<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended June 30, 1996
Commission File No. 0-18200
ARMANINO FOODS OF DISTINCTION, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1041418
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) Number)
30588 San Antonio Street
Hayward, CA 94544
(Address of principal executive office)
Registrant's telephone number, including area code: (510) 441-9300
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 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 ___
Number of registrant's common shares outstanding at June 30, 1996:
11,950,134.
<PAGE>
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
ASSETS
June 30 December 31
1996 1995
Current Assets:
Cash and cash equivalents $ 992,127 $ 746,250
Treasury bills, held to maturity 4,687,929 2,458,153
Accounts receivable 993,196 1,254,869
Inventory 1,002,562 957,800
Prepaid expenses 182,446 78,736
Current deferred tax asset 566,518 857,000
----------- ----------
Total Current Assets 8,424,778 6,352,808
Property and Equipment, Net 3,003,209 2,547,068
Other Assets:
Deferred costs and deposits 305,128 154,413
Organizational costs, net 42,062 -
Goodwill, net 622,767 -
----------- ----------
Total Other Assets 969,957 154,413
----------- ----------
Total Assets $12,397,944 $9,054,289
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 884,155 $ 812,141
Notes payable 152,348 -
Current portion of long-term debt 24,610 23,521
----------- ----------
Total Current Liabilities 1,061,113 835,662
Deferred tax liability 110,000 110,000
Long-term debt 59,006 71,599
----------- ----------
Total Liabilities 1,230,119 1,017,261
Stockholders' Equity:
Common stock 12,087,001 9,391,926
Additional paid in capital 22,311 22,311
Accumulated deficit (941,487) (1,377,209)
----------- ----------
Total Stockholders' Equity 11,167,825 8,037,028
----------- ----------
Total Liabilities and Stockholders'
Equity $12,397,944 $9,054,289
The accompanying notes are an integral part of these condensed financial
statements. The balances for December 31, 1995 were taken from the audited
financial statements at that date and condensed.
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<PAGE>
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC.
Condensed Consolidated Statements of Operations
For the Three Months Ended June 30, 1996 and 1995
(Unaudited)
June 30 June 30
1996 1995
Net Sales $3,529,005 $3,222,320
Cost of Goods Sold 2,364,792 2,051,940
---------- ----------
Gross Profit 1,164,213 1,170,380
---------- ----------
Operating Expenses:
General and administrative 345,740 314,805
Salaries and wages 314,295 242,609
Commissions 94,507 69,826
Advertising, demonstrations, promotions,
and slotting allowances 156,057 211,818
---------- ----------
Total Operating Expenses 910,599 839,058
---------- ----------
Income From Operations 253,614 331,322
Other Income 72,069 36,300
---------- ----------
Income From Continuing Operations Before
Income Taxes 325,683 367,622
Current Tax Expense - -
Deferred Tax Expense 130,273 147,049
---------- ----------
Net Income $ 195,410 $ 220,573
Primary Earnings Per Share $ .02 $ .02
Weighted Average Common Shares
Outstanding 12,623,090 10,450,290
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE>
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC.
Condensed Consolidated Statements of Operations
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
June 30 June 30
1996 1995
---------- ----------
Net Sales $6,914,204 $6,225,136
Cost of Goods Sold 4,558,794 4,033,260
---------- ----------
Gross Profit 2,355,410 2,191,876
---------- ----------
Operating Expenses:
General and administrative 599,944 604,548
Salaries and wages 613,068 493,640
Commissions 199,351 151,194
Advertising, demonstrations, promotions,
and slotting allowances 337,193 387,650
---------- ----------
Total Operating Expenses 1,749,556 1,637,032
---------- ----------
Income From Operations 605,854 554,844
Other Income 120,351 62,658
---------- ----------
Income From Continuing Operations Before
Income Taxes 726,205 617,502
Current Tax Expense - -
Deferred Tax Expense 290,482 247,001
---------- ----------
Net Income $ 435,723 $ 370,501
Primary Earnings Per Share $ .04 $ .04
Weighted Average Common Shares
Outstanding 11,890,097 10,413,210
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE>
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC.
