<PAGE> 1
UNITED STATES
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 quarter ended MARCH 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 No 0-15949
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2862863
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
1895 EAST FRANCISCO BLVD., SAN RAFAEL, CA 94901
(Address of principal executive offices) (Zip code)
(415) 257-3000
(Registrant's telephone number including area code)
Indicate by check mark whether 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, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
- -
As of May 10, 1996, 3,211,300 shares of the Registrant's Common Stock, no par
value, were outstanding.
<PAGE> 2
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Information
Consolidated Balance Sheets at March 31, 1996 and June 30, 1995 3
Consolidated Statements of Operations for the three months and nine months
ended March 31, 1996 and 1995 4
Consolidated Statements of Cash Flows for the nine months ended March 31,
1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-10
PART II - OTHER INFORMATION 11
Signatures 12
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL INFORMATION
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, 1996 JUNE 30, 1995
-------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 703,632 $ 523,235
Receivables, less allowances for doubtful
accounts and returns of $1,703,079 and $777,718 4,376,448 2,590,322
Inventories 2,328,664 1,625,631
Prepaid royalties and licenses 660,709 336,053
Deferred direct marketing costs 340,413 358,398
Deferred tax assets, net 554,362 321,362
Other current assets 196,612 182,637
------------ -----------
Total current assets 9,160,840 5,937,638
Furniture and equipment, net 979,031 836,610
Deferred tax assets, net 484,721 411,721
Capitalized software development costs, net 324,808 244,839
Other assets, net 309,626 39,583
------------ -----------
Total assets $ 11,259,026 $ 7,470,391
============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Credit line payable $ 900,000 $ 400,000
Short term debt and other obligations 424,756 186,529
Accounts payable and accrued expenses 4,408,903 3,139,059
Income taxes payable 814,219 245,008
------------ -----------
Total current liabilities 6,547,878 3,970,596
Long term debt and other obligations 586,848 102,570
------------ -----------
Total liabilities 7,134,726 4,073,166
Shareholders' equity:
Preferred stock, no par value; 20,000,000 shares
authorized; none issued or outstanding
Common stock, no par value; 300,000,000 authorized;
issued and outstanding 3,211,300 and 3,173,304 shares 5,913,839 5,863,776
Accumulated deficit (1,513,010) (2,177,369)
Cumulative translation adjustment (11,071) (23,724)
Notes receivable from shareholders (265,458) (265,458)
------------ -----------
Total shareholders' equity 4,124,300 3,397,225
------------ -----------
Total liabilities and shareholders' equity $ 11,259,026 $ 7,470,391
============ ===========
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 4
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, NINE MONTHS ENDED MARCH 31,
-------1996------- ----------1995------- ---------1996------- ------------1995------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues $7,528,298 100.0% $ 4,956,192 100.0% $18,423,246 100.0% $ 15,612,403 100.0%
Product costs 2,400,893 31.9% 2,178,620 44.0% 5,923,184 32.2% 5,664,070 36.3%
---------- ------ ----------- ------ ----------- ------ ------------ ------
Gross margin 5,127,405 68.1% 2,777,572 56.0% 12,500,062 67.8% 9,948,333 63.7%
Costs and expenses:
Sales and marketing 2,887,969 38.4% 2,226,594 44.9% 7,172,297 38.9% 6,988,824 44.8%
General and administrative 630,379 8.4% 673,266 13.6% 1,907,063 10.4% 1,783,121 11.4%
Research and development 945,644 12.6% 781,072 15.8% 2,159,093 11.7% 1,565,334 10.0%
---------- ------ ----------- ------ ----------- ------ ------------ ------
4,463,992 59.3% 3,680,932 74.3% 11,238,453 61.0% 10,337,279 66.2%
---------- ------ ----------- ------ ----------- ------ ------------ ------
Operating income 663,413 8.8% (903,360) (18.2%) 1,261,609 6.8% (388,946) (2.5%)
Other expense, net 97,014 1.3% 11,607 0.2% 190,062 1.0% 14,398 0.1%
---------- ------ ----------- ------ ----------- ------ ------------ ------
Income (loss) before income taxes 566,399 7.5% (914,967) (18.5%) 1,071,547 5.8% (403,344) (2.6%)
215,232 2.9% (283,889) (5.7%) 407,188 2.2% (64,403) (0.4%)
---------- ------ ----------- ------ ----------- ------ ------------ ------
Net income (loss) $ 351,167 4.7% $ (631,078) (12.7%) $ 664,359 3.6% $ (338,941) (2.2%)
========== ====== =========== ====== =========== ====== ============ ======
Net income (loss) per common
and common
equivalent share: $ 0.10 $ (0.20) $ 0.19 $ (0.11)
========== =========== =========== ============
Average common and common
equivalent shares used to
