<PAGE> 1
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
OR
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission file number 0-28088
MODACAD, INC.
(Exact name of small business issuer as specified in its charter)
California 95-4145930
(State or other jurisdiction (IRS Employer Identification Number)
incorporation or organization)
1954 Cotner Avenue, Los Angeles 90025
(Address of principal executive offices) (Zip Code)
(310) 312-9826
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required 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/ /
The number of shares outstanding of the registrant's common stock, as of August
13, 1996, was 3,864,492.
Transitional Small Business Disclosure Format: Yes/ / No /X/
<PAGE> 2
MODACAD, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Item Table of Contents Page
- ----------- -------------------------------------------------------------------- ----------
PART I. FINANCIAL INFORMATION
<S> <C> <C>
1. FINANCIAL STATEMENTS............................................ 1
Balance Sheet at June 30, 1996.................................. 1
Statements of Operations for the three and six months ended
June 30, 1996 and 1995....................................... 2
Statements of Cash Flows for the six months ended
June 30, 1996 and 1995........................................ 3
Notes to Financial Statements................................... 4
2. MANAGEMENT'S DISCUSSION AND ANALYSIS............................ 6
General ........................................................ 6
Results of Operations........................................... 6
Liquidity and Capital Resources................................. 10
PART II. OTHER INFORMATION
1. Legal Proceedings............................................... 12
2. Changes in Securities........................................... 12
3. Defaults Upon Senior Securities................................. 12
4. Submission of Matters to a Vote of Security Holders............. 12
5. Other Information............................................... 12
6. Exhibits and Reports on Form 8-K................................ 12
Signature....................................................... 13
Index .......................................................... 14
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MODACAD, INC.
BALANCE SHEET
JUNE 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 3,505,241
Accounts receivable, net of allowance for doubtful accounts of $15,000 477,704
Inventories 42,175
Prepaid expenses and other current assets 70,508
------------
Total current assets 4,095,628
Capitalized computer software development costs,
net of accumulated amortization of $177,280 1,635,038
Furniture and equipment, net of accumulated depreciation of $342,956 (Note 2) 528,777
Investment in and advances to unconsolidated subsidiary 55,324
Other assets 38,457
============
$ 6,353,224
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Advances -- officers/stockholders, unsecured, due on
demand, non-interest bearing (Note 3) $ 75,000
Accounts payable and accrued expenses 135,412
Deferred income 67,443
------------
Total current liabilities 277,855
------------
Stockholders' equity: (Note 4)
Common stock. no par value; authorized 15,000,000 shares;
issued and outstanding 3,864,492 11,763,039
Accumulated deficit (5,687,670)
------------
Total stockholders' equity 6,075,369
------------
$ 6,353,224
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
MODACAD, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 554,512 $ 639,891 $ 893,475 $ 974,700
----------- ----------- ----------- -----------
Cost of sales 30,786 48,868 59,542 127,247
Selling, general and administrative 462,349 258,596 842,973 579,531
Research and development 7,141 80,962 42,650 144,868
Amortization of capitalized software development costs 61,985 19,880 97,762 39,759
----------- ----------- ----------- -----------
Total expenses 562,261 408,306 1,042,927 891,405
----------- ----------- ----------- -----------
Income (Loss) from operations (7,749) 231,585 (149,452) 83,295
Interest/Dividend income 39,789 0 39,789 0
Interest expense -- related party 0 (76,632) 0 (152,422)
----------- ----------- ----------- -----------
Net income (loss) $ 32,040 $ 154,953 $ (109,663) $ (69,127)
=========== =========== =========== ===========
Net income (loss) per share $ 0.01 $ 0.09 $ (0.04) $ (0.04)
=========== =========== =========== ===========
Weighted average common shares outstanding 3,830,433 1,694,816 2,623,393 1,694,816
