<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1996
[ ] 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 0-14784
------------------------
Cable Car Beverage Corporation
------------------------------------------------------
Exact name of Registrant as specified in its charter)
DELAWARE 52-0880815
------------------------------- -----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
717 17th Street, Suite 1475, Denver, Colorado 80202
---------------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 298-9038
--------------
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
--------- ----------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
--------------------------------------------------------------------
(Title of class)
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 aggregate market value of equity securities held by non-
affiliates of the Registrant on March 25, 1997 was approximately
$18,730,000.
As of March 25, 1997 there were 8,905,324 shares of common stock
outstanding.
-1-
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
1996 FORM 10-K ANNUAL REPORT
----------------------------
Table of Contents
-----------------
Page
PART I
Item 1.Business 3
Item 2.Properties 6
Item 3.Legal Proceedings 6
Item 4.Submission of Matters to a
Vote of Security Holders 6
PART II
Item 5.Market for the Registrant's
Common Stock and Related
Stockholder Matters 7
Item 6.Selected Financial Data 7
Item 7.Management's Discussion and
Analysis of Financial
Condition and Results of Operations 9
Item 8.Financial Statements and Supplementary Data 11
Item 9.Changes in and Disagreements with
Accountants on Accounting and
Financial Disclosure 12
PART III
Item 10.Directors and Executive Officers of
the Registrant 13
Item 11.Executive Compensation 13
Item 12.Security Ownership of Certain
Beneficial Owners and
Management 13
Item 13.Certain Relationships and Related
Transactions 13
PART IV
Item 14.Exhibits, Financial Statement
Schedules and Reports on Form 8-K 14
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<PAGE>
PART I
ITEM 1. BUSINESS.
GENERAL
-------
Cable Car Beverage Corporation, (the "Company") was incorporated
under the laws of Delaware on April 1, 1968. The Company's business
consists of marketing its line of proprietary soft drinks and waters
throughout the United States and in Canada. As discussed in more detail
below, the Company's product line consists of Stewart's brand soft drinks,
JAVA COLA, Fountain Classics Seltzer, San Francisco Seltzer, Aspen
Mountain Spring Water and Aspen flavored waters. During 1996, the
Company began marketing two new Stewart's flavors (Stewart's Classic
Key Lime and Cherries N' Cream) as well as a new line of carbonated,
coffee-flavored cola under the name of JAVA COLA.
Proprietary Products Marketing:
General: The Company initially entered its current business of
marketing beverages on August 27, 1987 when it acquired, through its
subsidiary Old San Francisco Seltzer, Inc. ("SFS"), the assets and
business of Old San Francisco, Inc. ("Old SF"), a California corporation
that marketed a product line of flavored seltzers.
The Company added to its line of beverages when, on July 11, 1989,
it entered into a licensing agreement with Stewart's Restaurants, Inc.
("Stewart's"), a New Jersey based franchiser of Stewart's Drive-In Root
Beer Stands, pursuant to which the Company has the exclusive right to
produce and market Stewart's brand beverages for the entire United
States. Pursuant to an addendum to the Stewart's licensing agreement
dated April 11, 1994, the Company was granted the exclusive rights for
Canada, and once the Company achieves cumulative sales of 4,000,000
cases, the license becomes worldwide provided the Company maintains
annual sales of 1,000,000 cases. The agreement provides for a sliding
scale royalty with a minimum annual royalty of $50,000. For the year
ended December 31, 1996, the royalty payments exceeded the minimum
royalty due and the Company expects the same in future years.
Termination of the agreement may occur if the Company's annual sales of
Stewart's Root Beer are less than 500,000 cases for each year.
On December 1, 1993, the Company entered into a separate licensing
agreement with Stewart's, whereby the Company has the exclusive right to
market Stewart's brand beverages as a fountain product in 15 states. The
agreement provided for a one time licensing fee of $29,250 and payment of
a sliding scale royalty. The Company is marketing the Stewart's
fountain product through its wholly-owned subsidiary, Fountain Classics,
Inc. ("FCI").
On November 22, 1989, the Company acquired the assets and business of
Aspen Mineral Water Corporation ("Aspen"), a Colorado corporation that
marketed a sparkling water. Currently, the Company markets a line of
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<PAGE>
non-carbonated fruit flavored beverages under the brand name of Aspen.
The Company also markets a non-carbonated spring water under the
Aspen name.
Proprietary Products: The Company's proprietary product line
currently consists of Stewart's premium soft drinks (Root Beer, Orange
N' Cream, Cream Ale, Ginger Beer, Classic Key Lime, and Cherries N'
Cream), JAVA COLA, San Francisco Seltzer, Aspen Mountain Spring Water
and Aspen flavored waters. Stewart's products are packaged in original
and diet and are sweetened using non-sugar sweeteners - fructose in the
original line and NutraSweet brand sweetener in the diet line. JAVA COLA
is a unique coffee-flavored cola made with real coffee and is sold in
four different flavors: Original, Diet, Mocha and Vanilla. San
Francisco Seltzer is a naturally flavored soft drink which contains
no sodium or preservatives and is available in regular and diet flavors
that are sweetened with fructose and NutraSweet, respectively. Aspen
Mountain Spring Water is a non-carbonated water. Aspen flavored waters
are non-carbonated, fruit flavored beverages.
For the years ended December 31, 1996 and 1995, the Stewart's brand
accounted for approximately 98% and 96% of the Company's proprietary
brand sales, respectively. The Company anticipates that the Stewart's
brand will continue to account for a significant portion of sales for
the year ending December 31, 1997.
Marketing and Distribution: The brand products business consists of
both sales of concentrate to regional soft drink bottlers and the sale of
finished goods to distributors. Where the Company sells concentrate to
bottlers, the bottlers produce finished goods and sell through their own
distribution network. When the Company sells finished goods directly to
distributors, the Company has product produced for it by contract
manufacturers. The Company does not directly manufacture any of the
products it sells. The Company's products are retailed primarily in
grocery, convenience and liquor stores and food service accounts.
