<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number: 333-22895
---------------------------------------
BLUEFLY, INC.
(Exact name of small business issuer as specified in its charter)
New York 13-3612110
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
42 West 39th Street, New York, NY 10018
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (212) 944-8000
---------------------------------------
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 [ ]
As of May 10, 2000, the issuer had outstanding 4,924,906 of shares of Common
Stock, $.01 par value.
<PAGE>
BLUEFLY, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Part I . Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999 (unaudited) 3
Consolidated Statements of Operations for the three months ended
March 31, 2000 and 1999 (unaudited) 4
Consolidated Statements of Cash Flows for the three months ended
March 31, 2000 and 1999 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Part II. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
BLUEFLY, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
-------------- --------------
(REVISED)(1)
<S> <C> <C>
ASSETS
Current assets
Cash $ 3,909,000 $ 7,934,000
Inventories 7,462,000 7,020,000
Accounts receivable 799,000 381,000
Prepaid expenses 315,000 212,000
Other current assets 586,000 487,000
-------------- --------------
Total current assets 13,071,000 16,034,000
Property and equipment, net 1,107,000 1,037,000
Other assets 38,000 38,000
-------------- --------------
$ 14,216,000 $ 17,109,000
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Accounts payable $ 4,684,000 $ 4,287,000
Accrued expenses and other current liabilities 1,612,000 2,236,000
-------------- --------------
Total current liabilities 6,296,000 6,523,000
Note payable (net of $133,000 of unamortized discount) 2,867,000 --
-------------- --------------
9,163,000 6,523,000
-------------- --------------
Commitments and contingencies (Note 5)
Redeemable preferred stock--$.01 par value;
2,000,000 shares authorized and 500,000 shares
issued and outstanding (liquidation preference:
$20 per share plus accrued dividends) 9,943,000 9,943,000
Shareholders' equity (deficit)
Common stock--$.01 par value; 15,000,000 shares
authorized and 4,924,906 shares issued and
outstanding 49,000 49,000
Additional paid-in capital 17,959,000 17,825,000
Accumulated deficit (22,898,000) (17,231,000)
-------------- --------------
(4,890,000) 643,000
-------------- --------------
$ 14,216,000 $ 17,109,000
============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
(1) The Company has revised its consolidated financial statements for the year
ended December 31, 1999, to clarify treatment of the redemption features of the
Series A Convertible Preferred Stock. See Item 7 of Part II of the Form 10KSB/A
filed by the Company on May 15, 2000.
3
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BLUEFLY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
Net sales $ 3,558,000 $ 305,000
Cost of sales 2,712,000 253,000
-------------- --------------
Gross profit 846,000 52,000
Selling, marketing and fulfillment expenses 5,317,000 863,000
General and administrative expenses 1,267,000 494,000
-------------- --------------
Total (6,584,000) (1,357,000)
Operating loss from continuing operations (5,738,000) (1,305,000)
Interest income, net of interest expense 71,000 70,000
-------------- --------------
Loss from continuing operations (5,667,000) (1,235,000)
-------------- --------------
Discontinued operations--Note 2
Income from discontinued operations -- 63,000
-------------- --------------
Net loss $(5,667,000) $(1,172,000)
-------------- --------------
Preferred stock dividends (200,000) --
-------------- --------------
Net loss available to common shareholders $(5,867,000) $(1,172,000)
============== ==============
Basic and diluted (loss) income per common share
Continuing operations (1.19) (.27)
Discontinued operations -- .01
-------------- --------------
Net loss per common share $ (1.19) $ (.26)
============== ==============
Weighted average shares outstanding 4,924,906 4,516,900
============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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BLUEFLY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
Cash flows from operating activities
Loss from continuing operations $(5,667,000) $(1,235,000)
Adjustments to reconcile loss from continuing operations to net
cash used in operating activities:
Depreciation and amortization 56,000 23,000
Common stock issued for services -- 7,000
Changes in operating assets and liabilities:
(Increase) decrease in
Inventories (442,000) (725,000)
Accounts receivable (418,000) (50,000)
Other current assets (99,000) 12,000
Prepaid expenses (103,000) 93,000
Increase (decrease) in
Accounts payable 397,000 36,000
Accrued expenses and other current liabilities (624,000) 23,000
-------------- --------------
Net cash used in operating activities--continuing operations (6,900,000) (1,816,000)
-------------- --------------
Income from discontinued operations -- 63,000
Adjustments to reconcile income from discontinued operations to
net cash provided by operating activites:
Changes in operating assets and liabilities:
(Increase) decrease in
Non-factored receivables -- 187,000
Increase (decrease) in
Income taxes receivable -- 25,000
-------------- --------------
Net cash provided by operating activities--discontinued operations -- 275,000
-------------- --------------
Net cash used in operating activities (6,900,000) (1,541,000)
-------------- --------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
BLUEFLY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
2000 1999
------------- ------------
<S> <C> <C>
Cash flows from investing activities
Purchase of property and equipment (125,000) (60,000)
Funds deposited with factor -- (451,000)
------------- ------------
Net cash used in investing activities (125,000) (511,000)
------------- ------------
Cash flows from financing activities--continuing operations
Proceeds from notes payable 3,000,000 --
Net proceeds from warrant redemption -- 7,062,000
Net proceeds from unit purchase option exercises -- 5,000
------------- ------------
Net cash provided by financing activities--continuing operations 3,000,000 7,067,000
------------- ------------
Cash flows from financing activities--discontinued operations
Net change in due to factor -- 171,000
------------- ------------
Net cash provided by financing activities--discontinued operations -- 171,000
------------- ------------
Net cash provided by financing activities 3,000,000 7,238,000
------------- ------------
Net (decrease) increase in cash (4,025,000) 5,186,000
Cash balance--beginning of period 7,934,000 2,830,000
------------- ------------
Cash balance--end of period $ 3,909,000 $8,016,000
============= ============
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Income taxes $ -- $ 1,000
============= ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
BLUEFLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Bluefly, Inc. (the "Company"). All significant intercompany balances and
transactions have been eliminated in consolidation. The consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Rule 310 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. The results of operations of any interim period
are not necessarily indicative of the results of operations to be expected for
the fiscal year. For further information, refer to the consolidated financial
statements and accompanying notes included in the Company's Form 10-KSB/A for
the year ended December 31, 1999. There have been no changes in significant
accounting policies since December 31, 1999.
NOTE 2 - THE COMPANY
The Company is an Internet retailer of designer fashions and home accessories at
outlet store prices. The full service Web store ("Bluefly.com" or "Web Site")
sells over 350 brands of designer apparel, accessories and house and home
products at discounts of up to 75%. Bluefly.com, which launched in September
1998, also offers information on current fashion trends.
In June 1998, the Company's Board of Directors voted to discontinue the
operations of its golf sportswear division and devote all of the Company's
energy and resources to building Bluefly.com.
NOTE 3 - NOTES PAYABLE
The Company has obtained a commitment from affiliates of Soros Private Equity
Partners ("Soros") to provide, at the Company's option, up to $15 million of
financing at any time during 2000 on terms reflecting market rates for such
financings at the time such financing is provided (the "Soros Commitment"). The
Company's investment banker, Credit Suisse First Boston, is advising it in
determining its most prudent strategy for financing, including whether to
proceed with a round of financing with Soros pursuant to the Soros Commitment,
or otherwise. In March 2000, affiliates of Soros provided the Company with $3
million in debt financing, in the form of a note that bears interest at a rate
of 8% per annum and is due in January 2002 (the "Soros Note"). The Soros Note
provides that amounts due thereunder will convert into securities sold in the
Company's next round of financing and will be considered as part of the $15
million of financing committed under the terms of the Soros Commitment. In
connection with the Soros Commitment and Soros Note, the Company has granted
Soros a warrant (the "Soros Warrant") pursuant to which Soros has the right to
purchase up to 175,000 shares of Common Stock (subject to certain vesting
provisions relating to the timing of the Company's next round of financing) at
an exercise price equal to the value of a share of Common Stock as determined in
the Company's next round of financing, exercisable at any time during the next 5
years. The warrants issued in connection with the Soros Note have been valued at
$134,000 using the Black Scholes option model and accordingly, the Company has
recorded a charge to additional paid in capital and related debt discount. The
Soros Warrant expires five years after issuance.
NOTE 4 - EARNINGS (LOSS) PER SHARE
The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share." Basic earnings (loss) per share excludes dilution and
is computed by dividing earnings (loss) available to common shareholders by the
weighted average number of common shares outstanding for the period.
