<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
---------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: JANUARY 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO ____________
COMMISSION FILE NUMBER: 0-11552
TELEVIDEO, INC.
-----------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-2383795
------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
2345 HARRIS WAY, SAN JOSE, CALIFORNIA 95131
--------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 954-8333
---------
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
----- -----
THE NUMBER OF SHARES OUTSTANDING OF REGISTRANT'S COMMON STOCK, AS OF MARCH
12, 1998 IS: 45,547,970.
<PAGE>
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus and the Company's Quarterly Report on Form 10-Q for the
first quarter ended January 31, 1998, which is incorporated by reference
herein, include certain statements that may be deemed to be "forward-looking
statements" within the meaning of Section 27A of the Securities Act and
Section 21E of the Exchange Act. All statements, other than statements of
historical facts, included in this Prospectus that address activities, events
or developments that the Company expects, believes or anticipates will or may
occur in the future, including, but not limited to, such matters as future
product development, business development, marketing arrangements, future
revenues from contracts, business strategies, expansion and growth of the
Company's operations and other such matters are forward-looking statements.
These statements are based on certain assumptions and analyses made by the
Company in light of its experience and perception of historical trends,
current conditions, expected future developments and other factors it
believes are appropriate in the circumstances. Such statements are subject to
a number of assumptions, risks and uncertainties, including the risk factors
discussed below, general economic and business conditions, the business
opportunities (or lack thereof) that may be presented to and pursued by the
Company, changes in law or regulations and other factors, many of which are
beyond control of the Company. Prospective investors are cautioned that any
such statements are not guarantees of future performance and that actual
results or developments may differ materially from those projected in the
forward-looking statements.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
TELEVIDEO, INC.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1998 AND 1997 QUARTERLY DATA
The condensed consolidated financial statements included herein have
been prepared by the management of Televideo, Inc. (the "Company"), without
audit, 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 the disclosures which are made
are adequate to make the information presented not misleading. Further, the
condensed consolidated financial statements reflect, in the opinion of
management, all adjustments (which included only normal recurring
adjustments) necessary to present fairly the financial position and results
of operations as of and for the periods indicated.
It is suggested that these condensed consolidated financial statements
be read in conjunction with the financial statements and the notes thereto
included in the Company's Report on Form 10-K for the fiscal year ended
October 31, 1997.
The results of operations for the three-month period ended January 31,
1998, are not necessarily indicative of the results to be expected for the
entire fiscal year ending October 31, 1998.
1
<PAGE>
TELEVIDEO, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Jan. 31, Oct. 31,
ASSETS 1998 1997
-------- --------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,306 $ 3,604
Accounts receivable, less allowance of
$696 in 1998 and $971 in 1997 4,967 4,191
Inventories 4,202 2,923
Prepayments and other 97 220
Loan receivable from major customer 669 900
-------- --------
Total current assets 12,241 11,838
-------- --------
PROPERTY, PLANT AND EQUIPMENT:
Land 890 890
Building 1,035 1,035
Production equipment 529 524
Office furniture and equipment 1,141 1,140
Building improvements 1,105 1,105
-------- --------
4,700 4,694
Less accumulated depreciation and amortization 2,006 1,934
-------- --------
Property, plant and equipment, net 2,694 2,760
Long term receivable from major customer 608 608
INVESTMENTS IN AFFILIATES 2,610 2,712
-------- --------
Total assets $ 18,153 $ 17,918
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,534 $ 1,539
Accrued liabilities 717 730
Income taxes 361 361
-------- --------
Total current liabilities 3,612 2,630
-------- --------
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value;
Authorized--75,000,000 shares
Outstanding--45,547,970 shares in 1998
and 45,404,745 shares in 1997 455 455
Additional paid-in capital 95,687 95,671
Accumulated deficit (81,601) (80,838)
-------- --------
Total stockholders' equity 14,541 15,288
-------- --------
Total liabilities and stockholders' equity $ 18,153 $ 17,918
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
TELEVIDEO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JANUARY 31, 1998 AND JANUARY 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
NET SALES $ 4,539 $ 4,463