Consumer marketing consists of newspaper, magazine, outdoor and radio
advertising, along with in-store product demonstrations and point of sale
promotions. The Company presently sells product to numerous bottlers and
distributors in the United States and Canada.
Competition: The soft drink business is extremely competitive and
there are numerous competing products. Most competitors are larger and
have greater financial resources than the Company. The Company's
principal means for competing within this category are its product
line and flavors and through its advertising, packaging and promotions.
Trademarks: The Company owns the trademark "San Francisco Seltzer"
which was registered with the United States Patent and Trademark Office
on March 1, 1988. The Company also owns the trademark "Fountain
Classics" which is used on the Stewart's Premium Sodas line of products.
The "Fountain Classics" trademark was registered with the United States
Patent and Trademark Office on June 18, 1991. The Company owns the
trademark "Aspen" which was registered on May 31, 1994 with the United
States Patent and Trademark Office. The foregoing trademarks are
registered for a 10-year period and may be extended thereafter for
additional 10-year periods subject to compliance with federal statutory
and regulatory provisions. Management is of the view that its trademarks
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<PAGE>
are of significant importance to its operations and loss of such
trademarks could adversely affect the Company to an indeterminable
extent. The Company is taking appropriate steps to protect its
trademarks. Stewart's Restaurants, Inc. owns the trademark "Stewart's"
which is registered with the United States Patent and Trademark Office.
The Company has an exclusive trademark license agreement with Stewart's
Restaurants. (See "Proprietary Products Marketing - General".)
Wholesale Distribution - Divested on June 7, 1993
General: From 1987 until 1993, the Company was also engaged in the
business of wholesale distribution of beverages through its former
subsidiary, Sheya Brothers Specialty Beverages, Inc. ("SBSB"). On June
7, 1993, SBSB was merged into AMCON Distributing Company ("AMCON"), a
then privately-held, Omaha-based wholesale distributor.
In connection with the merger of SBSB into AMCON, the Company
received 306,143 shares of common stock of AMCON. Pursuant to the
Agreement and Plan of Merger with AMCON, on July 31, 1995, the Company
distributed 266,469 AMCON shares to shareholders of the Company on a
prorata basis. As of December 31, 1996, the Company holds 39,674 shares
of AMCON.
Seasonality:
Due to the seasonality of the beverage industry, the Company's sales
volumes are normally at their highest in the second and third calendar
quarters.
Prospective Products and Acquisition Activities:
The Company continues to develop line extensions under its various
brand names, primarily by adding new packages and flavors. As described
above, the Company introduced the following new products during 1996:
Stewart's Classic Key Lime and Cherries N' Cream. The Company intends
to continue expanding into beverage products, through both internal
development and acquisition, that are compatible with its existing brands
and can be sold through the Company's existing bottling and distribution
network.
Major Customers:
For the year ended December 31, 1996, two customers, K.O. Lester -
Lebanon, TN and Mid-State Beverage Company - New Brunswick, NJ, accounted
for approxiamtely 14% and 18% of the Company's net sales, respectively.
For the year ended December 31, 1995, the same two customers each
accounted for approximately 20% of the Company's net sales.
-5-
<PAGE>
Company Employees:
As of December 31, 1996, the Company had 17 employees. In addition,
the Company has used certain consultants on an "as needed" basis.
ITEM 2. PROPERTIES.
The Company is currently leasing, through September 1997,
approximately 3,024 square feet of office space at 717 17th Street,
Denver, Colorado 80202, at an annual cost of $28,350.
ITEM 3. LEGAL PROCEEDINGS.
The Company and its subsidiaries are not parties to, nor are any of
their properties subject to, any pending legal proceedings which are
expected to have any materially adverse effect on the Company's results
of operations or financial position. Additionally, to the best of
management's knowledge, no material legal proceeding is contemplated or
has been threatened against the Company and its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
There were no matters submitted to a vote of all security holders
during the quarter ended December 31, 1996.
-6-
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS.
The Company's Common Stock trades on the NASDAQ Small-Cap Market
under the symbol DRNK. The following table reflects the range of the
high and low bid prices per share of the Company's Common Stock as
reported by NASDAQ through December 31, 1996. These quotations represent
inter-dealer quotations, without adjustment for retail mark-ups, mark-
downs or commissions and may not necessarily represent market
transactions. As of March 25, 1997, the Company had approximately 1,100
holders of record of its shares and the Company is informed that
approximately 3,000 additional persons hold shares beneficially.
<TABLE>
<CAPTION>
COMMON STOCK
-----------------
High Low
---- ---
<S> <C> <C>
Year Ended December 31, 1996:
December 1996 Quarter $2.84 $2.00
September 1996 Quarter 2.56 1.44
June 1996 Quarter 1.84 1.25
March 1996 Quarter 1.88 1.44
Year Ended December 31, 1995:
December 1995 Quarter $1.66 $1.19
September 1995 Quarter 1.81 1.38
June 1995 Quarter 2.00 1.09
March 1995 Quarter 1.41 1.00
</TABLE>
The Company has never declared or paid a cash dividend on its common
stock and does not anticipate a change in this policy in the foreseeable
future. The Board of Directors currently intends to retain earnings to
finance the acquisition and development of new products, expansion of
markets and for other corporate purposes.
ITEM 6. SELECTED FINANCIAL DATA.
