SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
( ) 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 0-16055
XSCRIBE CORPORATION
(Exact name of registrant as specified in its charter)
California 95-3267788
------------------------------------ ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6285 Nancy Ridge Drive, San Diego, California 92121
--------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
(619) 457-5091
----------------------------------------------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 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
----- -----
At September 30, 1995, 5,742,000 shares of Common Stock of the
Registrant were outstanding.
Exhibit Index on Page 15
Page 1 of 16 <PAGE>
INDEX
XSCRIBE CORPORATION
Page
----
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS (UNAUDITED)
Condensed consolidated balance sheets as of
September 30, 1995 and March 31, 1995....... 3
Condensed consolidated statements of income
for the three months ended September 30, 1995
and 1994.................................... 4
Condensed consolidated statements of income
for the six months ended September 30, 1995
and 1994.................................... 5
Condensed consolidated statements of cash flows
for the six months ended September 30, 1995
and 1994.................................... 6
Notes to condensed consolidated financial
statements.................................. 7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS............................... 8
PART II - OTHER INFORMATION
ITEM 4: SUBMISSION OF MATTERS TO VOTE OF SECURITY
HOLDERS.................................. 13
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K........... 13
SIGNATURES.............................................. 14
Page 2 of 16 <PAGE>
XSCRIBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 1995 AND MARCH 31, 1995
September 30, 1995
(Unaudited) March 31, 1995
------------------ --------------
CURRENT ASSETS:
Cash and cash equivalents $ 248,000 $ 311,000
Accounts receivable, net 3,136,000 3,623,000
Inventories 4,725,000 3,897,000
Prepaid expenses and other 517,000 509,000
---------- ----------
TOTAL CURRENT ASSETS 8,626,000 8,340,000
PROPERTY AND EQUIPMENT, NET 2,247,000 2,491,000
INTANGIBLES AND OTHER ASSETS, NET 4,157,000 4,322,000
---------- ----------
$15,030,000 $15,153,000
========== ==========
CURRENT LIABILITIES:
Accounts payable $ 1,535,000 $ 2,182,000
Accrued liabilities and other 1,439,000 1,415,000
Line of credit 710,000 500,000
Current portion of notes payable 385,000 108,000
---------- ----------
TOTAL CURRENT LIABILITIES 4,069,000 4,205,000
NON-CURRENT LIABILITIES 1,352,000 699,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock (5,742,000 and 20,098,000 20,132,000
5,754,000 shares outstanding)
Accumulated deficit (10,522,000) (9,887,000)
Other 33,000 4,000
---------- ----------
TOTAL SHAREHOLDERS' EQUITY 9,609,000 10,249,000
---------- ----------
$15,030,000 $15,153,000
========== ==========
The accompanying notes are an integral part of these condensed
consolidated balance sheets.
Page 3 of 16 <PAGE>
XSCRIBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
1995 1994
---- ----
REVENUES $ 4,697,000 $ 4,862,000
COST OF REVENUES 3,043,000 3,084,000
---------- ----------
GROSS PROFIT 1,654,000 1,778,000
---------- ----------
OPERATING EXPENSES:
Selling, general and administrative 1,576,000 1,531,000
Research and development 189,000 95,000
---------- ----------
TOTAL OPERATING EXPENSES 1,765,000 1,626,000
---------- ----------
OPERATING INCOME (LOSS) (111,000) 152,000
OTHER INCOME (EXPENSE), NET (78,000) (27,000)
---------- ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES (189,000) 125,000
PROVISION FOR INCOME TAXES -- 1,000
---------- ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (189,000) 124,000
(LOSS) FROM DISCONTINUED OPERATION -- (105,000)
---------- ----------
NET INCOME (LOSS) $ (189,000) $ 19,000
========== ==========
INCOME (LOSS) PER COMMON SHARE:
CONTINUING OPERATIONS $ (0.03) $ 0.02
========== ==========
DISCONTINUED OPERATION -- $ (0.02)
========== ==========
NET INCOME $ (0.03) $ 0.00
========== ==========
Weighted average number of common and
common stock equivalent shares
outstanding 5,750,000 5,987,000
========== ==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Page 4 of 16 <PAGE>
XSCRIBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
1995 1994
---- ----
REVENUES $ 9,034,000 $10,266,000
COST OF REVENUES 6,050,000 6,360,000
---------- ----------
GROSS PROFIT 2,984,000 3,906,000
---------- ----------
OPERATING EXPENSES:
Selling, general and administrative 3,092,000 3,120,000
Research and development 392,000 258,000
---------- ----------
TOTAL OPERATING EXPENSES 3,484,000 3,378,000
---------- ----------