COST OF SALES 4,073 3,858
------- -------
GROSS PROFIT 466 605
OPERATING EXPENSES:
Sales and Marketing 782 774
Research and development 134 186
General and administration 346 292
------- -------
Total operating expenses 1,262 1,252
------- -------
Loss from operations (796) (647)
INTEREST INCOME, net 30 155
OTHER INCOME, net 4 (21)
------- -------
Net loss $ (762) $ (513)
------- -------
------- -------
Net loss per share $ (0.02) $ (0.01)
------- -------
------- -------
Average shares outstanding 45,530 45,405
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
TELEVIDEO, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED JANUARY 31, 1998 AND JANUARY 31, 1997
(IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
INCREASE (DECREASE) IN CASH:
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (762) $ (513)
Charges (credits) to operations not affecting cash:
Depreciation and amortization 71 85
Provision for bad debts (34) -
Provision for excess and obsolete inventories 130 -
Changes in operating assets and liabilities:
Accounts receivable (742) 1,071
Inventories (1,409) 1,651
Prepayments and other 354 4,899
Accounts payable 993 (2,550)
Accrued liabilities and royalties (12) 9
------- -------
Net cash provided by (used in) operating activities (1,411) 4,652
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net retirements of (additions to) property, plant and equipment (6) 36
Investments in affiliate 103 (150)
------- -------
Net cash provided by (used in) investing activities 97 (114)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 16 1
------- -------
Net cash provided by financing activities 16 1
------- -------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,298) 4,539
CASH AND CASH EQUIVALENTS AT THE BEGINNING
OF THE YEAR 3,604 4,496
------- -------
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR $ 2,306 $ 9,035
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
TELEVIDEO, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JANUARY 31, 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION
The condensed consolidated financial statements include the accounts of
the Company and certain of its majority owned subsidiaries, after
elimination of inter-company accounts and transactions. The Company's
investments in joint ventures in the Commonwealth of Independent States,
some of which represent a majority interest in the joint venture, are not
consolidated due to the lack of reliable financial information from the
entity. Such investments are carried at cost.
TRANSLATION
The Company applies Statement of Financial Accounting Standards No. 52
for purposes of translating foreign currency financial statements of its
foreign subsidiaries. Translation gains and losses resulting from the
translation of foreign currency financial statements are deferred and
classified as adjustments to stockholders' equity.
USE OF ESTIMATES
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of
the financial statements, as well as revenues and expenses during the
reporting period. Actual results could differ from those estimates.
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.
INVENTORIES
Inventories are stated at the lower of cost or market. Costs are
computed on a currently adjusted standard basis (which approximates
average cost) for both finished goods and work-in-process and includes
material, labor and manufacturing overhead costs. The cost of purchased
parts is determined on a first-in, first-out basis. Amounts shown are
net of reserves for obsolescence of $653,000 and $523,000 in 1998 and
1997, respectively:
<TABLE>
<CAPTION>
Jan. 31, Oct. 31,
1998 1997
-------- --------
<S> <C> <C>
Purchased parts and subassemblies $2,215 $1,075
Work-in-process 388 459
Finished goods 1,599 1,389
------ ------
$4,202 $2,923
------ ------
------ ------
</TABLE>
5
<PAGE>
PROPERTY, PLANT AND EQUIPMENT
Depreciation and amortization are provided over the estimated useful lives
of the assets using both straight-line and accelerated methods.
<TABLE>
<CAPTION>
<S> <C>
Building 40 years
Production equipment 1-10 years
Office furniture 1-10 years
</TABLE>
NET INCOME (LOSS) PER SHARE
Net income (loss) per share is based on the weighted average number of
shares of Common Stock outstanding during each period.
2. ACQUISITIONS AND DIVESTITURES:
ADMOS TECHNOLOGIES INC.
During fiscal 1991, the Company acquired through its wholly owned
subsidiary, Silicon Logic, Inc., a 20% equity interest in a chip
engineering firm (AdMOS Technologies Inc.) in exchange for certain assets
and a nominal cash payment, the total value of which was $145,000. The
acquisition of this interest had been accounted for on the cost method.
This investment was written off in fiscal 1992 due to the continued
economic difficulties experienced by AdMOS.
In fiscal 1991 and 1992, the Company loaned AdMOS a total of $470,000,
which has been partially repaid. The outstanding balance at January 31,
1998 was $4,000. The repayment of a portion of this loan is personally
guaranteed by the President and controlling shareholders of AdMOS. Due
to the economic difficulties AdMOS is currently experiencing, the
principal and interest balances due on this note have been fully reserved.
