FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
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 No. 2-331855
Go-Video, Inc.
--------------
(Exact name of registrant as specified in its charter)
Delaware 86-0492122
-------- ----------
(State of Incorporation) (IRS E.I.N.)
7835 East McClain Drive, Scottsdale, Arizona 85260
- -------------------------------------------- -----
(Address of principal executive offices) (Zip code)
(602) 998-3400
--------------
(Registrant's telephone number, including area code)
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
----- -----
11,331,012 shares of Common Stock were outstanding as of November 11, 1996
<PAGE>
GO-VIDEO, INC.
INDEX
Page No.
--------
Part I. FINANCIAL INFORMATION
Consolidated Balance Sheets --
At September 30, 1996 and March 31, 1996 3
Consolidated Statements of Operations --
Three and Six months ended September 30, 1996
and 1995 4
Consolidated Statements of Cash Flows --
Six months ended September 30, 1996 and 1995 5-6
Notes to Consolidated Financial Statements -- 7-8
Management's Discussion and Analysis of Results
of Operations and Financial Condition 9-12
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures S-1
2
<PAGE>
GO-VIDEO, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
ASSETS September 30, 1996 March 31, 1996
------------------ --------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 393,157 313,916
Receivables - less allowance for doubtful accounts of
$130,000 and $130,000, respectively 5,738,876 4,147,143
Inventories 6,942,206 5,127,102
Prepaid expenses and other assets 165,652 42,021
----------- -----------
Total current assets 13,239,891 9,630,182
----------- -----------
EQUIPMENT AND IMPROVEMENTS:
Furniture, fixtures & equipment 517,906 507,990
Leasehold improvements 208,888 173,157
Office equipment 513,542 483,861
Tooling 1,277,560 1,107,970
----------- -----------
Total 2,517,896 2,272,978
Less accumulated depreciation and amortization 1,344,785 1,100,386
----------- -----------
Equipment and improvements - net 1,173,111 1,172,592
----------- -----------
DUAL-DECK VCR PATENTS, net of amortization of $43,474
and $40,041, respectively 73,277 76,711
GOODWILL, net of amortization of $21,408, and $17,046,
respectively 144,894 153,417
OTHER ASSETS, net of amortization $522,988 and
$471,321, respectively 139,396 165,084
----------- -----------
TOTAL $14,770,569 $11,197,986
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,264,610 $ 2,512,594
Accrued expenses 707,310 375,972
Other current liabilities 674,822 731,824
Warranty reserve - current 197,000 186,000
Line of credit 4,163,185 2,430,330
----------- -----------
Total current liabilities 8,006,927 6,236,720
----------- -----------
WARRANTY RESERVE - Long-term 5,000 5,000
----------- -----------
DEFERRED RENT 23,328 15,520
----------- -----------
LONG TERM OBLIGATIONS 14,562 262,885
----------- -----------
MANDATORY CONVERTIBLE SUBORDINATED DEBT 1,270,000 0
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock $.001 par value - authorized, 50,000,000 shares;
issued and outstanding, 11,331,012 and
11,331,012 shares, respectively 11,391 11,331
Additional capital 19,134,736 19,054,796
Unamortized consulting services (22,502) (35,002)
Accumulated deficit (13,872,873) (14,353,264)
----------- -----------
Total stockholders' equity 5,250,752 4,677,861
----------- -----------
TOTAL $14,770,569 $11,197,986
=========== ===========
</TABLE>
3
<PAGE>
GO-VIDEO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For The Three For The Six
Months Ended September 30, Months Ended September 30,
-------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES $ 9,393,147 $ 9,170,337 $ 17,581,162 $ 16,109,705
COST OF SALES 7,254,281 6,985,475 13,572,737 12,930,861
------------ ------------ ------------ ------------
Gross profit 2,138,866 2,184,862 4,008,425 3,178,844
------------ ------------ ------------ ------------
OTHER OPERATING COSTS:
Sales and marketing 846,885 1,229,914 1,554,353 1,964,356
Research and development 233,065 162,682 458,144 314,434
General and administrative 593,720 642,216 1,203,892 1,334,837
------------ ------------ ------------ ------------
Total other operating costs 1,673,670 2,034,812 3,216,389 3,613,627
------------ ------------ ------------ ------------
Operating income (loss) 465,196 150,050 792,036 (434,783)
------------ ------------ ------------ ------------
OTHER (EXPENSE) REVENUES:
Interest income 9,702 1,356 11,855 1,769
Interest expense (182,586) (128,910) (324,637) (233,192)
Other income 480 6,600 1,138 7,751
------------ ------------ ------------ ------------
Total other expense (172,404) (120,954) (311,644) (223,672)