The following data, insofar as they relate to the consolidated
statement of operations for the years ended December 31, 1996, 1995 and
1994; and the balance sheet as of December 31, 1996 and 1995, have been
derived from the consolidated financial statements appearing in Part IV
of this Form 10-K. The consolidated statement of operations data for the
six-months ended December 31, 1993 and the fiscal years ended June 30,
1993 and 1992; and the consolidated balance sheet data as of December 31,
1994 and 1993, and June 30, 1993 and 1992 have been derived from the
historical consolidated financial statements of the Company for such
periods.
-7-
<PAGE>
The following table data should be read in conjunction with the
consolidated financial statements and notes thereto, and management's
commentary thereon contained in Item 7 of this report.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---- ---- ----
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C>
Revenue $ 18,872,556 $12,843,620 $8,322,301
=========== ========== =========
Net income
(loss) $ 1,257,132 $ 882,600 $ 721,695
=========== ========== =========
Net income
(loss) per
common
share: $ .14 $ .10 $ .09
=========== ========== =========
Weighted
average
common
and common
equivalent
shares
outstanding 9,255,479 8,915,666 8,318,909
========== ========== ==========
BALANCE SHEET DATA:
Total assets $ 7,141,782 $ 5,360,700 $ 4,448,832
=========== ========== ===========
Long-term
debt $ 0 $ 0 $ 5,970
=========== ========== ==========
Stockholders'
equity $ 5,982,046 $ 4,402,421 $ 3,944,778
=========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
SIX-MONTHS
ENDED
DECEMBER 31,
(1) YEAR ENDED JUNE 30,
------------ -------------------
1993 1993 1992
---- ---- ----
STATEMENT OF OPERATIONS DATA:
(CONT.)
<S> <C> <C> <C>
Revenue $ 3,030,982 $ 15,537,997 $ 14,838,598
========= ========== ===========
Net income
(loss) $ 143,449 $ (348,176) $ (22,384)
========= ========= ===========
Net income
(loss) per
common
share: $ .02 $ (.05) $
========= ========== ==========
Weighted
average
common
and common
equivalent
shares
outstanding 7,796,799 7,640,780 7,057,416
=========== ========== ==========
BALANCE SHEET DATA:
Total assets $ 3,920,799 $ 4,054,120 $ 5,266,381
========== ========== =========
Long-term
debt $ 10,099 $ 2,817 $ 108,476
========== ========== =========
Stockholders'
equity $ 3,096,886 $ 2,953,347 $ 3,066,613
========== ========== ==========
</TABLE>
(1) In 1993, the Company elected to change its fiscal year end
from June 30 to December 31.
-8-
<PAGE>
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS
The Company's future operating results are subject to a number of
uncertainties, including the ability of the Company to market its
beverage products and to develop and introduce new products, and the
number, quantity and marketing forces behind products introduced by
competitors. The Company expects the level of competition in the
beverage industry to become even more intense and large beverage
companies with greater resources have a competitive advantage over the
Company. In addition, general economic conditions, the cost of raw
materials and general conditions in the beverage business may have an
impact on the Company's future operations. There can be no assurance
the Company will continue to be successful nor that it will not
encounter difficulties in retaining its current market niche due to
a variety of factors such as market acceptance, costs of manufacturing
and marketing, and competition in the beverage industry, all of which
are largely beyond the Company's ability to reasonably predict, much
less control.
GENERAL
The Company entered into the business of non-alcoholic beverage
marketing in fiscal 1988 when it acquired the assets and business of
Old San Francisco Seltzer, Inc. Since that time, the Company added
Stewart's Root Beer and Aspen Sparkling Mountain Spring Water to the
proprietary brands that it markets nationally and has continued to grow
its line of Stewart's soft drinks (Root Beer, Orange N' Cream, Cream Ale,
Ginger Beer, Key Lime and Cherries N' Cream). Stewart's soft drinks are
currently sold in over 43 states and Canada. In December 1993, the
Company entered into a licensing agreement with Stewart's Restaurants,
Inc., whereby the Company has the exclusive right to sell Stewart's
brand beverages as a fountain product in 15 states.
FINANCIAL CONDITION
The Company's current ratio at December 31, 1996 is 5.0 to 1 as
compared to 4.0 to 1 at December 31, 1995.
Stockholders' equity at December 31, 1996 increased by $1,579,625
principally from net income of $1,257,132 for the year ended December
31, 1996 and the exercise of options of $322,493 which includes a tax
benefit.
LIQUIDITY AND CAPITAL RESOURCES
For the year ended December 31, 1996, cash increased by $832,538.
Operating activities provided cash of $773,658 primarily from net income
of $1,257,132 and increases in accrued income taxes and other current
liabilities of $116,998 and $239,209, respectively. These increases in
cash were partially offset by increases in accounts receivable and
inventory of $317,848 and $622,639, respectively and a decrease in
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accounts payable. Investing activities used cash of $257,653, primarily
from the purchase of short-term investments and the acquisition of
property and equipment. Financing activities generated $316,533,
primarily from the exercise of stock options. Working capital increased
$1,758,644 to a ratio of 5.0 to 1.
For the comparable twelve month period ended December 31, 1995,
investing and financing activities generated $14,004 and $365,653,
respectively and operating activities used $384,124 for a net decrease
in cash of $4,467.
The Company intends to utilize cash from operations to meet its
ongoing obligations. The Company has also maintained a bank line of
credit in the amount of $500,000 which it may utilize from time to time
to meet seasonal cash needs. Management does not expect liquidity
problems during 1997 assuming the Company can maintain or exceed its
current sales volume, and expenses as a percentage of sales remain
relatively constant.
RESULTS OF OPERATIONS
Comparison of the year ended December 31, 1996 to the comparable
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twelve month period ended December 31, 1995:
- --------------------------------------------
The Company had net income of $1,257,132 for the year ended December
31, 1996 versus net income of $882,600 for the comparable twelve month
period ended December 31, 1995. This represents an increase in net
income for 1996 of $374,532 or 42%.