OPERATING INCOME (LOSS) (500,000) 528,000
OTHER INCOME (EXPENSE), NET (121,000) (47,000)
---------- ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS BEFORE INCOME TAXES (621,000) 481,000
PROVISION FOR INCOME TAXES -- 5,000
---------- ----------
INCOME (LOSS) FROM CONTINUING
OPERATIONS (621,000) 476,000
(LOSS) FROM DISCONTINUED OPERATION (15,000) (170,000)
---------- ----------
NET INCOME (LOSS) $ (636,000) $ 306,000
========== ==========
INCOME (LOSS) PER COMMON SHARE:
CONTINUING OPERATIONS $ (0.11) $ 0.08
========== ==========
DISCONTINUED OPERATION $ 0.00 $ (0.03)
========== ==========
NET INCOME $ (0.11) $ 0.05
========== ==========
Weighted average number of common
and common stock equivalent
shares outstanding 5,752,000 6,040,000
========== ==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Page 5 of 16 <PAGE>
XSCRIBE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
1995 1994
---- ----
CASH FLOWS FROM OPERATIONS:
Income (loss) from continuing
operations $ (621,000) $ 476,000
Adjustments:
Depreciation and amortization 890,000 823,000
Changes in assets and liabilities:
Accounts receivable 487,000 395,000
Inventories (828,000) (1,059,000)
Prepaid expenses and other 43,000 (161,000)
Accounts payable (647,000) (276,000)
Accrued liabilities and other 29,000 (289,000)
---------- ----------
Net cash flow (used) in
continuing operations (647,000) (91,000)
Net operating cash flows (used)
in discontinued operation (12,000) (298,000)
---------- ----------
NET CASH (USED) IN OPERATIONS (659,000) (389,000)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (533,000) (668,000)
---------- ----------
NET CASH (USED) IN INVESTING ACTIVITIES (533,000) (668,000)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from credit facility, net 1,210,000 645,000
Payment of notes payable (76,000) (35,000)
Other (34,000) 53,000
---------- ----------
CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES 1,100,000 663,000
---------- ----------
EFFECTS OF EXCHANGE RATES ON CASH 29,000 20,000
---------- ----------
NET (DECREASE) TO CASH (63,000) (374,000)
CASH - BEGINNING OF PERIOD 311,000 557,000
---------- ----------
CASH - END OF PERIOD $ 248,000 $ 183,000
========== ==========
The accompanying notes are an integral part of these condensed
consolidated financial statements.
Page 6 of 16 <PAGE>
XSCRIBE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF SEPTEMBER 30, 1995 AND MARCH 31, 1995 AND
FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(Unaudited)
1. GENERAL
Basis of presentation
---------------------
The accompanying unaudited condensed consolidated financial
statements reflect the accounts of Xscribe Corporation (the
"Company"), together with its majority-owned subsidiaries. All
significant intercompany transactions and balances have been
eliminated.
These unaudited condensed consolidated financial statements have
been prepared pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and disclosures normally
included in annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted pursuant to those rules and regulations, although the Company
believes that the disclosures made are adequate to prevent the
information from being misleading. These unaudited condensed
consolidated financial statements reflect, in the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present the results of operations and
financial position as of the dates and for the periods presented.
These unaudited condensed consolidated financial statements should be
read in conjunction with the audited financial statements and related
notes included in the Company's Form 10-K filed with the Securities
and Exchange Commission for the year ended March 31, 1995. The
results for the interim periods presented are not necessarily
indicative of results to be expected for a full year.
2. SUPPLEMENTARY FINANCIAL INFORMATION
Inventories
-----------
As of September 30, 1995, inventories consist of the following:
Raw materials and spare parts $1,969,000
Work in process 955,000
Finished goods 1,801,000
---------
$4,725,000
=========
3. NEW CREDIT FACILITY
In August 1995, the Company increased its total credit facility
with a bank from $1.5 million to $2.0 million and converted
$1.0 million of outstanding borrowings into a 48-month amortizing term
loan at Prime plus 1-1/2% per annum. In connection with the renewal of
this credit facility, the Company granted to the bank a warrant to
acquire 75,000 shares of Xscribe common stock at an exercise price of
$1.00 per share.
Page 7 of 16 <PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and
results of operations should be read in conjunction with the condensed
consolidated financial statements and notes to condensed consolidated
financial statements included elsewhere herein.