Condensed Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
June 30 June 30
1996 1995
----------- -----------
Cash Flows From Operating Activities:
Net income $ 435,723 $ 370,501
----------- -----------
Adjustment to reconcile net income
to net cash (used for) provided
by operations:
Depreciation and amortization 164,030 178,522
Changes in assets and liabilities:
Decrease in accounts receivable 261,673 521,256
(Increase) Decrease in inventories (44,762) 70,236
(Increase) in prepaid costs (103,710) (1,306)
(Increase) in deferred costs
and deposits (150,715) (20,284)
Decrease in deferred tax assets 290,482 247,001
Increase (Decrease) in accounts
payable and accrued expenses 72,014 (579,335)
----------- -----------
Total Adjustments 489,012 416,090
----------- -----------
Net Cash Provided By
Operating Activities 924,735 786,591
----------- -----------
Cash Flows From Investing Activities:
Organizational costs paid ( 42,776) -
Purchase of Goodwill ( 626,267) -
Capital expenditures ( 615,958) (121,065)
Purchase of U.S. treasury bills, net (2,229,776) (683,326)
----------- -----------
Net Cash (Used For)
Investing Activities (3,514,777) ( 804,931)
----------- -----------
Cash Flows From Financing Activities:
Issuance of common stock 2,695,075 774
Payments on capital lease obligations ( 11,504) ( 10,500)
Increase in borrowings 152,348 -
----------- -----------
Net Cash Provided By (Used In)
Financing Activities: 2,835,919 ( 9,726)
Net Increase (Decrease) In Cash and
Cash Equivalents 245,877 ( 28,066)
Cash and Cash Equivalents Beginning of
Period 746,250 176,486
----------- -----------
Cash and Cash Equivalents End of Period $ 992,127 $ 148,420
The accompanying notes are an integral part of these condensed financial
statements.
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<PAGE>
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC.
Notes to Condensed Consolidated Financial Statements
June 30, 1996
(Unaudited)
Note 1 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
for interim financial information. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments, consisting of normal recurring accruals, considered necessary
for a fair presentation have been included. It is suggested that these
condensed consolidated financial statements be read in conjunction with the
financial statements and notes thereto included in the December 31, 1995
audited financial statements for Armanino Foods of Distinction, Inc. The
results of operations for the periods ended June 30, 1996 and 1995 are not
necessarily indicative of the operating results for the full year.
The condensed consolidated financial statements include the accounts of
Armanino Foods of Distinction, Inc. ("Parent") and it's wholly-owned
subsidiaries AFDI, Inc, (dba "Focaccia di Genova") and Alborough, Inc. (dba
"Emilia Romgana").
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments (Treasury Bills) purchased with a maturity of
three months or less to be cash equivalents.
The calculation of primary earnings per share is based on the weighted
average number of outstanding common shares during the period plus, when their
effect is dilutive, additional shares assuming the exercise of certain vested
and non-vested stock options and warrants reduced by the number of shares
which could be repurchased with proceeds. Fully dilutive earnings per share
are not presented as their effect for the quarter and six months ended June
30, 1996 was anti-dilutive.
The Company acquired a subsidiary (Alborough, Inc.) during the quarter
ended June 30, 1996. The Company recorded goodwill in the amount of $626,267
as part of the purchase. The Company is amortizing the goodwill over 15
years, on a straight line basis.
The Company is amortizing organizational cost, incurred to organize the
Company's subsidiary AFDI, Inc., over 60 months using the straight line
method.
