SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-28174
ELECTRONIC HAIR STYLING, INC.
(Exact name of registrant as specified in its charter)
Delaware 68-0301547
(State or other jurisdiction
of incorporation or organization) (I.R.S. Employer Identification No.)
One Lovell Avenue, Mill Valley CA 94941
(Address of principal executive offices) (Zip Code)
(415) 380-8200
(Registrant's telephone number, including area code)
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 [ ] No [ X ]
At June 30, 1996, there were 5,570,395 shares of the Registrant's
$.01 par value Common Stock outstanding.
<PAGE>
THIS QUARTERLY REPORT ON FORM 10-Q CONTAINS HISTORICAL INFORMATION AND
FORWARD-LOOKING STATEMENTS. STATEMENTS LOOKING FORWARD IN TIME ARE INCLUDED IN
THIS FORM 10-Q PURSUANT TO THE "SAFE HARBOR" PROVISION OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THEY INVOLVE KNOWN AND UNKNOWN RISKS
AND UNCERTAINTIES THAT MAY CAUSE THE COMPANY'S ACTUAL RESULTS IN FUTURE PERIODS
TO BE MATERIALLY DIFFERENT FROM ANY FUTURE PERFORMANCE SUGGESTED HEREIN.
FURTHER, THE COMPANY OPERATES IN AN INDUSTRY SECTOR WHERE SECURITIES VALUES MAY
BE VOLATILE AND MAY BE INFLUENCED BY ECONOMIC AND OTHER FACTORS BEYOND THE
COMPANY'S CONTROL. IN THE CONTEXT OF THE FORWARD-LOOKING INFORMATION PROVIDED
IN THIS FORM 10-Q AND IN OTHER REPORTS, PLEASE REFER TO THE DISCUSSIONS OF RISK
FACTORS DETAILED IN, AS WELL AS THE OTHER INFORMATION CONTAINED IN, THE
COMPANY'S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION DURING THE PAST
12 MONTHS.
<PAGE>
<TABLE>
ELECTRONIC HAIR STYLING, INC.
INDEX TO FORM 10-Q
JUNE 30, 1996
<CAPTION>
Page No.
<S> <C>
Part I - Financial Information
Item 1. Financial Statements
Condensed Financial Statements: (Unaudited)
Balance Sheets as of June 30, 1996 and December 31, 1995 3
Statements of Operations for the three months and six months
ended June 30, 1996 and 1995 4
Statements of Cash Flows for the six months ended June 30, 1996
and 1995 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 11
Signature 12
</TABLE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ELECTRONIC HAIR STYLING, INC.
BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
June 30, December 31,
1996 1995
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 11,805 $ 2,338
Receivables from Dow 4,753 2,374
Accounts receivable, net 13,643 10,307
Inventories 8,873 11,140
Prepaid expenses and other current assets 386 210
------------- ------------
Total current assets 39,460 26,369
Property, Plant and Equipment, Net 16,365 16,283
Other Assets 187 315
-------------- --------------
Total Assets 56,012 $ 42,967
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 7,777 $ 6,469
Accrued expenses 3,865 4,024
Accrued salaries, wages and employee related expenses 2,506 2,605
Current portion of long-term debt 1,200 1,200
Payables to related parties 1,500 1,725
------------- -------------
Total current liabilities 16,848 16,023
Long-Term Debt 7,669 12,850
Related Party Obligations 1,750 7,500
Stockholders' Equity :
Preferred stock series A, $0.01par value, 4,000,000 shares
authorized, 1,000,000 shares issued and outstanding at
June 30, 1996 and December 31, 1995.
($10,000,000 liquidation preference) 8,500 8,500
Preferred stock series B, 763,500 shares authorized, 763,500 shares
issued and outstanding at June 30, 1996.
($5,000,000 liquidation preference) 5,000 -
Common stock, $0.01 par value, 12,000,000 shares authorized,
5,570,395 and 2,944,920 shares, issued and outstanding at
June 30, 1996 and December 31, 1995, respectively. 56 29
Additional paid-in capital 19,908 1,718
Stock subscription receivable (50) (50)
Accumulated deficit (3,669) (3,603)
-------------- --------------
Total stockholders' equity 29,745 6,594
-------------- --------------
Total Liabilities and Stockholders' Equity $ 56,012 $ 42,967
============== ===============
</TABLE>
See notes to financial statements.
3
<PAGE>
<TABLE>
ELECTRONIC HAIR STYLING, INC.
STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- -----------------------------
1996 1995 1996 1995
---------------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Net Sales to Dow $ 6,632 $ - $ 13,496 $ -
Net Sales to Others 25,050 - 46,666 -
------------- ----------- ------------ ------------
Total Net Sales 31,682 - 60,162 -
Cost of Goods Sold 19,783 - 37,737 -
------------- ----------- ------------ ------------
Gross Margin 11,899 - 22,425 -
Selling, General and Administrative Expenses 10,888 101 21,731 194
------------- ----------- ------------ ------------
Operating Income (Loss) 1,011 (101) 694 (194)
Interest Expense (418) (19) (832) (37)
Other Income 64 - 72 -
------------- ----------- ------------ ------------
Net Income (Loss) $ 657 $ (120) $ (66) $ (231)
============= =========== ============ ============
Dividends on Series B Preferred Stock (33) - (33) -
------------- ----------- ------------ ------------
Net Income (Loss) Available to Common
Shareholders
$ 624 $ (120) $ (99) $ (231)
============= =========== ============= ============
Net Income (Loss) per Common Share $ .12 $ (.03) $ (.02) $ (.06)
============= =========== ============= ============
Weighted Average Common and Common
Equivalent Shares Outstanding
5,246 4,086 4,666 4,086
============= =========== ============ ============
</TABLE>
See notes to financial statements.
4
<PAGE>
ELECTRONIC HAIR STYLING, INC.
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Six Months Ended
June 30,
---------------------------
1996 1995
-------------- --------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss $ (66) $ (231)
Adjustments to reconcile net loss to net
cash used in operating activities:
Noncash credits for services 124 -
Issuance of common stock for services 100 -
Loss on disposal of fixed assets 11 -
Depreciation and amortization 685 1
Changes in:
Accounts receivable (5,715) -
Inventories 2,267 -
Other assets (76) -
Payables 1,274 46
Accrued expenses (258) 31
--------- --------
Net cash used in operating activities (1,654) (153)
-------- --------
CASH FLOWS USED IN INVESTING
ACTIVITIES - Additions to property, plant and
equipment (749) (1)
-------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Borrowings, net (6,156) 67
Proceeds from issuance of common stock, net 18,026 96
-------- --------
Net cash provided by financing activities 11,870 163
-------- --------
NET CHANGE IN CASH 9,467 9
CASH AT BEGINNING OF PERIOD 2,338 2
-------- --------
CASH AT END OF PERIOD $11,805 $ 11
========= =========
See notes to financial statements
5
<PAGE>
ELECTRONIC HAIR STYLING, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. ACCOUNTING POLICIES
The accompanying condensed financial statements are unaudited and include
all adjustments, which consist of only normal recurring accruals, that
management considered necessary to fairly present the results for such
periods. These financial statements should be read in conjunction with the
financial statements and the notes contained in Electronic Hair Styling,
Inc.'s ("Company") Registration Statement effective May 22, 1996. Results
for interim periods are not necessarily indicative of results for the full
year.
Net Income (Loss) per Share was computed by dividing net income (loss)
available to common shareholders by the weighted average number of shares
of common stock and common stock equivalents, which consist of series A
convertible preferred stock, warrants and options. In accordance with the
rules of the Securities and Exchange Commission, the common stock
equivalents issued within one year of the Company's initial public offering
have been considered as outstanding since the inception of the Company and
have been included in the calculation of weighted average common and common
equivalent shares outstanding for all periods presented using the treasury
stock method, even though they are antidilutive in loss periods.
2. INVENTORIES
Inventories include the following:
June 30 December 31
1996 1995
---------------- -----------------
Finished goods $ 5,128,000 $ 6,393,000
Work in process 632,000 480,000
Raw materials 3,113,000 4,267,000
------------- --------------
$ 8,873,000 $ 11,140,000
3. STOCKHOLDERS' EQUITY
On May 22, 1996, the Company completed its initial public offering of
2,600,000 shares of its common stock. Net proceeds to the Company
aggregated approximately $18.0 million. As of the closing date of the
offering, the $5.0 million convertible note with DowBrands Inc. ("Dow")
converted into 763,500 shares of Series B convertible preferred stock, the
holders of which are entitled to dividends ($400,000 annually) which will
accrue whether or not declared and will be cumulative to the extent not
paid.
6
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Pro Forma and Historical Results of Operations
The following table sets forth pro forma statements of operations
information in dollars and as a percentage of total net sales for the six months
and three months ended June 30, 1995, and historical statements of operations
information in dollars and as a percentage of total net sales for the six months
and three months ended June 30, 1996. The pro forma information gives effect to
the acquisition of Lamaur as if it had occurred January 1, 1995. The pro forma
information is not necessarily indicative of future results of operations.
