<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) of
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
COMMISSION FILE NUMBER 1-11831
SABRATEK CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
36-3700639
DELAWARE
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
5601 WEST HOWARD STREET
NILES, ILLINOIS 60714
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(847) 647-2760
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act") during the preceding 12 months (or for such shorter
period that the registrants were required to file such reports), and (2) have
been subject to such filing requirements for the past 90 days.
Yes ______ No __X__
As of August 1, 1996, 8,064,209 shares of Sabratek Corporation's common stock
were outstanding.
<PAGE> 2
SABRATEK CORPORATION
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Item 1. Financial Statements
Sabratek Corporation Balance Sheets
June 30, 1996 (Unaudited) and December 31, 1995........... 3
Sabratek Corporation Statements of Operations
Three and Six Months Ended June 30, 1996 and June 30,
1995 (Unaudited).......................................... 4
Sabratek Corporation Statements of Cash Flows
Six Months Ended June 30, 1996 and June 30,
1995 (Unaudited).......................................... 5
Notes to Financial Statements (Unaudited)................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 8
PART II OTHER INFORMATION......................................... 12
</TABLE>
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<PAGE> 3
SABRATEK CORPORATION
BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $25,548 $ 8
Receivables:
Trade, net of allowance for doubtful accounts of
$223,382 and $187,969 at June 30, 1996, and
December 31, 1995, respectively 2,947 766
Due from related party 1,028 576
------ -------
Total receivables 3,975 1,342
------ -------
Inventories 2,342 1,825
Other current assets 246 51
------- -------
Total current assets 32,111 3,226
------- -------
Property, plant and equipment, net 852 902
Other 51 51
------- -------
Total assets $33,014 $ 4,179
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Short term debt $ 130 $ 621
Current portion of capital lease obligation 151 151
Current portion of long-term debt 3 3
Accounts payable 1,411 2,377
Accrued expenses:
Payroll & commissions 718 191
Warranty 198 229
Stock appreciation rights payable 1,628 --
Other 852 287
Deferred rent 32 32
Deferred revenue 50 125
Due to affiliated company 247 312
------- -------
Total current liabilities 5,420 4,328
------- -------
Long-term capital lease obligation 47 149
Long-term debt 170 2,362
Accrued interest -- 161
------- -------
Total liabilities $ 5,637 $ 7,000
Stockholders' equity (deficit) ------- -------
Convertible preferred stock, issued and outstanding; -- 18
1,768,129 at December 31, 1995
Common stock, issued and outstanding; 8,064,209 at
June 30, 1996, 1,718,458 at December 31, 1995 81 17
Additional paid-in capital 42,610 10,709
Note receivable from stockholder (113) (113)
Accumulated deficit (15,182) (13,452)
Deferred compensation (19) --
------- -------
Total stockholders' equity (deficit) 27,377 (2,821)
------- -------
$33,014 $ 4,179
======= =======
</TABLE>
See accompanying notes to financial statements.
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<PAGE> 4
SABRATEK CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-----------------------------------------------------------------------
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $3,771 $1,063 $6,715 $1,993
Cost of sales 1,890 739 3,345 1,457
-----------------------------------------------------------------------
Gross margin 1,881 324 3,370 536
Selling, general and
administrative expenses 1,776 1,697 3,253 3,427
-----------------------------------------------------------------------
Operating income (loss) 105 (1,373) 117 (2,891)
-----------------------------------------------------------------------
Other income (expense):
Interest income 13 3 15 6
Interest expense (133) (22) (237) (33)
Stock appreciation rights - - (1,628) -
Other 1 (21) 3 (42)
-----------------------------------------------------------------------
Net loss ($14) ($1,413) ($1,730) ($2,960)
=======================================================================
Weighted average shares
outstanding 6,736 3,851 6,673 3,767
=======================================================================
Net loss per share $0.00 ($0.37) ($0.26) ($0.79)
=======================================================================
</TABLE>
See accompanying notes to financial statements.