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 292,792 $ 29,096 $ 480,392 $ (658,455)
============ ============ ============ ============
NET INCOME (LOSS) PER
COMMON SHARE $ 0.03 $ 0.00 $ 0.04 $ (0.06)
============ ============ ============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 11,331,012 11,301,012 11,331,012 11,289,149
============ ============ ============ ============
</TABLE>
4
<PAGE>
GO-VIDEO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Six
Months Ended September 30,
--------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 480,392 $ (658,455)
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 320,491 290,785
Provision for doubtful accounts 3,000 (3,005)
Change in operating assets and liabilities-net of
effect of acquisition:
Receivables (1,594,733) (1,540,500)
Inventories (1,815,104) (3,064,865)
Prepaid expenses and other assets (123,631) (12,648)
Other assets (980) 6,743
Accounts payable (247,983) 2,318,370
Accrued expenses 331,338 117,520
Other current liabilities (57,002) 137,844
Warranty reserve 11,000 17,000
Other liabilities (40,514) (1,245)
----------- -----------
Net cash used in operating activities (2,733,726) (2,392,456)
----------- -----------
INVESTING ACTIVITIES:
Equipment and improvement expenditures (244,888) (270,584)
Cash acquired from acquisition 0 39,951
----------- -----------
Net cash used in investing activities (244,888) (230,633)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 20,250
Net (repayments) borrowings under line of credit 1,732,855 2,863,958
Payment of financing costs (25,000) (15,000)
Proceed from issuance of mandatory convertible debt 1,350,000 0
Payment of debt assumed in acquisition 0 (257,314)
----------- -----------
Net cash provided by financing activities 3,057,855 2,611,894
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 79,241 (11,195)
CASH AND CASH EQUIVALENTS, beginning of period 313,916 166,819
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 393,157 $ 155,624
=========== ===========
SUPPLEMENTAL INFORMATION TO CASH FLOW
STATEMENT:
Interest paid $ 324,637 $ 233,192
=========== ===========
</TABLE>
5
<PAGE>
(Continued)
GO-VIDEO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
For the Six
Months Ended September 30,
--------------------------
1996 1995
---- ----
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
In connection with the acquisition, liabilities were
assumed as follows:
Liabilities assumed $ 0 $361,120
-------- --------
Fair value of assets acquired, including $39,951
in cash $ 0 $190,657
-------- --------
Excess of cost over fair value of assets acquired $ 0 $170,463
======== ========
6
<PAGE>
GO-VIDEO, INC. AND SUBSIDIARY
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------
GENERAL
- -------
In the opinion of the Company, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal reoccurring accruals)
necessary to present fairly the financial position of the Company and the
results of its operations and changes in its financial position for the periods
reported. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the entire year.
Inventories at September 30, 1996 consisted of $492,164 of raw materials and
service parts and $6,450,042 of finished goods.
Goodwill of approximately $170,000 resulting from the acquisition of the
Company's Security Products Division is being amortized on the straight line
basis over ten years.
The Company is engaged in one business segment, the design, development,
marketing and licensing of electronic video communication products. The
Company's current primary focus is the design, marketing, sale, and distribution
of several models of its Dual-Deck(TM) videocassette recorder. Sales to Circuit
City Stores totaled 10% or more of net sales for the six months ended September
30, 1996. Sales to Circuit City Stores were $3,374,380 for the six month period
ended September 30, 1996. Accounts receivable from Circuit City Stores was
$1,378,865 at September 30, 1996.
The Company sold $1.5 million of convertible subordinated notes in a private
placement with institutional holders in August 1996. The placement included six
Units, each consisting of one 10% Convertible Subordinated Note in the principle
amount of $250,000 with warrants to purchase 100,000 shares of common stock at
$1.25 per share. The notes must be converted to common stock within three years.
The warrants have an aggregate fair value of $230,000. In connection with the
private placement, the Company also issued warrants and commons stock to the
placement agent with a fair value of $46,000 and $75,000 respectively.
Certain reclassifications have been made to the prior financial statements to
conform to the current classifications.
Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating loss
and tax credit carryforwards. The tax effects of significant items comprising
the Company's net deferred tax asset as of September 30, 1996 are as follows:
7
<PAGE>
Deferred Tax Assets:
Current-reserves not currently
deductible $ 473,000
Noncurrent:
Differences between book & tax
basis of property $ 399,000
Operating loss carryforwards 7,722,000
Contribution carryforwards 8,000
Tax credit carryforwards 189,000
Other intangibles 95,000
-----------
Net Deferred Tax Asset 8,886,000
Valuation Allowance (8,886,000)
-----------
Net Deferred Asset $ -0-
============
The information presented within the financial statements should be read in
conjunction with the Company's audited Financial Statements for the fiscal year
ended March 31, 1996, the eight month transition period ended March 31, 1995,
and the fiscal year ended July 31, 1994 and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" from the 1996 Annual
Report on Form 10-K.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Three months ended September 30, 1996 compared with the three months ended
- --------------------------------------------------------------------------------
September 30, 1995:
- -------------------
Net sales increased 2.4% to $9.4 million during the three months ended September
30, 1996 from $9.2 million during the three months ended September 30, 1995. The
increase in net sales was primarily due to a 33% increase in net units sold for
the three months ended September 30, 1996 compared to the three months ended
September 30, 1995, offset in part by a 23% decrease in average revenue per unit
for the two periods. The increase in net unit sales was primarily due to the
Company having two full model lines for sale, the GV40xx and the GV60xx series
during the three months ended September 30, 1996. The decrease in average
revenue per unit was primarily due to an overall decrease in the per unit
selling price of the GV6010 and the GV40xx series models compared to the GV30xx
series models and the GV4060 model which were sold during the three months ended
September 30, 1995, and the Company's product sales mix which included a higher
percentage of its less expensive price leader models during the three months
ended September 30, 1996 as compared with the three months ended September 30,
1995. Net sales of the Company's Security Products Division, which was acquired
on April 1, 1995, were less than 5% of total net sales for the three months
ending September 30, 1996.
Gross profit was $2.1 million and $2.2 million for the three months ended
September 30, 1996 and 1995, respectively, representing a 2.1% decrease in gross
profit dollars. Gross profit as a percentage of net sales decreased to 22.8% for
the three month period ended September 30, 1996 compared to 23.8% for the three
month period ended September 30, 1995. The decrease in gross profit as a
percentage of sales is primarily due to the Company's product sales mix which
included a higher percentage of its less expensive price leader models during
the three months ended September 30, 1996 as compared with the three months
ended September 30, 1995.
Sales and marketing expense decreased 31.1% to $0.8 million for the three months
ended September 30, 1996 from $1.2 million for the three months ended September
30, 1995. As a percentage of sales, sales and marketing expenses decreased from
13.4% in the three months ended September 30, 1995, to 9.0% in the three months
ended September 30, 1996. The decrease in sales and marketing expenses as a
percentage of sales is primarily due to lower commission expense resulting from
reduced commission rates, and reduced spending on marketing and promotional
items during the three months ended September 30, 1996.
Research and development expenses increased 43.3% to $0.2 million for the three
months ended September 30, 1996. The increase in research and development
expenses is due primarily to expenses incurred in connection with the Company's
development of prototype-digital LCD projection and direct view televisions.
General and administrative expenses decreased 7.6% to $0.6 million for the three
months ended September 30, 1996. As a percentage of net sales, general and
administrative expense decreased from 7.0% for the three months ended September
30, 1995 to 6.3% for the three months ended September 30, 1996. The decrease in
general and administrative expense is primarily due to compensation expense
recorded by the Company during the three months ended September 30, 1995
relating to a Separation Agreement and reduced consulting fees.
As a result of the above, the Company recorded an operating profit of $465,196
for the three months ended September 30, 1996 compared with an operating profit
of $150,050 for the three months ended September 30, 1995. The Company recorded
net other expense of $172,404 for the three months ended
9
<PAGE>
September 30, 1996 compared with net other expense of $120,954 for the same
period of the prior year. The increase in net other expense was primarily due to
increased interest expense caused by an increase in the average daily loans
outstanding while the average effective interest rate remained consistent during
the three month period ending September 30, 1996 as compared to the three month
period ending September 30, 1995.
Net income for the three months ended September 30, 1996 was $292,792 compared
with net income of $29,096 for the three months ended September 30, 1995. The
Company did not recognize income tax expense for either quarter due to its net
operating loss carryforwards.
Six months ended September 30, 1996 compared with the six months ended September
- --------------------------------------------------------------------------------
30, 1995:
- ---------
Net sales increased 9.1% to $17.6 million during the six months ended September
30, 1996 from $16.1 million during the six months ended September 30, 1995. The
increase in net sales was primarily due to a 41.0% increase in net units sold
for the six months ended September 30, 1996 compared to the six months ended
September 30, 1995, offset in part by a 22.6% decrease in average revenue per
unit for the two periods. The increase in net unit sales was due to the
introduction of the Company's GV60xx series(VHS/VHS Dual-Deck VCR) during the
six months ended September 30, 1996. The decrease in average revenue per unit
was primarily due to an overall decrease in the per unit selling price of the
GV6010 and GV40xx series models compared to the GV30xx series models and the
GV4060 model which were sold during the six months ended September 30, 1995, and
the Company's product sales mix which included a higher percentage of its less
expensive price leader models during the six months ended September 30, 1996 as
compared with the six months ended September 30, 1995. Net sales of the
Company's Security Products Division, which was acquired on April 1, 1995, were
less than 5% of total net sales for the six months ending September 30, 1996.
