<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE QUARTERLY PERIOD ENDED September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO ___________
COMMISSION FILE NUMBER 0-21123
SRS LABS, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 33-0714264
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
2909 Daimler Street, Santa Ana, California 92705
(Address of principal executive Offices)
(714) 442-1070
(Issuer's telephone number)
Not Applicable
................................................................................
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports 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
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: as of October 31, 1996, 9,468,548
shares of the issuer's common stock, par value $.001 per share, were
outstanding.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
(CHECK ONE):
Yes..... No...X..
<PAGE> 2
SRS LABS, INC.
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
----
<S> <C>
ITEM 1. Financial Statements
Balance Sheets as of September 30, 1996 (unaudited) and
December 31, 1995 .................................................. 3
Statements of Operations for the three month and nine month periods
ended September 30, 1996 and 1995 (unaudited) ...................... 4
Statements of Cash Flows for the nine month periods ended
September 30, 1996 and 1995 (unaudited) ............................ 5
Notes to Financial Statements ...................................... 6
ITEM 2. Management's Discussion and Analysis or Plan of Operation .......... 7
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K ................................... 11
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
SRS LABS, INC
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
---- ----
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 7,425,587 $ 384,087
Royalty receivable 285,271 42,961
Accounts receivable 25,730 11,961
Other receivables 159,986 500,000
Inventories -- 1,144
Prepaid expenses 185,801 89,638
------------ -----------
Total current assets 8,082,375 1,029,791
INVESTMENTS AVAILABLE FOR SALE 17,241,185 --
FURNITURE, FIXTURES & EQUIPMENT - net 257,770 205,010
PATENTS - net 26,389 35,254
GOODWILL - net 319,961 427,492
------------ -----------
Total Assets $ 25,927,680 $ 1,697,547
============ ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Accounts Payable $ 637,565 $ 153,912
Accrued Liabilities 487,199 264,999
Income taxes payable 160,547 --
Current portion of consideration due on asset purchase 180,000 180,000
------------ -----------
Total current liabilities 1,465,311 598,911
CONSIDERATION DUE ON ASSET PURCHASE, net of
current portion 123,344 210,959
STOCKHOLDERS' EQUITY
Preferred stock - $.001 par value, 2,000,000 shares authorized; no
shares issued and outstanding
Common stock - $.001 par value, 56,000,000 shares authorized;
9,468,548 (at September 30, 1996) and 5,999,032 (at December 31,
1995) shares issued and outstanding 9,469 6,000
Additional paid-in capital 24,683,256 2,500,475
Unrealized gain on investments 22,582 --
Deferred stock option compensation 124,624 21,965
Accumulated deficit (500,906) (1,640,763)
------------ -----------
Total Stockholders' equity 24,339,025 887,677
------------ -----------
Total Liabilities and Stockholders' Equity $ 25,927,680 $ 1,697,547
============ ===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 4
SRS LABS, INC
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Licensing revenues $ 1,451,171 $ 125,582 $ 3,550,545 $ 458,106
Product sales -- 1,850 180 17,465
----------- ----------- ----------- -----------
Total revenues 1,451,171 127,432 3,550,725 475,571
COST OF SALES 30,583 1,206 52,887 2,239
----------- ----------- ----------- -----------
GROSS MARGIN 1,420,588 126,226 3,497,838 473,332
SALES AND MARKETING 230,044 175,482 720,715 619,684
RESEARCH AND DEVELOPMENT 122,581 119,084 345,229 291,001
GENERAL AND ADMINISTRATIVE 420,880 328,284 1,093,400 846,344
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS 647,084 (496,624) 1,338,494 (1,283,697)
INTEREST (INCOME)/EXPENSE, net (118,045) 2,744 (116,818) 34,680
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE PROVISION
FOR INCOME TAXES 765,129 (499,368) 1,455,312 (1,318,377)
PROVISION FOR INCOME TAXES 132,520 -- 315,455 800
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ 632,609 $ (499,368) $ 1,139,857 $(1,319,177)
=========== =========== =========== ===========
NET INCOME (LOSS) PER COMMON
AND COMMON EQUIVALENT SHARE $ 0.07 $ (0.08) $ 0.14 $ (0.22)
=========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
USED IN THE CALCULATION OF NET
INCOME (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE 9,571,795 6,132,368 8,344,489 5,999,352
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
4
<PAGE> 5
SRS LABS, 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) $ 1,139,857 $(1,319,177)
