<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1998
--------------------
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: 0-19487
-------------
NSA INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 62-1387102
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4260 East Raines Road, Memphis, Tennessee 38118
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(Address of principal executive offices) (Zip Code)
(901) 541-1223
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(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(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 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.
[X] Yes [] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
4,695,036 shares of Common Stock, $.05 par value were outstanding at
December 14, 1998.
<PAGE> 2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
NSA International, Inc. and Subsidiaries:
Consolidated Balance Sheets as of October 31, 1998 (unaudited) and
April 30, 1998
Consolidated Statements of Operations for the Three and Six Month
Periods Ended October 31, 1998 and 1997 (unaudited)
Consolidated Statements of Shareholders' Equity for the Six Month
Periods Ended October 31, 1998 and 1997 (unaudited)
Consolidated Statements of Cash Flows for the Six Month Periods Ended
October 31, 1998 and 1997 (unaudited)
Notes to Consolidated Financial Statements
<PAGE> 3
NSA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OCTOBER 31, APRIL 30,
1998 1998
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,006,307 $ 2,121,058
Short-term investments 1,242,685 1,509,004
Receivables, net 4,035,602 3,078,385
Refundable income taxes 304,000
Inventories 6,640,905 6,587,848
Deferred income taxes 15,000 15,000
Notes receivable - short-term 551,000 414,000
Other current assets 92,333 163,996
------------ ------------
Total current assets 15,583,832 14,193,291
PROPERTY AND EQUIPMENT, At cost:
Leasehold improvements 37,838 37,837
Manufacturing equipment 456,062 456,062
Office furniture and equipment 384,178 890,906
Data processing equipment 57,555 593,600
------------ ------------
Total 935,633 1,978,405
Less accumulated depreciation and amortization (792,073) (1,381,910)
------------ ------------
Property and equipment, net 143,560 596,495
NOTES RECEIVABLE - LONG-TERM 2,368,240 2,079,303
OTHER ASSETS 914,813 1,005,250
------------ ------------
TOTAL ASSETS $ 19,010,445 $ 17,874,339
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Amounts due to NSA, Inc. $ 10,921,503 $ 9,291,356
Accounts payable, trade 526,902 913,567
Accrued sales commissions and allowances 80,380 116,631
Accrued compensation and expenses 2,229,165 2,005,484
Accrued sales returns 41,319 60,038
Advance payments by dealers/distributors 16,383 12,564
Income taxes payable 269,000 321,000
Other current liabilities 160,306 143,585
------------ ------------
Total current liabilities 14,244,958 12,864,225
DEFERRED INCOME TAXES 15,000 15,000
OTHER LIABILITIES 1,042,453 1,114,608
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.05 par value, 100,000,000 shares authorized,
4,695,036 shares issued and outstanding 234,752 234,752
Additional paid-in capital 28,844,804 28,844,804
Deficit (25,371,522) (25,199,050)
------------ ------------
Total shareholders' equity 3,708,034 3,880,506
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 19,010,445 $ 17,874,339
============ ============
</TABLE>
See notes to consolidated financial statements.
1
<PAGE> 4
NSA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED OCTOBER 31, ENDED OCTOBER 31,
---------------------------- ------------------------------
1998 1997 1998 1997
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
NET REVENUES:
Net sales $ 6,442,320 $ 5,347,038 $ 13,300,199 $ 11,688,372
Dealer/distributor fee income 241,391 196,688 497,940 401,962
----------- ----------- ------------ ------------
Total 6,683,711 5,543,726 13,798,139 12,090,334
COSTS AND EXPENSES:
Dealer/distributor commissions and allowances (421,250) (580,367) (1,149,469) (1,181,236)
Cost of products sold (4,835,200) (4,256,440) (9,536,245) (8,897,721)
Operating expenses (1,539,508) (1,876,581) (3,340,487) (3,938,339)
Licensing and management fees to NSA, Inc. (12,535) (22,736) (43,675) (57,962)
Interest income, net 85,894 190,151 179,227 348,677
Other income (expense), net 55,281 54,498 (79,962) 201,417
----------- ----------- ------------ ------------
Total (6,667,318) (6,491,475) (13,970,611) (13,525,164)
----------- ----------- ------------ ------------
NET INCOME (LOSS) $ 16,393 $ (947,749) $ (172,472) $ (1,434,830)
=========== =========== ============ ============
INCOME (LOSS) PER COMMON SHARE $ Nil $ (0.20) $ (0.04) $ (0.30)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING 4,695,036 4,855,656 4,695,036 4,856,906
TRANSACTIONS WITH NSA, INC. INCLUDED IN THE ABOVE:
Net sales to NSA, Inc. $ 3,206,000 $ 2,188,000 $ 6,185,000 $ 4,262,000
Cost of products sold (purchased from NSA, Inc.) 49,971 127,638 226,062 151,928
</TABLE>
See notes to consolidated financial statements.