In February 1995, the Company further loaned AdMOS $384,000 at an
interest rate of 10% per annum. Approximately $104,000 was repaid to the
Company in August 1995. In November 1995, the Company received another
$100,000 from AdMOS. The Company has fully reserved the unpaid balance
of $184,000 plus accrued interest as of January 31, 1998.
TLK, INC.
In November 1996, the Company invested $150,000 in exchange for a 20%
ownership in TLK, Inc. for the China Power Plant projects in Lin Zhang,
Quin Yuan and Henan Provinces in China. The Company expects to have a
return on investment within the next twelve months. The investment is
accounted for using the cost method.
KORAM, INC.
On March 3, 1997, the Company deposited $224,820 in escrow in Korea which
amount is to be used to purchase a 50% ownership in a restaurant venture
in Seoul, Korea. The amount deposited has been written down to $109,820
due to the devaluation of the Korean won.
6
<PAGE>
APPLIED PHOTONICS TECHNOLOGY, INC.
On April 16, 1997, the Company entered into a Common Stock Purchase
agreement with Applied Photonics Technology, Inc. (APT), a California
corporation, whereby the Company purchased a 30% interest in APT for $3.0
million.
Founded in October 1996, APT is a developmental stage enterprise
specializing in the development of electronics display technology. The
anticipated market for APT's outdoor media display system include the
high end of billboard and illuminated sign markets, sports stadiums and
arenas, transportation terminals, volume retailers and malls, and
safety/public information displays. APT has not recorded any sales to
date. APT estimates its first sales to commence towards the end of
fiscal 1998.
The Company accounts for its investment in APT using the equity method of
accounting. The excess of the cost of the investment over the book
value of the 30% interest acquired totaled $2,054,366 and is being
amortized to operations over a 5 year period. For the year ended October
31, 1997, the Company recorded a loss from this investment of $623,097 of
which $233,079 represented amortization of the excess investment cost
over book value.
THREE H
Three H Partners (owned equally by TeleVideo and a Russian entity) was
formed in fiscal 1991 and the initial investment was $16,000. In July
1996, the Company further invested $60,000 in the joint venture.
TELEVIDEO-RUS
In January 1996, TeleVideo set up a company called "TeleVideo-RUS" in the
Commonwealth of Independent States with an initial investment of
$150,000. The main purpose of this company is to act as a liaison between
TeleVideo and the authorities in the CIS.
In October 1997, the Company received $250,000 from the sale of
Televideo-RUS. The Company recognized a $100,000 profit during fiscal
1997.
At the indicated dates the Company had the following investments in
affiliates and joint ventures: (in thousands)
<TABLE>
<CAPTION>
Jan. 31, Oct. 31,
1998 1997
-------- --------
<S> <C> <C>
TLK, Inc. $ 150 $ 150
Three H 76 76
Koram 110 110
Applied Photonics Technology 2,274 2,377
------ ------
$2,610 $2,713
------ ------
------ ------
</TABLE>
7
<PAGE>
3. LETTER OF CREDIT AGREEMENT:
The Company has a $3.0 million line of credit agreements with the banks.
The agreements are secured by $2.0 million in time deposit and $1.0
million in accounts receivable which altogether can be used for standby
and sight letter of credits and for operating loans. At January 31,
1998, the Company had letters of credit outstanding of approximately
$994,000.
4. INCOME TAXES:
The Company adopted, effective November 1, 1993, Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes,"
issued in February 1992. Under the liability method specified by SFAS
109, deferred tax assets and liabilities are determined based on the
difference between the financial statement and tax bases of assets and
liabilities as measured by the enacted tax rates which will be in effect
when these differences reverse. Deferred tax expense is the result of
changes in deferred tax assets and liabilities.
As of January 31, 1998, the only issue pending is California Franchise
Tax exposure resulting from the previous Federal Income Tax audits. The
Company believes that a resolution of this audit could occur in fiscal
1998 and its maximum exposure will not exceed $350,000. The Company has
accrued this full amount as of January 31, 1998.