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
MODACAD, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (109,663) $ (69,127)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation 25,146 9,696
Amortization of capitalized software development costs 97,762 39,759
(Increase) decrease in:
Accounts receivable (99,076) 24,851
Inventories (32,625) 0
Prepaid expenses and other current assets (66,088) 930
Other assets (26,497) 24,037
Increase (decrease) in:
Accounts payable and accrued expenses (502,346) 106,168
Deferred income 7,445 77,561
Accrued interest 0 152,422
----------- -----------
Net cash used in (provided by) operating activities (705,942) 366,297
----------- -----------
Cash flows from investing activities:
Purchase of furniture and equipment (408,424) (93,101)
Capitalized computer software development cost (776,705) (329,752)
----------- -----------
Net cash used in investing activities (1,185,129) (422,853)
----------- -----------
Cash flows from financing activities:
Repayment of borrowings under notes payable (250,000) 0
Repayment of borrowings (Advances) from officers/stockholders (200,000) 10,000
Proceeds from issuance of common stock and warrants 5,543,491 0
Increase (Decrease) in deferred offering costs 289,597 (2,038)
----------- -----------
Net cash provided by financing activities 5,383,088 7,962
Net increase (decrease) in cash 3,492,017 (48,594)
Cash, beginning of period 13,224 86,198
----------- -----------
Cash, end of period $ 3,505,241 $ 37,604
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 0 $ 0
=========== ===========
Income taxes paid $ 800 $ 0
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
MODACAD, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1: GENERAL
As contemplated by the Securities and Exchange Commission under Item 310(b) of
Regulation S-B, the accompanying financial statements and footnotes have been
condensed and therefore do not contain all disclosures required by generally
accepted accounting principles. The interim financial data are unaudited;
however, in the opinion of ModaCAD, Inc. (the "Company"), the interim data
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results for the interim periods. Results
for interim periods are not necessarily indicative of those to be expected for
the full year.
Note 2: FURNITURE AND EQUIPMENT
Furniture and equipment consist of the following:
<TABLE>
<S> <C>
Office equipment $ 27,255
Computer equipment and software 681,829
Furniture and fixtures 122,926
Leasehold improvements 39,723
--------
$871,733
Less: Accumulated depreciation 342,956
--------
$528,777
========
</TABLE>
Note 3: ADVANCES - OFFICERS/STOCKHOLDERS
During the first quarter of 1996, the Company borrowed a total of $115,000 from
certain of its officers/stockholders under non-interest-bearing notes. In April
1996, the Company repaid $315,000 to the officers/stockholders.
Note 4: STOCKHOLDERS' EQUITY
Issuance of Common Stock
In January 1996, the Company issued 11,251 shares of common stock to employees
of the Company for employee stock awards accrued in prior years.
Exercise of Warrant
In March 1996, certain of the Company's officers and majority shareholders
exercised a warrant to purchase 236,955 shares of the Company's common stock for
$9,125.
Conversion of Note Payable
A note payable to certain of the Company's officers/stockholders in the
principal amount of $3,073,713 and accrued interest of $1,471,462 was converted
into 900,000 shares of the Company's common stock on March 27, 1996.
4
<PAGE> 7
MODACAD, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 3: STOCKHOLDERS' EQUITY (Continued)
Initial Public Offering
In April 1996, the Company completed an initial public offering (the "IPO") of
1,400,000 units ("Units") resulting in net proceeds to the Company of
approximately $5,600,000 after paying underwriters' fees and costs associated
with the offering. Each Unit consisted of one share of the Company's common
stock and one redeemable warrant exercisable to purchase one share of common
stock at a price of $6.50 per share for a period of five years from March 27,
1996. In April 1996, an additional 210,000 Units were sold pursuant to the
over-allotment option granted to the underwriters resulting in net proceeds to
the Company of approximately $900,000 after paying underwriters' fees and cost
of issuance.
Repurchase of Common Stock
Upon completion of the IPO, the Company repurchased 312,168 shares of its common
stock for $900,000.