Note 2 - INVENTORY
Inventory is carried at the lower of cost or market with cost being
determined on the first-in, first-out method and consisted of the following at
June 30, 1996 and December 31, 1995:
June 30, December 31,
1996 1995
Raw materials $ 267,558 $ 275,208
Packaging supplies 161,111 148,352
Finished goods 573,893 534,240
---------- ----------
$1,002,562 $ 957,800
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<PAGE>
Note 3 - RELATED PARTY TRANSACTIONS
The Company incurred $17,502 and $18,683 respectively, for the six months
ended June 30, 1996 and 1995, in accounting and consulting fees to an
accounting firm, the managing partner of which is also a stockholder and
director of the Company. Services provided by the accounting firm are an
extension of the internal accounting functions of the Company, as well as
management, business and systems consulting.
Note 4 - INCENTIVE COMPENSATION
The Company has accrued $153,450 and $96,246 for the six months ended
June 30, 1996 and June 30, 1995 respectively, for its management and employee
incentive compensation plans. These amounts are based on achieving a
predetermined level of pre-tax earnings. For the current year this amount is
eligible for distribution only when the predetermined level of income is
achieved.
Note 5 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
June 30, December 31,
1996 1995
Furniture & Office Equipment $ 212,034 $ 165,771
Plant Machinery & Equipment 2,152,895 1,749,633
Leasehold Improvements 1,550,759 1,230,793
---------- ----------
3,915,688 3,146,197
Accumulated Depreciation (912,479) (599,129)
---------- ----------
$3,003,209 $2,547,068
During the quarter ended June 30, 1996 the Company completed making
improvements and acquiring equipment for its first quick service Italian
restaurant in Burlingame, California. Additionally, the Company began making
leasehold improvements for its second restaurant in Mountain View, California.
Property and equipment includes expenditures made in connection with these two
locations.
On May 20, 1996, the Company acquired Alborough, Inc., (dba Emilia
Romagna). The Company recorded property and equipment acquired at the fair
market value of these assets on May 20, 1996. Above amounts include the
property and equipment acquired through the purchase of Alborough, Inc.
Note 6 - LINES OF CREDIT
In September of 1994, the Company obtained two lines of credit totalling
$1,250,000 with Wells Fargo Bank in San Francisco, California. These two
lines consisted of a $500,000 business loan line of credit and a $750,000
equipment loan line of credit.
The $500,000 business loan provides for interest at prime plus .75% with
a maturity date of September 10, 1996. At June 30, 1996, there were no
amounts borrowed against this line. This line of credit is secured by the
Company's inventory, accounts receivable, and equipment and is subject to the
Company maintaining an aggregate minimum balance of $1,000,000 in cash, cash
equivalents and treasury bills on the balance sheet at all times.
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<PAGE>
The $750,000 equipment loan line of credit provided for interest at prime
plus .75% with a conversion date of November 15, 1995 to an installment
equipment loan. The Company converted this loan/line to an equipment loan on
November 15, 1995, in the amount of $323,000 which amount was paid in full as
of December 31, 1995, at which time the equipment line of credit expired.
Note 7 - NOTES PAYABLE
The Company assumed a note in the amount of $72,510 when it acquired
Alborough, Inc. The note provides for monthly payments of principal and
interest at an annual rate of 10%. The final payment is due June 30, 1997.
At June 30, 1996, the balance due on this note was $62,588.
At June 30, 1996, the Company owes a balance of $89,760 to the
shareholders of Alborough, Inc. This balance represents an amount which was
held back for possible adjustments to the purchase price of Alborough, Inc.
This balance will be paid once the parties have agreed to the final
determination of the net assets of Alborough, Inc.
Note 8 - INCOME TAXES
Effective January 1, 1993 the Company adopted FASB Statement 109,
"Accounting for Income Taxes."
As of June 30, 1996 and December 31, 1995 the net deferred tax assets and
liabilities consisted of the following:
June 30 December 31
1996 1995
Current deferred tax asset $ 561,118 $ 857,000
Deferred Tax Liability (110,000) (110,000)
Management estimates that the Company will generate adequate net profits
to offset net operating loss carryforwards prior to the expiration of the net
operating loss carryforwards. Consequently, a deferred tax asset valuation
allowance has not been accrued.
