<PAGE> 1
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
---------------------
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
---------------------
For the quarter ended March 31, 1996 Commission File Number 1-8355
HELIONETICS, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-2629097
(State of incorporation) (IRS Employer ID No.)
or organization)
6849 Hayvenhurst Avenue, Van Nuys, California 91406
(Address of principal executive offices)
(818) 778-0000
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
------------------- -------------------
<S> <C>
Common stock, no par value OTC Bulletin Board
</TABLE>
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by checkmark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
YES X NO
----- -----
Shares of common stock outstanding as of April 15, 1996 4,992,059
- -------------------------------------------------------------------------------
<PAGE> 2
HELIONETICS, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE #
--------------------- ------
<S> <C>
Item 1. Financial Statements
--------------------
Statements of Operations 1
Balance Sheets 2-4
Statements of Cash Flows 5-6
Notes to Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 2. None
Item 3. None
Item 4. None
Item 5. None
Item 6. Exhibits and Reports 12
</TABLE>
<PAGE> 3
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
(unaudited)
(dollars in thousands except per share and share data)
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
--------------------
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------
1996 1995
---- ----
<S> <C> <C>
REVENUES (Note 1) $ 878 $ 9,934
------- -------
COSTS AND EXPENSES
Cost of sales 660 6,917
Selling, general and administrative 1,781 4,150
Interest 75 166
------- -------
2,516 11,233
------- -------
OTHER INCOME (EXPENSE) (59) 1
------- -------
INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE PROVISION FOR
INCOME TAXES (1,697) (1,298)
Provision for income tax (Note 4) -- --
------- -------
LOSS FROM CONTINUING OPERATIONS (1,697) (1,298)
DISCONTINUED OPERATIONS:
Income (loss) of discontinued segment -- (183)
------- -------
NET INCOME (LOSS) $(1,697) $(1,481)
======= =======
PRIMARY EARNINGS PER SHARE (Note 1) $ (0.34) $ (0.55)
======= =======
</TABLE>
The accompanying notes are an integral part of these statements.
1
<PAGE> 4
HELIONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
(dollars in thousands)
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
---- ----
(unaudited)
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents, including $93 restricted $ 104 $ 189
Accounts receivable, less allowance of $110 in
1995 and 1994 415 428
Notes receivable from officers -- --
Inventories (Note 1) 1,085 960
Prepaid expenses and other 71 133
------ ------
Total current assets 1,675 1,710
------ ------
PROPERTY, PLANT AND EQUIPMENT
at cost:
Leasehold improvements 242 232
Machinery and equipment 1,610 1,600
------ ------
1,852 1,832
Less--Accumulated depreciation and amortization (915) (796)
------ ------
937 1,036
------ ------
OTHER ASSETS:
Patent costs (Note 1) 111 188
Excess of cost over net assets of acquired companies,
net (Note 1) 4,114 4,351
Notes receivable and other assets (Note 1) 272 64
------ ------
4,497 4,603
------ ------
$7,109 $7,348
====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
2
<PAGE> 5
HELIONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
(dollars in thousands)
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
---- ----
(unaudited)
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt (Note 2) $ 815 $ 1,093
Accounts payable 4,319 4,165
Accrued liabilities 10,954 10,080
------- -------
Total current liabilities 16,088 15,338
------- -------
LONG-TERM DEBT, net of current maturities (Note 2) 895 943
------- -------
NOTES and LOANS PAYABLE to proponents and shareholder
(Note 3) 1,764 1,009
------- -------
MINORITY INTEREST 165 165
------- -------
COMMITMENTS AND CONTINGENCIES (Note 1)
SHAREHOLDERS' EQUITY (Note 6):
Preferred stock, no par value
Authorized--2,000,000 shares; none outstanding -- --
Class A and B convertible preferred stock
No stated value
Authorized--150,000 shares of each
Outstanding --
51,175 shares of Class A in 1996 and 1995 and 57,629
shares of Class B in 1996 and 1995, respectively -- --
Class C convertible preferred stock,
$3.50 stated value
Authorized--2,800,000 shares
Outstanding--304,000 shares in 1996 and 304,000
shares in 1995 692 692
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
HELIONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
(dollars in thousands)
<TABLE>
<CAPTION>
March 31 December 31
1996 1995
---- ----
(unaudited)
<S> <C> <C>
SHAREHOLDERS' EQUITY (cont'd)
Class D convertible preferred stock
$10.00 stated value
Authorized--100,000 shares
