U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO ____________
Commission file number 0-18863
American Body Armor & Equipment, Inc.
(Exact name of small business issuer as specified in its charter)
Florida 59-2044869
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
191 Nassau Place Road, Yulee, Florida 32097
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(904)261-4035
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court.
Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's class of common
equity, as of July 26, 1996: $.03 par value Common Stock - 6,919,816 3%
Convertible $1.00 stated value Preferred Stock - 0
<PAGE>
PART I
Item 1. Financial Statements
AMERICAN BODY ARMOR & EQUIPMENT, INC.
Three and Six Month Periods Ended June 30, 1996 and July 1, 1995
The accompanying condensed financial statements of the Company are
unaudited for the interim periods, but include all adjustments
(consisting only of normal recurring accruals) which management
considers necessary for the fair presentation of results as of June 30,
1996 and for the three and six month periods ended June 30, 1996 and
July 1, 1995.
Moreover, these condensed financial statements should be read in
conjunction with the financial statements included in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1995.
2
<PAGE>
AMERICAN BODY ARMOR & EQUIPMENT, INC.
BALANCE SHEET
June 30,
1996
----------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 9,004,168
Accounts receivable, net of allowance for
doubtful accounts of $87,741 1,967,827
Invento 1,237,020
Prepaid expenses and other current assets 804,096
-----------
Total current assets 13,013,111
PROPERTY, PLANT AND EQUIPMENT, net 466,746
REORGANIZATION VALUE IN EXCESS
OF AMOUNTS ALLOCABLE TO IDENTIFIABLE
ASSETS, net 3,505,079
OTHER ASSETS 735,297
-----------
TOTAL ASSETS $17,720,233
===========
See notes to condensed financial statements
3
<PAGE>
AMERICAN BODY ARMOR & EQUIPMENT, INC.
BALANCE SHEET (CONTINUED)
June 30,
1996
-----------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short term borrowings and current portion
of long-term debt $ 31,751
Accounts payable, accrued expenses
and other current liabilities 856,631
Taxes currently payable 91,000
-----------
Total current liabilities 979,382
5% CONVERTIBLE SUBORDINATED NOTES
Due to Affiliates 3,450,000
Due to Others 8,050,000
-----------
TOTAL 11,500,000
OTHER LONG TERM DEBT AND CAPITALIZED
LEASE OBLIGATION, less current portion 24,479
-----------
Total liabilities 12,503,861
STOCKHOLDERS' EQUITY:
Convertible preferred stock, $1 stated value,
1,700,000 shares authorized, 0 issued
and outstanding --
Common stock, $.03 par value, 15,000,000
shares authorized; 6,919,816 shares issued
and outstanding 207,594
Additional paid-in capital 3,829,058
Retained earnings 1,179,720
-----------
Total stockholders' equity 5,216,372
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,720,233
===========
See notes to condensed financial statements
4
<PAGE>
AMERICAN BODY ARMOR & EQUIPMENT, INC.
INCOME STATEMENTS
FOR THE THREE MONTHS ENDED
July 1, July 1,
1996 1995
---------- -----------
(unaudited) (unaudited)
NET SALES $3,595,521 $2,938,982
COST AND EXPENSES:
Cost of sales 2,257,838 1,850,087
Selling, general and administrative expenses 1,008,071 809,483
Interest expense, affiliates 28,750 --
Interest expense, others 1,698 69,694
---------- ----------
OPERATING INCOME 299,164 209,718
Amortization of deferred debt issue costs 28,114 --
Amortization of reorganization value in
excess of amounts allocable to identifiable
assets 25,495 --
---------- ----------
INCOME BEFORE INCOME TAXES 245,555 209,718
INCOME TAXES 102,000 82,000
---------- ----------
NET INCOME $ 143,555 $ 127,718
========== ==========
EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE $ .02 $ .02
WEIGHTED AVERAGE COMMON SHARES
AND COMMON EQUIVALENT SHARES 7,765,197 6,794,714
See notes to condensed financial statements
5
<PAGE>
AMERICAN BODY ARMOR & EQUIPMENT, INC.