compute earnings (loss)
per share: 3,580,974 3,158,990 3,525,699 3,133,916
========== =========== =========== ============
</TABLE>
See Notes to Consolidated Financial Statements
4
<PAGE> 5
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED MARCH 31,
-------------------------------
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 664,359 $ (338,941)
Adjustments to reconcile net income to net
cash used by operating activities
Depreciation and amortization 672,244 1,050,538
Deferred income taxes (306,000) (43,043)
Loss on disposition of equipment -- 37,279
Increase in accounts receivable (1,786,126) (997,095)
Increase in inventories (703,033) (82,780)
(Increase)/Decrease in prepaid royalties and
licenses (324,656) 11,015
Decrease in direct marketing costs 17,985 297,478
Increase in other current assets (13,975) (107,471)
Increase in accounts payable
and accrued expenses 1,269,843 267,759
Increase (decrease) in income taxes payable 569,211 (21,093)
Currency translation adjustment 12,653 29,695
----------- -----------
Net cash used by operating activities 72,505 103,341
Cash flows from investing activities:
Purchase of equipment (138,677) (393,213)
Capitalized software development costs (396,843) (122,344)
Increase in other assets (343,840) (50,000)
----------- -----------
Net cash used by investing activities (879,360) (565,557)
Cash flows from financing activities:
Credit line borrowings 1,425,000 1,970,000
Credit line repayments (925,000) (1,495,000)
Term loan and other obligations additions 675,000 95,762
Capital lease and other obligations repayment (237,811) (81,399)
Payments on notes receivable -- 20,000
Proceeds from issuance of common stock 50,063 61,889
----------- -----------
Net cash provided by financing activities 987,252 571,252
----------- -----------
Net increase in cash and cash equivalents 180,397 109,036
Cash and cash equivalents at beginning of period 523,235 521,347
----------- -----------
Cash and cash equivalents at end of the period $ 703,632 $ 630,383
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
5
<PAGE> 6
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. BASIS OF PREPARATION.
The accompanying condensed consolidated financial statements have been prepared
from the records of International Microcomputer Software, Inc. and Subsidiaries
(the "Company") without audit. In the opinion of management, all adjustments,
which consist only of normal recurring adjustments, necessary to present fairly
the financial position, results of operations and cash flows at March 31, 1996,
and for all periods presented, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. Accounting policies followed by the Company are
described in the notes to the financial statements in its Annual Report on Form
10-K for the year ended June 30, 1995. The condensed financial statements should
be read in conjunction with the financial statements and notes thereto contained
in such Annual Report on Form 10-K.
The results of operations for the three month and nine month periods ended March
31, 1996 and 1995 are not necessarily indicative of the results to be expected
for the full year. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
Certain fiscal 1995 amounts have been reclassified to conform with the method of
presentation in fiscal 1996.
NOTE 2. STOCK SPLIT
In October 1995, the Company's Board of Directors authorized a 3 for 2 stock
split in the form of a dividend. The stock split was payable to shareholders of
record on October 20, 1995 and was distributed to shareholders on November 3,
1995. All share and per share figures presented have been restated to reflect
this stock split.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SUMMARY
The Company's fiscal 1996 third quarter net revenues of $7,528,298 increased 52%
from third quarter net revenues of $4,956,192 in the prior fiscal year. Gross
margin in the third quarter of fiscal 1996 increased to 68.1% from 56.0% from
the same quarter in the previous year. Operating expenses in the third quarter
of fiscal 1996 were $4,463,992 compared to $3,680,932 for the same period last
year, representing an increase of 21%. Net income in the third quarter of fiscal
1996 was $351,167 as compared to a net loss of $631,078 in the same period last
year. The increase in net income can be primarily attributed to greater revenues
in both the direct and retail sales channels resulting from two major product
releases in the current quarter, and to one time charges of approximately
$913,000 recorded in the quarter ended March 31, 1995. These charges related to
the write-off of software acquisition and development costs of approximately
$507,000 included in research and development expenses and to accelerated
amortization of capitalized software acquisition and development costs of
approximately $406,000 included in product costs.