7
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BLUEFLY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
Diluted earnings (loss) per share is computed by dividing earnings (loss)
available to common shareholders by the weighted average number of common shares
outstanding for the period, adjusted to reflect potentially dilutive securities.
Due to the loss from continuing operations, options and warrants to purchase
1,265,595 shares of Common Stock and Preferred Stock convertible into 952,381
shares of Common Stock were not included in the computation of diluted earnings
per share because the result of the exercise of such would be antidilutive.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
MARKETING AND ADVERTISING COMMITMENTS
The Company has advertising and marketing commitments through December 31, 2000
of approximately $2.0 million. These amounts include payments due in connection
with the Company's online marketing relationships as well as print advertising
commitments.
NOTE 6 - RECLASSIFICATIONS
Certain amounts in the consolidated financial statements of the prior period
have been reclassified to conform to the current period presentation for
comparative purposes.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company is a leading Internet retailer of designer fashions and home
furnishings at outlet store prices. The Company offers an extensive selection of
designer products from over 350 brands, which the Company believes to be the
broadest selection of designer products available on the Internet.
The Company derives revenue primarily from the sale of designer products on its
Web Site. Merchandise revenue is recognized when goods are shipped to the
Company's customers from its third party warehouse, which occurs only after
credit card authorization. For sales of merchandise, the Company is responsible
for pricing, processing and fulfilling the orders. The Company processes
merchandise returns and bears the credit risk for these transactions. The
Company generally permits returns for any reason within 90 days of the sale.
Accordingly, the Company reserves for estimated future returns and bad debt at
the time of shipment based on historical data. However, the Company's future
return and bad debt rates could differ significantly from historical figures.
The Company has incurred substantial costs to develop its Web Site and
infrastructure. In order to expand its business, the Company intends to invest
heavily in sales, marketing, merchandising, operations, information systems,
site development and additional personnel to support these activities. The
Company, therefore, expects to continue to incur substantial operating losses
for the foreseeable future.
The Company's quarterly net sales increased to $3,558,000 for the first quarter
of 2000, an increase of 17% compared to sales during the fourth quarter of 1999
of $3,042,000. The Company's quarterly net sales grew throughout 1999, from
$305,000 during the first quarter to $741,000 in the second quarter, to $863,000
in the third quarter, to approximately $3 million in the fourth quarter.
The Company's quarterly sales increased by 17% in the first quarter of 2000 as
compared to the fourth quarter of 1999, despite the fact that, for apparel
retailers, the fourth quarter typically results in the highest volume, while the
first quarter is typically a much slower quarter. The Company believes that this
growth in sales was driven, in large part, by investments made in its technology
and operations infrastructure during the second half of 1999, which allowed it
to deliver a superior customer
8
<PAGE>
experience during the 1999 Holiday season. The Company further believes that its
ability to deliver a superior customer experience during the 1999 Holiday season
has resulted in a high number of repeat customers during the first quarter and
positive "word of mouth" marketing from existing customers to new users, both of
which allow for more efficient customer acquisition.
Positive trends in several key metrics also suggest that the Company's
performance during the 1999 Holiday season has been an effective customer and
revenue acquisition tool. The Company acquired 32,000 customers in the first
quarter of 2000, which exceeds the number of customers added in the fourth
quarter of 1999 and brings the Company's total active customer base (i.e.
customers who have purchased in the past 12 months) to 87,500. Similarly, repeat
customers accounted for approximately 42% of sales during the first quarter, the
highest level the Company has ever recorded. On average, repeat customers placed
3 orders in the first quarter of 2000.
According to Media Metrix data, Bluefly.com attracted 387,000 average monthly
visitors during the first quarter of 2000, approximately 118% higher than
traffic during the same period in 1999. Gross revenue per unique visitor was
$4.20 for the first quarter, 588% higher than the same period a year ago.
Bluefly.com was launched in September 1998. In June 1998, prior to the launch of
Bluefly.com, the Company discontinued its Pivot Rules division, which marketed a
collection of golf sportswear in order to devote all of its resources to
building Bluefly.com.
RESULTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 1999.