INCOME STATEMENTS
FOR THE SIX MONTHS ENDED
June 30, July 1,
1996 1995
-------------- ----------
(unaudited) (unaudited)
NET SALES $6,862,849 $5,476,134
COST AND EXPENSES:
Cost of sales 4,368,251 3,436,422
Selling, general and administrative expenses 1,976,488 1,516,791
Interest expense, affiliates 28,750 --
Interest expense, other 73,709 129,677
---------- ----------
OPERATING INCOME 415,651 393,244
Amortization of deferred debt issue costs 28,114 --
Amortization of reorganization value in excess
of amounts allocable to identifiable assets 25,495 --
---------- ----------
INCOME BEFORE INCOME TAXES 362,042 393,244
INCOME TAXES 147,000 154,000
---------- ----------
NET INCOME $ 215,042 $ 239,244
========== ==========
EARNINGS PER COMMON SHARE AND
COMMON EQUIVALENT SHARE $ .03 $ .04
WEIGHTED AVERAGE COMMON SHARES
AND COMMON EQUIVALENT SHARES 7,679,536 6,514,087
See notes to condensed financial statements
6
<PAGE>
AMERICAN BODY ARMOR & EQUIPMENT, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
June 30, July 1,
1996 1995
----------- -----------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 215,042 $ 239,244
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 131,735 65,909
Deferred income taxes 56,000 154,000
Decrease (increase) in accounts
receivable 351,927 (135,544)
Increase in inventories (135,085) (107,294)
Increase in prepaid expenses
and other assets (319,206) (87,210)
Decrease in accounts payable, accrued
liabilities and other current
liabilities (156,262) (88,805)
---------- ---------
Net cash provided by operating activities 144,151 40,300
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (70,513) (51,619)
---------- ---------
Net cash used in investing activities (70,513) (51,619)
---------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Preferred stock dividends (22,155) (21,662)
Exercise of stock grants and options 76,865 --
Net repayments under line of credit (2,050,647) (187,646)
Repayments of long-term debt and
capitalized lease obligation (3,071) --
Net proceeds from issuance of
5% convertible subordinated notes 10,656,566 --
---------- ---------
Net cash provided by (used in) financing
activities 8,657,558 (209,308)
---------- ---------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 8,731,196 (220,627)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 272,972 315,231
---------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $9,004,168 $ 94,604
========== =========
See notes to condensed financial statement
7
<PAGE>
AMERICAN BODY ARMOR & EQUIPMENT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
For The Three and Six Month Periods Ended June 30, 1996 and 1995
(unaudited)
1. Basis of Presentation
The condensed financial statements include the accounts of American
Body Armor & Equipment, Inc (the "Company"). The financial statements
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission related to interim financial
statements.
The financial statements should be read in conjunction with the
financial statements and notes thereto for the year ended December 31,
1995 included in the Company's Annual Report on Form 10- KSB for the
year ended December 31, 1995.
All adjustments of a normal recurring nature which, in the opinion of
management, are necessary to present a fair statement of the results
for the interim periods have been made.
2. Issuance of Convertible Debt
On April 30, 1996, the Company completed a private placement of its 5%
Convertible Subordinated Notes due April 30, 2001 (the "Notes")
pursuant to which $11,500,000 aggregate principal amount of Notes were
sold by the Company. Of the $11,500,000 sold, $3,450,000 were purchased
by affiliates of the Company.
The Notes bear interest at 5% per annum, due semi-annually beginning
December 31, 1996 and mature April 30, 2001. In addition, the Notes may
be convertible into shares of common stock of the Company (the "Common
Stock") at the option of the holder thereof at any time prior to the
maturity date at a conversion price of $5.00 per share, subject to
adjustment as set forth in the Convertible Subordinated Note Purchase
Agreement. The Company may redeem the Notes at par at any time two
years after issuance, or at any time after their issuance if the
closing price of the Common Stock exceeds $7.50 per share for 10
consecutive trading days and the shares of Common Stock underlying the
Notes have been registered under the Securities Act of 1933, as
amended.
On July 19, 1996 the Company filed with the Securities and Exchange
Commission a registration statement on Form S-3 for the shares of
Common Stock into which the Notes are convertible.