- 4 -
<PAGE> 5
SABRATEK CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Six Months Ended
-------------------------------
June 30, 1996 June 30, 1995
-------------------------------
<S> <C> <C>
Cash flows from operating activities ($1,730) ($2,960)
Net loss
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 151 78
Deferred compensation 1 -
Stock appreciation rights expense 1,628 -
Provision for bad debts 35 38
Changes in assets and liabilities
Receivables (2,668) (27)
Deferred revenue (75) -
Inventories (517) (651)
Advances to stockholders - 70
Accounts payable (966) 802
Accrued expenses 1,062 126
Due to affiliated company (65) (59)
Other (196) 29
-------------------------------
Net cash used in operating activities (3,340) (2,554)
-------------------------------
Cash flows from investing activities:
Purchases of property, plant and
equipment (101) (416)
-------------------------------
Net cash used in investing activities (101) (416)
-------------------------------
Cash flows from financing activities:
Proceeds from issuance of short-term debt - 388
Repayment of short-term debt (491) -
Repayment of long-term debt (350) (1)
Proceeds from issuance of long-term debt 1,738 250
Payments of capital lease obligations, net (102) (78)
Proceeds of capital lease - 185
Proceeds from sale of stock, net 28,186 1,999
-------------------------------
Net cash provided by financing activities 28,981 2,743
-------------------------------
Increase (decrease) in cash 25,540 (227)
Cash at beginning of period 8 765
-------------------------------
Cash at end of period $25,548 $ 538
===============================
</TABLE>
See accompanying notes to financial statements.
-5-
<PAGE> 6
SABRATEK CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1996
(UNAUDITED)
(1) FINANCIAL STATEMENTS
The financial statements included herein have been prepared by the Company,
without audit, and include all adjustments of a normal recurring nature
which are, in the opinion of management, necessary for fair presentation of the
results of operations for the three month and six month periods June 30, 1996
and 1995 pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures in these
financial statements are adequate to make the information presented not
misleading. These financial statements should be read in conjunction with the
Company's financial statements and the notes thereto included in the Company's
Form S-1 Registration Statement (No. 333-3866) filed by the Company with the
Securities and Exchange Commission. The results of operations for the six
months ended June 30, 1996 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1996.
(2) INITIAL PUBLIC OFFERING
In June, 1996, the Company completed an initial public offering of 2,875,000
shares of Common Stock, par value $0.01, at a price of $10.00, with proceeds
to the Company of $26,737,500 after underwriters' discounts and commissions. The
Company's shares are traded on the Nasdaq National Market under the symbol
"SBTK."
(3) CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent funds in demand deposit and money market
accounts. Such funds are immediately accessible.
(4) LONG-TERM DEBT
Immediately following the initial public offering, subordinated debentures in
the principal amount of $350,000, plus remaining interest, were repaid.
Approximately $26,530 of interest was paid in the form of 5,574 shares of
Common Stock, as originally provided for in certain debentures.
Upon the closing of the initial public offering, convertible subordinated
debentures in the principal amount of $3,012,793, along with accrued interest
thereon of $337,680, were converted into 1,202,965 shares of Common Stock.
Certain debentures provided for a conversion premium that substantially reduced
the stated conversion price.
-6-
<PAGE> 7
(5) SERIES A PREFERRED STOCK
Upon the closing of the initial public offering, all 1,768,129 shares of
outstanding Series A Preferred Stock were converted into 1,838,113 shares of
the Company's Common Stock, including anti-dilutive adjustments.
(6) WARRANTS
On June 27, 1996 a warrant was exercised for 9,454 shares of Common Stock
providing proceeds to the Company of $45,000.
(7) COMMON STOCK TRANSACTIONS
The following table summarizes common stock activity since March 31, 1996:
<TABLE>
<CAPTION>
Shares
------
<S> <C>
Balance at March 31, 1996 2,133,103
Sale of Common Stock 2,875,000
Conversion of Long-term Debt 1,202,965
Conversion of Series A Preferred Stock 1,838,113
Payment of interest 5,574
Warrant exercise 9,454
---------
Balance at June 30, 1996 8,064,209
</TABLE>
(8) SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest during the six month period ending June 30, 1996 was
$33,665.
In February, 1996, the Company issued 124,488 shares of Common Stock in
satisfaction of accrued liabilities in the amount of $592,500 for services
rendered in 1995.
During the six months ended June 30, 1996, the Company retired aggregate
long-term debt principal of $3,597,793 and satisfied accrued interest
obligations on long-term debt of $364,210, in exchange for 1,331,451 shares of
Common Stock, in aggregate.
- 7 -
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE COMPANY
Sabratek Corporation (the "Company" or "Sabratek") develops, produces
and markets technologically-advanced, user-friendly and cost-effective
multi-therapy infusion systems designed to meet the unique needs of the
alternate-site health care market. The Company's integrated infusion products
incorporate advanced communications technology which is designed to reduce
provider operating costs while maintaining the integrity and quality of care.