Adjustments to reconcile net income (loss) to net
cash provided by (used) in operating activities:
Depreciation and amortization 200,820 175,203
Loss on disposal of fixed assets -- 8,111
Accretion of consideration due on asset
purchase 28,548 40,281
Increase in deferred compensation 102,659 --
Ascribed value of services contributed 29,000 37,500
Changes in operating assets and liabilities:
Increase in royalty receivable (242,310) 2,060
Decrease (increase) in accounts receivable (13,769) 53,720
(Increase) in interest receivable (159,986) --
Decrease in inventories 1,144 2,239
Decrease (increase) in other current and
long term assets 403,837 (589,396)
Increase (decrease) in accounts payable 483,653 (100,842)
Increase in other accrued liabilities 222,199 166,537
(Decrease) in interest payable -- (8,191)
Increase in income taxes payable 155,817 --
------------ -----------
Net cash provided by (used) in operating
activities 2,351,469 (1,531,955)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of furniture, fixtures and equipment (110,548) (8,465)
Purchase of investments available for sale (17,213,873) --
------------ -----------
Net cash used in investing activities (17,324,421) (8,465)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on note payable (311,907)
Payment of consideration due on asset purchase (142,799) (174,607)
Issuance of common stock 22,057,251 2,683,498
Exercise of stock options 100,000 --
------------ -----------
Net cash provided by financing activities $ 22,014,452 $ 2,196,984
============ ===========
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 7,041,500 656,564
CASH AND CASH EQUIVALENTS, beginning of period 384,087 54,432
------------ -----------
CASH AND CASH EQUIVALENTS, end of period $ 7,425,587 $ 710,996
============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION - Cash paid during the period for:
Income taxes $ 30,270 $ 800
============ ===========
Interest $ -- $ 20,721
============ ===========
SUPPLEMENTAL DISCLOSURES ON NON CASH
TRANSACTIONS
Additional consideration accrued for asset purchase $ 26,636 $ 38,508
</TABLE>
See accompanying notes to financial statements.
5
<PAGE> 6
SRS LABS, INC.
NOTES TO THE FINANCIAL STATEMENTS
1. GENERAL
GENERAL BUSINESS
SRS Labs, Inc. ("the Company") develops, markets and licenses patented audio
technologies for use in five worldwide markets: consumer home audio, computer
multimedia, car audio, professional sound and video and arcade games.
On August 8, 1996, the Company completed an initial public offering of 3,100,000
shares of common stock for $8.00 per share netting proceeds to the Company after
underwriting discounts and expenses of approximately $22,100,000.
BASIS OF PRESENTATION
The accompanying financial statements have been prepared pursuant to the rules
and regulations of the U.S. Securities and Exchange Commission ("SEC").
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles ("GAAP") for complete financial
statements. The financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's Registration
Statement on Form SB-2 (File No. 333-4974-LA) declared effective on August 8,
1996.
In the opinion of management, the financial statements contain all adjustments,
consisting only of normal recurring adjustments, considered necessary for a fair
statement of the balance sheets as of September 30, 1996 and December 31, 1995,
the statements of operations for the three and nine month periods ended
September 30, 1996 and 1995 and the statements of cash flows for the nine month
periods ended September 30, 1996 and 1995. The results of operations for the
nine month period ended September 30, 1996 are not necessarily indicative of the
results of operations for the entire fiscal year ending December 31, 1996.
2. INVESTMENTS AVAILABLE FOR SALE
The Company has classified its investments as available-for-sale in accordance
with SFAS No. 115. They are recorded at their fair value. As of September 30,
1996, the Company's available-for-sale investments had a cost of $17,213,873 and
an estimated fair value of $17,241,185 based on quoted market prices. The
unrealized gains on these investments of $27,312 net of income taxes of $4,730
have been reported in the Company's balance sheet as an increase in
stockholders' equity.
3. NET INCOME (LOSS) PER SHARE
Net income (loss) per share is computed by dividing net income (loss) by the
weighted average number of common and common equivalent shares outstanding.
Weighted average common and common equivalent shares include common shares
outstanding and equivalent shares issuable upon exercise of stock options using
the treasury stock method.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
OVERVIEW
SRS Labs, Inc. (the "Company") develops, markets and licenses patented
audio technologies for use in five worldwide markets: consumer home audio,
computer multimedia, car audio, professional sound and video and arcade games.