RESULTS OF OPERATIONS
NET REVENUES
Net revenues for the quarter and nine months ended March 31, 1996 were
$7,528,298 and $18,423,246, respectively compared to $4,956,192 and $15,612,403
for the same periods in the previous year. The increase in net revenues can be
attributed to two major product releases during the current quarter, an upgrade
to its flagship product TurboCAD, which accounted for approximately 69% of the
Company's net revenues during the current quarter, and Masterclips 35,000, a
content/clip art product.
Net revenues from channel sales accounted for $4,532,655 or 60% and $12,145,686
or 66% of net revenues for the quarter and nine months ended March 31, 1996, and
$3,025,576 or 61% and $9,057,013 or 58% of net revenues for the comparable
periods in fiscal year 1995. Channel sales increased $1,507,079 or 50% and
$3,088,673 or 34% for the quarter and nine months ended March 31, 1996 compared
to the same periods last year. The increase in net revenues from channel sales
in both the quarter and the nine months can be attributed to the successful
release of both TurboCAD and Masterclips 35,000 in the current quarter as well
as the Company's ongoing strategy of transitioning sales towards the retail
channel rather than the direct market.
Net revenues from direct mail sales accounted for $2,995,643 or 40% and
$6,277,560 or 34% of net revenues for the quarter and nine months ended March
31, 1996 compared to $1,930,616 or 39% and $6,555,390 or 42% of net revenues for
the quarter and nine months ended March 31, 1995. Net direct mail revenues
increased $1,065,027 or 55% and decreased $277,830 or 4% for the quarter and
nine months ended March 31, 1996 compared to the same periods last year. The
increase in direct mail sales in the quarter ended March 31, 1996 can be
attributed to the Company's release of its upgrade to TurboCAD, while the
decrease in direct mail sales for the nine months ended March 31, 1996 reflects
the Company's overall strategy to focus its selling activities primarily in the
retail market.
International net revenues accounted for $2,369,173 or 31% and $5,300,167 or 29%
of total net revenues for the quarter and nine months ended March 31, 1996
compared to $1,700,604 or 34% and $5,124,031 or 33% of total net revenues for
the same periods in the previous fiscal year. International net revenues
7
<PAGE> 8
increased $668,569 or 39% and $176,136 or 3% for the quarter and nine months
ended March 31, 1996 compared to the same periods in the previous fiscal year.
PRODUCT COSTS
Product costs include direct costs of production (manuals, diskettes, compact
disks, duplication, packaging materials and assembly), shipping, royalties,
inventory spoilage, reserves for obsolete inventory, and amortization of
capitalized software development costs. Product costs were $2,400,893 and
$5,923,184 for the quarter and nine months ended March 31, 1996 compared to
$2,178,620 and $5,664,070 for the comparable periods in the previous fiscal
year. Product costs as a percentage of revenues was 31.9% and 32.2% for the
quarter and nine months ended March 31, 1996, compared to 44.0% and 36.3% for
the same periods in the previous fiscal year. The improvement was primarily a
result of an improved mix of sales with higher gross margins, coupled with
accelerated amortization of capitalized software costs in 1995 described below.
Amortization of capitalized software development costs and acquired software
costs included in product costs were $127,464 and $390,671 for the quarter and
nine months ended March 31, 1996 compared to $509,770 and $766,628 for the same
periods in the previous fiscal year. The decrease in amortization expense in
fiscal 1996 is attributable to the Company's revision of the economic lives of
its capitalized software products in the quarter ended March 31, 1995, which
resulted in accelerated amortization of approximately $406,000 in that quarter.
SALES AND MARKETING
Sales and marketing expenses include salaries and benefits for retail channel,
direct mail and marketing personnel, commissions, advertising, trade show,
design, and direct mail promotional costs (design, postage, printing,
fulfillment and list rentals).
Sales and marketing expenses increased to $2,887,969 and $7,172,297 in the
quarter and nine months ended March 31, 1996 from $2,226,594 and $6,988,824 for
the same periods in the previous fiscal year. As a percentage of revenues, sales
and marketing costs decreased to 38.4% and 38.9%, respectively in the quarter
and nine months ended March 31, 1996 from 44.9% and 44.8%, respectively for the
same periods in the previous fiscal year. This decrease in sales and marketing
expenses as a percent of revenues can be attributed to the Company's continued
transition to retail channel sales rather than direct sales as well as the
effect on direct sales of the more profitable upgrade release of TurboCAD in the
most recent quarter.