Outstanding--none -- --
Class E convertible preferred stock
$10.00 stated value
Authorized--90,000 shares
Outstanding--none -- --
Class F convertible preferred stock
no stated value
Authorized--2,800,000 shares
Outstanding--0 in 1996 and
and 1995, respectively -- --
Class H convertible preferred stock
1,150,000 shares to be authorized
None outstanding -- --
Common stock
No par value
Authorized--50,000,000 shares
Outstanding--4,939,000 shares in 1996
and in 1995 78,571 78,571
Additional paid-in capital 2,674 2,674
Accumulated deficit (93,740) (92,043)
-------- --------
Total shareholders' equity (11,803) (10,106)
-------- --------
$ 7,109 $ 7,349
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
HELIONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income from continuing operations $(1,697) $(1,481)
Adjustment to reconcile net income to net cash
provided by (used in) operating activities of
continuing operations--
Depreciation and amortization 433 474
Minority interest 180
Interest -- proponent 59 78
Change in operating assets and liabilities 700 (1,495)
------- -------
Net cash provided by (used in) operations (505) (2,244)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment ( 20) (88)
Cash paid in connection with investment in AccuLase -- --
Cash acquired in business acquisition -- --
Deferred product costs -- --
Other assets (208) 253
------- -------
Net cash provided by (used in) investing activities (228) 165
------- -------
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 8
HELIONETICS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in line of credit $ -- $ 23
Increase (decrease) in long term debt, net (48) (24)
Increase (decrease) in notes payable to proponents and
shareholders, net 696 (54)
Proceeds from exercise of Series F warrants -- --
Deferred offering cost -- --
Proceeds from offshore sale of common stock, net -- --
----- -------
Net cash provided by (used in) financing activities 648 (55)
----- -------
Net increase (decrease) in cash and equivalents (85) (2,134)
Cash and equivalents at beginning of period 189 5,464
----- -------
Cash and equivalents at end of period $ 104 $ 3,330
===== =======
Interest paid $ 15 $ 88
===== =======
SUPPLEMENTAL DISCLOSURE OF NON CASH INVESTING
AND FINANCING ACTIVITIES (amounts in whole dollars):
. The Company, in 1995, converted Class C and Class F preferred shares
into 2,109 and 41,000 shares of common stock amounting to
$7,381 and $90,200, respectively.
. The Company, in 1995, retired fully depreciated property and equipment
totalling $1,567,000.
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE> 9
HELIONETICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
The unaudited consolidated financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission
and are unaudited except for the balance sheet as of December 31, 1995.
Certain information and footnote disclosures normally included in the financial
statements have been condensed or omitted pursuant to such rules and
regulations. It is suggested that these financial statements be read in
conjunction with the financial statements and the notes thereto included in the
Company's latest annual report on Form 10-K with attention to Note 3-Basis of
Presentation, discussing the uncertainty as to the Company's continuance as a
going concern because of certain litigation settlements and other
contingencies. In the opinion of management the accompanying financial
statements contain all adjustments necessary to present fairly the Company's
financial position and the results of operations for the periods presented.
The results of operations for the three months ended March 31, 1996, are not
necessarily indicative of the results to be expected for the full year. All
share data for 1995 was restated to reflect the 10 for 1 reverse stock split in
February 1996.
The consolidated financial statements of the Company during the interim
of 1995 have not been restated and included Tri-Lite. In the fourth quarter of
1995, due to the reduction of ownership and control over Tri-Lite, and the
bankruptcy filing previously disclosed, the Company changed its method of
accounting for their investment in Tri-Lite for the year ended December 31, 1995
from consolidation to the equity method.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts
of the Company and its subsidiaries. Upon consolidation all material
intercompany transactions and accounts have been eliminated.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method)
or estimated net realizable value. Costs include direct material, direct labor
and applicable manufacturing and engineering overhead.
OTHER ASSETS
Patent costs are amortized on a straight-line basis over the shorter of
the estimated periods to be benefitted or the term of the patent.
