<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
OR
[ ] 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 1-10927
VSI ENTERPRISES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 84-1104448
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
5801 GOSHEN SPRINGS ROAD
NORCROSS, GEORGIA 30071
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(770) 242-7566
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
N/A
(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, and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
--------- -------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
OUTSTANDING AT
CLASS OF SECURITIES AUGUST 5, 1997
-------------------
COMMON STOCK, $.00025 PAR VALUE 44,480,309
===============================================================================
<PAGE> 2
VSI ENTERPRISES, INC. AND SUBSIDIARIES
Index
<TABLE>
<CAPTION>
FINANCIAL INFORMATION Page No.
--------
<S> <C>
Item 1. Financial Statements:
Consolidated Condensed Balance Sheets
June 30, 1997 and December 31, 1996............................................. 3
Consolidated Condensed Statements of Operations
Three Months and Six Months Ended June 30, 1997 and 1996........................ 4
Consolidated Condensed Statements of Cash Flows
Six Months Ended June 30, 1997 and 1996......................................... 5
Notes to Consolidated Condensed Financial Statements............................ 6
Item 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations:
Financial Condition............................................................. 7
Results of Operations........................................................... 7
Liquidity and Sources of Capital................................................ 8
Changes in Securities........................................................... 10
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders..................... 10
Item 6. Exhibits and Reports on Form 8-K....................................... 11
</TABLE>
2
<PAGE> 3
CONSOLIDATED CONDENSED BALANCE SHEETS
VSI Enterprises, Inc. and Subsidiaries
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
(Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 728,624 $ 2,260,185
Accounts receivable, net 6,246,882 3,884,446
Inventories, net 2,607,577 2,810,231
Rental and demonstration inventory, net 1,391,172 1,542,667
Prepaid expenses 951,559 365,435
----------- -----------
Total current assets 11,925,814 10,862,964
----------- -----------
Property and equipment, net 1,293,317 1,356,313
Costs in excess of net assets acquired, net 9,291,189 9,537,558
Software development costs 818,158 980,110
Other assets 632,569 560,665
----------- -----------
$23,961,047 $23,297,610
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 513,905 $501,641
Bank credit facilities 81,018 127,605
Accounts payable 2,692,599 2,410,049
Accrued expenses 1,839,766 1,463,952
Deferred revenue 952,002 725,662
----------- -----------
Total current liabilities 6,079,290 5,228,909
Convertible Debentures 0 4,250,000
Stockholders' Equity:
Common stock, authorized 60,000,000 shares of
$.00025 par value; issued and outstanding
41,334,578 and 39,516,249 shares, respectively 11,120 9,879
Additional paid-in capital 44,161,761 38,222,005
Accumulated deficit (25,915,534) (24,124,509)
Cumulative translation adjustment (375,590) (288,674)
----------- -----------
Total Stockholders' Equity 17,881,757 13,818,701
----------- -----------
$23,961,047 $23,297,610
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
3
<PAGE> 4
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
VSI Enterprises, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
1997 1996 1997 1996
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 11,757,921 $ 6,995,264 $ 6,251,505 $ 4,026,707
Costs and expenses
Cost of revenue 5,623,599 5,059,686 2,889,275 3,008,641
Selling, general and administrative 7,198,424 4,411,251 3,591,048 2,257,679
Research & development 540,037 666,201 255,536 317,455
------------ ------------ ------------ ------------
Total costs and expenses 13,362,059 10,137,138 6,735,860 5,583,775
------------ ------------ ------------ ------------
Loss from operations (1,604,138) (3,141,874) (484,355) (1,557,068)
Other expenses, primarily financing charges (127,001) (266,607) (25,330) (103,339)
------------ ------------ ------------ ------------
Net loss from operations before income taxes (1,731,140) (3,408,481) (509,685) (1,660,407)
------------ ------------ ------------ ------------
Income tax (provision) benefit (59,885) 46,189 (38,101) 7,583
------------ ------------ ------------ ------------
Net Loss $ (1,791,025) $ (3,362,292) $ (547,786) $ (1,652,824)
============ ============ ============ ============
Net loss per common share $ (0.04) $ (0.10) $ (0.01) $ (0.05)
============ ============ ============ ============
Weighted average shares outstanding 41,955,001 35,269,167 43,260,163 35,275,222
============ ============ ============ ============
</TABLE>
4
See notes to consolidated condensed financial statements.