Direct mail sales and marketing expenses comprised 46% and 47%, respectively of
total sales and marketing expense for the quarter and nine months ended March
31, 1996, compared to 57% and 64%, respectively for the same periods last year.
GENERAL AND ADMINISTRATIVE
General and administrative expenses are comprised primarily of the costs of the
Company's administrative, finance and human resources functions. General and
administrative expenses were $630,379 and $1,907,063 in the quarter and nine
months ended March 31, 1996 compared to $673,266 and $1,783,121 for the same
periods in the previous fiscal year. As a percentage of revenues, general and
administrative expenses were 8.4% and 10.4% for the quarter and nine months
ended March 31, 1996, compared to 13.6% and 11.4% for the same periods last
year. The decrease in general and
8
<PAGE> 9
administrative expenses as a percent of revenues is primarily the result of
revenue growth in fiscal 1996, as general and administrative expenses tend to be
more fixed in nature.
RESEARCH AND DEVELOPMENT
Research and development expenses are comprised primarily of personnel costs,
costs required to conduct the Company's development efforts and third-party
software development costs. Research and development expense increased to
$945,644 and $2,159,093 in the quarter and nine months ended March 31, 1996 from
$781,072 and $1,565,334 in the same periods for the previous fiscal year. As a
percentage of revenues, research and development expenses were 12.6% and 11.7%,
respectively for the quarter and nine months ended March 31, 1996, compared to
15.8% and 10.0%, respectively for the same periods last year. The increase in
absolute dollars in the current quarter and as a percent of revenues for the
current fiscal year can be attributed to increased domestic headcount, the
utilization of additional software development personnel in Russia and other
third party development costs resulting from an aggressive fiscal 1996 product
release schedule.
OTHER EXPENSE, NET
Other expense, net was $97,014 and $190,062, respectively for the quarter and
nine months ended March 31, 1996 compared to $11,607 and $14,398 for the same
periods in the previous fiscal year. The increase in other expense in both the
quarter and nine months ended March 31, 1996 can be attributed to increased
interest expense relating to higher levels of both short-term and long-term debt
in fiscal 1996. Additionally, the Company recorded foreign exchange losses of
$38,488 and $57,228 in the quarter and nine months ended March 31, 1996,
compared to foreign currency gains of $1,489 and $30,956 in the same periods
last year.
PROVISION FOR INCOME TAXES
The Company's provision for income tax was $215,232 and $407,188, respectively
for the quarter and nine months ended March 31, 1996, compared to a benefit of
$283,889 and $64,403 for the same periods in the previous fiscal year. The
Company's estimated annual effective income tax rate for fiscal 1996 is 38%,
compared to 16% estimated at March 31, 1995 for fiscal 1995. The primary reason
for this increase is attributable to the utilization NOL carryforwards in fiscal
1995, partially offset by the utilization of research and experimentation tax
credits in fiscal 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its business primarily from operating revenues,
short-term and long-term bank borrowings, capital leases and proceeds from the
sale of stock. Working capital increased to $2,612,962 at March 31, 1996 from
$1,967,042 at June 30, 1995 primarily due to the increased investment in
receivables, inventories and prepaid royalties, partially offset by increased
short-term borrowings and higher accounts payable and accrued expenses.
The Company has used cash generated from operations and short-term and long-term
borrowings to fund its working capital requirements and to acquire capital
equipment. The Company's operating activities generated net cash of $72,505 in
the nine months ended March 31, 1996 and $103,341 in the nine months ended March
31, 1995. The Company's investing activities totaled $879,360 and $565,557 in
the nine months ended March 31, 1996 and 1995, respectively. These investing
activities were primarily for the acquisition and development of software
products. The increase is fiscal 1996 is primarily attributable to
9
<PAGE> 10
the Company's purchase of the FloorPlan software product line in September 1995,
for approximately $700,000. Borrowings on the line of credit provided cash of
$1,425,000 and repayments used cash of $925,000 in the nine months ended March
31, 1996, compared to borrowings of $1,970,000 and repayments of $1,495,000 in
the nine months ended March 31, 1995. In addition, the Company obtained a term
loan in September 1995 which provided cash of $675,000. During the nine months
ended March 31, 1996, principal payments on this term loan totaled $112,500.
