and services in the three months ended
October 31, 1995, due primarily to an increased installed base of LOM systems
and to increased sales efforts aimed at improving sales of materials and
services.
<TABLE>
<CAPTION>
Product Mix Percentages:
- ------------------------
Three Months Ended
------------------------------------
October 31, 1995 October 31, 1996
---------------- ----------------
<S> <C> <C>
LOM Systems 83.3% 62.4%
Materials and Service 16.7% 37.6%
LOM System Units Sold During the
- --------------------------------
Periods Indicated:
- ------------------
LOM 1015s LOM 2030s
--------- ---------
Three Months ended October 31, 1995 6 14
Three Months ended October 31, 1996 2 6
</TABLE>
As of October 31, 1995 and 1996, the Company had deferred revenue in the
amounts of approximately $384,000 and $309,000, respectively, relating to
shipment of LOM systems subject to agreements providing the customer the right
to exchange such systems for an upgraded version. This amount decreased due to
shipment of an upgraded machine, pursuant to such a contract, partially offset
by an additional agreement entered into during fiscal 1996.
Gross Profit. Cost of sales consists primarily of the costs of labor, raw
materials and overhead used in the production of the Company's rapid prototyping
systems. Gross profit for the three months ended October 31, 1996 was
approximately $506,000, a decrease of approximately $1,444,000, or 74.1%,
compared to gross profit of approximately $1,950,000 for the three months ended
October 31, 1995. Gross profit as a percentage of sales decreased from 46.7%
in the three months ended October 31, 1995, to 26.0% in the three months ended
October 31, 1996. The decrease in gross profit as a percentage of sales was
attributable primarily to the product mix of system shipments. The costs of
material and labor for the LOM-2030H systems are higher than that of the
LOM-1015 and first-generation LOM-2030 systems. During the three months ended
October 31, 1996, 6 of the 8 systems shipped were LOM-2030H systems. The
decrease was also due to lower margins normally experienced on sales of
materials and services, which increased to 37.6% of net sales during the three
months ended October 31, 1996, compared to 16.7% for the three months ended
October 31, 1995. To the extent that the Company's sales continue to consist of
a greater percentage of LOM-2030Hs, as compared to LOM-2030s and LOM-1015s, and
as the comparative rate of change in sales of materials and services continues
to be greater than the comparative rate of change in total net sales, the
Company's gross profit margins are unlikely to increase. Further, there can be
no assurance that the Company will be able to maintain current levels of gross
profit on sales of its LOM-2030H systems as compared to the LOM-2030s. There can
also be no assurance that the Company will be able to re-obtain a positive
growth rate in sales of its systems or products and services.
-8-
<PAGE>
Selling, General and Administrative Expense. Selling, general and
administrative expense consists primarily of commissions, sales and
administrative salaries, office expenses and general overhead. Selling, general
and administrative expense for the three months ended October 31, 1996, was
approximately $1,287,000, an increase of approximately $320,000, or 33.1%,
compared to approximately $967,000 for the three months ended October 31, 1995.
Increased costs relating to additional staffing hired during fiscal 1996,
outside services (legal, accounting, marketing and investor relations), travel,
trade shows, and advertising were responsible for most of the increase in
expenses. Such additional hirings and increased expenditures were made to
facilitate the introduction and market acceptance of the LOM-2030H and to
adequately support and increase sales to existing customers with installed LOM
systems. The Company anticipates hiring four to five more sales representatives,
and anticipates additional increased spending on facility and administrative
related expenses through fiscal 1997. However, should sales of the LOM-2030H and
existing products and services fail to match such levels of expenditures,
management anticipates re-evaluating the Company's expenditure levels.
Research and Development Expense. Research and development expense
consists of engineering costs incurred in the development and enhancement of LOM
systems and new materials research. Research and development expense also
includes costs expended to secure government grants, which the Company uses to
subsidize certain research activities. To the extent that grants are awarded to
the Company, the costs incurred in performing the grant are offset by income
received from the grant. Any income in excess of costs incurred is reflected in
net sales. Research and development expense for the three months ended
October 31, 1996, was approximately $809,000, an increase of approximately
$399,000, or 97.3%, compared to approximately $410,000 for the three months
ended October 31, 1995. The increase was primarily due to development costs,
including parts and materials, of the latest-generation LOM-2030H and the hiring
of additional personnel to perform research and development. The Company
anticipates these higher expenditure levels to continue through fiscal 1997.
However, should sales of the LOM-2030H and existing products and services fail
to match levels of these expenditures, management anticipates re-evaluating
these expenditure levels. Though expenditures associated with the development of
the LOM-2030H are unlikely to continue to be incurred once commercial levels of
production of the LOM-2030H are achieved, there can be no assurance that such
expenditures will cease to be necessary or that additional, similar expenditures
will not become necessary for other reasons.
Income/loss from Operations. Losses from operations for the three months
ended October 31, 1996, were ($1,622,000), a decrease of approximately
$2,159,000 compared to income of $537,000 for the three months ended October 31,
1995. This decrease resulted primarily from the delay in shipping the LOM-2030H
system, the accompanying development costs for the latest-generation LOM-2030H
system and a corresponding increase in operating costs due to the growth of the
infrastucture of the company.
Other Income (Expense). Other expense for the three months ended
October 31, 1996, was approximately $32,000, compared to other expense of
approximately $36,000 for the three months ended October 31, 1995.