<PAGE> 5
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
VSI Enterprises, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Six months ended June 30,
1997 1996
(Unaudited) (Unaudited)
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,791,025) $(3,362,292)
Adjustments to reconcile net loss to net
cash provided (used) in operating activities:
Depreciation and amortization 1,033,531 710,126
Allowance to reduce inventory to lower
cost or market 220,225 75,025
Provision for doubtful accounts, net 12,836 (28,525)
Changes in operating assets and liabilities:
Accounts receivable (2,375,272) 2,539,962
Inventories (17,571) 528,109
Rental and demonstration inventory (122,116) (822,339)
Prepaid expenses and other assets (586,124) 125,447
Accounts payable 282,550 (773,012)
Accrued expenses 375,814 (861,232)
Deferred revenue 226,340 671,138
----------- -----------
Net cash provided (used) by operating activities $(2,740,812) (1,197,593)
----------- -----------
Cash flows from investing activities:
Purchases of property and equipment (256,967) (529,201)
Change in other assets (71,904) 50,501
Capitalized software development costs (31,635) (30,663)
----------- -----------
Net cash used by investing activities (360,506) (509,363)
----------- -----------
Cash flows from financing activities:
Borrowings / (payments) on notes payable 12,264 (2,352,544)
Net borrowings / (payments) on short term credit facilities (46,587) (4,672)
Proceeds from issuance of common stock in connection
with debt agreements 538,991 591,424
Proceeds from exercise of stock options, warrants
and stock purchase plan 114,780 317,477
Proceeds from private placements net of
issuance costs 1,037,227 -
----------- -----------
Net cash provided by financing activities 1,656,674 (1,448,315)
----------- -----------
Effect of exchange rate changes on cash (86,916) 61,484
Increase (decrease) in cash and cash equivalents (1,531,561) (3,093,787)
Cash and cash equivalents at beginning of the period 2,260,185 4,202,613
----------- -----------
Cash and cash equivalents at end of the period $ 728,624 $ 1,108,826
=========== ===========
Cash paid during the six month period:
Interest $ 98,300 $ 191,370
=========== ===========
</TABLE>
See notes to consolidated condensed financial statements.
5
<PAGE> 6
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
VSI ENTERPRISES, INC. AND SUBSIDIARIES
NOTE A - BASIS OF PRESENTATION.
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. 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 considered necessary for a fair presentation have been made and are
of a normal recurring nature. Operating results for the three month and six
month periods ended June 30, 1997 are not necessarily indicative of the results
that may be expected for the year ending December 31, 1997. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's Form 10-K for the year ended December 31,
1996.
NOTE B - PRINCIPLES OF CONSOLIDATION.
The consolidated financial statements include the accounts of VSI Enterprises,
Inc. and its subsidiaries, Videoconferencing Systems, Inc., VSI Network
Services Inc. (d/b/a. Integrated Network Services, or INS), Videoconferencing
Systems, n.v., VSI Solutions, Inc. and VSI Network Solutions, Inc. (d/b/a
Eastern Telecom, or ETI). All significant intercompany transactions and
balances have been eliminated.
NOTE C - NET INCOME (LOSS) PER SHARE OF COMMON STOCK.
Net income (loss) per share of Common Stock for the three month and six month
periods ended June 30, 1997 and 1996 have been computed based on the weighted
average number of shares and common equivalent shares outstanding during each
period. Fully diluted information is not presented as fully diluted earnings
per share is not significantly different from the primary earnings per share
presented.
NOTE D - CONVERTIBLE DEBENTURES
In September 1996, the Company issued $5.0 million of 5% convertible
debentures, due in September 1999. The debentures were convertible into common
stock at the lesser of the per share market price at the time of funding or 80%
of the per share price of the common stock at the time of conversion. As of
June 9, 1997, all convertible debentures amounting to $5.0 million plus accrued
interest of $111,749 were converted into 3,889,146 common shares. There are no
outstanding convertible debentures.