3. Acquisition of NIK Assets
On July 15, 1996, the Company acquired, effective as of July 1, 1996,
certain assets of the NIK Public Safety Product Line from Ivers-Lee
Corporation (the "NIK Assets"). The purchase price of the acquisition
was 310,931 shares (the "NIK Shares") of the
8
<PAGE>
Company's common Stock valued at $2,400,000, plus $255,000 in costs
incurred related to the purchase. The Company acquired inventory,
receivables and certain intangibles. The total purchase price was
allocated to the NIK Assets based upon their respective relative fair
market values. Patents, trademarks and other intangibles will be
amortized over their respective useful lives, which range from 5-25
years. On the closing date, the Company advanced to the seller
$1,200,000 (the "Advance"). The Advance will not bear interest and must
be repaid with the first $1,200,000 realized from the sales of the NIK
Shares. In the event that the sum of the aggregate net proceeds from
the sales of the NIK Shares and the Advance are less than $2,400,000 by
December 31, 1996, the Company has agreed to pay the difference to the
seller. Alternatively, if the sum of the aggregate net proceeds from
the sales of the NIK Shares and the Advance are greater than $2,400,000
at any time, the seller has agreed to pay the difference to the
Company.
4. Income Taxes
As of January 1, 1996, the Company had an income tax net operating loss
carry forward ("NOL") of approximately $5 million. Effective with the
change in control of the Company by Kanders Florida Holdings, Inc. on
January 18, 1996, the utilization of the NOL became restricted to
approximately $300,000 per year. As a result, the Company has income
taxes currently payable. In previous years, the future benefits
obtained by the Company from utilization of the NOL had been applied to
reduce the reorganization value in excess of amounts allocable to
identifiable assets. Beginning in 1996, and for future years,
amortization expenses related to this intangible will be a minimum of
approximately $51,000 per year which is non-deductible for income tax
purposes.
5. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on July 16, 1996.
Of the 6,812,490 shares of Common Stock entitled to vote at the
meeting, 5,426,401 shares of Common Stock were present in person or by
proxy and entitled to vote. Such number of shares represented
approximately 80% of the Company's outstanding shares of Common Stock.
At the meeting, the Company's shareholders approved: (i) an amendment
to the Company's Amended and Restated Articles of Incorporation
changing the name of the Company to "Armor Holdings, Inc."; (ii) the
reincorporation of the Company under the laws of the State of Delaware
by means of a merger of the Company with and into a newly formed
wholly-owned subsidiary incorporated in the State of Delaware for such
purpose; (iii) an amendment to the Company's Amended and Restated
Articles of Incorporation, increasing the number of authorized shares
of the Company's Common Stock from 15,000,000 shares to 50,000,000
shares; (iv) an amendment to the Company's Amended and Restated
Articles of Incorporation, creating a series of preferred stock, with
the right conferred upon the Board of Directors to set the dividend,
voting, conversion, liquidation and other rights, as well as such
redemption or sinking fund provisions and the qualifications,
limitations and restrictions with respect thereto, as the Board may
from time to time determine; (v) the adoption of the Company's 1996
Stock Option Plan of which 1,500,000 shares of Common Stock are
reserved for issuance; and (vi) the adoption of the Company's 1996
Non-Employee Directors Stock Option Plan of which 300,000 shares of
Common Stock are reserved for issuance.
Item 2. Management's Discussion and Analysis or Plan of Operation
The following discussion should be read in conjunction with the
financial statements and notes thereto included herein and the
financial statements and management's discussion and analysis or plan
of operation included in the Company's annual report on Form 10- KSB
for the year ended December 31, 1995.
Results of Operations
Three Months Ended June 30, 1996 Compared to Three Months Ended July 1,
1995
Sales for the three months ended June 30, 1996, were $3,595,521
representing an increase of $656,539 compared to
the same period in 1995. Domestic law enforcement sales increased by
29% and international sales increased by 31%.
The gross profit margin (sales less manufacturing costs for materials,
labor and overhead as a percent of total sales) increased to 37.2% for
the 1996 period from 37% in the comparable period for 1995.
9
<PAGE>
Selling, General and Administrative Expenses for the three month period
ended June 30, 1996 were $1,008,071 (28% of sales) compared to $809,483
(28% of sales) during the comparable period in 1995. The increase in
the actual dollar amount of selling, general and administrative
expenses between the periods, amounted to $198,588 and consisted
primarily of increased international commissions due to the increase in
international sales.