(Provision)/Benefit for Income Taxes. Benefits from income taxes for the
three months ended October 31, 1996, was $528,000, an increase of $743,000,
compared to a provision for taxes of ($215,000) for the three months ended
October 31, 1995. This increase was primarily due to the losses incurred during
the three months ended October 31, 1996, as compared to profits recorded for
the three months ended October 31, 1995. The effective tax rate for the three
months ended October 31, 1996, was (32.5%) as compared to 40.0% for the three
months ended October 31, 1995. The change in effective tax rates is due
primarily to the utilization of federal net operating loss carrybacks in the
quarter ended October 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash from operating activities of approximately
$69,000 for the three months ended October 31, 1995, and used cash of $937,000
in the three months ended October 31, 1996. These operating cash flows are
consistent with the operating losses, decrease in sales and related decrease in
accounts receivable during the quarter ended October 31, 1996.
-9-
<PAGE>
Working capital was approximately $5,338,000 at July 31, 1996, compared to
approximately $4,251,000 at October 31, 1996. This decrease was primarily due to
decreases in cash and accounts receivable as a result of decreased sales volume
in the three months ended October 31, 1996. Additionally, these decreases were
offset by (i) increased inventory levels due to the delay in commencement of
shipping of the LOM-2030H systems until the end of October, 1996 and increased
inventory of the LOM-1015; and (ii) increased income taxes receivable as a
result of losses incurred by the Company.
Cash used in investing activities, which includes purchases of property,
plant and equipment, was approximately $73,000 and $7,000 for the three months
ended October 31, 1996, and October 31, 1995, respectively. During the three
months ended October 31, 1996, the Company purchased additional equipment and
office furniture and fixtures.
As of July 31, 1996, the Company had a secured $3,000,000 revolving credit
facility with City National Bank bearing interest at prime plus one-half of one
percent per annum. This revolving credit facility would have matured in January
1997 and was collateralized by substantially all of the assets of the Company,
except for the Company's building and land. The Company did not comply with
certain financial covenants contained in the line of credit as of July 31, 1996,
nor did it comply with such covenants for the period from August 1, 1996,
through November 1, 1996. As a result, the lender declared the Company in
default of the provisions of the line of credit agreement on November 4, 1996,
and withdrew the credit terms extended to the Company under the line of credit
agreement. As of November 4, 1996, there was no balance outstanding under this
line of credit. The Company has obtained a $1.5 million line of credit from
Cruttenden Roth Incorporated which bears interest at 10% per annum. This
revolving credit facility is unsecured and matures on July 31, 1997. No
borrowings have been made under this line of credit. Further, the Company is
currently exploring additional alternative financing arrangements which would
also be collateralized by substantially all of its available assets. There can
be no assurance that the Company will be able to obtain such alternative
additional financing.
The Company has obtained a $300,000 credit line, which expires in September
1998, from Winthrop Financial, for purposes of leasing capital equipment. At
October 31, 1996, the Company had not yet received any advances under this
credit line.
The Company believes that its existing cash and equivalents remaining from
proceeds of its initial public offering, together with the funds available from
its new line of credit with Cruttenden Roth Incorporated, will be sufficient to
meet its capital and liquidity needs for the next 12 months. However, the
Company's belief is based upon achieving significant sales of its latest
generation LOM-2030 system machines, restoring gross profit levels, controlling
operating costs and securing a new bank working capital credit facility.
Therefore, management's belief is based on projections which are subject to a
high degree of uncertainty because of the limited sales history of the latest-
generation product and because of the uncertainty associated with the Company's
ability to obtain further financing.
Further, during the three months ended October 31, 1996, the Company has
continued to experience significant cash expenditures in conjunction with the
introduction of the LOM-2030H and due to the expansion of the Company's research
and development efforts and infrastructure. Should the Company's existing cash
equivalents remaining from the proceeds of its initial public offering and
funds available under the line of credit from Cruttenden Roth become
insufficient to finance the Company's working capital requirements, the Company
will be required to raise additional funds through public or private equity or
debt financing. There can be no assurance that cash flows from the offering and
funds available under the line of credit from Cruttenden Roth will be sufficient
to meet future operating requirements, or, if required, that additional
financing will be available, or, if available, be on terms satisfactory to the
Company. Significant additional dilution may be incurred by current investors as
a result of any additional financing.
FORWARD-LOOKING STATEMENTS
This report on Form 10-QSB contains forward-looking statements that involve
risk and uncertainties. As discussed in the Company's Form 10-KSB, the
Company's future operating results are uncertain and may be impacted by the
following factors, among others: uncertainty of market acceptance of the
LOM-2030H, potential development of similar products by competitors, and
potential future capital requirements and uncertainty of additional funding.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
None
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the three months ended
October 31, 1996
-10-
<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.
HELISYS, INC.
Date: December 15, 1996 By: /s/ DAVE T. OKAZAKI
______________________________________
Dave T. Okazaki
Chief Financial Officer
-11-
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description Number
- ------- ----------- ------
<C> <S> <C>
16
</TABLE>
-12-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> AUG-01-1996
<PERIOD-END> OCT-31-1996
<CASH> 1,571,728
<SECURITIES> 0
<RECEIVABLES> 1,607,947
<ALLOWANCES> 203,000
<INVENTORY> 2,655,315
<CURRENT-ASSETS> 7,726,586
<PP&E> 3,422,082
<DEPRECIATION> 549,571
<TOTAL-ASSETS> 10,626,069
<CURRENT-LIABILITIES> 3,475,762
<BONDS> 0
0
0
<COMMON> 3,992
<OTHER-SE> 5,272,086
<TOTAL-LIABILITY-AND-EQUITY> 10,626,069
<SALES> 1,942,721
<TOTAL-REVENUES> 1,942,721
<CGS> 1,437,211
<TOTAL-COSTS> 3,532,961
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 31,971
<INCOME-PRETAX> (1,622,211)
<INCOME-TAX> (528,000)
<INCOME-CONTINUING> (1,094,211)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,094,211)
<EPS-PRIMARY> (0.27)
<EPS-DILUTED> 0
</TABLE>
