<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 SEPTEMBER 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 of (IRS Employer Identification
incorporation or organization) Number)
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 October
18, 1996, was 3,865,790.
Transitional Small Business Disclosure Format: Yes No X
<PAGE> 2
MODACAD, INC.
FORM 10-QSB
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
Item Table of Contents Page
- ------ --------------------------------------------------------- ----
PART I. FINANCIAL INFORMATION
<S> <C> <C>
1. FINANCIAL STATEMENTS........................................ 1
Balance Sheet at September 30, 1996......................... 1
Statements of Operations for the three and nine months ended
September 30, 1996 and 1995.............................. 2
Statements of Cash Flows for the nine months ended
September 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
Exhibit Index .............................................. 14
</TABLE>
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ModaCAD, Inc.
BALANCE SHEET
September 30, 1996
(Unaudited)
ASSETS
<TABLE>
<S> <C>
Current assets:
Cash $2,403,503
Accounts receivable, net of allowance for doubtful accounts of $6,830 1,524,342
Inventories 37,750
Prepaid expenses and other current assets 115,742
----------
Total current assets 4,081,337
Capitalized computer software development costs,
net of accumulated amortization of $245,722 2,061,498
Furniture and equipment, net of accumulated depreciation of $374,952 (Note 2) 592,619
Investment in and advances to unconsolidated subsidiary 55,324
Other assets 38,006
----------
$6,828,784
==========
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 215,391
Deferred income 43,944
----------
Total current liabilities 334,335
----------
Stockholders' equity: (Note 4)
Common stock. no par value; authorized 15,000,000 shares;
issued and outstanding 3,865,790 11,592,905
Accumulated deficit (5,098,456)
----------
Total stockholders' equity 6,494,449
----------
$6,828,784
==========
</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 September 30, Nine Months Ended September 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $1,269,599 $ 468,516 $2,163,074 $1,443,216
---------- ---------- ---------- ----------
Cost of sales 23,316 52,642 82,858 179,889
Selling, general and administrative 605,539 275,442 1,448,512 854,972
Research and development 20,491 60,542 63,141 205,410
Amortization of capitalized software development costs 68,442 19,880 166,204 59,639
---------- ---------- ---------- ----------
Total expenses 717,788 408,506 1,760,715 1,299,910
---------- ---------- ---------- ----------
Income from operations 551,811 60,010 402,359 143,306
Interest/Dividend income 37,403 0 77,192 0
Interest expense -- related party 0 (77,474) 0 (229,896)
---------- ---------- ---------- ----------
Net income (loss) $ 589,214 $ (17,464) $ 479,551 $ (86,590)
========== ========== ========== ==========
Net income (loss) per share $ 0.15 $ (0.01) $ 0.16 $ (0.05)
========== ========== ========== ==========
Weighted average common shares outstanding 3,908,259 1,694,816 3,088,104 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>
Nine Months Ended September 30,
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 479,551 $ (86,590)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities:
Depreciation 57,141 16,854
Amortization of capitalized software development costs 166,204 59,639
(Increase) decrease in:
Accounts receivable (1,145,714) 75,008
Inventories (28,200) 0
Prepaid expenses and other current assets (111,322) 130
Other assets (26,046) 24,037
Increase (decrease) in:
Accounts payable and accrued expenses (478,622) 83,064
Deferred income (16,054) 71,706
Accrued interest 0 229,896
---------- ----------
Net cash (used in) provided by operating activities (1,103,062) 473,744
---------- ----------
Cash flows from investing activities:
Purchase of furniture and equipment (504,261) (109,100)
Capitalized computer software development cost (1,271,607) (514,065)
---------- ----------
Net cash used in investing activities (1,775,868) (623,165)
---------- ----------
Cash flows from financing activities:
Repayment of borrowings under notes payable (250,000) 0
Repayment of borrowings (Advances) from officers/stockholders (200,000) 85,000
Proceeds from issuance of common stock and warrants 5,429,612 0
Decrease (Increase) in deferred offering costs 289,597 (2,038)
---------- ----------
Net cash provided by financing activities 5,269,209 82,962
Net increase (decrease) in cash 2,390,279 (66,459)
Cash, beginning of period 13,224 86,198
---------- ----------
Cash, end of period $2,403,503 $ 19,739
========== ==========
Supplemental Cash Flow Information
Interest paid $ 0 $ 0
========== ==========
Income taxes paid $ 1,367 $ 800
========== ==========
</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" or "ModaCAD"), 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 $ 49,132
Computer equipment and software 740,867
Furniture and fixtures 129,835
Leasehold improvements 47,737
--------
$967,571
Less: Accumulated depreciation 374,952
--------
$592,619
========
</TABLE>
Note 3: ADVANCES - OFFICERS/STOCKHOLDERS
During the first quarter of 1996, the Company borrowed a total of $115,000 from
two of its officers/stockholders under non-interest-bearing notes. In April
1996, the Company repaid $315,000 to the officers/stockholders for non-interest
bearing loans made to the Company in 1995 and 1996.