Revenue from the sale of products increased to $18,872,556 in 1996
from $12,843,620 in 1995. This increase of $6,028,936 or 47% was due
primarily to the general expansion of the Company's customer base and
from the introduction of two new Stewart's brand flavors: Key Lime and
Cherries N' Cream.
Cost of goods sold was $4,051,774 greater in 1996 than in 1995 due
to higher revenue. The cost of goods sold as a percentage of sales,
however, decreased from 75% to 72% primarily due to increased unit sales
price on certain Stewart's brand packages which was intended to offset
increasing material costs over the last two years.
General and administrative expense increased $297,221 from 1995 to
1996, and remained relatively constant as a percentage of total revenue
at 6%. The increase in general and administrative expense in 1996 was
primarily the result of the addition of 4 new employees, increased cost
related to professional services, and an increase in bad debt expense.
Selling expense increased $593,358 from 1995 to 1996, and remained
relatively constant as a percentage of total revenue at 11%. The
increased selling expense in 1996 was primarily the result of increased
promotional spending and expenses related to development and introduction
of two new Stewart's flavors and the JAVA COLA line.
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<PAGE>
Comparison of the year ended December 31, 1995 to the comparable
----------------------------------------------------------------
twelve month period ended December 31, 1994:
- --------------------------------------------
The Company had net income of $882,600 for the year ended December
31, 1995 versus net income of $721,695 for the comparable twelve month
period ended December 31, 1994.
Revenue from the sale of products increased to $12,843,620 in 1995
from $8,322,301 in 1994. This increase of $4,521,319 or 54% was due
primarily to an expanded customer base for the Stewart's brand products.
Cost of goods sold was $3,588,613 greater in 1995 than in 1994 due
to higher revenue. The cost of goods sold as a percentage of sales,
however, increased from 73% to 75% primarily due to increased costs of
certain raw materials which were not passed on to its customers through
increased sales prices.
General and administrative expense increased $100,188 from 1994 to
1995, but decreased as a percentage of total revenue from 9% to 6%. This
percentage decrease is primarily a result of increased sales with nominal
increases in corporate overhead.
Selling expense increased $595,535 from 1994 to 1995, and increased
as a percentage of sales from 10% to 11%. The increase is primarily due
to increased promotional expenses used to introduce new brands and
products, and the addition of two new sales representatives during 1995.
Net income was impacted in the year 1995 by two non-recurring and
unrelated items: a write-down of an investment and the recording of a
deferred income tax benefit. During the third quarter 1995, the Company
wrote-down its investment in AMCON Distributing Company, Inc. to the
market price of AMCON common stock as reported by NASDAQ on August 4,
1995, the date upon which the stock was initially included on NASDAQ.
The write-down resulted in a charge of $848,342.
During the third quarter of 1995, the Company recorded an income tax
benefit of $936,440 which primarily represents the future tax benefits
associated with the Company's net operating loss carryforwards. The
Company recorded the tax benefit based on management's determination in
the third quarter of 1995 that it was more likely than not that the
Company would utilize its future income tax benefits.
ITEM 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
See financial statements listed in the index on page F1.
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<PAGE>
ITEM 9.CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
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<PAGE>
PART III
Information required in items 10, 11, 12 and 13 of Part III will be
included in the Company's Proxy Statement for the Annual Meeting of
Stockholders and will be filed in not more than 120 days after the
Company's fiscal year end.
-13-
<PAGE>
PART IV
ITEM 14.EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K.
(a) The following documents are filed as a part of this report:
Financial Statements and Financial Statement Schedules
------------------------------------------------------
The financial statements and financial statement schedules filed
with this report are listed in the Index to Financial Statements
appearing on page F1.
Exhibits
--------
The documents listed below have been filed as exhibits to this report:
Exhibit Number Exhibits
-------------- --------
(3)-A Certificate of Incorporation, as amended (Filed as
Exhibit (3) with and incorporated by reference from
Form 10-K dated October 9, 1987)
(3)-B Certificate of Amendment - July 20, 1989, changing
name *
(3)-C Bylaws, as amended (Filed as Exhibit (3) with and
incorporated by reference from Form 10-K dated
October 9, 1987)
(10)-G Stewart's Master Agreement - Stewart's Restaurants,
Inc. as amended by Addendum, dated April 11, 1994 and
incorporated by reference from Form 10-K dated May 4,
1994
(10)-S Employment Agreement with executive, Samuel M. Simpson
(21) Subsidiaries of the Company (Filed as Exhibit (22)
with and incorporated by reference to the current
Form 10-K, Note 1 to the Consolidated Financial
Statements.)
* Incorporated by reference to Form S-1 filed September 25, 1989, SEC
file #33-30480.
(b) Reports on Form 8-K
None.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, Cable Car Beverage Corporation has duly caused this
report to be signed on its behalf by the undersigned, hereunto duly
authorized.
(Registrant) CABLE CAR BEVERAGE CORPORATION
(Date) March 27, 1997
BY:(Signature) /s/Samuel M. Simpson
(Name and Title) Samuel M. Simpson
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
BY:(Signature) /s/Samuel M. Simpson
(Name and Title) Samuel M. Simpson
Chairman of the Board & President
(Date) March 27, 1997
BY:(Signature) /s/James P. McCloskey
(Name and Title) James P. McCloskey
Director
(Date) March 27, 1997
BY:(Signature) /s/William H. Rutter
(Name and Title) William H. Rutter
Director
(Date) March 27, 1997
BY:(Signature) /s/Myron D. Stadler
(Name and Title) Myron D. Stadler
Chief Accounting Officer
(Date) March 27, 1997
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<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
INDEX TO FINANCIAL STATEMENTS
-----------------------------
PAGE
----
Report of independent accountants F2
Consolidated balance sheet at December 31, 1996,
and 1995 F3
Consolidated statement of operations for the years
ended December 31, 1996, 1995 and 1994 F4
Consolidated statement of cash flows for the years
ended December 31, 1996, 1995 and 1994 F5
Consolidated statement of changes in stockholders'
equity for the years ended December 31, 1996, 1995
and 1994 F6
Notes to consolidated financial statements F7
No financial statement schedules are required.