Warrant
In 1995 and January 1996, the Company issued warrants to a third party lender to
purchase 200,000 Units with an exercise price of $4.00 per Unit. The warrants
are exercisable through December 1997. The warrants included in the Units will
be exercisable to purchase one share of common stock at a price of $6.50 per
share for a period of five years from March 27, 1996.
Issuance of Warrant
The Company issued to the underwriters in the IPO, in consideration for $1,400,
a warrant to purchase 140,000 units, at a per unit exercise price of $6.00, each
consisting of one share of Common Stock and one redeemable warrant exercisable
to purchase one share of Common Stock at an exercise price of $9.10 per share.
Such units are exercisable for a four-year period commencing March 26, 1997.
Stock Option Plan
In 1995, the Company adopted the 1995 Stock Option Plan which expires in 2006.
Under the Plan 300,000 shares have been reserved for issuance. In January 1996,
180,000 options were issued to an employee with an exercise price of $5.00 per
share.
5
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the financial
statements and the notes thereto appearing elsewhere in this Form 10-QSB.
GENERAL
ModaCAD was incorporated in 1988 to develop, market and support software
products based on its proprietary modeling and rendering technology for use in
industrial design applications including the apparel, textile and home
furnishings industries. The Company's existing products utilize the Company's
proprietary modeling and rendering technology, operate on standard personal
computers running Macintosh or Windows operating systems and are grouped into
two principal product families: computer aided design ("CAD") and electronic
merchandising software products. The Company's CAD software products are used
principally by industrial designers to model three-dimensional synthetic objects
from two-dimensional images and to render such objects in real time with
photorealistic imagery. The Company's electronic merchandising software combines
the Company's technology with digital product catalogs produced by the Company
or by product manufacturers using the Company's CAD software. The Company's
revenues have been generated principally from sales of its CAD and electronics
merchandising products. Currently, the Company is developing a new consumer
software product line called ModaCAD's Home Decorator Series aimed at the
consumer software market.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1996 AND 1995
The following table sets forth selected items from the Company's statements of
operations (in thousands) and the percentages that such items bear to net sales:
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------------------------
1996 1995
------------------ ------------------
<S> <C> <C> <C> <C>
Net sales $ 555 100.0% $ 640 100.0%
Cost of sales 31 5.6 49 7.6
Selling, general and administrative 463 83.4 258 40.4
Research and development 7 1.3 81 12.7
Amortization of software development costs 62 11.2 20 3.1
----- ----- ----- -----
Total expenses 563 101.5 408 63.8
----- ----- ----- -----
Income (Loss) from operations (8) (1.5) 232 36.2
Interest/Dividend income 40 7.2 0 0.0
Interest expense 0 0.0 (77) (12.0)
----- ----- ----- -----
Net income $ 32 5.7% $ 155 24.2%
===== ===== ===== =====
</TABLE>
Net Sales
Net sales decreased $85,000, or 13%, to $555,000 in the second quarter of 1996
from $640,000 in the second quarter of 1995 due primarily to sales decreases in
electronic merchandising, CAD products, hardware, consulting, training and
maintenance services.
6
<PAGE> 9
Sales of electronic merchandising products decreased $29,000, or 10%, to
$274,000 in the second quarter of 1996 from $303,000 in the second quarter of
1995. Sales of CAD products decreased $23,000, or 10%, to $218,000 in the second
quarter of 1996 from $241,000 in the second quarter of 1995. The higher demand
in the second quarter of 1995 was due primarily to the release of updated
versions of electronic merchandising and CAD software in that quarter, which
demand was not replicated in the second quarter of 1996.
Net sales attributable to consulting services, training and hardware sales
decreased $19,000, or 40%, to $29,000 in the second quarter of 1996 from $48,000
in the second quarter of 1995 due primarily to the Company's decisions to
outsource some customer training to an independent contractor and to phase out
its hardware sales which historically generated low profit margins for the
Company. Net sales resulting from products maintenance fees decreased $5,000 in
the second quarter of 1996 compared to the second quarter of 1995.