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. In August 1996,
the Company issued additional 1,298 shares of common stock to an employee as a
stock award.
Exercise of Warrant
In March 1996, two 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.
4
<PAGE> 7
MODACAD, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 4: STOCKHOLDERS' EQUITY (Continued)
Conversion of Note Payable
A note payable to two 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 in connection
with the Company's initial public offering.
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, the effective date of the Registration Statement. 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 from two affiliated minority shareholders.
Warrant
In December 1995 and January 1996, the Company issued two-year Unit purchase
warrants to a third party lender to purchase an aggregate of 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 27, 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 to purchase common stock were granted 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 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 products combine
the Company's technology with digital product catalogs produced by the Company
or by product manufacturers using the Company's CAD software. The Company is
currently developing consumer software products for interior home decorating
applications. Prior to the third quarter of 1996, the Company's revenues have
been generated principally from sales of its CAD and electronics merchandising
products. During the third quarter of 1996, the Company generated a significant
portion of its total revenue as a result of the fulfillment of certain
obligations pursuant to an agreement with its consumer software publisher.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED SEPTEMBER 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 September 30,
--------------------------------------------
1996 1995
------------------- -------------------
<S> <C> <C> <C> <C>
Net sales $1,270 100.0% $ 469 100.0%
Cost of sales 23 1.8 53 11.2
Selling, general and administrative 606 47.7 275 58.8
Research and development 20 1.6 61 12.9
Amortization of software development costs 69 5.4 20 4.2
------ ----- ------ -----
Total expenses 718 56.5 409 87.1
------ ----- ------ -----
Income from operations 552 43.5 60 12.9
Interest/Dividend income 37 2.9 0 0.0
Interest expense 0 0.0 (77) (16.5)
------ ----- ------ -----
Net income (loss) $ 589 46.4% $ (17) (3.6%)
====== ===== ====== =====
</TABLE>
Net Sales
Net sales increased $801,000, or 171%, to $1,270,000 in the third quarter of
1996 from $469,000 in the third quarter of 1995 primarily due to sales increases
in the Company's commercial products (electronic
6
<PAGE> 9
merchandising and CAD products) and revenue generated under publishing agreement
relating to the Company's new consumer product line being developed.
Sales of electronic merchandising and CAD products increased $104,000, or 28%,
to $472,000 in the third quarter of 1996 from $368,000 in the third quarter of
1995 primarily due to establishment of certain new major accounts in the third
quarter of 1996.
Most of the Company's third quarter net sales increase was attributable to the
recognition of revenue upon the fulfillment of certain obligations under an
agreement with its consumer software publisher with respect to the Company's new
interior home decorating software products being developed.
There were no hardware sales in both the third quarters of 1996 and 1995 due to
the Company's decision to phase out such sales which historically generated low
profit margins for the Company.
Cost of Sales
Cost of sales decreased $30,000, or 57%, to $23,000 in the third quarter of 1996
from $53,000 in the third quarter of 1995. This decrease was primarily due to
the Company's decision to phase out hardware sales.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased $331,000, or 120%, to
$606,000 in the third quarter of 1996 from $275,000 in the third quarter of
1995. This increase was primarily due to the increase of $172,000 in personnel
costs resulting from the hiring of additional personnel in 1996 in support of
the accelerated activities associated with the Home Decorator Series consumer
software product line. Certain related costs including travel, marketing,
telephone, and office supplies expenses increased $71,000 in the third quarter
of 1996 compared to the third 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 the Company's initial public offering (the "IPO") in
April 1996.
Research and Development
The Company incurred $515,000 of research and development costs during the third
quarter of 1996, of which $495,000 was capitalized as software development costs
and $20,000 was expensed, compared to $245,000 for the third quarter of 1995, of
which $184,000 was capitalized and $61,000 was expensed. The 110% increase in
research and development expenditure from the third quarter of 1995 to the third
quarter of 1996 was primarily due to the hiring of additional personnel in
connection with the development of the Home Decorator Series and the Company's
next generation commercial products.
Amortization of Software Development Costs
The amortization of software development costs increased $49,000, or 245%, to
$69,000 in the third quarter of 1996 from $20,000 in the third quarter of 1995
as the Company began marketing (and amortizing development costs associated
with) several new versions of software products in 1996.
7
<PAGE> 10
Interest/Dividend Income
Interest/Dividend income of $37,000 in the third 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 third 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 has been incurred in 1996.
Income Taxes
The Company recorded no provision for income taxes in the third quarter of 1996
and 1995 due to the utilization of net operating loss carryforwards.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 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>
Nine Months Ended September 30,
---------------------------------------------
1996 1995
------------------- --------------------
<S> <C> <C> <C> <C>
Net sales $2,163 100.0% $1,443 100.0%
Cost of sales 83 3.8 180 12.5
Selling, general and administrative 1,449 67.0 855 59.2
Research and development 63 2.9 205 14.2
Amortization of software development costs 166 7.7 60 4.1
------ ----- ------ -----
Total expenses 1,761 81.4 1,300 90.0
------ ----- ------ -----
Income from operations 402 18.6 143 10.0
Interest/Dividend income 77 3.6 0 0.0
Interest expense 0 0.0 (230) (15.9)
------ ----- ------- -----
Net income (loss) $ 479 22.2% $ (87) (5.9%)
====== ===== ======= =====
</TABLE>
Net Sales
Net sales increased $720,000, or 50%, to $2,163,000 in the first nine months of
1996 from $1,443,000 in the comparable period of 1995 primarily due to sales
increases in the Company's commercial products (electronic merchandising and CAD
products) and revenue generated under publishing agreement relating to the
Company's new consumer product line being developed. However, there were small
sales decreases in hardware, consulting, training and maintenance services which
slightly offset those increases.