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors
and Stockholders of Cable
Car Beverage Corporation
In our opinion, the accompanying consolidated balance sheet and the
related consolidated statements of operations, of cash flows and of
changes in stockholders' equity present fairly, in all material respects,
the financial position of Cable Car Beverage Corporation and its
subsidiaries (the "Company") at December 31, 1996 and 1995, and the
results of their operations and their cash flows for each of the three
years in the period ended December 31, 1996, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to
express an opinion on these financial statements based on our audits. We
conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting
principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Denver, Colorado
March 14, 1997
F-2
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED BALANCE SHEET
--------------------------
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------ ------------
ASSETS
------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,408,729 $ 576,191
Short-term investments 195,042
Accounts receivable, net of
allowance for doubtful accounts
of $100,743 at December 31,
1996 and $55,949 at December 31,
1995 1,336,094 1,063,040
Inventories 2,430,896 1,808,257
Prepaid expenses and other
current assets 23,582 40,394
--------- ---------
Deferred income tax assets 394,029 340,389
Total Current Assets 5,788,372 3,828,271
PROPERTY AND EQUIPMENT, NET
Property and equipment, less
accumulated depreciation of
$144,441 at December 31,
1996 and $99,231 at December
31, 1995 130,778 116,466
OTHER ASSETS:
Goodwill and other intangibles,
less accumulated amortization
of $387,168 at December 31,
1996 and $347,007 at December
31, 1995 591,265 631,426
Investment in AMCON
Distributing Company 99,185 99,185
Other assets 58,603 72,498
Deferred income tax assets 473,579 612,854
--------- --------
$ 7,141,782 $ 5,360,700
========= =========
LIABILITIES AND STOCKHOLDERS'
- ----------------------------
EQUITY
- ------
CURRENT LIABILITIES:
Accounts payable and accrued
liabilities $ 231,408 $ 380,198
Accrued Income taxes 146,140 29,142
Other current liabilities 782,188 542,979
Current portion of long-term
debt 5,960
---------- ---------
Total Current Liabilities 1,159,736 958,279
========== =========
COMMITMENTS: (See Note 8)
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value;
25,000,000 shares authorized;
8,981,681 issued at December
31, 1996 and 8,658,349 shares
issued at December 31, 1995 89,817 86,584
Additional paid-in capital 9,822,137 9,502,877
Accumulated deficit (3,901,273) (5,158,405)
Less - 76,357 common shares
in treasury (28,635) (28,635)
--------- ---------
5,982,046 4,402,421
--------- ---------
$ 7,141,782 $ 5,360,700
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED
FINANCIAL STATEMENTS
F-3
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994
----------- ----------- ------------
REVENUE:
<S> <C> <C> <C>
Sales $ 18,872,556 $ 12,843,620 $ 8,322,301
COST AND EXPENSES:
Cost of goods sold 13,670,934 9,619,160 6,030,547
General and admini-
strative 1,108,329 811,108 710,920
Selling and distri-
bution 1,993,580 1,400,222 804,687
Depreciation and
amortization 88,460 66,388 57,485
---------- ---------- ---------
16,861,303 11,896,878 7,603,639
---------- ---------- ---------
INCOME FROM
OPERATIONS 2,011,253 946,742 718,662
---------- ---------- ---------
OTHER INCOME AND
(EXPENSES):
Interest income and
other 52,775 51,405 20,479
Interest expense (350) (1,114) (2,346)
Loss on AMCON stock (848,342)
--------- -------- --------
INCOME BEFORE INCOME
TAXES 2,063,678 148,691 736,795
PROVISION (BENEFIT)
FOR INCOME TAXES 806,546 (733,909) 15,100
--------- -------- --------
NET INCOME $ 1,257,132 $ 882,600 $ 721,695
========== ========= ========
NET INCOME PER
COMMON SHARE $ 0.14 $ 0.10 $ 0.09
========== ========= =========
WEIGHTED AVERAGE
COMMON AND COMMON
EQUIVALENT SHARES 9,255,479 8,915,666 8,318,909
========== ========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN
INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
1996 1995 1994
--------- -------- --------
CASH FLOWS FROM OPERATING
ACTIVITIES:
<S> <C> <C> <C>
Net Income $ 1,257,132 $ 882,600 $ 721,695
Adjustment to reconcile
net income to net cash
from operating
activities:
Loss on investment in
AMCON 848,342
Depreciation and
amortization 88,460 66,388 57,486
Provision for loss on
accounts receivable 44,794 (3,662) 32,111
Deferred income tax
assets 85,635 (953,243)
Change in current
assets and liabilities:
Accounts receivable (317,848) (401,554) (163,477)
Inventories (622,639) (1,209,320) (99,703)
Prepaid expenses and
other current assets 16,812 (8,020) (21,359)
Other assets 13,895 (68,677) 10,246
Accounts payable and
accrued liabilities (148,790) 276,714 (269,146)
Accrued income taxes 116,998 26,042 3,100
Other current liabilities 239,209 160,266 69,316
--------- -------- --------
NET CASH FROM (USED IN)
OPERATING ACTIVITIES 773,658 (384,124) 340,269
CASH FLOWS FROM INVESTING
ACTIVITIES:
Cash paid for short-term
investments (195,042) (151,876)
Proceeds from short-term
investments 151,876
Equipment acquisitions (62,611) (97,872) (24,276)
Other (40,000) (12,500)
-------- ------- -------
NET CASH FROM (USED IN)
INVESTING ACTIVITIES (257,653) 14,004 (188,652)
-------- ------- -------
CASH FLOWS FROM
FINANCING ACTIVITIES:
Principal payments on
debt (5,960) (8,796) (11,339)
Proceeds from issuance
of stock 182,498 374,449 67,197
Tax benefit associated
stock options 139,995
-------- -------- -------
NET CASH FROM FINANCING
ACTIVITIES 316,533 365,653 55,858