The Company licenses its flagship technology, SRS(logo)(R), the Sound Retrieval
System(R) ("SRS") to leading original equipment manufacturers.
The following is management's discussion and analysis of the
operations of the Company during the periods included in the accompanying
financial statements. This discussion and analysis should be read in conjunction
with the Company's Registration Statement on Form SB-2 (File No. 333-4974-LA)
declared effective by the SEC on August 8, 1996.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1995
Revenues
Revenues for the three months ended September 30, 1996 were $1,451,171
compared to $125,582 for the three months ended September 30, 1995, an increase
of 1,055.6%. This increase resulted primarily from growth of the licensee base
and increased shipments of products incorporating SRS on which royalties are
paid by licensees. Of the $1,451,171 in revenues for the three months ended
September 30, 1996, $250,000 related to one time license fees and $1,201,171
related to on-going royalties.
Cost of Sales
Cost of sales consists primarily of fees paid to third party
representatives for sales administration and support. Cost of sales for the
three months ended September 30, 1996 were $30,583 compared to $1,206 for the
three months ended September 30, 1995, an increase of 2,435.9%. Cost of sales
were 2.1% of total revenues for the three months ended September 30, 1996
compared to 1.0% for the three months ended September 30, 1995. This increase
resulted from the increase in license revenue on which the Company pays fees to
third party representatives.
Sales and Marketing
Sales and marketing expenses consist of contracted services and
salaries of marketing personnel (including sales commissions), customer service
activities, and advertising, promotional, marketing and trade show costs. Sales
and marketing expenses for the three months ended September 30, 1996 were
$230,043 compared to $175,482 for the three months ended September 30, 1995, an
increase of 31.1%. The increase from the three months ended September 30, 1995
to the three months ended September 30, 1996 was primarily attributable to
increased staffing and an increase in marketing and promotional activities aimed
at establishing SRS as an international standard. As a percentage of total
revenues, sales and marketing expenses decreased to 15.9% in the three months
ended September 30, 1996 from 137.7% in the three months ended September 30,
1995 as the Company leveraged its expenses on higher sales volumes.
7
<PAGE> 8
Research and Development
Research and development expenses consist primarily of salaries and
consulting fees to support the development of audio technologies. Research and
development expenses for the three months ended September 30, 1996 were $122,581
compared to $119,084 for the three months ended September 30, 1995, an increase
of 2.9%. This increase from the three months ended September 30, 1995 to the
three months ended September 30, 1996 was primarily attributable to increased
expenses associated with the internal development of new and existing
technologies. As a percentage of total revenues, research and development
expenses decreased to 8.5% in the three months ended September 30, 1996 from
93.5% in the three months ended September 30, 1995 as the Company leveraged its
expenses on higher sales volumes.
General and Administrative
General and administrative expenses consist primarily of salaries and
facility costs for administrative, and executive personnel, as well as certain
consulting expenses, insurance costs, professional fees and other costs. General
and administrative expenses for the three months ended September 30, 1996 were
$420,880 compared to $328,284 for the three months ended September 30, 1995, an
increase of 28.2%. This increase from the three months ended September 30, 1995
to the three months ended September 30, 1996 was primarily attributable to
increased staffing and related costs. As a percentage of total revenues, general
and administrative expenses decreased to 29.0% in the three months ended
September 30, 1996 from 257.6% in the three months ended September 30, 1995 as
the Company leveraged its expenses on higher sales volumes.
Income Tax Expense
Income tax expenses for the three months ended September 30, 1996 were
$132,520. The Company had no income tax expense for the three months ended
September 30, 1995, as the Company had a net loss during that period. Income tax
expenses for the three months ended September 30, 1996 are partially offset by
the use of federal and state tax loss carryforwards.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED TO NINE MONTHS ENDED
SEPTEMBER 30, 1995
Revenues
Revenues for the nine months ended September 30, 1996 were $3,550,725
compared to $475,571 for the nine months ended September 30, 1995, an increase
of 646.6%. This increase resulted primarily from growth of the licensee base and
increased shipments of products incorporating SRS on which royalties are paid by
licensees. Of the $3,550,725 in revenues for the nine months ended September 30,
1996, $475,000 related to one time license fees and $3,075,725 related to
on-going royalties.