Excess of cost over net assets of acquired companies is amortized on a
straight-line basis over five to thirty years.
EARNINGS PER SHARE
Earnings per common share is based upon the weighted average number of
shares outstanding during each period including common equivalent shares. The
1995 weighted average shares were restated to reflect the 10 for 1 reverse
stock split in 1996.
Earnings per common share, assuming full dilution, is based upon the
weighted average number of shares outstanding plus the common shares issuable
upon conversion in exercise of securities whose exercise conversion as of
January 1 would reduce earnings per common and common equivalent share for that
year.
7
<PAGE> 10
HELIONETICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
The weighted average shares used in calculating earnings per share are
summarized as follows:
<TABLE>
<CAPTION>
(amounts in thousands)
1995 1994
---- ----
<S> <C> <C>
Primary 4,992 2,673
Fully diluted 4,992 2,673
</TABLE>
RECLASSIFICATIONS AND RESTATEMENTS
Certain account reclassifications have been made to the 1995 balances to
conform to the 1996 presentation.
(2) LONG-TERM DEBT AND CREDIT FACILITIES
------------------------------------
Notes and long-term debt at March 31, 1996 and December 31, 1995 were as
follows (in thousands):
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Convertible unsecured note payable bearing interest at 6%,
with interest payable quarterly beginning March 31, 1994
and principal and remaining accrued interest due on
December 31, 1996. $ 400 $400
Convertible secured promissory notes 100 500
Note payable-directors and unsecured creditors, interest at prime,
quarterly interest only, principal due October 1, 1999, unsecured 448 448
Note payable-US Treasury, interest 9%, payable monthly principal and
interest of $5,000 through December 1999, unsecured 191 202
Priority tax payable quarterly with interest ranging from
10% to 14% per annum 58 58
Others 513 383
------ ------
1,710 1,991
Less: Current maturities (815) (1,093)
------ -------
$ 895 $ 898
====== =======
</TABLE>
8
<PAGE> 11
HELIONETICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
(3) NOTES AND LOANS PAYABLE TO PROPONENTS AND SHAREHOLDERS
------------------------------------------------------
At March 31, 1996 and December 31, 1995, the Company had notes and
loans payable to proponents and shareholders totaling $1,764,000 and
$1,009,000, respectively. The notes and loans bear interest at rates ranging
from 7.5 percent to 10 percent per annum. The notes and loans represent
advances between the Company and the proponents. All other notes and loans are
secured by the appropriate UCC-1 filings. In May 1996, Ms. Barnes required the
Company pursuant to the Security Agreement signed by the Compnay, to deliver to
Ms. Barnes possession of all securities evidencing ownership by the Company of
all of its subsidiaries until such time as all of her loans are paid in full.
Subsequent to March 31, 1996, notes and loans of approximately
$904,000 payable to Ms. Barnes will be extinguished through the issuance of
common stock at its fair market value.
(4) INCOME TAXES
------------
No provision for federal and state income taxes was provided for the
period as a result of the taxable losses incurred. Through December 31, 1992,
the Company accounted for income taxes under Statement of Financial Accounting
Standards No. 96, "Accounting for Income Taxes". This standard required income
taxes to be provided based upon a liability approach, under which deferred
taxes were recorded at the rates to be in effect when such taxes were due.
Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes." Under Statement
109, the liability method is used in accounting for income taxes. Under this
method, deferred tax assets and liabilities are determined based on differences
between financial reporting and tax bases of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. As permitted by Statement 109, the
Company has elected not to restate the consolidated financial statements of any
prior years. The effect of the change was not material to the consolidated
financial statements.
At March 31, 1996, the Company believes it has significant net
operating loss carryforwards for federal and state income tax purposes. Such
amounts would be available to reduce future federal and state income tax
liabilities as appropriate and, to the extent not used, would expire through
2010. As a result of various stock transactions during the past two years,
certain of these net operating loss carryforwards are subject to annual
limitations of approximately $1,400,000 to be used in future periods.
At March 31, 1996, Laser Photonics and Acculase had net operating loss
carryforwards of approximately $5,700,000 and $10,002,000 which expire in
various years through 2010. These net operating losses are subject to annual
limitations imposed by the Internal Revenue Code due to change in control of
Companies.