-------- -------- -------
NET INCREASE (DECREASE)
IN CASH AND CASH
EQUIVALENTS 832,538 (4,467) 207,475
CASH AND CASH
EQUIVALENTS AT
BEGINNING OF PERIOD 576,191 580,658 373,183
-------- -------- --------
CASH AND CASH
EQUIVALENTS AT
END OF PERIOD $ 1,408,729 $ 576,191 $ 580,658
=========== ========= =========
SUPPLEMENTAL DISCLOSURE
OF NON-CASH FINANCING
AND INVESTING ACTIVITIES:
Property dividend of
investment in AMCON stock $ 799,407
Conversion of debt to
equity $ 59,000
Capital lease
obligations $ 7,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN
INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
NUMBER OF PAID-IN
SHARES AMOUNT CAPITAL
<S> <C> <C> <C>
Balance, December 31, 1993 7,873,156 $ 78,732 $ 9,010,082
Exercise of stock options
and warrants, net 131,462 1,315 65,882
Conversion of debt to equity 100,000 1,000 58,000
Issuance of stock to retire
warrants 50,000 500 (500)
Net income
-------- ----- -------
Balance, December 31, 1994 8,154,618 81,547 9,133,464
Exercise of stock options
and warrants, net 503,731 5,037 369,413
Dividend of AMCON stock
Net income
-------- ------ -------
Balance, December 31, 1995 8,658,349 86,584 9,502,877
Exercise of stock options 323,332 3,233 179,265
Tax benefit associated
stock options 139,995
Net income
-------- ------- -------
BALANCE, December 31, 1996 8,981,681 $ 89,817 $ 9,822,137
========= ======== =========
</TABLE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
ACCUMU- TREASURY STOCK
LATED NUMBER OF
DEFICIT SHARES AMOUNT
<S> <C> <C> <C>
Balance, December 31, 1993 (5,963,293) 76,357 $(28,635)
Exercise of stock options and
warrants, net
Conversion of debt to equity
Issuance of stock to retire
warrants
Net income 721,695
--------- ------ ------
Balance, December 31, 1994 (5,241,598) 76,357 (28,635)
Exercise of stock options
and warrants, net
Dividend of AMCON stock (799,407)
Net income 882,600
--------- ------ ------
Balance, December 31, 1995 (5,158,405) 76,357 (28,635)
Exercise of stock options
Tax benefit associated
stock options
Net income 1,257,132
--------- ------- -------
BALANCE, December 31, 1996 $ (3,901,273) $76,357 $(28,635)
========== ====== =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN
INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
F-6
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
NOTE 1 - ORGANIZATION AND OPERATIONS AND SUMMARY OF SIGNIFICANT
- ----------------------------------------------------------------
ACCOUNTING POLICIES:
- --------------------
Organization and operations - Cable Car Beverage Corporation (the
- ----------------------------
"Company"), formerly Great Eastern International, Inc., was incorporated
under the laws of Delaware on April 1, 1968. Since 1987, the Company's
primary business has been the marketing and distribution of beverages
and it has been engaged in the food and beverage business since 1986.
Summary of significant accounting policies:
- -------------------------------------------
PRINCIPLES OF CONSOLIDATION - The Company's consolidated financial
statements include the accounts of its wholly-owned subsidiaries Old
San Francisco Seltzer, Inc. ("SFS") and Fountain Classics, Inc. ("FCI").
All significant intercompany accounts and transactions have been
eliminated.
REVENUE RECOGNITION - Revenue from beverage finished product and
concentrate sales are recorded at the time of receipt and acceptance by
the customer.
CONCENTRATION OF CREDIT RISK - The Company's customers consist primarily
of beverage distributors. Financial instruments which potentially
subject the Company to concentrations of credit risk are primarily
accounts receivable, short-term investments and cash equivalents. The
Company performs ongoing credit evaluations of its customers' financial
condition and generally requires no collateral from its customers. The
Company's sales to major customers are discussed in Note 9.
INVENTORIES - Inventories are recorded at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.
PROPERTY AND EQUIPMENT - Property and equipment, primarily consisting of
furniture and office equipment, is stated at cost and is generally
depreciated on a straight-line method over the estimated useful lives
of the respective depreciable assets of three to five years. Maintenance
and repairs are expensed as incurred and improvements are capitalized.
GOODWILL - Goodwill is recorded for the excess of the purchase price over
the fair value of net tangible assets acquired. Goodwill is amortized on
a straight-line basis over a 25-year period. The recoverability of
goodwill is assessed quarterly, based on undiscounted projected cash
flows. Impairment is recognized when a permanent diminution in value
occurs.
NET INCOME PER COMMON SHARE - Net income per common share is computed
under the treasury stock method using the weighted average number of
common shares and dilutive common stock equivalent shares outstanding
during the year.
F-7
<PAGE>
CASH EQUIVALENTS - Generally, only highly liquid investments purchased
with original maturities of three months or less are considered to be
cash equivalents. Cash equivalents included in cash and cash equivalents
at December 31, 1996 and 1995 are certificates of deposit which
aggregated approximately $135,429 and $318,694, respectively. Cash
equivalents are carried at cost which approximates fair value. The
Company has a cash investment policy which generally restricts investments
to ensure preservation of principal and maintenance of liquidity.
SHORT-TERM INVESTMENTS - Short-term investments are stated at an
amortized cost of $195,042 which, at December 31, 1996, approximates
market value.