NET SALES: For the three months ended March 31, 2000, gross sales (revenue from
product sales before any adjustment for reserves) totaled $4,878,000. The
Company recorded a provision for returns and credit card chargebacks and other
discounts of $1,320,000, or approximately 27% of gross sales. The reserve
allowance takes into account the Company's 90-day return policy and actual
experience to date, which may vary over time. After the necessary provisions for
returns, credit card chargebacks and adjustments for uncollected sales taxes,
the Company's net sales for the first quarter of 2000 were $3,558,000. This
represents an increase of over 1067% compared to net sales for the three month
period ended March 31, 1999, in which net sales totaled $305,000.
COST OF SALES: Cost of sales for the three months ended March 31, 2000 totaled
$2,712,000, resulting in gross margin of approximately 23.8%. Cost of sales
consists of the cost of product sold to customers, in-bound shipping costs,
inventory reserves and packing materials. Cost of sales for the three months
ended March 31, 1999 were $253,000, resulting in gross margin of 17%. The gross
margin percentage was effected positively by improvements in the Company's
overall merchandising strategy, and purchasing leverage and was offset by 60
basis points as a result of the Company's first ever promotion and 90 basis
points by certain other promotional activities.
SELLING, MARKETING AND FULFILLMENT EXPENSES: Selling, marketing and fulfillment
expenses totaled $5,317,000 for the three months ended March 31, 2000,
representing costs associated with online strategic marketing relationships,
print advertising, Web Site hosting, inventory management, including outbound
shipping costs, fulfillment and customer service. Approximately 68% of selling,
marketing and fulfillment expenses in the quarter related to advertising
expenses. Selling, marketing and fulfillment expenses for the same period in
1999 were approximately $863,000.
GENERAL AND ADMINISTRATIVE EXPENSES: General and administrative expenses were
$1,267,000 for the three months ended March 31, 2000 compared to $494,000 for
the same period in 1999. General and administrative expenses include salaries
and related expenses, insurance costs, accounting and legal fees, depreciation
and other office related expenses. The increase in general and administrative
expenses in the first quarter 2000, as compared to 1999, was largely the result
of an increase in employees, and their related benefits as well as increased
professional fees. The Company has increased its head count across all
departments, growing the Company from 26 employees as of March 31, 1999 to 84 as
of March 31, 2000.
9
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LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had approximately $3.9 million of cash. At March
31, 2000, the Company had $7,462,000 of inventory, of which approximately 8% was
purchased in the latter part of March for Mother's and Father's Day promotions.
This inventory was not offered for sale on the Web Site until April 2000.
Pursuant to the Soros Commitment, Soros has agreed, at the Company's option, to
provide up to $15 million of financing at any time during 2000 on terms
reflecting market rates for such financings at the time such financing is
provided. The Company's investment banker, Credit Suisse First Boston, is
advising it in determining its most prudent financing strategy, including
whether to proceed with a round of financing with Soros pursuant to the Soros
Commitment, or otherwise. In March 2000, Soros provided the Company with $3
million in debt financing through the issuance of a note that bears interest at
the rate of 8% per annum and is due in January 2002 (the "Soros Note"). The
Soros Note provides that amounts due thereunder will convert into securities
sold in the Company's next round of financing and will be considered as part of
the $15 million of financing committed under the terms of the Soros Commitment.
In connection with the Soros Commitment and the Soros Note, the Company has
granted Soros the Soros Warrant, pursuant to which Soros has the right to
purchase up to 175,000 shares of Common Stock (subject to certain vesting
provisions relating to the timing of the Company's next round of financing) at
an exercise price equal to the value of a share of Common Stock as determined in
the Company's next round of financing, exercisable at any time during the next 5
years. The warrants issued in connection with the Soros Note have been valued at
$134,000 using the Black Scholes option pricing model and accordingly, the
Company has recorded a charge to additional paid in capital, and related debt
discount. The Soros Warrant expires five years after issuance. The Company
anticipates obtaining additional debt financing of $3 million from Soros
pursuant to the Soros commitment during May 2000, and issuing additional
warrants to Soros in connection with such financing.
The Company anticipates, based on current plans and assumptions relating to its
operations, that the proceeds from the Soros Note, and the Company's next round
of financing (whether through the Soros Commitment or otherwise), together with
existing resources and cash generated from operations, should be sufficient to
satisfy the Company's current cash requirements through the end of 2000.