Note 9 - COMMON STOCK ISSUANCES
During the first six months of 1996, the Company received $2,567,321 from
the exercise of 1,712,682 warrants net of offering costs prior to their
expiration on March 18, 1996. The Company also received $81,504 from the
exercise of underwriters warrants to purchase 21,562 units, each unit
consisting of two shares of common stock and one warrant. Additionally, the
Company received $46,250 from the issuance of 50,000 shares at $.925 in
connection with options exercised, under the 1993 Stock Option Plan.
Note 10 - ACQUISITION OF SUBSIDIARY
On May 20, 1996, the Company acquired all of the outstanding common stock
of Alborough, Inc., (dba Emilia Romagna), in a business combination accounted
for as a purchase. Alborough, Inc. is primarily engaged in the manufacturing
of gourmet Italian foods. The result of operations of Alborough, Inc. is
included in the accompanying financial statements since the date of
acquisition. The total cost of the acquisition was $755,108, which exceeded
the fair market value of the net assets of Alborough, Inc. by $626,267. The
excess is recorded as goodwill and is being amortized over 15 years. The
purchase price could increase significantly depending upon Alborough, Inc.
meeting certain earnings performance
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<PAGE>
criteria over the next 3 years. The agreement between the parties provides
that additional payments may be earned by Alborough, Inc. shareholders based
on a percentage of gross margin attributable to sales made to specified
customers. The sales must be made during a specified period of time and
subject to certain minimum sales levels being achieved.
The following summarized proforma (unaudited) information assumes the
acquisition had occurred on January 1, 1995:
6 months 12 months
ended ended
6/30/96 12/31/95
Net Sales $7,442,727 $14,593,483
Net Income $ 432,128 $ 1,146,385
Earnings Per Share
Primary Earnings
per share $ .04 $ .11
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<PAGE>
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
QUARTER AND SIX MONTHS ENDED JUNE 30, 1996 V. QUARTER AND SIX MONTHS ENDED
JUNE 30, 1995
Net sales for the quarter ended June 30, 1996 were $3,529,005 as compared
to $3,222,320 for the quarter ended June 30, 1995. For the first six months
of 1996, the Company reported sales of $6,914,204 as compared to $6,225,136
for the first six months of 1995, an 11% increase. Both pesto and meatball
product lines had increased sales for the quarter and the six months ended
June 30, 1996 as compared to June 30, 1995. Pesto sales increased mainly in
the foodservice area. Expansion of the customer base to the East Coast market
and continuing strength in the West Coast facilitated this growth. A slight
increase in the meatball product line sales was due to increased retail and
club store sales. The sales increases in the pesto and meatball product lines
were partially offset by a decrease in sales of the Company's pasta products
due to increased price competition in the club store area.
Cost of goods sold as a percentage of net sales increased from 63.7% for
the quarter ended June 30, 1995 to 67% for the quarter ended June 30, 1996.
Cost of goods sold as a percentage of net sales increased from 64.8% for the
six months ended June 30, 1995 to 65.9% for the six months ended June 30, 1996
This increase was primarily due to a change in the product mix. The change in
the product mix was the result of purchasing a new subsidiary (Alborough,
Inc.) and opening the Company's first quick service Italian restaurant (AFDI,
Inc). The cost of sales increased due to the total product mix including new
products of these two subsidiaries.
Operating expenses as a percentage of net sales were approximately 25.8%
for the quarter ended June 30, 1996 as compared to 26% for the quarter ended
June 30, 1995. Operating expenses for the first six months of 1996 were 25.3%
as compared to 26.3% for the first six months of 1995. The dollar amount of
operating expenses increased from $839,058 for the quarter ended June 30, 1995
to $910,599 for the quarter ended June 30, 1996. Operating expenses increased
from $1,637,032 for the six months ended June 30, 1995 to $1,749,556 for the
six months ended June 30, 1996. The increase in the dollar amount for the
quarter and six months is attributed to several factors. Salaries increased
primarily due to an increase in the incentive bonus accrual. Commissions
increased due to an increase in sales. These increases were partially offset
by a decrease in the advertising, demonstrations, promotions, and slotting
allowances expense. The decrease in this expense was due to a decrease in
demonstrations at club stores.