(5) OPTIONS
-------
The following are options granted subsequent to December 31, 1995 and
outstanding as of July 31, 1996:
<TABLE>
<CAPTION>
Shares Price
------ -----
<S> <C> <C>
Bernard B. Katz 150,000 $3.50
KB Equities, Inc. 600,000 0.35
Maxwell Malone 150,000 3.50
Chaim Markheim 150,000 3.50
</TABLE>
9
<PAGE> 12
HELIONETICS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(unaudited)
(5) OPTIONS (CONTINUED)
-------------------
<TABLE>
<S> <C> <C>
Richard Sergo 150,000 3.50
Raymond Hartman 150,000 3.50
Larry Suelzle 150,000 3.50
Adrian Cayetano 75,000 3.50
</TABLE>
(6) SUBSEQUENT EVENT
----------------
On July 22, 1996, Acculase filed for an Investigational Device Exemption
("IDE") with the US Food and Drug Administration ("FDA") for permission
to undergo human clinical trials with the AcculasRevascularization
("TMR") system.
On July 22, 1996, Helionetics joined as co-proponent with Tri-Lite to
file a Tri-Lite Plan of Reorganization in the Tri-Lite Chapter 11
proceeding. A hearing on the adequacy of the plan was set on August 29,
1996 in the Bankruptcy court.
10
<PAGE> 13
HELIONETICS, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
LIQUIDITY AND CAPITAL RESOURCES
Working capital (the difference between current assets and current
liabilities) deficit was $14,323,000 at March 31, 1996 compared with
$13,628,000 at December 31, 1995, or a decline of $695,000. Receivables and
inventories increased by a combined total of $112,000; trade payables and
accrued liabilities increased by $1,028,000. Capital expenditures are minimal
and totalled $20,000 for the three months period.
The Company believes that its current ongoing operations are viable. In
addition, the Company believes that it has access to additional debt financing
to augment operating cash flow, if necessary, to continue its business
operations. However, the Company has several litigation settlements accrued,
as well as other actual and contingent liabilities and if such accruals and
liabilities can not be renegotiated and must be paid in cash, substantial doubt
about the Company's ability to continue as a going concern exists. The
liquidity needs of the Company in 1996 will be provided as follows: LPI
liquidity will be provided through sales of its securities; Marinco and DECC
division from its own internal operations; Corporate activities, Sentinel and
Acculase primarily on loans to be provided by Ms. Susan Barnes, issuance of
shares of the Company's common stock and sale of the Company's securities from
private placements.
The Company, in February 1996, approved issuance of approximately 1,047,300
shares of the Company's common stock for services rendered by employees,
consultants and for professional fees. For the three months ended March 1996,
Ms. Barnes loaned the Company approximately $764,000 which included payments
for Company expenses and debt and consulting fees.
RESULTS OF OPERATIONS
The Company spun-off KSWI in December 1995 and Tri-Lite results of
operations for 1996 was not included due to its filing for Chapter 11
bankruptcy and the reduction of the Company's ownership and control of Tri-Lite
in late 1995. Tri-Lite's results of operations however, was included in the
interim financial statements during 1995.
The Company had approximately $878 thousands in revenues for the three
months ended March 31, 1996, compared with $9.9 million for the corresponding
period in the prior year, or a net decrease of $9.0 million. $9.3 million of
1995 revenues was attributed to Tri-Lite, which the Company's investment wrote
off in 1995 as a result of Tri-Lite's filing for Chapter 11 proceedings and the
reduction of the Company's ownership interest (approximately 49%) in Tri-Lite.
LPI, acquired May 1995, contributed $607 thousand of revenues in 1996.
The loss in 1996 reflects the continued research and development support for
Acculase's excimer laser for TMR application and continued commercialization
efforts for Sentinel's Sentry-E fault tolerant computer.
Cost of sales was 75% and 70% for 1996 and 1995, respectively. The decline
in margin was attributed to the effect of DECC's decline in revenues (lower
revenues to offset fixed cost). In 1995 Tri-Lite contributed to a favorable
consolidated margin compared with 1996, which excluded Tri-Lite.
Selling, general and administrative expenses were $1,781,000 and $4,150,000,
and as a percent of revenue, were 203% and 42% for 1996 and 1995, respectively.
Tri-Lite contributed $2.5 million in 1995 and none in 1996.