NOTE E - NEW ACCOUNTING PRONOUNCEMENT
The FASB has issued Statement of Financial Accounting Standards No. 128,
Earnings Per Share, which is effective for financial statements issued after
December 15, 1997. Early adoption of the new standard is not permitted. The new
standard eliminates primary and fully diluted earnings per share and requires
presentation of basic and diluted earnings per share together with disclosure
of how the per share amounts were computed. The adoption of this new standard
is not expected to have a material impact on the disclosure of earnings per
share in the financial statements.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
VSI ENTERPRISES, INC. AND SUBSIDIARIES
PART I
FINANCIAL CONDITION
Since December 31, 1996, the Company's total assets increased 3% to
$23,961,047, primarily due to a $2,362,436, or 61%, increase in accounts
receivable and a $586,124, or 160%, increase in prepaid expenses. These
increases were partially offset by a $1,531,561, or 68%, decrease in cash and
decreases in inventories (7%), rental and demonstration inventory (10%) and
software development costs (17%). The rise in accounts receivable was due to an
increase in revenues late in the second quarter that were not collected by June
30. Also, the cash position on December 31, 1996 was positively affected by the
issuance in September 1996 of $5.0 million in 5% convertible debentures due
September 1999, the proceeds of which were used to fund the cash portion of the
October 2, 1996 acquisition of Eastern Telecom (ETI) and for working capital
purposes.
Current liabilities as of June 30, 1997 were $6,079,290, an increase of
$850,381, or 16%, from December 31, 1996, primarily as a result of an increase
in accrued expenses, deferred revenue and accounts payable. Partially
offsetting the increases was a 37% decrease in bank credit facilities.
In September 1996, the Company issued $5.0 million of 5% convertible
debentures, due in September 1999. As of June 9, 1997, all convertible
debentures amounting to $5.0 million plus accrued interest of $111,749 were
converted into 3,889,146 common shares. There are no outstanding convertible
debentures.
RESULTS OF OPERATIONS - THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE
MONTHS ENDED JUNE 30, 1996
Revenues for the three months ended June 30, 1997 were $6,251,505, an increase
of 55% over the revenues of $4,026,707 recorded for the three months ended June
30, 1996. The increase was due primarily to a 26% increase in videoconferencing
system sales and to growth in sales and account management commissions from
wholly-owned subsidiary ETI, which contributed 31% of second quarter revenues.
ETI was acquired in October 1996.
The Company's backlog of purchase orders at June 30, 1997 was $3,336,516.
Gross margin as a percentage of revenues for the three months ended June 30,
1997 was 54%, up from 25% for the three months ended June 30, 1996, due to an
increase in sales of higher margin videoconferencing system products,
corporate-wide cost reduction initiatives and the addition of high margin sales
and account management commissions from ETI, a sales agency for a number of
major telecommunications companies.
Selling, general and administrative expenses for the three months ended June
30, 1997 were $3,591,048, an increase of $1,333,369, or 59%, over the three
months ended June 30, 1996, due to an increase in the Company's sales,
marketing and distribution initiatives in the United States (primarily the
acquisition of ETI and its 40-person sales force) and the Far East.
The Company charges research and development costs to expense as incurred until
technological feasibility of a software product has been established. Software
development costs incurred after technological feasibility has been established
are capitalized and amortized over the useful life of the product. For the
three month period ended June 30, 1997, the Company's research and development
expenses were $255,536, a 20% decrease over the three month period ended June
30, 1996. At June 30, 1997, the balance in software development costs was
$818,158, a 17% decrease as compared to the $980,110 capitalized as of June 30,
1996.
Non-operating expenses for the three month period ended June 30, 1997 were
$25,330, a decrease of $78,009, or 75%, from the three month period ended June
30, 1996. This decrease was primarily due to reduced costs associated
7
<PAGE> 8
with the Company's secured credit facilities, as those balances were reduced
during the three month period ended June 30, 1997.
Net losses for the three month period ended June 30, 1997 were $547,786,
representing 9% of net product sales, as compared to $1,652,824, or 41% of net
product sales, for the three month period ended June 30, 1996. The
decrease in losses was due to a 55% increase in revenues and a substantial
improvement in gross margins.
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS
ENDED JUNE 30, 1996
Revenues for the six months ended June 30, 1997 were $11,757,921, an increase
of 68% over the revenues of $6,995,264 recorded for the six months ended June
30, 1996. The increase was due primarily to a 41% increase in videoconferencing
system sales and to growth in sales and account management commissions from
wholly-owned subsidiary ETI, which contributed about 31% of first and second
quarter revenues. ETI was acquired in October 1996.