Income from continuing operations before income taxes was $195,410 for
the quarter ended June 30, 1996, as compared to $220,573 for the quarter ended
June 30, 1995. For the first six months ended June 30, 1996, income from
continuing operations before provision for income taxes was $435,723 as
compared to $370,501 for the six months ended June 30, 1995. The decrease in
net income for the quarter is primarily due to the start-up of operations of
AFDI, Inc., and the acquisition of Alborough, Inc. The Company incurred costs
prior to opening its first quick service Italian restaurant. These were
expensed when the operations of the restaurant commenced. Net income for the
six months increased due to the Company's strong first quarter which was
attributed to higher sales and production efficiencies.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996, the Company had working capital of $7,363,665, an
increase of $1,846,519 from December 31, 1995. The increase is primarily
attributable to
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<PAGE>
proceeds received from stock warrant exercises. Current assets included
$6,673,252 in cash and cash equivalents, U.S. treasury bills, and accounts
receivable. Management believes that this level of working capital is
adequate to meet anticipated needs for liquidity.
During the six months ended June 30, 1996, cash provided by operating
activities of the Company amounted to $924,735. This was primarily a result
of the net income from continuing operations, a decrease in accounts
receivable and a reduction in the deferred tax asset.
In the first six months of 1996, the Company received $2,567,321 from the
exercise of 1,712,682 warrants net of offering costs and $81,504 from the
exercise 21,562 of underwriter units.
In September 1994, the Company obtained two lines of credit totaling
$1,250,000 with Wells Fargo Bank in San Francisco, California. These two
lines consisted of $500,000 business loan line of credit and a $750,000
equipment loan line of credit. The $500,000 business loan provides for
interest at prime plus .75% with a maturity date of September 10, 1996. At
June 30, 1996 there were no amounts borrowed against this line. The $750,000
equipment loan line of credit provided for interest at prime plus .75% with a
conversion date of November 15, 1995, to an installment equipment loan. The
Company converted this loan/line to an equipment loan on November 15, 1995, in
the amount of $323,000 of which amount was paid in full prior to December 31,
1995, at which time the equipment line of credit expired. The purpose for
obtaining both lines of credit was to afford the Company greater cash
liquidity.
The Company expects that during the year ended December 31, 1996, it will
purchase additional manufacturing equipment to increase production for
existing products and/or to produce additional products.
The Company has developed a concept for quick service Italian
restaurants. As of June 30, 1996, the Company opened its first quick service
Italian restaurant in Burlingame, California. The Company incurred $325,000
in leasehold improvements and equipment purchases for this location as of June
30, 1996. In addition, the Company incurred $107,000 in start-up and pre-
opening costs for this and future locations.
At the present time, the Company is making leasehold improvements and
purchasing equipment for its second quick service Italian restaurant in
Mountain View, California. The total commitment is expected to be
approximately $250,000.
On May 20, 1996, the Company purchased all of the outstanding stock of
Alborough, Inc. (dba Emilia Romagna). The total cost of the acquisition was
$755,108 including professional fees paid in relation to the acquisition.
Additionally, the terms of the agreement include an "earn-out" formula which
provides for payments to Alborough shareholders over a three year period based
on certain performance criteria established. The purchase price could
increase significantly depending upon Alborough, Inc. meeting certain earnings
performance criteria over the next 3 years. The agreement between the parties
provides that additional payments may be earned by Alborough, Inc.
shareholders based on a percentage of gross margin attributable to sales made
to specified customers. The sales must be made during a specified period of
time and subject to certain minimum sales levels being achieved. As of June
30, 1996, the Company paid $665,348 for the purchase of the outstanding common
stock of Alborough, Inc. and the related costs. The remaining $89,760 will be
paid once the parties have agreed to the final determination of the net assets
of Alborough, Inc.