8
<PAGE> 9
Cost of Sales
Cost of sales consists primarily of fees paid to third party
representatives for sales administration and support. Cost of sales for the nine
months ended September 30, 1996 were $52,887 compared to $2,239 for the nine
months ended September 30, 1995, an increase of 2,262.1%. Cost of sales were
1.5% of total revenues for the nine months ended September 30, 1996 compared to
.5% for the nine months ended September 30, 1995. This increase resulted from
the increase in license revenue on which the Company pays fees to third party
representatives.
Sales and Marketing
Sales and marketing expenses consist of contracted services and
salaries of marketing personnel (including sales commissions), customer service
activities, and advertising, promotional, marketing and trade show costs. Sales
and marketing expenses for the nine months ended September 30, 1996 were
$720,715 compared to $619,684 for the nine months ended September 30, 1995, an
increase of 16.3%. The increase from the nine months ended September 30, 1995 to
the nine months ended September 30, 1996 was primarily attributable to increased
staffing and an increase in marketing and promotional activities aimed at
establishing SRS as an international standard. As a percentage of total
revenues, sales and marketing expenses decreased to 20.3% in the nine months
ended September 30, 1996 from 130.3% in the nine months ended September 30, 1995
as the Company leveraged its expenses on higher sales volumes.
Research and Development
Research and development expenses consist primarily of salaries and
consulting fees to support the development of audio technologies. Research and
development expenses for the nine months ended September 30, 1996 were $345,229
compared to $291,001 for the nine months ended September 30, 1995, an increase
of 18.6%. This increase from the nine months ended September 30, 1995 to the
nine months ended September 30, 1996 was primarily attributable to increased
staffing and an increase in expenses associated with the internal development of
new and existing technologies. As a percentage of total revenues, research and
development expenses decreased to 9.7% in the nine months ended September 30,
1996 from 61.2% in the nine months ended September 30, 1995 as the Company
leveraged its expenses on higher sales volumes.
General and Administrative
General and administrative expenses consist primarily of salaries and
facility costs for administrative, and executive personnel, as well as certain
consulting expenses, insurance costs, professional fees and other costs. General
and administrative expenses for the nine months ended September 30, 1996 were
$1,093,400 compared to $846,344 for the nine months ended September 30, 1995, an
increase of 29.2%. This increase from the nine months ended September 30, 1995
to the nine months ended September 30, 1996 was primarily attributable to
increased staffing and general management expenses for the support of the
licensing activities and new business development. As a percentage of total
revenues, general and administrative expenses decreased to 30.8% in the nine
months ended September 30, 1996 from 178.0% in the nine months ended September
30, 1995 as the Company leveraged its expenses on higher sales volumes.
9
<PAGE> 10
Income Tax Expense
Income tax expenses for the nine months ended September 30, 1996 were
$315,455 compared to $800 for the nine months ended September 30, 1995, which
represented minimum state income taxes as the Company had a net loss during that
period. Income tax expenses for the nine months ended September 30, 1996 are
partially offset by the use of federal and state tax loss carryforwards.
Seasonality
The Company licenses its technology to OEM's that sell consumer
electronic products and personal multimedia computers. As a result, the
Company's license revenues have displayed a seasonality related to that of
manufacturers of consumer electronics products. Shipments by manufacturers of
consumer electronics products tend to be higher in the third and fourth calendar
quarters. However, because the Company recognizes revenue when license payments
are due, generally 30 to 60 days after the end of each quarter, the Company's
revenues have been typically higher in the fourth and first calendar quarters.
Since the Company's revenue depends on manufacturer's shipments, the revenue may
also vary from quarter to quarter depending on retail inventory levels and
retail promotional activities.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1996, the Company had short-term cash resources
(i.e., cash and cash equivalents) equal to $7,425,587.
The Company has primarily financed its operations through private
sales of equity securities and more recently from cash flow from operations. The
Company's operating activities provided $2,351,469 in cash for operating
activities in the nine months ended September 30, 1996 and used $1,531,955 in
cash for operating activities in the nine months ended September 30, 1995. Cash
flows provided by operating activities during the nine months ended September
30, 1996 resulted from the Company achieving profitable operations during the
period. The Company has no significant commitments for capital expenditures nor
does it anticipate entering into any such commitments in 1996.