Results of Operations
Three months ended September 30, 1995 compared to the three months
ended September 30, 1994
------------------------------------------------------------------
Consolidated revenues in the quarter ended September 30, 1995
decreased 3% to $4,697,000 from revenues in the quarter ended
September 30, 1994 of $4,862,000. Revenues in the Solutions Segment
decreased 16% to $2,328,000 in the quarter ended September 30, 1995
from $2,765,000 in the quarter ended September 30, 1994. As in
previous quarters, this decrease in the Solutions Segment was due
primarily to declines in computer-aided-transcription (CAT) system
prices and units sold. Revenues in the Imaging Segment increased 13%
from $2,097,000 in the quarter ended September 30, 1994 to $2,369,000
in the quarter ended September 30, 1995. This increase in Imaging-
Segment revenue was due primarily to a 61% increase in scanner product
and service revenue, offset by a 41% reduction in computer-output-
microfiche (COM) related revenue.
Consolidated gross margin decreased $124,000 (7%) from $1,778,000
to $1,654,000 in the quarters ended September 30, 1994 and 1995,
respectively. Gross margin in the Solutions Segment decreased
$329,000 (30%) from $1,104,000 in the quarter ended September 30, 1994
to $775,000 in the quarter ended September 30, 1995. This decrease in
gross margin dollars was due primarily to CAT revenue declines and
price erosion. Gross margin as a percent of sales in the Solutions
Segment decreased from 40% in the quarter ended September 30, 1994 to
33% in the quarter ended September 30, 1995; this decrease in gross
margin percentage arose from eroding CAT prices and a change in the
mix of groupware sales from higher-margin software sales to lower-
margin hardware sales. Gross margin in the Imaging Segment increased
$205,000 (30%) from $674,000 in the quarter ended September 30, 1994
to $879,000 in the quarter ended September 30, 1995. The increase in
gross margin dollars in the Imaging Segment arose primarily from the
61% increase in scanner product and services referred to above. Gross
margin as a percent of sales in the Imaging Segment increased from 32%
to 37% in the quarters ended September 30, 1994 and 1995,
respectively. This increase resulted from volume efficiencies as well
as a change in mix from lower-margin COM duplicators towards higher-
margin aperture card scanners.
Selling, general and administrative ("SG&A") expenses increased
$45,000 from $1,531,000 in the quarter ended September 30, 1994 to
$1,576,000 in the quarter ended September 30, 1995. This increase was
due primarily to increased costs at Photomatrix to develop its sales
channels, offset by cost containment efforts at Xscribe Legal Systems.
As a percent of sales, SG&A increased from 31% in the quarter ended
Page 8 of 16 <PAGE>
September 30, 1994 to 34% in the quarter ended September 30, 1995,
primarily due to the sales decreases referred to above.
Product development expenses increased $94,000 from $95,000 in
the quarter ended September 30, 1994 to $189,000 in the quarter ended
September 30, 1995. Product development expenditures that were
capitalized because they related to technologically feasible projects
were $150,000 in the current quarter compared to $177,000 in the prior
quarter. Total product development spending increased $67,000 from
$272,000 in the prior quarter to $339,000 in the current quarter.
This increased spending was due to increased scanner-development
activity at Photomatrix.
Other income (expense), which consists primarily of interest
expense, increased $51,000 from $27,000 in the quarter ended
September 30, 1994 to $78,000 in the quarter ended September 30, 1995.
This increase was due to an increase in borrowings under the Company's
credit facility in the current quarter as compared to the prior
quarter.
The Company's provisions for income taxes were zero and $1,000 in
the quarters ended September 30, 1995 and 1994, respectively. These
amounts are substantially less than the provision calculated using the
statutory rates because of the effects of net operating losses and
related carryforwards, net of valuation allowances.
The decreases in revenues and gross margin, and the increased
product development, SG&A and interest expenses resulted in a net loss
from continuing operations of $189,000 for the quarter ended
September 30, 1995. This compares to income from continuing
operations of $124,000 for the quarter ended September 30, 1994.
In the quarter ended September 30, 1994, the Company operated a
scanning service bureau. Subsequent thereto, this service bureau was
discontinued. Including the prior-quarter loss from discontinued
operations of $105,000, net income decreased from $19,000 (or $0.00
per share) in the prior quarter to a net loss of $189,000 (or $0.03
per share) in the current quarter.