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<PAGE>
PART II - OTHER INFORMATION
II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None
Item 2. CHANGES IN SECURITIES.
None
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 23, 1996, the Company held an Annual Meeting of
Shareholders at which William J. Armanino, Deborah Armanino-LeBlanc, John J.
Micek, III, David Scatena, Robert M. Geller, Tino Barzie, Henry W. Poett, III,
and Soren Svenningsen were each reelected to the Board of Directors. In
addition, the Company's shareholders ratified the appointment of Pritchett,
Siler & Hardy, P.C. as the Company's auditors, and approved an amendment to
the Company's 1993 Stock Option Plan to increase the number of shares included
in the plan from 2,500,000 to 3,250,000. The following sets forth the votes
cast for, against or withheld, as well as the number of abstentions and broker
non-votes, as to each of the matters presented at the meeting:
1. ELECTION OF DIRECTORS
Nominees For Withheld
William J. Armanino 10,427,224 Shares 52,855 Shares
Deborah Armanino LeBlanc 10,451,771 Shares 28,308 Shares
John J. Micek, III 10,455,406 Shares 24,673 Shares
David Scatena 10,451,270 Shares 28,809 Shares
Robert M. Geller 10,449,626 Shares 30,453 Shares
Tino Barzie 10,445,257 Shares 34,822 Shares
Henry W. Poett, III 10,450,426 Shares 29,653 Shares
Soren Svenningsen 10,450,426 Shares 29,653 Shares
2. APPOINTMENT OF PRITCHETT, SILER & HARDY, P.C.
Abstentions
and Broker
For Against Non-Votes
10,453,162 Shares 11,209 Shares 15,708 Shares
3. AMENDMENT TO THE 1993 STOCK OPTION PLAN
Abstentions
and Broker
For Against Non-Votes
5,411,302 Shares 350,882 Shares 4,717,895 Shares
Item 5. OTHER INFORMATION.
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits - None
B. Reports on Form 8-K.
During the quarter ended June 30, 1996, the Company filed
one Report on Form 8-K dated May 20, 1996, reporting information under ITEM 5
- - OTHER EVENTS, concerning the acquisition of Alborough, Inc., doing business
as Emilia Romagna Foods.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the
undersigned thereunto duly authorized.
ARMANINO FOODS OF DISTINCTION, INC.
Dated: August 15, 1996 By /s/ William J. Armanino
-----------------------------------------
William J. Armanino, President,
Chief Executive Officer, Chief
Financial Officer and Treasurer
<PAGE>
EXHIBIT INDEX
EXHIBIT METHOD OF FILING
- ------- ------------------------------
27. Financial Data Schedule Filed herewith electronically
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
balance sheets and statements of operations found on pages 2 and 4 of the
Company's Form 10-Q for the year to date, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CIK> 0000814339
<NAME> ARMANINO FOODS OF DISTINCTION, INC.
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 992,127
<SECURITIES> 4,687,929
<RECEIVABLES> 993,196
<ALLOWANCES> 0
<INVENTORY> 1,002,562
<CURRENT-ASSETS> 8,424,778
<PP&E> 3,003,209
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,397,944
<CURRENT-LIABILITIES> 1,061,113
<BONDS> 0
<COMMON> 12,087,001
0
0
<OTHER-SE> (919,176)
<TOTAL-LIABILITY-AND-EQUITY> 12,397,944
<SALES> 6,914,204
<TOTAL-REVENUES> 6,914,204
<CGS> 4,558,794
<TOTAL-COSTS> 4,558,794
<OTHER-EXPENSES> 1,749,556
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 726,205
<INCOME-TAX> 290,482
<INCOME-CONTINUING> 435,723
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 435,723
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