Gross profit was $4.0 million and $3.2 million for the six months ended
September 30, 1996 and 1995, respectively, representing a 26.1% increase in
gross profit dollars. Gross profit as a percentage of net sales increased to
22.8% for the six month period ended September 30, 1996 from 19.7% for the six
month period ended September 30, 1995. The increase in gross profit as a
percentage of sales is primarily due to higher sales margins realized on the
GV60xx and GV40xx series over the close-out of the GV30xx series in the six
months ended September 30, 1995.
Sales and marketing expense decreased 20.9% to $1.6 million for the six months
ended September 30, 1996 from $1.9 million for the six months ended September
30, 1995. As a percentage of sales, sales and marketing expenses decreased from
12.2% in the six months ended September 30, 1995, to 8.8% in the six months
ended September 30, 1996. The decrease in sales and marketing expenses as a
percentage of sales is primarily due to lower commission expense resulting from
reduced commission rates and reduced spending on marketing and promotional items
during the six months ended September 30, 1996.
Research and development expenses increased 45.7% to $0.5 million for the six
months ended September 30, 1996 from $0.3 million for the six months ended
September 30, 1995. The increase in research and development expenses is due
primarily to expenses incurred in connection with the Company's development of
prototype digital LCD-projection and direct view televisions.
General and administrative expenses decreased 9.9% to $1.2 million for the six
months ended September 30, 1996 from $1.3 million for the six months ended
September 30, 1995. As a percentage of net sales, general and administrative
expense decreased from 8.3% for the six months ended September 30, 1995 to 6.8%
for the six months ended September 30, 1996. The decrease in general and
administrative expense is primarily due to compensation expense recorded by the
Company during the six months ended September 30, 1995 relating to a Separation
Agreement.
10
<PAGE>
As a result of the above, the Company recorded an operating profit of $792,036
for the six months ended September 30, 1996 compared with an operating loss of
$434,783 for the six months ended September 30, 1995. The Company recorded net
other expense of $311,644 for the six months ended September 30, 1996 compared
with net other expense of $223,672 for the same period of the prior year. The
increase in net other expense was primarily due to increased interest expense
caused by an increase in the average daily loans outstanding while the average
effective interest rate remained consistent during the six month period ending
September 30, 1996 as compared to the six month period ending September 30,
1995.
Net income for the six months ended September 30, 1996 was $480,392 compared
with a net loss of $658,455 for the six months ended September 30, 1995. The
Company did not recognize income tax expense for the six months ended September
30, 1996 due to its net operating loss carryforwards. For the six months ended
September 30, 1995, the Company did not recognize an income tax benefit due to
recording a valuation allowance to offset the potential tax benefit of the loss.
Seasonality
- -----------
As the growth of the current distribution network has slowed, seasonal factors
are now more evident in the Company's operating results. Accordingly, the
Company expects to continue to experience peaks consistent with previous years
in its sales from September through December, which covers the holiday season.*
The Company's performance during and following this period will be affected by
retail sales of its customers.
Future Results
- --------------
This Report on Form 10-Q contains "Forward Looking Statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended. The Company's future
operating results may be affected by a number of factors, including the general
economic conditions in the markets in which the Company operates, the Company's
ability to design, distribute and sell its products profitably, competition in
general and competitive pricing in particular.
Capital Resources and Liquidity
- -------------------------------
Net cash used in operating activities was $2.7 million for the six months ended
September 30, 1996 compared to cash used in operations of $2.4 million for the
six months ended September 30, 1995. The more significant factors comprising the
net cash used were a $1.8 million increase in inventory and a $1.5 million
increase in receivables. The increase in the inventory balance from March 31,
1996 to September 30, 1996 was primarily due to increased inventory in transit
ordered for the holiday selling season. The Company had less inventory
in-transit at March 31, 1996. The increase in the receivable balance from March
31, 1996 to September 30, 1996 is primarily due to the timing of shipments
during the six months ended September 30, 1996 which were weighted heavily near
the end of the six month period, as the Company's average collection experience
has generally remained consistent.