11
<PAGE> 14
HELIONETICS, INC. AND SUBSIDIARIES
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
In March 1995, an action was instituted by Bo B. Sramek and Hevka H. Sramek
against Helionetics and Bernard B. Katz in the Superior Court of California,
Central Orange County District (Case No. 743947) for shares of Helionetics'
common stock which Helionetics failed to deliver. In April 1996, an amount of
$2.4 milllion was awarded to the Srameks. An award is also made in favor of
Bernard B. Katz, as an individual, against the plaintiff. In connection with
Mr. Katz's award, Mr. Katz is contemplating an action against the plaintiff and
their counsel. Should Mr. Katz prevail on his contemplated action, any
proceeds to be awarded Mr. Katz less court costs will be contributed by Mr.
Katz to Helionetics.
The Company is a defendant in class action law suits alleging violation of
federal securities laws. Although management believes that these actions are
without merit and intends to defend them vigorously, counsel for the Company
has determined a probable loss in the seven-digit range. Based on ongoing
negotiations, management of the Company has accrued $3,500,000 as of December
31, 1995, which is included in accrued liabilities in the accompanying
statements.
In October 1995, Tri-Lite, Inc. filed a complaint in the U. S. District
Court for the Northern District of Ohio against the company for $2 million in
compensatory damages and $2 million in punitive damages for the alleged
repudiation and revocation of the company's guaranty of Tri- Lite's credit
facility with its senior lender, along with other cause of actions. The
company disputes all of Tri-Lite's credit claims. Due to Tri-Lite's Chapter 11
Bankruptcy filing in February 1996, there is a stay on the case. The company
will file a counter-suit against the Tri-Lite's officers and board of directors
when the stay is lifted. The Company believes that the suit filed by Tri-Lite
is without merit and anticipates that any jugement would not have a material
adverse effect on its financial condition or results of operations.
The Company in July 1995 filed a civil complaint in Superior Court of Los
Angeles County (Case No. BC 131 749) against U. S. Surgical Corporation and
other for over $2.5 million compensatory damages and unspecified punitive
damages. The defendants removed the case to the U. S. District Court for the
Central District of California under Case No. 95-5513 RAP (RNBx). The company
expects this to be a significant and protracted litigation. The company has
recently retained a Connecticut counsel and plans to vigorously pursue the
action. The case is currently in discovery.
Helionetics is currently in litigation in the case of Lawrence Fund, et al.
v. Helionetics, et al., in the United States District Court, Sourthern District
of New York (Case No. 95 Civ. 1005 RPP). After inquest, a judgement was
rendered in the amount of $612,045 in favor of Lawrence Fund, which judgement
is currently on appeal. Management is confident that Helionetics will be
successful on appeal and/or that the matter will be disposed on favorable
terms.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
Form 8-K, dated February 16, 1996, with respect to the change of
accountants and amendments to the Articles of Incorporation and 10
for 1 reverse stock split.
12
<PAGE> 15
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.
HELIONETICS, INC.
DATE: August 19, 1996 /s/ E. Maxwell Malone
------------------------------- ------------------------------
E. Maxwell Malone
Chief Executive Officer
DATE: August 19, 1996 /s/ Chaim Markheim
------------------------------- ------------------------------
Chaim Markheim
Vice-President
DATE: August 19, 1996 /s/ Adrian Cayetano
------------------------------- ------------------------------
Adrian Cayetano
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1,000
<CASH> 104
<SECURITIES> 0
<RECEIVABLES> 525
<ALLOWANCES> 110
<INVENTORY> 1,085
<CURRENT-ASSETS> 1,675
<PP&E> 1,852
<DEPRECIATION> 915
<TOTAL-ASSETS> 7,109
<CURRENT-LIABILITIES> 16,088
<BONDS> 0
0
692
<COMMON> 78,571
<OTHER-SE> (91,066)
<TOTAL-LIABILITY-AND-EQUITY> 7,109
<SALES> 878
<TOTAL-REVENUES> 878
<CGS> 660
<TOTAL-COSTS> 660
<OTHER-EXPENSES> 1,856
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,697)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,697)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,697)
<EPS-PRIMARY> (0.34)
<EPS-DILUTED> (0.34)
</TABLE>