Interest expense of $30,448 for the three month period ended June 30,
1996 is approximately $40,000 lower than the comparable period in the
prior year. The decrease resulted primarily from the paying down of the
Company's credit facility with LaSalle Business Credit, Inc.
("LaSalle") on May 1, 1996. Effective April 30, 1996 the Company
received proceeds of $11.5 million related to the issuance of 5%
Convertible Subordinated Notes (the "Notes"). Deferred debt issue
costs associated with the Notes are being amortized over the term of
the Notes, which is five years.
Income tax expense for the three month period ended June 30, 1996
represents the federal and state statutory rates. The Company's
operating loss carry forward at January 1, 1996 amounted to
approximately $5 million. Due to the Company's change in control in
January 1996, this tax benefit became restricted to approximately
$300,000 per year. For the second quarter of 1996, pre-tax income and
net income amounted to $245,555 and $143,555; respectively, compared to
$209,718 and $127,718 for the comparable period in 1995. This change
reflects the increase in gross profit margin and lower interest costs
between the periods, as discussed above, being partially offset by the
increase in selling, general and administrative costs and amortization
costs related to debt issue and reorganization value in excess of
amounts allocable to identifiable assets.
Six Months Ended June 30, 1996 Compared to Six Months Ended July 1,
1995
Sales for the six months ended June 30, 1996 were $6,862,849
representing an increase of $1,386,715 compared to the same period in
1995. The increase results primarily from the increase in domestic
sales of 28% over last year.
Gross profit on sales for the six months ended June 30, 1996 increased
by $454,886 compared to the same period in the prior year, primarily
due to the increase in gross sales. The gross profit margin decreased
by approximately one percent, primarily due to the impact of price
increases incurred on the Company's main raw material and the mix of
sales between the Company's major market segments. The effect of the
price increase on the Company's gross margin is expected to yield an
approximate one point decrease in margin percentage for the full year
of 1996, as compared to 1995.
Selling, General and Administrative Expenses for the first six months
of 1996 were $1,976,488 (29% of sales) compared to $1,516,791 (28% of
sales) in the 1995 period. Increases in commissions due to increased
sales plus increased marketing efforts accounted for a majority of the
overall dollar increase between the periods.
10
<PAGE>
Interest expense of $102,459 for the 1996 period was approximately
$27,000 lower than the prior year. As noted previously, the decrease is
due primarily to the paying down of the Company's credit facility with
LaSalle on May 1, 1996.
Income tax expense for the six month period ended 1996 represents a
deferred tax expense amounting to 38% of pre-tax income. The Company's
operating loss carry forward at January 1, 1996 amounted to
approximately $5 million. Due to the Company's change in control in
January 1996, this tax benefit became restricted to approximately
$300,000 per year. For the first six months of 1996, pre-tax income and
net income decreased to $362,042 and $215,042, respectively, from
$393,244 and $239,244 for the first half of 1995. This change reflects
the effect of amortization expenses as they relate to our current tax
situation and the note offering, being partially offset by the increase
in gross profit margin between the periods.
Financial Condition
The Company's backlog consists of orders received but not yet
manufactured. As of July 21, 1996, the Company had a backlog of orders
of approximately $802,356.
As of May 1, 1996, the Company paid down its credit facility with
LaSalle. Effective June 30, 1996 the financing agreement expired and
was not renewed. As of July 24, 1996 the Company is in discussions with
other financial institutions to obtain working capital financing.
As of June 30, 1996, the Company had working capital of $12,033,729
which reflects the gross proceeds from the issuance of convertible debt
of $11,500,000 and the continued profitability of operations. Working
capital at March 31, 1996 was $949,749 and at June 30, 1995 was
$154,379.
The Company anticipates that continuing operations will enable the
Company to meet its liquidity, working capital requirements, and
capital expenditure requirements during the next year.
PART II
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its Annual Meeting of Shareholders on July 16, 1996.
Of the 6,812,490 shares of Common Stock entitled to vote at the
meeting, 5,426,401 shares of Common Stock were present in person or by
proxy and entitled to vote. Such number of shares represented
approximately 80% of the Company's outstanding shares of Common Stock.