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
-------------------------------------- ----------------------------------------
PRO PRO
HISTORICAL FORMA HISTORICAL FORMA
1996 % 1995 % 1996 % 1995 %
----------- ------ ------- ------ ---------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total net sales $60,162 100.0% $61,856 100.0% $31,682 100.0% $30,203 100.0%
Cost of goods sold 37,737 62.7% 37,522 60.7% 19,783 62.4% 17,968 59.5%
----------- ------ ------- ------ ---------- ------ -------- ------
Gross margin 22,425 37.3% 24,334 39.3% 11,899 37.6% 12,235 40.5%
Operating expenses 21,731 36.1% 22,555 36.4% 10,888 34.4% 11,813 39.1%
Write-down of
assets 0 0.0% 11,000 17.8% 0 0.0% 0 0.0%
----------- ------ ------- ------ ---------- ------ -------- ------
Operating income
(loss) 694 1.2% (9,221) (14.9%) 1,011 3.2% 422 1.4%
Other income (expense)
Interest expense (832) (1.4%) (788) (1.3%) (418) (1.3%) (378) (1.2%)
Other income 72 0.1% 73 0.1% 64 0.2% 34 0.1%
----------- ------ ------- ------- ---------- ------ -------- ------
Net income (loss) (66) (0.1%) (9,936) (16.1%) 657 2.1% 78 0.3%
=========== ====== ======= ======= ========== ====== ======== ======
</TABLE>
Six Months Ended June 30, 1996 (Historical) Compared to Six Months
Ended June 30, 1995 (Pro Forma)
Total net sales for the six months ended June 30, 1996, were $60.2
million, compared with pro forma net sales of $61.9 million for the same period
in the prior year, a decline of 2.7%. Although the Company experienced sales
increases from the STYLE(R) line of products and contract manufacturing during
the six months ended June 30, 1996, the Company experienced sales decreases in
both PERMASOFT(R) and SALON STYLE(R). Lamaur's new management implemented a
strategy that includes increased advertising during the quarter ended June 30,
1996, intended to reverse the decline in PERMASOFT(R) sales. SALON STYLE(R) was
introduced in 1994 and was supported by a heavily funded marketing campaign
through the first four months of 1995. In April 1995, Dow discontinued
advertising of SALON STYLE(R) in conjunction with the decision to sell the
Lamaur Division. During the next ten months, SALON STYLE(R) was not supported
with any advertising funds until the new Lamaur management team reinstituted an
aggressive marketing
7
<PAGE>
campaign in the first quarter of 1996. Management believes that over time, its
new campaign can reverse the decline in PERMASOFT(R) and SALON STYLE(R) sales.
The Company believes that contract manufacturing sales will continue to
increase throughout the balance of 1996 as a result of the addition of two new
customers.
Gross margin for the six months ended June 30, 1996 decreased by $1.9
million, or 7.8%, as compared with pro forma gross margin for the same period in
1995. Gross margin as a percentage of net sales was 37.3% for the six months
ended June 30, 1996, as compared with pro forma gross margin of 39.3% during the
same period in 1995. The decrease in gross margin percentage in 1996 was due to
a change in product mix to lower-margin products as a result of an increase in
sales of the lower-margin STYLE(R) line of products and contract manufacturing
and a decrease in consumer retail purchases of the higher margin PERMASOFT(R)
and SALON STYLE(R) product line.
Operating expenses of $21.7 million for the six months ended June 30,
1996, decreased by $0.8 million or 3.7% compared to pro forma operating expenses
for the same period in 1995. This decrease is principally attributable to the
reduction in variable expenses including brokerage and freight as a result of a
change in product sales mix and lower sales in 1996, a one-time charge in 1995
related to the write-off of a mold for discontinued product packaging, and the
savings realized in 1996 as a result of the organizational restructuring
implemented in the second quarter of 1995 and the first quarter of 1996.
The $11.0 million write-down of assets by Dow in the first quarter of
1995 reflected a further adjustment in the carrying value of Lamaur to its net
realizable value in connection with Dow's decision to sell Lamaur. Future
significant changes are not expected as all assets and liabilities were recorded
at their estimated fair value at the date of the Company's acquisition of
Lamaur.