Cost of Sales
Cost of sales decreased $18,000, or 37%, to $31,000 in the second quarter of
1996 from $49,000 in the second quarter of 1995. This decrease is due primarily
to lower cost associated with customer training and sales of computer hardware
as a result of the Company's decision to outsource some customer training and
phase out hardware sales.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $205,000, or 79%, to
$463,000 in the second quarter of 1996 from $258,000 in the second quarter of
1995. This increase was due primarily to increased personnel costs of $112,000
resulting from the hiring of additional personnel in the second quarter of 1996
in support of the accelerated activities associated with the Company's consumer
products being developed, currently referred as the Home Decorator Series.
Certain related costs including travel, marketing, and office supplies expenses
increased $87,000 in the second quarter of 1996 compared to the second quarter
of 1995. The increases in the marketing expenses reflect the implementation of
the Company's planned expansion into new markets after the close of initial
public offering (the "IPO") in April 1996. The increase was partially offset by
an $11,000 decline in professional fees.
Research and Development
The Company incurred $490,000 of research and development costs during the
second quarter of 1996, of which $483,000 was capitalized and $7,000 was
expensed, compared to $249,000 for the second quarter of 1995, of which $168,000
was capitalized and $81,000 was expensed. The 97% increase in research and
development expenditure from the second quarter of 1995 to the second quarter of
1996 was due primarily to the hiring of additional personnel in connection with
the development of the Home Decorator Series.
Amortization of Software Development Costs
The amortization of software development costs increased $42,000, or 212%, to
$62,000 in the second quarter of 1996 from $20,000 in the second quarter of 1995
as the Company began marketing (and amortizing development costs associated
with) several new versions of software products during the second quarter of
1996.
7
<PAGE> 10
Interest/Dividend Income
Interest/Dividend income of $40,000 in the second quarter of 1996 was generated
from a "money market" account in which the unexpended proceeds from the
Company's IPO are maintained.
Interest Expense
The Company incurred interest expense of $77,000 in the second quarter of 1995
on a promissory note held by the Company's majority stockholders who are also
officers of the Company. The note and the related accrued interest were
converted into 900,000 shares of the Company's common stock in March 1996 in
connection with the IPO, and no interest expense was incurred in 1996.
Income Taxes
The Company recorded no provision for income taxes in the second quarter of 1996
and 1995 due to the utilization of net operating loss carryforwards.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 1996 AND 1995
The following table sets forth selected items from the Company's statements of
operations (in thousands) and the percentages that such items bear to net sales:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------------------------------
1996 1995
-------------------- --------------------
<S> <C> <C> <C> <C>
Net sales $ 893 100.0% $ 975 100.0%
Cost of sales 59 6.7 127 13.1
Selling, general and administrative 843 94.3 580 59.5
Research and development 43 4.8 145 14.9
Amortization of software development costs 98 10.9 40 4.1
------- ----- ------- -----
Total expenses 1,043 116.7 892 91.6
------- ----- ------- -----
Income (Loss) from operations (150) (16.7) 83 8.4
Interest/Dividend income 40 4.5 0 0.0
Interest expense 0 0.0 (152) (15.6)
------- ----- ------- -----
Net income (loss) $ (110) (12.2%) $ (69) (7.2%)
======= ===== ======= =====
</TABLE>
Net Sales
Net sales decreased $82,000, or 8%, to $893,000 in the first six months of 1996
from $975,000 in the comparable period of 1995 due primarily to sales decreases
in CAD products, hardware, consulting, training and maintenance services.
However, an increase in sales of electronic merchandising products partially
offset those decreases.
Sales of electronic merchandising products increased $18,000, or 5%, to $380,000
in the first six months of 1996 from $362,000 in the comparable period of 1995
due primarily to establishment of new electronic merchandising accounts in the
first six months of 1996. The increase in sales in the first six months of 1996
compared to the comparable period of 1995 was also due to the release of new
updates of the Company's electronic merchandising products (primarily in the
first quarter of 1996).