11
<PAGE>
At the meeting, the Company's shareholders approved: (i) the election
of Warren B. Kanders, Jonathan M. Spiller, Burtt R. Ehrlich, Nicholas
Sokolow, Thomas W. Strauss and Richard C. Bartlett to the Company's
Board of Directors ("Proposal 1"); (ii) an amendment to the Company's
Amended and Restated Articles of Incorporation, changing the name of
the Company to "Armor Holdings, Inc." ("Proposal 2"); (iii) the
reincorporation of the Company under the laws of the State of Delaware
by means of a merger of the Company with and into a newly formed
wholly-owned subsidiary incorporated in the State of Delaware for such
purpose ("Proposal 3"); (iv) an amendment to the Company's Amended and
Restated Articles of Incorporation, increasing the number of authorized
shares of the Company's Common Stock from 15,000,000 shares to
50,000,000 shares ("Proposal 4"); (v) an amendment to the Company's
Amended and Restated Articles of Incorporation, creating a series of
preferred stock, with the right conferred upon the Board of Directors
to set the dividend, voting, conversion, liquidation and other rights,
as well as such redemption or sinking fund provisions and the
qualifications, limitations and restrictions with respect thereto, as
the Board may from time to time determine ("Proposal 5"); (vi) the
adoption of the Company's 1996 Stock Option Plan ("Proposal 6"); (vii)
the adoption of the Company's 1996 Non-Employee Directors Stock Option
Plan ("Proposal 7"); and (viii) the
appointment of Deloitte & Touche LLP as the Company's independent
auditors for the fiscal year ending December 31, 1996 ("Proposal 8").
Proposals 1, 2, 3, 4, 5, 6, 7 and 8 were approved by the Company's
shareholders as follows:
Votes For Votes Against Votes Abstaining
--------- ------------- ----------------
Proposal 1:
Warren B. Kanders 5,426,344 57 0
Jonathan M. Spiller 5,426,344 57 0
Burtt R. Ehrlich 5,426,344 57 0
Nicholas Sokolow 5,426,344 57 0
Thomas W. Strauss 5,426,344 57 0
Richard C. Bartlett 5,426,344 57 0
Proposal 2: 5,417,999 236 8,166
Proposal 3: 5,417,832 203 8,366
Proposal 4: 5,414,946 2,355 9,100
Proposal 5: 5,411,746 6,455 8,200
Proposal 6: 5,415,346 1,889 9,166
12
<PAGE>
Proposal 7: 5,406,947 10,088 9,366
Proposal 8: 5,418,368 33 8,000
Item 6. Exhibits & Reports on Form 8-K
a. Exhibits
The following Exhibits are hereby filed as part of this Quarterly
Report on Form 10-QSB:
EXHIBIT DESCRIPTION
11.1 Earnings Per Share Computations
27.1 Financial Data Schedule
b. The Company filed a report on Form 8-K on May 14, 1996 in
connection with the Company's private placement of
$11,500,000 aggregate principal amount of the Company's 5%
Convertible Subordinated Notes due 2001, which are
convertible into shares of the Company's Common Stock at a
conversion price of $5.00 per share, subject to adjustment
as therein provided. In addition, on July 30, 1996, the
Company filed a report on Form 8-K in connection with the
Company's acquisition of certain assets of the NIK Public
Safety Product Line from Ivers-Lee Corporation.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
AMERICAN BODY ARMOR & EQUIPMENT, INC.