As a result of the foregoing factors, the operating income for the six
months ended June 30, 1996 was $0.7 million, compared with a pro forma
operating loss of $9.2 million in the same period in 1995. Excluding the
write-down of assets, the pro forma operating income for the six months ended
June 30, 1995, would have been $1.8 million.
Interest expense was $0.8 million for each of the six months ended June
30, 1996, and 1995.
As a result of the foregoing factors, the net loss for the six months
ended June 30, 1996, was $0.1 million, compared to a pro forma net loss of $9.9
million for the same period in 1995.
8
<PAGE>
Three Months Ended June 30, 1996 (Historical) Compared to Three months
Ended June 30, 1995 (Pro Forma)
Total net sales for the three months ended June 30, 1996, were $31.7
million, compared with pro forma net sales of $30.2 million for the same period
in the prior year, an increase of 4.9%.
The major contributor to the increased sales for the three months ended
June 30, 1996, was contract manufacturing. This increase was partially offset
by the decline in sales of PERMASOFT(R) and SALON STYLE(R) for the quarter
ended June 30, 1996.
Gross margin for the three months ended June 30, 1996 decreased by $.3
million or 2.7% as compared with pro forma gross margin for the same period in
1995. Gross margin as a percentage of net sales was 37.6% for the three months
ended June 30, 1996 compared with pro forma gross margin of 40.5%. The decrease
in gross margin percentage was due to the change in product mix to lower margin
products as a result of increased sales in contracting manufacturing.
Operating expenses of $10.9 million for the three months ended June 30,
1996, decreased by $0.9 million or 7.8% compared to pro forma operating expenses
for the same period in 1995. This decrease in 1996 is principally attributable
to the reduction in variable expenses including brokerage and freight as a
result of a change in product sales mix, a one-time charge in the second quarter
of 1995 related to the write-off of a mold for discontinued product packaging,
and the savings realized in 1996 as a result of the organizational restructuring
implemented in the second quarter of 1995 and the first quarter of 1996.
Interest expense was $0.4 million for each of the three months ended
June 30, 1996, and 1995.
As a result of the foregoing factors, the net income for the three
months ended June 30, 1996, was $0.7 million, compared to pro forma net income
of $0.1 million for the three months ended June 30, 1995.
Historical Results of Operations
Six Months Ended June 30, 1996 and 1995, and Three Months Ended
June 30, 1996 and 1995
The Company was in a development stage and had no revenues until it
completed the acquisition of Lamaur in November 1995. Operating expenses of
$21.7 million were incurred in the six months ended June 30, 1996, compared with
$0.2 million in the six months ended June 30, 1995, and operating expenses of
$10.9 million were incurred in the three months ended June 30, 1996, compared
with $0.1 million in the three months ended June 30, 1995. The higher operating
expenses for 1996 primarily reflect the inclusion of Lamaur's operating
expenses. Prior to the Lamaur acquisition, the Company's operating expenses were
comprised of marketing, administrative, and other operating expenses incurred to
support the Company's technology development and research activities. As a
result of the foregoing factors, the Company incurred a net loss of $0.1 million
in the six months ended June 30, 1996, compared with a net loss of $0.2
9
<PAGE>
million for the same period in 1995, and net income of $0.7 million in the three
months ended June 30, 1996, compared with a net loss of $0.1 million in the same
period in 1995.
Liquidity and Capital Resources
The Company has primarily financed its working and other capital
requirements from equity infusions and borrowings from certain of its
shareholders.
At June 30, 1996, the Company had $11.8 million in cash and cash
equivalents. In May 1996, the Company completed its initial public offering for
the sale of 2,600,000 shares of common stock at $8 per share. Net proceeds to
the Company were approximately $18.0 million.
In June 1996, the Company used $8.0 million of the net proceeds from
its initial public offering to pay down a portion of its revolver with Norwest
Business Credit, Inc. As of June 30, 1996, the Company had approximately $3.5
million of debt outstanding under its revolver agreement with Norwest. The
revolver currently bears interest at the annual rate of 8.75% which is 0.50%
over Norwest's current base rate. The Company may, from time to time, increase
its borrowings under its revolving line of credit up to $14.0 million, as needed
for its working capital and general corporate requirements.
Upon the completion of the public offering, the $5.0 million
convertible note converted into 763,500 shares of Series B convertible preferred
stock, the holders of which are entitled to dividends ($400,000 annually) which
will accrue whether or not declared, and will be cumulative to the extent not
paid.
As a result of the above, the Company's long and short-term debt has
been reduced to $12.1 million from $23.0 million at December 31, 1995.