Sabratek's proprietary health care information system provides remote
programming as well as real-time diagnostic and therapeutic data capture
capabilities, allowing caregivers to monitor patient compliance more
effectively and allowing providers to develop outcome analyses and optimal
clinical protocols. The Company has designed its integrated hardware and
software system to permit providers of infusion therapy to achieve
cost-effective movement of patients along the continuum of alternate-site
health care settings. The Company intends to expand its product line beyond
infusion therapy to become a leading developer and marketer of a variety of
interactive therapeutic and diagnostic medical systems for the delivery of
high-quality, cost-effective health care at alternate sites. The Company's
revenues are currently derived from the sale of its multi-therapy infusion
pumps, related disposables and accessories.
Sabratek's strategy focuses specifically on the alternate-site health
care market, which it believes will continue to experience significant growth
as managed care payors continue to move patients to the lowest-cost care
setting. Such growth may be attributed to increasing cost-containment
pressures, along with advances in medical technology, that have transitioned
the delivery of health care away from the traditional acute-care setting to
more cost-effective sites. The alternate-site market includes, among other
things, the provision of infusion services rendered in various settings,
including the patient's residence, sub-acute care facilities, nursing homes,
outpatient clinics, dialysis centers and hospice facilities.
The Company believes that for alternate-site health care providers, the
management of costly resources such as nursing staff and infusion equipment
inventories is critical to their operating viability. The Company's strategic
response to the need to achieve cost-effective movement of patients along the
continuum of alternate-site care has been to develop a SEAMLESS DELIVERY SYSTEM
that integrates stationary and ambulatory multi-therapy infusion pumps,
disposable supplies, a proprietary interactive software system and a
proprietary diagnostic testing device. Sabratek's SEAMLESS DELIVERY SYSTEM
maximizes the similarities in operating features and range of therapeutic
applications of the Company's stationary and ambulatory infusion devices,
thereby reducing the costly time requirements of training and infusion
administration as well as minimizing equipment inventories. The Company's
interactive software system is designed to augment the utilization of
Sabratek's infusion pumps and allow providers to program therapies and monitor
compliance on a real-time basis from a remote location. The Company's
portable, automatic testing device will enable providers to perform on-site
diagnostic tests on Sabratek's infusion pumps and thereby reduce costs by
eliminating the traditional reliance on third-party testing services and
in-house biomedical engineering capabilities.
In 1992, the Company commercially launched its multi-therapy stationary
infusion device (the "3030 Stationary Pump"), and in 1995 introduced its
multi-therapy ambulatory infusion device (the
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<PAGE> 9
"6060 Ambulatory Pump"). In addition, the Company markets a comprehensive line
of related disposable tubing sets. Both the 3030 Stationary Pump and the 6060
Ambulatory Pump have received 510(k) clearance from the Food and Drug
Administration (the "FDA"). The Company is preparing to launch its proprietary
medical software system ("MediVIEW") and its proprietary diagnostic testing
device (the "PumpMaster"). The Company currently markets its products
domestically to national, regional and local alternate-site health care
providers through a direct sales force and a network of specialized
alternate-site medical products distributors. The Company also markets its
products internationally through distributors in Europe, Asia, South America
and the Middle East.
The following narrative discusses the results of operations, liquidity
and capital resources for Sabratek Corporation.
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996 VS. THREE MONTHS ENDED JUNE 30, 1995 AND
SIX MONTHS ENDED JUNE 30, 1996 VS. SIX MONTHS ENDED JUNE 30, 1995
Net Sales. Net sales increased $2.7 million to $3.8 million for the
three month period ended June 30, 1996 as compared to $1.1 million for the
three month period ended June 30, 1995, an increase of 245%. Net sales for the
six month period ended June 30, 1996 were $6.7 million as compared to $2.0
million for the six month period ended June 30, 1995. Approximately $1.1
million of the increase during the three month period ended June 30, 1996 is
attributable to incremental sales volume of the 3030 Stationary Pump and
related disposables to national accounts in the alternate-site health care
market. The balance of the increase for the three month period ended June 30,
1996 resulted from the addition of the 6060 Ambulatory Pump, disposables and
related products that were first introduced in the fourth quarter of 1995.
Cost of Sales. Cost of sales increased $1.2 million to $1.9 million
for the three months ended June 30, 1996 as compared to $739,000 for the three
months ended June 30, 1995, an increase of 162%. Approximately $1.1 million of
the increase was the result of incremental sales volume and the balance of the
increase is attributable to the investment in fixed manufacturing costs
necessary to increase production capacity. Cost of sales for the six month
period ended June 30, 1996 was $3.3 million as compared to $1.5 million for the
six months ended June 30, 1995, an increase of $1.8 million, or 120%.
Incremental sales volume contributed primarily to the increase.