/s/ Jonathan M. Spiller
-------------------------
Jonathan M. Spiller
President and Chief Executive Officer
Dated August 1, 1996
/s/ Carol T. Burke
-------------------------
Carol T. Burke
Vice President of Finance
Dated August 1, 1996
14
EARNINGS PER SHARE COMPUTATIONS
Three Month Period Ended
June 30, July 1,
1996 1995
---- ----
PRIMARY EARNINGS PER SHARE:
Net Income $ 143,555 $ 127,718
---------- ----------
Shares:
Weighted average common shares outstanding 6,825,835 4,697,255
Effect of shares issuable under stock option
and stock grant plans, based on the treasury
stock method 939,362 118,623
Effect of shares issuable under conversion of
preferred stock - if converted method (for 1996
the "if converted" method is applied from the
beginning of the period to the actual conversion
date of the preferred stock of January 19, 1996) 0 1,978,836
---------- ----------
Adjusted common shares and equivalents 7,765,197 6,794,714
---------- ----------
FULLY DILUTED EARNINGS PER SHARE:
Net Income $ 143,555 $ 127,718
Add Back:
After tax interest expense accrued on Note $ 59,580 --
---------- ----------
Adjusted net income $ 203,135 $ 127,718
---------- ----------
Shares:
Weighted Average common shares outstanding 6,825,835 4,697,255
Effect of shares issuable under stock option
and stock grants plans, based on the treasury
stock method 991,201 138,378
Effect of shares issuable under conversion of
subordinated note - if converted method (for
1996 the "if converted" method is applied
from the date of the note of April 30, 1996
to the end of the period) 1,541,758 -
Effect of shares issuable under conversion of
preferred stock - if converted method (for 1996
the "if converted" method is applied from the
beginning of the period to the actual conversion
date of the preferred stock of January 19, 1996) 0 1,978,836
---------- ----------
Adjusted common shares and equivalents 9,358,794 6,814,469
Earnings per share - fully diluted $ .02 $ .02
---------- ----------
<PAGE>
EARNINGS PER SHARE COMPUTATIONS
Six Month Period Ended
June 30, July 1,
1996 1995
---- ----
PRIMARY EARNINGS PER SHARE:
Net Income $ 215,042 $ 239,244
---------- ----------
Shares:
Weighted average common shares outstanding 6,644,740 4,697,255
Effect of shares issuable under stock option
and stock grant plans, based on the treasury
stock method 853,701 118,623
Effect of shares issuable under conversion of
preferred stock - if converted method (for 1996
the "if converted" method is applied from the
beginning of the period to the actual conversion
date of the preferred stock of January 19, 1996) 181,095 1,761,382
---------- ----------
Adjusted common shares and equivalents 7,679,536 6,577,260
Earnings per share - primary $ .03 $ .04
---------- ----------
FULLY DILUTED EARNINGS PER SHARE:
Net Income $ 215,042 $ 239,244
Add Back:
After tax interest expense accrued on Note $ 59,580 --
---------- ----------
Adjusted net income 274,622 239,244
---------- ----------
Shares:
Weighted Average common shares outstanding 6,644,740 4,697,255
Effect of shares issuable under stock option
and stock grants plans, based on the treasury
stock method 961,809 209,350
Effect of shares issuable under conversion of
subordinated note - if converted method (for
1996 the "if converted" method is applied from
the date of the note of April 30, 1996 to the
end of the period)
770,879 --
Effect of shares issuable under conversion of
preferred stock - if converted method (for 1996
the "if converted" method is applied from the
beginning of the period to the actual conversion
date of the preferred stock of January 19, 1996) 181,095 1,761,382
---------- ----------
Adjusted common shares and equivalents 8,558,523 6,667,987
---------- ----------
Earnings per share - fully diluted $ .03 $ .04
---------- ----------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE COMPANY'S FINANCIAL
STATEMENTS FOR THE QUARTERLY PERIOD ENDED JUNE 30,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 9,004,168
<SECURITIES> 0
<RECEIVABLES> 2,055,568
<ALLOWANCES> 87,741
<INVENTORY> 1,237,020
<CURRENT-ASSETS> 13,013,111
<PP&E> 815,322
<DEPRECIATION> 348,576
<TOTAL-ASSETS> 17,720,233
<CURRENT-LIABILITIES> 979,382
<BONDS> 11,524,479
0
0
<COMMON> 207,594
<OTHER-SE> 5,008,778
<TOTAL-LIABILITY-AND-EQUITY> 17,720,233
<SALES> 3,595,521
<TOTAL-REVENUES> 3,595,521
<CGS> 2,257,838
<TOTAL-COSTS> 676,118
<OTHER-EXPENSES> 357,448
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 58,562
<INCOME-PRETAX> 245,555
<INCOME-TAX> 102,000
<INCOME-CONTINUING> 143,555
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 143,555
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