Accounts Receivable at June 30, 1996, increased $5.7 million from
December 31, 1995, principally due to higher sales in June 1996 compared to
December 1995.
Management believes that the Company's cash on hand, anticipated cash
flow from operations, and the amounts available to the Company under the Norwest
Credit Agreement will be sufficient for its working capital, capital
expenditures, and debt service and preferred stock requirements for at least the
next 18-24 months.
10
<PAGE>
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.
(a),(c) On May 15, 1996, prior to the Company's initial public
offering the stockholders of the Company took the actions
described below by written consent in lieu of a special meeting:
(i) approved the 1996 Stock Incentive Plan (the "1996 Plan")
with 1,250,000 shares of the Company's Common Stock reserved for
issuance; (ii) approved the Stock Option Plan for Non-Employee
Directors and Advisory Board Members (the "Director Plan") with
150,000 shares of the Company's Common Stock reserved for
issuance; (iii) approved the appointment of members of the
Compensation Committee of the Board of Directors to serve as the
Committee administering the 1996 Plan; (iv) approved the
assumption of the stock incentive plans of the Company's
Washington predecessor with the 1993 Long Term Incentive Plan,
the Senior Management Incentive Plan, and the 1995 Incentive
Plan assumed by the 1996 Plan, and the Outside and Non-Executive
Director Stock Plan assumed by the Director Plan; and (v)
approved Indemnification Agreements between the Company and each
director of the Company from time to time.
There were 1,893,787 shares of Common Stock voting for the
matters described above (52.3%), 0 shares of Common Stock voting
against such matters (0%), and 1,726,708 shares of Common Stock
which were not solicited to vote on such matters (47.7%). There
were 3,620,495 shares entitled to vote on the matters.
Item 5. Other Information. None.
Item 6. Exhibits and reports on Form 8-K.
(a) Exhibits. The following exhibits are filed as part of this
Quarterly Report on Form 10-Q:
11.1 Statement re: computation of per share earnings.
27.1 Financial Data Schedule
(b) Reports on Form 8-K. None.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ELECTRONIC HAIR STYLING, INC.
(Registrant)
DATE: August 6, 1996 /s/ John D. Hellmann
Vice President-Finance and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
12
<TABLE>
EXHIBIT 11.1
ELECTRONIC HAIR STYLING, INC.
STATEMENT OF COMPUTATION OF EARNINGS PER SHARE
UNAUDITED
<CAPTION>
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Net Income (Loss) $657 ($120) ($66) ($231)
Dividends on Series B Preferred Stock (33) (33)
------------------------- -----------------------
Net Income (Loss) Available to Common Shareholders 624 (120) (99) (231)
========================= =======================
Weighted Average Shares Outstanding 4077 2961 3519 2961
Incremental Shares from the Exercise
of Warrants and Options (1) 509 465 487 465
Shares Issued Upon the Conversion of
Series A Preferred Stock 660 660 660 660
------------------------- -----------------------
Total Weighted Average Common and
Common Equivalent Shares Outstanding 5246 4086 4666 4086
========================= =======================
Net Income (Loss) Per Share $0.12 ($0.03) ($0.02) ($0.06)
========================= =======================
</TABLE>
(1) In accordance with the rules of the Securities and Exchange Commission
common stock and common stock equivalents issued within one year of an initial
public offering are to be included in the calculation of weighted average
common and common stock equivalent shares outstanding for all periods presented
using the treasury stock method, even though they are antidilutive in loss
periods.
(2) Fully diluted earnings per share is not presented since it is antidilutive.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE UNAUDITED CONSOLIDATED FINANCIAL
STATEMENT OF ELECTRONIC HAIR STYLING, INC. FOR THE
QUARTER ENDED JUNE 30, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 11,805
<SECURITIES> 0
<RECEIVABLES> 18,396
<ALLOWANCES> 0
<INVENTORY> 8,873
<CURRENT-ASSETS> 39,460
<PP&E> 16,365
<DEPRECIATION> 0
<TOTAL-ASSETS> 56,012
<CURRENT-LIABILITIES> 16,848
<BONDS> 9,419
0
13,500
<COMMON> 56
<OTHER-SE> 16,189
<TOTAL-LIABILITY-AND-EQUITY> 56,012
<SALES> 60,162
<TOTAL-REVENUES> 60,162
<CGS> 37,737
<TOTAL-COSTS> 37,737
<OTHER-EXPENSES> 21,731
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 832
<INCOME-PRETAX> (66)
<INCOME-TAX> 0
<INCOME-CONTINUING> (66)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (66)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