However, the Company intends to seek additional debt and/or equity financing
during 2000 through a public offering, private placement or otherwise in order
to maximize the growth of its business. There can be no assurance that any
additional financing or other sources of capital will be available to the
Company upon acceptable terms, or at all. The inability to obtain additional
financing, when needed, would have a material adverse effect on the Company's
business, financial condition and results of operations and significantly slow
the pace of both customer and revenue growth.
As of March 31, 2000, the Company has marketing and advertising commitments of
$2.0 million through December 31, 2000. In addition, the Company believes that
in order to grow the business, the Company will need to make additional
marketing and advertising commitments in the future. However, the Company's
marketing budget is subject to a number of factors, including the Company's
results of operations as well as the Company's ability to raise additional
capital.
In order to continue to expand its product offerings, the Company intends to
expand its relationships with suppliers of end-of-season and excess name brand
apparel and fashion accessories. The Company expects that its suppliers will
continue to include designers and retail stores that sell excess inventory as
well as third party end-of-season apparel aggregators. To achieve its goal of
offering a wide selection of top name brand designer clothing and fashion
accessories, the Company may acquire certain goods on consignment and may
explore leasing or partnering select departments with strategic partners and
distributors.
The Company expects to hire and train additional employees for the operations
and development of Bluefly.com. However, the Company's ability to hire such
employees is subject to a number of factors, including the Company's results of
operations as well as the Company's ability to raise additional capital.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB
101 summarizes certain of the Commission's views in applying generally accepted
accounting principles to revenue recognition in financial statements. SAB 101 is
not a rule or interpretation of the Commission, however, it represents
interpretations and practices followed by the Division of Corporate Finance and
Office of the Chief Accountant in administering the disclosure requirements of
the Federal securities laws. The Company believes that the interpretations
outlined in SAB 101 did not have an impact on the Company's revenue recognition
policies.
10
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SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This report may include statements that constitute "forward-looking" statements,
usually containing the words "believe," "project," "expect," or similar
expressions. These statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking statements
inherently involve risks and uncertainties that could cause actual results to
differ materially from the forward-looking statements. The risks and
uncertainties are detailed from time to time in reports filed by the company
with the Securities and Exchange Commission, including Forms 8-A, 8-K, 10-QSB,
and 10-KSB. These risks and uncertainties include, but are not limited to, the
following: the competitive nature of the business and the potential for
competitors with greater resources to enter such business; the Company's limited
working capital and need for additional financing; risk of litigation for sale
of inauthentic or damaged goods and litigation risks related to sales in foreign
countries; consumer acceptance of the Internet as a medium for purchasing
apparel; recent losses and anticipated future losses; the startup nature of the
Internet business; the capital intensive nature of such business (taking into
account the need for advertising to promote such business); the dependence on
third parties and certain relationships for certain services; the successful
hiring and retention of personnel; the dependence on continued growth of online
commerce; rapid technological change; online commerce security risks;
governmental regulation and legal uncertainties; management of potential growth;
and unexpected changes in fashion trends.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following is a list of exhibits filed as part of this Report:
EXHIBIT NO. DESCRIPTION
----------- -----------
27 Financial Data Schedule.
(b) Reports on Form 8-K.
The Company filed no reports on Form 8-K during the period covered by this
report.
11
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BLUEFLY, INC.
By: /s/ E. Kenneth Seiff
-------------------------
E. Kenneth Seiff
President
By: /s/ Patrick C. Barry
-------------------------
Patrick C. Barry
Chief Financial Officer
May 15, 2000
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 3,909,000
<SECURITIES> 0
<RECEIVABLES> 799,000
<ALLOWANCES> 0
<INVENTORY> 7,462,000
<CURRENT-ASSETS> 13,071,000
<PP&E> 1,393,000
<DEPRECIATION> 286,000
<TOTAL-ASSETS> 14,216,000
<CURRENT-LIABILITIES> 6,296,000
<BONDS> 0
9,943,000
0
<COMMON> 49,000
<OTHER-SE> (4,939,000)
<TOTAL-LIABILITY-AND-EQUITY> 14,216,000
<SALES> 3,558,000
<TOTAL-REVENUES> 3,558,000
<CGS> 2,712,000
<TOTAL-COSTS> 6,584,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (5,667,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (5,667,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (5,667,000)
<EPS-BASIC> (1.19)
<EPS-DILUTED> (1.19)
</TABLE>