The Company had net working capital of $5.2 million and $3.4 million at
September 30, 1996 and March 31, 1996, respectively. At September 30, 1996, the
Company's current ratio (the ratio of current assets to current liabilities) was
1.7 to 1.
The Company's sales seasonality requires incremental working capital for
investment primarily in inventories and receivables. The primary source of funds
over the six months ended September 30, 1996 has been borrowings under the
Company's line of credit. The Company has a line of credit that was
- --------
*Contains "Forward Looking Statements".
11
<PAGE>
entered into in October 1992 and was amended in May 1993, November 1993, August
1994, August 1995, and June 1996. The maximum line of credit, as amended, is
$14.0 million limited by specific inventory and receivable balances used as a
borrowing base, and provides for cash loans, letters of credit and acceptances.
The agreement, as amended, has a term of five years, with an origination fee of
1%, an annual facility fee of 0.5%, a non-use fee of 0.25%, and a prepayment (if
applicable) fee of 1%. Loans are priced at prime plus 2.5%. The lender is
collateralized by all assets of the Company. The unused and available line of
credit at September 30, 1996 was $1,843,660. The Company has capitalized $0.5
million of closing costs related to the origination and amendment of the
financing agreement. These costs are being amortized over the term of the
agreement. Management believes its current financial resources to be adequate to
support operations over the next twelve months.*
The Company sold $1.5 million of convertible subordinated notes in a private
placement with institutional holders in August 1996. The notes must be converted
to common stock within three years.
The Company expects to incur increased expenses for research and development and
marketing expenses related to the LCD projection television project, the Loewe
Opta television project, and other product lines currently being considered.*
The Company leases a 33,000 square foot executive office and warehouse facility
in north Scottsdale, Arizona, which is fully utilized, in good condition, and
adequate for the Company's needs. The lease began in January 1996 and has a term
of seven years, with one three year extension at the option of the Company.
Inflation
- ---------
Inflation has had no material effect on the Company's operations or financial
condition.
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on August 29, 1996. There
were present at the Annual Meeting, either in person or by proxy, 10,486,275
shares, which constituted a quorum. At the meeting, shareholders approved the
election of a director, and did not approve an amendment to provide for
preferred stock:
Item 1: Election of the following directors:
For Withheld Against
--- -------- -------
Roger B. Hackett 9,962,828 466,449 56,998
Item 2: Approval of amendment to the Certificate of Incorporation to
authorize 1,000,000 shares of Preferred Stock.
For Withheld Against Not Voted
--- -------- ------- ---------
2,474,793 142,974 953,354 6,915,154
- --------
*Contains "Forward Looking Statements".
12
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a. The following exhibit is filed as part of this Report:
<TABLE>
<CAPTION>
Exhibit No. Exhibit Method of Filing
- ----------- ------- ----------------
<S> <C> <C>
4.3 Form of Warrant Certificate Incorporated by reference to Exhibit 4.3
to the Company's S-2 filed November 7,
1996
4.4 Form of Mandatory Convertible Incorporated by reference to Exhibit 4.3
Subordinated Note to the Company's S-2 filed November 7, 1996
27 Financial Data Schedule
</TABLE>
b. Reports on Form 8-K
NONE
13
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
GO-VIDEO, INC. (Registrant)
Date: November 11, 1996 By /S/ ROGER B. HACKETT
-------------------------------------
Roger B. Hackett
Chairman of the Board,
Chief Executive Officer,
President and Chief Operating Officer
Date: November 11, 1996 By /S/ DOUGLAS P. KLEIN
-------------------------------------
Douglas P. Klein
Vice President, Chief Financial Officer,
Secretary and Treasurer
(principal financial and
accounting officer)
S-1
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 393,157
<SECURITIES> 0
<RECEIVABLES> 5,738,876
<ALLOWANCES> 130,000
<INVENTORY> 6,942,206
<CURRENT-ASSETS> 13,239,891
<PP&E> 1,173,111
<DEPRECIATION> 1,344,785
<TOTAL-ASSETS> 14,770,569
<CURRENT-LIABILITIES> 8,006,927
<BONDS> 0
0
0
<COMMON> 11,391
<OTHER-SE> 5,239,361
<TOTAL-LIABILITY-AND-EQUITY> 14,770,569
<SALES> 17,581,162
<TOTAL-REVENUES> 17,593,017
<CGS> 13,572,737
<TOTAL-COSTS> 13,572,737
<OTHER-EXPENSES> 3,216,389
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 324,637
<INCOME-PRETAX> 480,392
<INCOME-TAX> 0
<INCOME-CONTINUING> 480,392
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 480,392
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.04
</TABLE>