5. LITIGATION AND OTHER:
The Company has been named, along with dozens of other manufacturers,
designers, and distributors of computer equipment, as a defendant in
several lawsuits regarding product liability in connection with the
alleged defective design of computer terminal keyboards and the size of
the computer monitor screens. The first issue alleges that the various
plaintiffs have suffered some form of severe wrist injury from the use of
said keyboards. The second issue alleges that there was false
advertising which claimed that the video screens were 17 inches in size,
when in reality they were only 15 inches. The Company's attorneys have
prepared a defense for these cases and the Company's insurance carriers
are informed of the plaintiff's claims. The Company intends to
vigorously defend against the allegations of these suits. Management
believes that the ultimate outcome of these lawsuits will not have a
material adverse effect on the Company's financial position.
6. RELATED PARTY TRANSACTIONS:
During 1998 and 1997 the Company has had transactions with its affiliates
as follows (in thousands):
<TABLE>
<CAPTION>
Jan. 31, Oct. 31,
1998 1997
-------- --------
<S> <C> <C>
Note receivable:
AdMOS (1) $ 4 $ 4
AdMOS (1) 180 180
Interest receivable:
AdMOS (1) 68 68
AdMOS (1) 64 60
(1) Amounts are fully reserved.
</TABLE>
8
<PAGE>
7. TRANSACTIONS WITH MAJOR CUSTOMER
The Company has entered into the following transactions with one of its
major customers, Applied Computer Technology, Inc., (ACT). Sales to ACT
for the year ended October 31, 1997 aggregated approximately $3,308,000
or 16.6% of net sales.
1) In June, 1997, the Company loaned ACT $2,300,000. Interest on the
loan accrues at 2% per month. All interest income accrued on the
loan is being deferred by the Company until the amounts are
received. As of October 31, 1997, the loan principal balance was
$900,000. The loan has since been paid down to $500,000.
Management expects full repayment of principal and accrued interest
in March, 1998.
2) At October 31, 1997, ACT owed the Company approximately $2.1 million
in trade receivables, which represented approximately 41% of net
trade receivables. Subsequent to year end, the Company agreed to
exchange $900,000 of outstanding trade receivables for $900,000 of
Series A convertible preferred stock of ACT. The preferred shares
are convertible into common stock at the option of the holder, based
on the 5 day average closing bid price of ACT common stock prior to
conversion, subject to a floor of $2.50 per share and a ceiling of
$4.25 per share. ACT has the obligation to register the shares by
filing a registration statement with the Securities and Exchange
Commission and the preferred shares will be automatically converted
once the registration statement becomes effective.
The preferred shares were issued in December 1997. As of January 31,
1998, the Company has reflected the $900,000 as a long term receivable
and has further provided a reserve of $292,500 against the $900,000 to
reflect the fair value of the preferred shares ultimately issued, taking
into consideration the lack of liquidity of the securities.
In summary, at October 31, 1997, the Company's balance sheet reflects net
assets of $2,704,000 from ACT, $1,196,000 in trade receivables, $900,000
in current loans receivable and $608,000 in a net long term receivable
subsequently converted into preferred stock.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
RESULTS OF OPERATIONS
Net sales for the first quarter of fiscal 1998 were approximately $4.54
million, an increase of approximately 1.7% from the approximately $4.46
million in net sales reported in the first quarter of fiscal 1997. The
increase in net sales was mainly due to the increase in sales of the monitor
products, which was introduced in the first quarter 1997 to $1.3 million in
the first quarter of fiscal 1998, offset by a decrease in multimedia sales
from $2.2 million in the first quarter of fiscal 1997 to $1.3 million in the
first quarter of fiscal 1998. Net sales of terminals and other products were
quite steady which remained at the $2.2 million level.
Cost of sales increased from $3.86 million in the first quarter of
fiscal 1997 to $4.07 million in the first quarter of fiscal 1998, an increase
of $215,000 or 5.6%.
Sales and marketing expenses decreased as a percentage of sales from
approximately 17.4% in the first quarter of fiscal 1997 to 17.2% in the first
quarter of fiscal 1998, while actual expenses increased from $774,000 in the
first quarter of fiscal 1997 to $782,000 in the first quarter of fiscal 1998,
an increase of more than 1% from the prior year.