On August 8, 1996, the Company completed an initial public offering of
3,100,000 shares of common stock for $8.00 per share, netting proceeds to the
Company after underwriting discounts and expenses of approximately $22,100,000.
Management believes that the cash generated from operations, together
with the proceeds received from the Company's initial public offering, will be
sufficient to meet its cash requirements for the foreseeable future.
FORWARD LOOKING INFORMATION
Included in this Item 2. Management's Discussion and Analysis or Plan
of Operation and elsewhere in this Report are certain forward-looking statements
reflecting management's current expectations. Although the Company believes that
its expectations are based upon reasonable assumptions, there can be no
assurances that the Company's financial goals will be realized. Numerous factors
may affect the Company's actual results and may cause results to differ
materially from those expressed in forward-looking statements made by or on
behalf of the Company. Some of these factors include the extent to which the
Company's licensees incorporate SRS or the Company's other technologies into
products, the increase in the Company's licensee base or the acceptance of the
Company's new technologies.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit No.
-----------
3.1 Certificate of Incorporation of the Company, previously
filed with the U.S. Securities and Exchange Commission
(the "Commission") as Exhibit 3.1 to the Company's
Registration Statement on Form SB-2, File No.
333-4974-LA, specifically included in Amendment No. 1
to such Registration Statement filed with the
Commission on July 3, 1996 ("Registration Statement
No. 333-4974-LA"), which is hereby incorporated herein
by reference.
3.2 Bylaws of the Company, previously filed with the
Commission as Exhibit 3.2 to Registration Statement No.
333-4974-LA, which is hereby incorporated herein by
reference.
11 Statement re: computation of per share earnings.
27 Financial Data Schedule.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the Company's third quarter
ended September 30, 1996.
11
<PAGE> 12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned thereunto duly
authorized.
SRS LABS, INC.,
a Delaware Corporation
Date: November 14, 1996 By: /s/ JANET M. BISKI
--------------------------------------------
Janet M. Biski
Vice President, Chief Financial Officer
and Secretary
(Principal Financial and
Accounting Officer)
12
<PAGE> 13
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation of the Company, previously
filed with the Commission as Exhibit 3.1 to the Company's
Registration Statement on Form SB-2, File No. 333-4974-LA,
specifically included in Amendment No. 1 to such
Registration Statement filed with the Commission on
July 3, 1996 ("Registration Statement No. 333-4974-LA"),
which is hereby incorporated herein by reference.
3.2 Bylaws of the Company, previously filed with the Commission
as Exhibit 3.2 to Registration Statement No. 333-4974-LA,
which is hereby incorporated herein by reference.
11 Statement re: computation of per share earnings.
27 Financial Data Schedule.
13
<PAGE> 1
Exhibit 11
SRS LABS, INC
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Nine Months
Ended Ended
Sept. 30, 1996 Sept. 30, 1996
-------------- --------------
<S> <C> <C>
Common Shares and common share equivalents:
Number of shares outstanding at beginning of period 6,361,096 5,999,032
Weighted average common shares issued from the exercise
of stock options -- 341,949
Weighted average common shares issued in conjunction
with the initial public offering 1,810,817 603,626
Shares issuable upon the exercise of common stock
options net of shares assumed to be repurchased
from proceeds obtained therefrom 1,399,882 1,399,882
---------- ----------
Weighted average common and common equivalent
shares at end of period 9,571,795 8,344,489
========== ==========
Net income for primary net income per share $ 632,609 $1,139,857
Primary net income per common and common equivalent shares $ 0.07 $ 0.14
========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,425,587
<SECURITIES> 17,241,185
<RECEIVABLES> 470,987
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,082,375
<PP&E> 411,345
<DEPRECIATION> 153,575
<TOTAL-ASSETS> 25,927,680
<CURRENT-LIABILITIES> 1,465,311
<BONDS> 0
0
0
<COMMON> 9,469
<OTHER-SE> 24,329,556
<TOTAL-LIABILITY-AND-EQUITY> 25,927,680
<SALES> 3,550,725
<TOTAL-REVENUES> 3,550,725
<CGS> 52,887
<TOTAL-COSTS> 2,159,344
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (116,818)
<INCOME-PRETAX> 1,455,312
<INCOME-TAX> 315,455
<INCOME-CONTINUING> 1,139,857
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,139,857
<EPS-PRIMARY> .14
<EPS-DILUTED> 0
</TABLE>