Six months ended September 30, 1995 compared to the six months ended
September 30, 1994
--------------------------------------------------------------------
Consolidated revenues for the period ended September 30, 1995
decreased $1,232,000 (12%) to $9,034,000 from $10,266,000 in the
period ended September 30, 1994. Revenues in the Solutions Segment
decreased $970,000 (17%) from $5,751,000 in the prior period to
$4,781,000 in the current period. This decrease was due primarily to
decreased CAT sales volumes and continued price erosion. Revenues in
the Imaging Segment decreased $262,000 (6%) from $4,515,000 in the
prior period to $4,253,000 in the current period. The decrease in
revenue in the Imaging Segment was due to a 41% reduction in COM
duplicator sales, offset by a 27% increase in scanner product and
service revenue.
Consolidated gross margins for the period ended September 30,
1995 decreased $922,000 (24%) to $2,984,000 from $3,906,000 for the
Page 9 of 16 <PAGE>
period ended September 30, 1994. Gross margin in the Solutions
Segment decreased $842,000 (35%) to $1,534,000 in the current period
from $2,376,000 in the prior period. This decrease in gross margin
was due primarily to declining sales volumes and prices in the CAT
marketplace. Gross margin as a percent of sales in the Solutions
Segment decreased from 41% to 32% primarily due to CAT price erosion
and product mix issues. Gross margin in the Imaging Segment decreased
5% ($80,000) in the current period to $1,450,000 from $1,530,000
consistent with the revenue declines. Gross margin as a percent of
sales in the Imaging Segment held consistent at 34% in both the prior
and current periods.
SG&A decreased $28,000 (1%) from $3,120,000 in the period ended
September 30, 1994 to $3,092,000 in the period ended September 30,
1995. The increase was due primarily to increased costs at
Photomatrix to develop its sales channels, offset by cost containment
efforts at Xscribe Legal Systems. As a percentage of sales, SG&A
increased from 30% to 34% due primarily to the decrease in sales in
the current period.
Product development expenses increased $134,000 from $258,000 in
the prior period to $392,000 in the current period. Product
development expenditures that were capitalized because they related to
technologically feasible projects were $333,000 in the current period
compared to $359,000 in the prior period. Total product development
spending increased $108,000 from $617,000 in the prior period to
$725,000 in the current period. This increased spending was due to
increased scanner-development activity at Photomatrix.
Other income (expense), which consists primarily of interest
expense, increased $74,000 from $47,000 in the period ended
September 30, 1994 to $121,000 in the period ended September 30, 1995.
This increase was due to an increase in borrowings under the Company's
credit facility in the current period as compared to the prior period.
The Company's provisions for income taxes were zero in the
current period and $5,000 in the prior period. These amounts are
substantially less than the provision calculated using statutory rates
because of the effects of net operating losses and related
carryforwards, net of valuation allowances.
The decreased revenues and gross margins, along with the
increased product development and interest expenses, resulted in a
loss from continuing operations for the period ended September 30,
1995 of $621,000 or $0.11 per share. This compares to income from
continuing operations of $476,000 or $0.08 per share for the period
ended September 30, 1994.
In the period ended September 30, 1994, the Company operated a
scanning service bureau. Subsequent thereto, this service bureau was
discontinued. Including the loss from the discontinued operation of
$170,000 and $15,000 in the prior and current periods, respectively,
net income decreased from $306,000 (or $0.05 per share) in the prior
period to a net loss of $636,000 (or $0.11 per share) in the current
period.
Page 10 of 16 <PAGE>
Liquidity and Capital Resources
Following is a discussion of Xscribe's recent and future sources
of and demands on liquidity as well as an analysis of liquidity
levels.
Recent and Future Sources of and Demands on Liquidity and Capital
Resources
-----------------------------------------------------------------
During the six months ended September 30, 1995, the Company's
primary sources of liquidity were cash generated by operations (net
loss plus depreciation and amortization) of $269,000, reductions in
the Company's accounts receivable of $487,000, proceeds from the
Company's credit facility of $1,210,000, and cash reserves. Primary
uses of cash in the period ended September 30, 1995 were to increase
inventories ($828,000), reduce accounts payable ($647,000), capital
expenditures ($533,000), and to repay notes payable ($76,000). In the
period ended September 30, 1995, the Company's cash balance decreased
$63,000 from $311,000 to $248,000.
In August 1995, the Company increased its total credit facility
with a bank from $1.5 million to $2.0 million and converted
$1.0 million of outstanding borrowings into a 48-month amortizing term
loan at prime plus 1-1/2% per annum; monthly principal payments on this
term note are $21,000. The remaining $1.0 million line of credit
accrues interest on outstanding borrowings at prime plus 1-1/4% per
annum. Outstanding borrowings under the credit facility are
collateralized by all of the Company's assets. The Company is
required to maintain certain financial balances and ratios, the most
restrictive of which is a maximum debt to tangible net worth ratio of
1.0 to 1.0. The line expires in August 1996. The balance outstanding
on the line of credit as of September 30, 1995 was $710,000.