Gross margin as a percentage of revenues for the six months ended June 30, 1997
was 52%, up from 28% for the six months ended June 30, 1996, due to an increase
in sales of higher margin videoconferencing system products, corporate-wide
cost reduction initiatives and the addition of high margin sales and account
management commissions from ETI, a sales agency for a number of major
telecommunications companies.
Selling, general and administrative expenses for the six months ended June 30,
1997 were $7,198,424, an increase of $2,787,173 or 63%, over the six months
ended June 30, 1996, due to an increase in the Company's sales, marketing and
distribution initiatives in the United States (primarily the acquisition of ETI
and its 40-person sales force) and the Far East.
The Company charges research and development costs to expense as incurred until
technological feasibility of a software product has been established. Software
development costs incurred after technological feasibility has been established
are capitalized and amortized over the useful life of the product. For the six
month period ended June 30, 1997, the Company's research and development
expenses were $540,037, a 19% decrease over the six month period ended June 30,
1996. Expenses in 1996 had been somewhat higher than historical levels, due to
an expansion in the research and development workforce to accommodate projects
related to forthcoming generations of the Omega product line and other software
projects. Many of those projects were completed or were winding down by first
quarter 1997, and the workforce -- primarily at subsidiary VSI Solutions, Inc.
- -- was reduced. At June 30, 1997, the balance in software development costs was
$818,158, a 17% decrease as compared to the $980,110 capitalized as of June 30,
1996.
Non-operating expenses for the six month period ended June 30, 1997 decreased
$139,606, or 52%, to $127,001 from the six month period ended June 30, 1996.
This decrease was primarily due to reduced costs associated with the Company's
secured credit facilities, as those balances were reduced significantly during
the six month period ended June 30, 1997.
Net losses for the six month period ended June 30, 1997 were $1,791,025,
representing 15% of net product sales, as compared to $3,362,292, or 48% of net
product sales, for the six month period ended June 30, 1996. The decrease in
losses was due to a 68% increase in revenues and a substantial improvement in
gross margins.
LIQUIDITY AND SOURCES OF CAPITAL
In April, 1997, the Company completed a private placement of 843,882 shares of
common stock to two VSI insiders and four other accredited investors, resulting
in proceeds of $800,000. The proceeds of this offering were added to the
working capital of the Company and utilized for general corporate purposes.
Since June 1995, Videoconferencing Systems, Inc. (VSI), a subsidiary of VSI
Enterprises, Inc., has had a revolving credit and security agreement with
Fidelity Funding of California Inc. This credit facility provides the company
with up to $4.0 million at an interest rate of prime plus 2%. Funds available
under the credit facility are based on 80% of
8
<PAGE> 9
eligible VSI accounts receivable invoices, with certain restrictions. The
credit facility is secured by the accounts receivable and inventory of VSI. At
June 30, 1997, approximately $336,727 was owed to Fidelity Funding under the
credit facility. Outstanding advances under this agreement are classified as a
reduction of accounts receivable in the accompanying consolidated balance
sheets.
Since December 1996, VSI Network Services, Inc. (d/b/a Integrated Network
Services, or INS), a subsidiary of VSI Enterprises Inc., has had a revolving
credit and security agreement with Presidential Financial Corporation. This
credit facility provides INS with up to $750,000 at an interest rate of prime
plus 3%. Funds available under the credit facility are based on 80% of eligible
accounts receivable, with certain restrictions. The credit facility is secured
by receivables, inventory and fixed assets of INS. At June 30, 1997,
approximately $337,118 was owed to Presidential Financial Corporation.
As of June 30, 1997, Videoconferencing Systems, n.v. had a secured bank
facility of $389,159, of which $156,307 was outstanding at that time.
As of June 30, 1997, the Company had cash and cash equivalents of $728,624. The
Company's liquidity sources include existing cash, accounts receivable and
credit facilities. The Company's liquidity sources also include existing credit
facilities. In order to meet its cash flow requirements, the Company will
likely require additional financing in 1997. This additional funding could be
in the form of debt, equity or both. A reduction in operating expenses could
also be effected. However, there can be no assurance that the Company will be
able to obtain such financing if and when needed, or that if obtained, such
financing will be sufficient or on terms and conditions acceptable to the
Company.