8
<PAGE> 11
Sales of CAD products decreased $9,000, or 2%, to $378,000 in the first six
months of 1996 from $387,000 in the comparable period of 1995. The higher demand
in the first six months of 1995 was due primarily to strong sales of CAD
products in the second quarter of 1995 after introduction of new versions of the
CAD products.
Net sales attributable to consulting services, training and hardware sales
decreased by $97,000, or 67%, to $48,000 in the first six months of 1996 from
$145,000 in the comparable period of 1995 due primarily to the Company's
decisions to outsource some customer training to an independent contractor and
to phase out its hardware sales which historically generated low profit margins
for the Company. Net sales resulting from products maintenance fees decreased
$3,000 in the first six months of 1996 compared to the comparable period of
1995.
Cost of Sales
Cost of sales decreased $68,000, or 53%, to $59,000 in the first six months of
1996 from $127,000 in the comparable period of 1995. This decrease is due
primarily to lower cost associated with customer training and sales of computer
hardware as a result of the Company's decision to outsource some customer
training and phase out hardware sales.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $263,000, or 45%, to
$843,000 in the first six months of 1996 from $580,000 in the comparable period
of 1995. This increase was due primarily to increased personnel costs of
$206,000 resulting from the hiring of additional personnel in the first six
months of in support of the accelerated activities associated with the Home
Decorator Series. Certain related costs including travel, marketing, and office
supplies expenses increased $95,000 in the first six months of 1996 compared to
the comparable period of 1995. The increases in the marketing expenses reflect
the implementation of the Company's planned expansion into new markets after the
close of the IPO in April 1996. The increase was partially offset by a $50,000
decline in professional fees.
Research and Development
The Company incurred $820,000 of research and development costs during the first
six months of 1996, of which $777,000 was capitalized and $43,000 was expensed,
compared to $475,000 for the comparable period of 1995, of which $330,000 was
capitalized and $145,000 was expensed. The 73% increase in research and
development expenditure from the first six months of 1995 to the first six
months of 1996 was due primarily to the hiring of additional personnel in
connection with the development of the Home Decorator Series.
Amortization of Software Development Costs
The amortization of software development costs increased $58,000, or 146%, to
$98,000 in the first six months of 1996 from $40,000 in the comparable period of
1995 as the Company began marketing (and amortizing development costs associated
with) several new versions of software products during the first six months of
1996.
9
<PAGE> 12
Interest/Dividend Income
Interest/Dividend income of $40,000 in the first six months of 1996 was
generated from a "money market" account in which the unexpended proceeds from
the Company's IPO are maintained.
Interest Expense
The Company incurred interest expense of $152,000 in the first six months of
1995 on a promissory note held by the Company's majority stockholders who are
also officers of the Company. The note and the related accrued interest were
converted into 900,000 shares of the Company's common stock in March 1996 in
connection with the IPO, and no interest expense was incurred in 1996.
Income Taxes
The Company recorded no provision for income taxes in the first six months of
1996 and 1995 due to the utilization of net operating loss carryforwards.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of capital through the first quarter of 1996
were cash flow from its operations and cash loans provided by two of its
officers who are the majority shareholders of the Company, on an as-needed basis
in support of the Company's software development programs. At the end of March
1996, total officers' loans in the principal amount of $3,073,713 and accrued
interest thereon of $1,471,462 were converted into 900,000 shares of the
Company's common stock in March 1996 pursuant to an agreement between such
officers and the Company in connection with the Company's initial public
offering.
In June 1995, the Company needed additional funding to support its accelerated
costs of operation and the development program for ModaCAD's Home Decorator
Series. To fund such costs from June 1995 through March 1996,
non-interest-bearing loans in the aggregate amount of $390,000 were provided by
the two officers and majority shareholders mentioned in the preceding paragraph.