Cost of sales as a percent of sales was 50% for the three months ended
June 30, 1996 as compared to 70% for the three months ended June 30, 1995. For
the six month periods ended June 30, 1996 ad 1995, cost of sales as a percent
of sales was 50% and 73%, respectively. The decrease is primarily due to the
distribution of fixed manufacturing costs over a greater unit volume than the
prior comparative period. Higher average unit pricing and reductions in direct
production costs also contributed to the decreased percentage.
Gross Margin. Gross margin for the three month period ended June 30,
1996 was $1.9 million as compared to $324,000 for the three month period ended
June 30, 1995, an increase of $1.6 million. For the six month period ended
June 30, 1996 and 1995, gross margins were $3.4 million and $536,000,
respectively. Gross margin as a percent of sales was 50% for the three months
ended
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<PAGE> 10
June 30, 1996 as compared to 30% for the three months ended June 30, 1995. For
the six months ended June 30, 1996 and 1995, gross margins as a percent of sales
were 50% and 27%, respectively. The increase in gross margin, both absolute
and as a percent of sales, was due primarily to increased sales volume and the
variable contribution margin thereon and, secondarily, to higher average
pricing levels, as discussed above, for the 3030 Stationary Pump and the higher
initial margins inherent to the 6060 Ambulatory Pump.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased $100,000 to $1.8 million for the three months
ended June 30, 1996 as compared to $1.7 million for the three months ended June
30, 1995, an increase of 6%. A non-recurring charge of approximately $46,000
was recorded in the three month period ended June 30, 1996 for debt conversion
premiums relating to certain debt instruments converted to common stock upon the
Company's initial public offering. Selling, general and administrative expenses
for the six month period ended June 30, 1996 were $3.3 million as compared to
$3.4 million for the six month period ended June 30, 1995. As a percent of
sales for the three month periods ended June 30, 1996 and 1995, selling, general
and administrative expenses were 47% and 160%, respectively. The Company has
expanded its sales and clinical support staff by approximately 14 employees at
June 30, 1996 as compared to June 30, 1995; however, the incremental expenses of
approximately $650,000, for the six month period ended June 30, 1996, associated
with the expansion were virtually offset by the absence of financing, marketing,
and development consulting fees incurred during the comparative period of 1995.
Operating Income (Loss). The Company reported operating income of
$105,000 for the three months ended June 30, 1996 as compared to an operating
loss of $1.4 million for the three month ended June 30, 1995. For the six
month period ended June 30, 1996 the Company reported operating income of
$117,000 versus an operating loss of $2.9 million for the six month period
ended June 30, 1995. The primary factors in achieving operating profitability,
as discussed above, are the addition of the 6060 Ambulatory Pump product line
in the fourth quarter of 1995 and increased volume of existing products in the
comparative periods.
Interest Expense. Interest expense increased $111,000 to $133,000 for
the three months ended June 30, 1996 as compared to $22,000 for the three
months ended June 30, 1995. For the six month periods ended June 30, 1996 and
1995, interest expense was $237,000 and $33,000, respectively. The increase is
attributable to the incremental amount of debt issued by the Company and
outstanding during the comparative periods. Approximately $2.5 million in
long-term debt was issued subsequent to June 30, 1995 and was retired at the
end of June, 1996.
Income Tax Provision. Due to pre-tax losses for the three months and
six months ended June 30, 1996, the Company did not incur any federal or state
income tax liability for such periods.
Net Loss. Net loss for the three months ended June 30, 1996 was
$14,000 as compared to $1.4 million for the three months ended June 30, 1995.
The net loss for the six months ended June 30, 1996 was $1.7 million versus a
net loss of $3.0 million for the six month period ended June 30, 1995. The
net loss was reduced for both comparative periods primarily as a result of
increased sales volume of new and existing products and the corresponding
contribution margin thereon. The six month period ended June 30, 1996 includes
a non-recurring charge for stock appreciation rights of $1.6 million.
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<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
In June, 1996, the Company completed an initial public offering with
proceeds of $26,737,500 after underwriters' discounts and commissions. As of
June 30, 1996, unused proceeds were invested in a money market account pursuant
to the Company's trust agreement.
As of June 30, 1996, the Company had approximately $25,548,000 in cash
and cash equivalents and net working capital of approximately $26,691,000.
The Company maintains a credit facility which it may use to supplement working
capital and is based upon qualifying trade accounts receivable. As of June 30,
1996, the outstanding balance of the credit facility was approximately
$130,000; however, the total credit available under the facility was not fully
utilized as of that date. Sufficient direct collections have been received by
the lender, subsequent to June 30, 1996, to fully eliminate the remaining
balance on the credit facility.