SIGNIFICANT ESTIMATES - Certain estimates and assumptions that affect
the reported amounts of assets and liabilities, and the reported amounts
of revenue and expenses are made by management in the preparation of
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from these estimates.
NOTE 2 - MERGER OF SHEYA BROTHERS SPECIALTY BEVERAGES, INC. AND
- ---------------------------------------------------------------
INVESTMENT IN AMCON STOCK:
- --------------------------
On June 7, 1993, the Company merged its wholly-owned subsidiary, Sheya
Brothers Specialty Beverages, Inc. ("SBSB"), into AMCON Distributing
Company ("AMCON"), a then privately held, Omaha-based wholesale
distributor. In exchange for the net assets of SBSB, the Company
received 12.5% of the issued and outstanding common stock of AMCON. As
part of the transaction, the Company agreed to distribute a minimum of
two-thirds of the AMCON shares to its shareholders, representing
approximately an 8% ownership interest in AMCON.
During the third quarter of 1995, the Company wrote-down its investment
in the market price of AMCON common stock as reported by NASDAQ on August
4, 1995, the date upon which the stock was initially included on NASDAQ,
which resulted in a charge of $848,342. The Company then distributed
266,469 shares of AMCON common stock as a dividend to the Company's
shareholders of record as of July 5, 1995. This distribution of 266,469
shares of AMCON represented 87% of the Company's holdings in AMCON. At
December 31, 1996, the Company continued to hold 39,674 shares of AMCON
common stock.
NOTE 3 - INVENTORIES:
- --------------------
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Finished Goods $ 1,330,990 $ 1,009,223
Raw Materials 1,099,906 799,034
----------- ----------
$ 2,430,896 $ 1,808,257
=========== ===========
</TABLE>
F-8
<PAGE>
NOTE 4 - OTHER CURRENT LIABILITIES:
- -----------------------------------
Other current liabilities consist of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
----------- ------------
<S> <C> <C>
Commitments for marketing and
promotional programs $ 397,474 $ 218,621
Unbilled inventory receipts 64,521 106,808
Bonuses 141,800 75,000
Travel and entertainment 36,186 53,500
Other, individually not
material 142,207 89,050
-------- --------
$ 782,188 $ 542,979
</TABLE>
NOTE 5 - LINE OF CREDIT:
- ------------------------
During 1996, the Company extended for one year its $500,000 revolving
line of credit collateralized by the Company's accounts receivable
and inventory. No borrowings were outstanding under the line as of
December 31, 1996. Borrowings made under the agreement bear interest at
a variable rate of one point over prime. The line of credit agreement
also includes certain financial and other covenants. The agreement is
currently scheduled to expire in June 1997.
NOTE 6 - INCOME TAXES:
- ----------------------
The Company's net deferred income tax asset consists of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1996 1995
------------ ------------
<S> <C> <C>
Net operating loss carryforwards $ 621,000 $ 742,000
Accrued liabilities and reserves 170,000 145,000
Other, net 39,000 45,000
Allowance for doubtful accounts 38,000 21,000
---------- ---------
$ 868,000 $ 953,000
F-9
<PAGE>
The net operating loss carryforwards are subject to certain annual
utilization limits. Previously, the Company had recorded a valuation
allowance equal to the deferred income tax assets due to management's
uncertainty about the likelihood that the Company would fully utilize
these benefits. However, it was determined by the Company during 1995
that, based upon the Company's recent and expected future operating
results, it was then more likely than not that the Company would realize
its future income tax benefits. Based on this determination, the Company
released the valuation allowance and provided an income tax benefit of
$936,440 during 1995. As of December 31, 1996, the Company has net
operating loss carryforwards of approximately $1,634,000 which expire
from 2000 through 2005. Pursuant to Section 382 of the Internal Revenue
Code, the Company is limited in the amount of net operating loss
carryforwards it may use each year to offset taxable income. The
Company's consolidated Section 382 annual limitation is approximately
$343,000.
The provision (benefit) for income taxes is comprised of the following:
</TABLE>
<TABLE>
<CAPTION>
Year Ended Year Ended Year Ended
December 31, 1996 December 31, 1995 December 31, 1994
----------------- ----------------- -----------------
<S> <C> <C> <C>
Current $ 721,000 $ 219,000 $ 15,100
Deferred 86,000 (953,000) 0
---------- ---------- --------
$ 807,000 $ (734,000) $ 15,100
</TABLE>
The provision for income taxes differs from the amount computed by
applying the U.S. federal income tax rate of 34% to pretax earnings
as follows:
<TABLE>
<CAPTION>
Year Year Year
Ended Ended Ended
December 31, December 31, December 31,
1996 1995 1994
------------- ------------- -------------
<S> <C> <C> <C>
Income before income taxes $ 2,063,678 $ 148,691 $ 737,000
U.S. federal income tax at
statutory rate $ 702,000 $ 50,600 $ 251,000
Differences:
State income taxes, net
of federal
tax benefit 43,000 5,200
Loss on dividend of AMCON
stock 318,100
Increase (decrease) in
unrecognized net
operating losses and
future deductions (1,139,000) (271,000)
Non-deductible items and
other, net 62,000 31,100 35,100
------- --------- -------
Provision for income taxes $ 807,000 $ (734,000) $ 15,100
======= ========= =======
</TABLE>
F-10
<PAGE>
NOTE 7 - STOCK OPTIONS:
The Company, on a discretionary basis, grants non-qualified stock options
to directors, key employees, and consultants to purchase common stock of
the Company. Stock options are granted at an exercise price not less than
the fair market value of the common stock on the date of grant and
generally vest over four or five years. The expiration period generally
occurs between three to six years.