Certain statements contained in this filing are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995,
such as statements relating to financial results and plans for future business
development activities, and are thus prospective. Such forward-looking
statements are subject to risks, uncertainties and other factors which could
cause actual results to differ materially from future results expressed or
implied by such forward-looking statements. Potential risks and uncertainties
include, but are not limited to, economic conditions, competition and other
uncertainties detailed from time to time in the Company's Securities and
Exchange Commission filings.
9
<PAGE> 10
PART II
CHANGES IN SECURITIES
On April 22, 1997, the Company completed a private placement of 843,882 shares
of Common Stock to two VSI insiders and four other accredited investors,
resulting in proceeds of $800,000. The proceeds of this offering were added to
the working capital of the Company and utilized for general corporate purposes.
On April 22, 1997, the Company issued 200,000 shares of Common Stock to Smith,
Gambrell & Russell, LLP, the Company's general counsel. These shares were
issued as payment for services rendered.
On May 13, 1997, the Company completed a private placement of 250,000 shares of
Common Stock to Bank von Ernst & CIB, resulting in proceeds of $237,500. The
proceeds of this offering were added to the working capital of the Company and
utilized for general corporate purposes.
On May 16, 1997, the Company issued 100,000 shares of Common Stock to NRT
Contract Manufacturing, Inc., a principal supplier of components for the
Company's videoconferencing equipment. These shares were issued as payment for
shipments of components to the Company.
All issuances of securities described above were made in reliance on the
exemption from registration provided by Section 4(2) and/or 3(b) of the
Securities Act of 1933 as transactions by an issuer not involving a public
offering. All of the securities were acquired by the recipients thereof for
investment and with no view toward the resale or distribution thereof. In each
instance, the offers and sales were made without any public solicitation and
the stock certificates bear restrictive legends. No underwriter was involved in
the transactions and no commissions were paid.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 21, 1997, the Company held its 1997 Annual Meeting of Shareholders. At
the meeting, the following persons were elected to serve on the Company's Board
of Directors for a term of one year and until their successors are elected and
have qualified: Bill R. Brewer, Carleton A. Brown, Larry M. Carr, Leo M.
Cortjens, Mark E. Munro, Edward S. Redstone and Richard K. Snelling. The number
of votes cast for and against election of each nominee for director was as
follows:
<TABLE>
<CAPTION>
Director For Against
-------- --- -------
<S> <C> <C>
Bill R. Brewer, CPA.................................... 29,598,474 351,356
Carleton A. Brown...................................... 29,566,199 383,631
Larry M. Carr.......................................... 29,635,209 314,621
Leo M. Cortjens........................................ 29,012,309 937,521
Mark E. Munro.......................................... 29,589,712 360,118
Edward S. Redstone..................................... 29,637,409 312,421
Richard K. Snelling.................................... 29,578,789 371,041
</TABLE>
In addition, the Company's shareholders approved an Amendment to the
Certificate of Incorporation to increase the number of authorized shares of
Common Stock of the Company from 46 million shares to 60 million shares. The
number of votes cast in favor of the amendment was 28,087,013 and the number of
votes cast against the amendment was 1,792,642. There were 70,172 abstentions.
10
<PAGE> 11
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The following exhibit is filed with this report:
27.1 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the quarter ended June 30,
1997.
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.
VSI ENTERPRISES, INC.
Date: August 5, 1997 /s/ Richard K. Snelling
--------------- ----------------------------------
Chairman & Chief Executive Officer
/s/ B.R. Brewer
----------------------------------
Group President & Chief Financial
Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 729
<SECURITIES> 0
<RECEIVABLES> 6,247
<ALLOWANCES> 0
<INVENTORY> 2,608
<CURRENT-ASSETS> 11,925
<PP&E> 1,293
<DEPRECIATION> 0
<TOTAL-ASSETS> 23,961
<CURRENT-LIABILITIES> 6,079
<BONDS> 0
0
0
<COMMON> 11
<OTHER-SE> 17,871
<TOTAL-LIABILITY-AND-EQUITY> 23,691
<SALES> 11,758
<TOTAL-REVENUES> 11,758
<CGS> 5,624
<TOTAL-COSTS> 13,362
<OTHER-EXPENSES> 127
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,731)
<INCOME-TAX> 60
<INCOME-CONTINUING> (1,791)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,791)
<EPS-PRIMARY> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