As of March 31, 1996, the Company had a credit agreement with a bank under which
it can borrow the lesser of $1,500,000 or 25% of eligible inventory up to a cap
of $500,000 and 80% of eligible accounts receivable, at the bank's index rate
plus 1/2%. This credit agreement will expire on October 31, 1996. Under terms of
the agreement, all assets not subject to liens of other financial institutions
have been pledged as collateral against the line of credit. As of March 31, 1996
the Company had $900,000 outstanding under this line of credit. In January 1996,
the Company increased its borrowing capacity to the lesser of $1,800,000 or 25%
of eligible inventory up to a cap of $500,000 and 80% of eligible accounts
receivable as noted above, until May 31, 1996.
The Company believes that cash flow from operations, together with existing
sources of liquidity, will satisfy the Company's working capital and capital
expenditure requirements for at least the next twelve months. The Company's long
term goal, however, is to grow substantially. Expansion of the Company's current
business may involve significant financial risk and require significant capital
investment. Significant expansion of the Company's operations, future
acquisitions of products or companies, unexpected increases in expenses or other
factors might lead the Company to seek additional debt or equity financing.
While the Company believes it will be able to raise any necessary funds, there
can be no assurances that the Company will be able to do so, and failure to
obtain sufficient capital could have a material adverse effect on the Company or
adversely affect the Company's ability to continue to grow. In order to finance
future growth or for other reasons, the Company may consider an offering of its
equity securities within the next year or thereafter. The decision to undertake
such an offering, and the size of such an offering, would depend upon many
factors, such as the market price of the Common Stock, the working capital and
capital expenditure needs of the Company, the availability of alternative
sources of capital, and general market conditions.
QUARTERLY TRENDS
The Company's consolidated results of operations to date have not been
materially affected by seasonal trends. However, the Company believes that in
the future its results may be impacted by such factors as order deferrals in
anticipation of new product releases, delays in shipments of new products, a
slower growth rate in the software markets in which the Company operates, or
adverse general economic and industry conditions in any of the countries in
which the Company does business. In addition, with significant portions of net
revenues contributed by international operations, fluctuations of the U.S.
dollar against foreign currencies and the seasonality of the European,
Asia/Pacific, and other international markets could impact the Company's results
of operations and financial position in a particular quarter. Rapid
technological change and the Company's ability to develop, manufacture, and
market products that successfully adapt to the change may also impact results of
operations. Further, increased market competition from competitors either known
or unknown to the Company could also negatively impact the Company's results of
operations. Due to these factors, the Company's future earnings and stock price
may be subject to significant volatility, particularly on a quarterly basis. Any
shortfall in revenues or earnings from anticipated levels could have an
immediate and adverse effect on the trading price of the Company's common stock.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
Proposal 1. Election of Directors
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C>
Earl S. Hamlin 2,691,935 5,806 None
Geoffrey B. Koblick 2,691,445 6,296 None
Gordon K. Landies 2,691,835 5,906 None
Robert Mayer 2,689,363 8,378 None
Martin Sacks 2,691,948 5,793 None
</TABLE>
Proposal 2. Amendment to the Company's 1993 Employee Incentive Plan
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C>
1,885,452 73,958 6,910
</TABLE>
ITEM 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended March
31, 1996.
11
<PAGE> 12
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.
DATE: May 13, 1996 INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
By: /s/ MARTIN SACKS
--------------------------------------
Martin Sacks
President & Chief Executive Officer
(Principal Executive Officer)
By: /s/ MARK H. COSMEZ, II
--------------------------------------
Mark H. Cosmez, II
V.P. Finance & Chief Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 703,632
<SECURITIES> 0
<RECEIVABLES> 4,376,448
<ALLOWANCES> 1,703,079
<INVENTORY> 2,328,664
<CURRENT-ASSETS> 9,160,840
<PP&E> 979,031
<DEPRECIATION> 903,400
<TOTAL-ASSETS> 11,259,026
<CURRENT-LIABILITIES> 6,547,878
<BONDS> 0
0
0
<COMMON> 5,913,839
<OTHER-SE> (1,789,539)
<TOTAL-LIABILITY-AND-EQUITY> 11,259,026
<SALES> 18,423,246
<TOTAL-REVENUES> 18,423,246
<CGS> 5,923,184
<TOTAL-COSTS> 5,923,184
<OTHER-EXPENSES> 11,238,453
<LOSS-PROVISION> 131,622
<INTEREST-EXPENSE> 132,834
<INCOME-PRETAX> 1,071,547
<INCOME-TAX> 407,188
<INCOME-CONTINUING> 664,359
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 664,359
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