The following table summarizes stock option activity for 1994, 1995 and
1996:
<TABLE>
<CAPTION>
Shares Weighted Average
Exercise Price
--------- -------------------
<S> <C> <C>
Outstanding at December 31, 1993 1,224,996 $ .85
Granted during 1994 100,000 .75
Exercised during 1994 (110,000) .45
Forfeited during 1994 (15,000) .75
--------- -------------
Outstanding at December 31, 1994 1,199,996 .88
Granted during 1995 312,500 1.23
Exercised during 1995 (101,666) .70
Forfeited during 1995 (275,000) .75
--------- -------------
Outstanding at December 31, 1995 1,135,830 1.02
Granted during 1996 190,000 2.00
Exercised during 1996 (323,332) .56
Forfeited during 1996 (99,998) 2.37
--------- -------------
Outstanding at December 31, 1996 902,500 1.24
========= =============
</TABLE>
The weighted average fair values of options granted during 1996 and 1995
were $.448 and $.685, respectively.
F-11
<PAGE>
The following table summarizes information about stock options as of
December 31, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
------------------------ -----------------------
Weighted Avg. Weighted
Remaining Average
Range of Number Contractual Number Exercise
Exercise Prices Outstanding Life Exercisable Price
- --------------- -------------------------- ------------------------
<S> <C> <C> <C> <C>
$0.70 - 0.75 215,000 2.86 years 215,000 0.70
$1.10 225,000 3.08 years 205,800 1.10
$1.25 272,500 3.65 years 184,300 1.25
$2.00 190,000 4.31 years
--------- ----------- -------- -----
902,500 3.46 YEARS 605,100 1.00
========= =========== ======== =====
</TABLE>
The Company applies APB 25 in accounting for its stock compensation plans,
and no compensation expense has been recognized in the financial
statements for options granted to employees and directors. Had
compensation expense for the Company's stock option plan been determined
based on the fair values at the grant dates for awards under the plan
consistent with the method of accounting prescribed by FASB Statement 123,
the Company's net income and income per share would have been decreased
to the pro forma amounts indicated below for the years ended December 31:
<TABLE>
<CAPTION>
1996 1995
------------ -------------
<S> <C> <C>
Net income:
As reported $ 1,257,132 $ 882,600
Pro forma 1,221,278 805,378
Net income per share:
As reported $ 0.14 $ 0.10
Pro forma 0.13 0.09
</TABLE>
In accordance with the guidance provided under SFAS 123, the fair value
of each option grant is estimated using the Black-Scholes option-
pricing model with the following weighted-average assumptions: dividend
yield of zero; expected volatility of 47% in 1996 and 36% in 1995; risk-
free interest rate of 5.83% in 1996 and 5.59% in 1995; and an expected
term of five years. The risk-free interest rate used in the calculation
in the yield on the grant date of the U.S. Treasury Strip with a maturity
equal to the expected term of the option.
F-12
<PAGE>
NOTE 8 - COMMITMENTS:
- ---------------------
The Company has commitments to lease office space through September 30,
1997. Rental expense of $41,339, $39,139 and $37,901 has been recognized
for the years ended December 31, 1996, 1995 and 1994, respectively. At
December 31, 1996, the minimum annual rental commitments under
noncancellable operating leases were approximately $28,350 through
September 1997.
The Company has outstanding commitments to purchase raw materials
(primarily glass) which aggregate approximately $2.6 million at
December 31, 1996.
The Company has a licensing agreement with Stewart's Restaurants, Inc.
which provides for a sliding-scale royalty with a minimum annual
royalty of $50,000.
NOTE 9 - MAJOR CUSTOMERS:
- -------------------------
Two customers accounted for approximately 18% and 14% individually of
the Company's net sales for the year ended December 31, 1996. Two
customers each accounted for approximately 20% of net sales for the years
ended December 31, 1995 and 1994.
NOTE 10 - QUARTERLY INFORMATION (UNAUDITED) 1
- ---------------------------------------------
The following interim financial information represents the 1996 and 1995
consolidated results of operations on a quarterly basis:
<TABLE>
<CAPTION>
Per
Common
Pretax Share
Gross Income Net Net
Quarter Ended Revene Profit (loss) Income Income
- -------------- --------- ---------- --------- ----------- ------
<S> <C> <C> <C> <C> <C>
December 31, 1996 $ 4,275,088 $ 1,153,903 $ 339,092 $ 208,610 $.02
September 30, 1996 5,664,924 1,579,016 758,762 445,115 .05
June 30, 1996 5,249,735 1,482,795 675,506 430,051 .05
March 31, 1996 3,682,809 985,908 290,318 173,356 .02
December 31, 1995 $ 3,214,852 $ 699,116 $ 120,515 $ 102,054 $.01
September 30, 1995 4,286,294 1,060,199 (502,320) 355,763 .04
June 30, 1995 3,453,111 957,094 397,313 322,001 .04
March 31, 1995 1,889,363 508,051 133,182 102,782 .01
</TABLE>
1The Unaudited Quarterly Information for 1995 was not reviewed by the
Company's independent accountants in accordance with standards established
for such reviews.
F-13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,408,729
<SECURITIES> 99,185
<RECEIVABLES> 1,436,837
<ALLOWANCES> 100,743
<INVENTORY> 2,430,896
<CURRENT-ASSETS> 5,788,372
<PP&E> 275,219
<DEPRECIATION> 144,441
<TOTAL-ASSETS> 7,141,782
<CURRENT-LIABILITIES> 1,159,736
<BONDS> 0
0
0
<COMMON> 8,981,681
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,141,782
<SALES> 18,872,556
<TOTAL-REVENUES> 18,872,556
<CGS> 13,670,934
<TOTAL-COSTS> 16,861,303
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 350
<INCOME-PRETAX> 2,063,678
<INCOME-TAX> 806,543
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,257,132
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