Sales of electronic merchandising software and CAD products increased $113,000,
or 10%, to $1,231,000 in the first nine months of 1996 from $1,118,000 in the
comparable period of 1995 primarily due to establishment of new major accounts
in the first nine months of 1996. The increase in sales in the
8
<PAGE> 11
first nine 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).
Most of the Company's first nine months net sales increase was attributable to
the recognition of revenue upon the fulfillment of certain obligations under an
agreement with its consumer software publisher with respect to the Company's new
interior home decorating software products being developed.
Net sales attributable to consulting services, training and hardware sales
decreased by $82,000, or 69%, to $36,000 in the first nine months of 1996 from
$118,000 in the comparable period of 1995 primarily due 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.
Net sales resulting from products maintenance fees decreased $8,000 in the first
nine months of 1996 compared to the comparable period of 1995.
Cost of Sales
Cost of sales decreased $97,000, or 54%, to $83,000 in the first nine months of
1996 from $180,000 in the comparable period of 1995. This decrease was primarily
due to lower costs 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 $594,000, or 69%, to
$1,449,000 in the first nine months of 1996 from $855,000 in the comparable
period of 1995. This increase was primarily due to the increase of $377,000 in
personnel costs resulting from the hiring of additional personnel in the first
nine months of 1996 in support of the accelerated activities associated with the
Home Decorator Series consumer software product line. Certain related costs
including travel, marketing, telephone, and office supplies expenses increased
$171,000 in the first nine 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.
Research and Development
The Company incurred $1,335,000 of research and development costs during the
first nine months of 1996, of which $1,272,000 was capitalized as software
development costs and $63,000 was expensed, compared to $720,000 for the
comparable period of 1995, of which $515,000 was capitalized and $205,000 was
expensed. The 85% increase in research and development expenditure from the
first nine months of 1995 to the first nine months of 1996 was primarily due to
the hiring of additional personnel in connection with the development of the
Home Decorator Series and the Company's next generation commercial products.
Amortization of Software Development Costs
The amortization of software development costs increased $106,000, or 177%, to
$166,000 in the first nine months of 1996 from $60,000 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 nine
months of 1996.
9
<PAGE> 12
Interest/Dividend Income
Interest/Dividend income of $77,000 in the first nine 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 $230,000 in the first nine 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 has been incurred in 1996.
Income Taxes
The Company recorded no provision for income taxes in the first nine 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, loans by such officers and majority shareholders 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 pursuant to an agreement between
such officers/shareholders and the Company in connection with the Company's IPO.
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 (each Unit consisting of one share of
common stock and one warrant to purchase one share of common stock) 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.
10
<PAGE> 13
In April 1996, the Company issued a warrant to the underwriters for $1,400 to
purchase 140,000 units (each unit consisting of one share of common stock and
one warrant to purchase one share of common stock). (See Note 4 to Financial
Statements included elsewhere herein.) The units are exercisable for a four-year
period commencing March 27, 1997 at an exercise price of $6.00 per unit.
The Company believes that its existing capital and anticipated funds from
operations 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:
27.1 Financial Data Schedule.(1)
(b) Reports on Form 8-K
None.
- -----------------
(1) 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: October 18, 1996 By: /s/ LEE FREEDMAN
---------------------------
Lee Freedman
Vice President, Finance and
Chief Financial Officer
13
<PAGE> 16
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION NUMBERED PAGE
27.1 Financial Data Schedule.(1)
- ------------------
(1) 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 OPERATION AS OF SEPTEMBER 30, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH (B) 10-QSB FOR QUARTER ENDED SEPTEMBER 30,
1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 2,403,503
<SECURITIES> 0
<RECEIVABLES> 1,531,172
<ALLOWANCES> 6,830
<INVENTORY> 37,750
<CURRENT-ASSETS> 4,081,337
<PP&E> 967,571
<DEPRECIATION> 374,952
<TOTAL-ASSETS> 6,828,784
<CURRENT-LIABILITIES> 334,335
<BONDS> 0
0
0
<COMMON> 11,592,905
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 6,828,784
<SALES> 2,163,074
<TOTAL-REVENUES> 2,163,074
<CGS> 82,858
<TOTAL-COSTS> 82,858
<OTHER-EXPENSES> 1,677,857
<LOSS-PROVISION> 9,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 479,551
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 479,551
<EPS-PRIMARY> 0.16
<EPS-DILUTED> 0.15
</TABLE>