The Company is obligated under a series of notes payable
totalling $777,000. These notes bear interest at a rate of 8% per
annum and mature in April 2000. Interest and principal payments
totalling $16,000 are due monthly.
The Company's assured sources of future short-term liquidity as
of September 30, 1995 are its cash balance of $248,000 and the unused
portion of its line of credit of $290,000.
The Company is currently obligated to pay approximately $40,000
per month in lease payments. Aside from these commitments, the
Company has not made any material capital commitments.
Analysis of Liquidity Levels
----------------------------
The Company expects that the capital expenditures required to
maintain and grow its consolidated operations will approximate
$1.2 million per year for the coming three years. The capital
expenditures required in future periods will consist primarily of
software development costs needed to maintain products at competitive
levels and demonstration equipment needed to sell the Company's
products. However, the Company may be required to reallocate or
Page 11 of 16 <PAGE>
increase its capital expenditures due to competitive conditions or
other unforeseen circumstances and the Company reserves the right to
change its strategy and to reallocate or change the amount of its
capital expenditures. Future additional working capital requirements
will depend on future growth rates, if any, and will stem from the
need to finance increased inventory and accounts receivable levels
commensurate with the growth rate. The Company believes that the
future capital expenditures and working capital increases will be
financed from internally generated funds (i.e. profits before
depreciation and amortization). Accordingly, the Company believes
that it currently has sufficient liquidity to fund its consolidated
operating needs for at least three years, assuming that Xscribe can
improve profitability and reduce inventory levels.
Page 12 of 16 <PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of Matters to Vote of Security Holders
-------------------------------------------------
On August 7, 1995, at the Annual Meeting of Shareholders,
Suren G. Dutia, Donald R. Miller, Jr., Patrick W. Moore, Jukka V.
Norokorpi, Ira H. Sharp, John F. Staley, and Evan A. Wyly were elected
to the Board of Directors. The tabulation of votes for all nominees
was as follows:
Votes
Nominee Votes For Withheld
------------------------ ---------- ----------
Suren G. Dutia 4,403,125 56,292
Donald R. Miller, Jr. 4,403,576 55,841
Patrick W. Moore 4,404,590 54,828
Jukka V. Norokorpi 4,404,656 54,762
Ira H. Sharp 4,404,590 54,828
John F. Staley 4,404,590 54,828
Evan A. Wyly 4,404,576 54,842
Also, the shareholders ratified the appointment of KPMG Peat
Marwick as the Company's independent auditor for the fiscal year ended
March 31, 1996. The following is the vote tabulation for this matter:
Votes Abstained/
Matter Votes For Against Withheld
------------------------- ---------- --------- ----------
Ratification of KPMG Peat
Marwick 4,429,064 16,280 14,073
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. Reports on Form 8-K
-------------------
There were no reports on Form 8-K filed during the quarter ended
September 30, 1995.
b. Exhibits
--------
Exhibit 27 - Financial Data Schedule.
Page 13 of 16 <PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
XSCRIBE CORPORATION
Date: November 14, 1995 By /s/ Suren G. Dutia
---------------------------
Suren G. Dutia
President
Chief Executive Officer
Date: November 14, 1995 By /s/ Bruce C. Myers
---------------------------
Bruce C. Myers
Chief Financial Officer
Date: November 14, 1995 By /s/ Peter B. Harker
---------------------------
Peter B. Harker
Controller
Principal Accounting Officer
Page 14 of 16 <PAGE>
EXHIBIT INDEX
No. Description Page
---- ------------- -----
27 Financial Data Schedule 16
Page 15 of 16 <PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> SEP-30-1995
<CASH> 248,000
<SECURITIES> 0
<RECEIVABLES> 3,136,000
<ALLOWANCES> 0
<INVENTORY> 4,725,000
<CURRENT-ASSETS> 8,626,000
<PP&E> 2,247,000
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,030,000
<CURRENT-LIABILITIES> 4,069,000
<BONDS> 1,352,000
<COMMON> 20,098,000
0
0
<OTHER-SE> (10,489,000)
<TOTAL-LIABILITY-AND-EQUITY> 15,030,000
<SALES> 0
<TOTAL-REVENUES> 9,034,000
<CGS> 0
<TOTAL-COSTS> 6,050,000
<OTHER-EXPENSES> 3,484,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 121,000
<INCOME-PRETAX> (621,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (621,000)
<DISCONTINUED> (15,000)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (636,000)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