The Company used cash in its operations of approximately $3.2 million
for the six month period ended June 30, 1996. Cash used in operations for the
period exceeds the Company's operating results for the same period due,
primarily, to the growth in trade accounts receivable and inventories.
Subsequent to June 30, 1996, the Company disbursed funds to satisfy all stock
appreciation rights obligations in the aggregate amount of approximately $1.6
million. These obligations are classified as "Stock appreciation rights
payable" on the Company's Balance Sheet as of June 30, 1996.
The Company believes that the net proceeds received from the initial public
offering, together with interest thereon, will be sufficient to fund its
operations for the foreseeable future. Future liquidity, capital resources and
results of operations could be adversely influenced by certain factors unique to
the Company and the industry in which the Company competes. Such factors
include; dependence on a relatively new customer base, regulatory or legislative
changes pertaining to health care, product liability exposure regarding the
delivery of medication, dependence on future product development, protection of
intellectual property rights and inventory obsolescence resulting from evolving
market conditions. There can be no assurance that the Company will not require
additional financing and may, in the future, seek additional funds through bank
facilities, debt or equity offerings. To the extent such additional financing is
not available, the Company would suffer material adverse effects to its
financial condition and the results of its operations.
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<PAGE> 12
PART II
OTHER INFORMATION
All of the information which would be required in response to Items 1,
2, 4 and 5 is incorporated by reference to the Company's Registration
Statement on Form S-1, declared effective by the United Securities and Exchange
Commission on June 21, 1996 (File No. 333-3869).
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit Page Number Incorporation
Number Description of Documents (if applicable) by Reference
- ------- ----------------------- -------------- (if applicable)
--------------
<S> <C> <C> <C>
3(i) Articles of Incorporation +
3(ii) ByLaws +
10 Material contracts +
11.1 Statement re: computation of per share earnings 14
27 Financial Data Schedule 15
</TABLE>
+ Incorporated by reference to the Company's Registration Statement on Form
S-1, declared effective by the Commission on June 21, 1996 (File No.
333-3866).
(b) Sabratek Corporation has not filed any reports on Form 8-K during the
quarterly period ended June 30, 1996.
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<PAGE> 13
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.
SABRATEK CORPORATION
Date: August 16, 1996 By: /s/ K. Shan Padda
--------------- ---------------------------
K. Shan Padda
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the undersigned, in his capacity as the principal
financial officer of the registrant.
Date: August 16, 1996 By: /s/ Scott Skooglund
--------------- ----------------------------
Scott Skooglund
Principal Financial Officer and
Chief Accounting Officer
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<PAGE> 1
Sabratek Corporation
Exhibit 11.1 - Statement Re Computation of Share Earnings
<TABLE>
<CAPTION>
Three months ended Six months ended
---------------------------------------------------------------------------
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
---------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net loss ($14,000) ($1,413,176) ($1,729,738) ($2,960,131)
===========================================================================
Weighted average common
shares outstanding - 2,259,478 1,513,205 2,077,834 1,511,801
Weighted average preferred
shares outstanding assuming conversion - 1,838,113 1,613,200 1,838,113 1,530,234
Effect of conversion of convertible
subordinated debentures - 1,245,002 0 1,245,002 0
Additional shares pursuant to SAB 83 - 1,393,353 724,527 1,511,807 724,527
---------------------------------------------------------------------------
6,735,946 3,850,932 6,672,756 3,766,562
===========================================================================
Net loss per share $0.00 ($0.37) ($0.26) ($0.79)
===========================================================================
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 25,547,603
<SECURITIES> 0
<RECEIVABLES> 4,198,641
<ALLOWANCES> 223,382
<INVENTORY> 2,341,540
<CURRENT-ASSETS> 32,111,147
<PP&E> 1,236,189
<DEPRECIATION> 383,855
<TOTAL-ASSETS> 33,014,309
<CURRENT-LIABILITIES> 5,420,126
<BONDS> 217,266
0
0
<COMMON> 80,642
<OTHER-SE> 27,296,275
<TOTAL-LIABILITY-AND-EQUITY> 33,014,309
<SALES> 6,639,952
<TOTAL-REVENUES> 6,714,953
<CGS> 3,263,691
<TOTAL-COSTS> 3,345,208
<OTHER-EXPENSES> 3,252,638
<LOSS-PROVISION> 35,413
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 117,107
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,729,738)
<EPS-PRIMARY> (0.26)
<EPS-DILUTED> NA
</TABLE>