In April 1996, a partial payment of $315,000 of the loans was made.
In December of 1995 and January 1996, a third party loaned the Company $250,000
and $150,000, respectively, to help finance the costs of the IPO and the ongoing
operations of the Company. In connection with such loans, the Company granted
the lender two-year Unit Purchase Warrants , with registration rights, to
purchase an aggregate of 200,000 Units with an exercise price of $4.00 per Unit.
In April 1996, the loans with aggregate principal of $400,000 and accrued
interest of $14,650 were paid.
In April 1996, the Company completed an initial public offering of 1,400,000
Units resulting in net proceeds to the Company of approximately $5,600,000 after
paying underwriters' fees and costs associated with the offering. An additional
210,000 Units were sold in April 1996 pursuant to the over-allotment option
granted to the underwriters resulting in additional net proceeds to the Company
of approximately $900,000 after paying underwriters' fees and cost of issuance.
In April 1996, the Company issued a warrant to the underwriters for $1,400 to
purchase 140,000 units. (See Note 3 to Financial Statements above.) The units
are exercisable for a four-year period commencing March 26, 1997 at an exercise
price of $6.00 per unit.
10
<PAGE> 13
Together with its existing capital and anticipated funds from operations, the
Company believes that the net proceeds received from the IPO will be sufficient
to provide its anticipated cash needs for working capital and capital
expenditure for at least the next 12 months. Thereafter, if cash generated from
operations is insufficient to satisfy the Company's capital requirements, the
Company may have to sell additional equity or debt securities or obtain credit
facilities.
11
<PAGE> 14
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:
3.1 Amended and Restated Articles of Incorporation.(1)
3.2 Bylaws, as amended.(1)
27.1 Financial Data Schedule.(2)
(b) Reports on Form 8-K
None.
(1) Incorporated by reference to the Company's Registration Statement on Form
SB-2 (Registration No. 333-1166-LA) filed with the Securities and Exchange
Commission on February 7, 1996, as amended by Amendment No. 1 thereto filed on
March 19, 1996 and Amendment No. 2 thereto filed on March 27, 1996.
(2) This exhibit is being filed electronically in the electronic format
specified by EDGAR.
12
<PAGE> 15
SIGNATURE
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.
ModaCAD, INC.
Date: August 13, 1996 By: /s/ LEE FREEDMAN
------------------
Lee Freedman
Chief Financial Officer
13
<PAGE> 16
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER SEQUENTIALLY
DESCRIPTION NUMBERED PAGE
<S> <C>
3.1 Amended and Restated Articles of Incorporation.(1)
3.2 Bylaws, as amended.(1)
27.1 Financial Data Schedule.(2)
</TABLE>
(1) Incorporated by reference to the Company's Registration Statement on Form
SB-2 (Registration No. 333-1166-LA) filed with the Securities and Exchange
Commission on February 7, 1996, as amended by Amendment No. 1 thereto filed on
March 19, 1996 and Amendment No. 2 thereto filed on March 27, 1996.
(2) This exhibit is being filed electronically in the electronic format
specified by EDGAR.
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from (A)
balance sheet and statement of operations as of June 30, 1996
and is qualified in its entirety by reference to such (B)
10-QSB for quarter ended June 30, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 3,505,241
<SECURITIES> 0
<RECEIVABLES> 492,704
<ALLOWANCES> 15,000
<INVENTORY> 42,175
<CURRENT-ASSETS> 4,095,628
<PP&E> 871,733
<DEPRECIATION> 342,956
<TOTAL-ASSETS> 6,353,224
<CURRENT-LIABILITIES> 277,855
<BONDS> 0
0
0
<COMMON> 11,763,039
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,353,224
<SALES> 893,475
<TOTAL-REVENUES> 893,475
<CGS> 59,542
<TOTAL-COSTS> 59,542
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (109,663)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (109,663)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