Research and development expenses decreased as a percentage of sales
from approximately 4.2% in the first quarter of fiscal 1997 to 3.0% in the
first quarter of fiscal 1998, while actual expenses decreased from $186,000
to 134,000 during the same period in 1998, a decrease of 27.7%.
General and administrative expenses increased as a percentage of sales
from approximately 6.5% in the first quarter of fiscal 1997 to 7.6% in the
first quarter of fiscal 1998, while actual expenses increased from $292,000
in the first quarter of fiscal 1997 to $346,000 during the same period in
1998, or 18.6%.
The loss from operations increased from $647,000 in the first quarter of
fiscal 1997 to $796,000 in the first quarter of fiscal 1998, a $135,000
increase or 23.2%.
Interest income earned decreased from $155,000 in the first quarter of
fiscal 1997 to $30,000 in the first quarter of fiscal 1998, a 80.6% decrease
compared to the same period last year.
Net loss for the first quarter of fiscal 1998 was approximately
$762,000, compared with a net loss of $513,000 in the first quarter of fiscal
1997, a 48.5% increase.
As a result of the foregoing, net loss per share in the first quarter of
fiscal 1998 was $0.02, based on 45,529,570 weighted average shares
outstanding, compared to a net loss per share in the first quarter of fiscal
1997 of $0.01, based on 45,404,745 weighted average shares outstanding.
No income tax expense or credit was provided for in the quarter ended
January 31, 1998, as the Company has adequate net operating loss and credit
carryovers to offset future federal and state corporate income tax
liabilities. No net deferred tax asset has been recognized by the Company for
any future tax benefit to be provided from the loss carry forwards since
realization of any such benefit is not assured.
Inflation had no significant impact on the Company's business or results
of operations.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled approximately $2.3 million at January
31, 1998, down $1.3 million from fiscal year October 31, 1997 levels of $3.6
million. The decrease in the cash and cash equivalents resulted primarily
from the net operating loss in the first quarter ending January 31, 1998 and
the changes in operating assets during the same period.
Net accounts receivable increased by $776,000 from $4.2 million in
fiscal year ending October 31, 1997 to $5.0 million in the first quarter
ending January 31, 1998 an increase of 18.5%.
Net inventories increased to $4.2 million during the first quarter of
fiscal 1998 from $2.9 million in fiscal year ending October 31, 1997, an
increase of $1.3 million or 43.7%.
Working capital at the end of the first quarter of fiscal 1998 was
approximately $8.6 million, down approximately 6.5% from the fiscal 1997
year-end level of approximately $9.2 million.
At the current consumption rate, the Company's cash balance of
approximately $2.3 million at January 31, 1998, (which includes $2.0 million
pledged as security for stand-by and sight letters of credit) plus revenues
from operations and other non-operating cash receipts was deemed adequate to
fund the Company's fiscal 1998 operations at projected levels.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
See Note 5 of "Notes to Condensed Consolidated Financial Statements."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBIT(S).
Exhibit 27.0 Financial Data Schedule.
(b) REPORTS ON FORM 8-K. None.
[The remainder of this page is intentionally left blank.]
12
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TELEVIDEO, INC.
-----------------------------------
(REGISTRANT)
DATE: MARCH 16, 1998 BY: /s/ K. PHILIP HWANG
-----------------------------------
DR. K. PHILIP HWANG
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER
/s/ KEN HO CHONG
-----------------------------------
KEN HO CHONG
VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1998
<PERIOD-START> NOV-01-1997
<PERIOD-END> JAN-31-1998
<CASH> 2,306
<SECURITIES> 0
<RECEIVABLES> 5,663
<ALLOWANCES> 696
<INVENTORY> 4,202
<CURRENT-ASSETS> 12,241
<PP&E> 4,700
<DEPRECIATION> 2,006
<TOTAL-ASSETS> 18,153
<CURRENT-LIABILITIES> 3,612
<BONDS> 0
0
0
<COMMON> 455
<OTHER-SE> 14,086
<TOTAL-LIABILITY-AND-EQUITY> 18,153
<SALES> 4,539
<TOTAL-REVENUES> 4,587
<CGS> 4,073
<TOTAL-COSTS> 5,335
<OTHER-EXPENSES> 14
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10
<INCOME-PRETAX> (762)
<INCOME-TAX> 0
<INCOME-CONTINUING> (762)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (762)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