2
<PAGE> 5
NSA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SIX MONTH PERIODS ENDED OCTOBER 31, 1998 AND 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK
-------------------------- ADDITIONAL
NUMBER PAID-IN
OF SHARES AMOUNT CAPITAL DEFICIT TOTAL
--------- ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE AT APRIL 30, 1997 4,858,156 $ 242,908 $ 29,106,950 $(21,042,595) $8,307,263
Net loss (1,434,830) (1,434,830)
Repurchase and retirement of common stock (2,500) (125) (755) (880)
--------- ----------- ------------ ------------- -----------
BALANCE AT OCTOBER 31, 1997 4,855,656 $ 242,783 $ 29,106,195 (22,477,425) $ 6,871,553
========= =========== ============ ============= ===========
BALANCE AT APRIL 30, 1998 4,695,036 $ 234,752 $ 28,844,804 $(25,199,050) $3,880,506
Net loss (172,472) (172,472)
--------- ----------- ------------ ------------- -----------
BALANCE AT OCTOBER 31, 1998 4,695,036 $ 234,752 $ 28,844,804 $ (25,371,522) $ 3,708,034
========= =========== ============ ============= ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
NSA INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTH PERIODS ENDED OCTOBER 31, 1998 AND 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
OCTOBER 31, OCTOBER 31,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (172,472) $(1,434,830)
Adjustments to reconcile net loss to net cash provided (used) by operations:
Loss on sales of property and equipment 87,096 459
Depreciation and amortization 90,255 135,967
Recognition of deferred gain (105,000)
Changes in assets and liabilities, net of the effects of disposals, as discussed in Note 4:
Receivables, net (957,218) (402,567)
Inventories (317,791) 1,208,906
Other current assets 162,100 (94,932)
Accounts payable (386,664) (180,230)
Liability for sales returns (18,719) (322,941)
Advance payments by dealers/distributors 3,819 (18,677)
Accrued expenses 131,594 (628,318)
Income taxes payable and refundable 252,000 64,121
Other liabilities (55,434) 317,899
----------- -----------
Net cash used in operating activities (1,286,434) (1,355,143)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from (purchase of) short-term investments 266,319 (144,636)
Purchases of property and equipment (28,247) (73,022)
Proceeds from receipt of notes receivable 241,519 200,723
Proceeds from sale of property and equipment 61,945
----------- -----------
Net cash provided by (used in) investing activities 541,536 (16,935)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of common stock and warrants (880)
Advances from NSA, Inc. for equipment purchases and working capital 1,630,147 41,569
----------- -----------
Net cash provided by financing activities 1,630,147 40,689
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 885,249 (1,331,389)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,121,058 5,771,563
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 3,006,307 $ 4,440,174
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for:
Interest $ Nil $ 4,700
Income taxes refunded, net 252,000 64,121
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
See discussion of non-cash investing activities at Note 4
</TABLE>
See notes to consolidated financial statements.
4
<PAGE> 7
NSA INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTH PERIODS ENDED OCTOBER 31, 1998 AND 1997 (UNAUDITED)
- --------------------------------------------------------------------------------
1. FINANCIAL STATEMENT PRESENTATION
The consolidated balance sheet as of October 31, 1998, the consolidated
statements of operations for the three month and six month periods ended
October 31, 1998 and 1997, and the consolidated statements of
shareholders' equity and cash flows for the six month periods ended
October 31, 1998 and 1997 have been prepared by the Company, without
audit. It is management's opinion that these statements include all
adjustments, consisting only of normal recurring adjustments, necessary to
present fairly the financial position, results of operations, and cash
flows as of October 31, 1998 and for all periods presented. The results
for the periods presented are not necessarily indicative of the results
that may be expected for the full year.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
these consolidated financial statements be read in conjunction with the
consolidated financial statements and notes thereto included in the
Company's Annual Report on Form 10-K, previously filed with the Securities
and Exchange Commission.
2. INCOME (LOSS) PER SHARE
Amounts shown as income (loss) per share have been computed by dividing
net income (loss) applicable to common shareholders by the weighted
average number of common shares outstanding.
3. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
OCTOBER 31, APRIL 30,
1998 1998
----------- -----------
<S> <C> <C>
Raw materials $ 1,824,084 $ 2,040,031
Finished goods 6,373,429 5,778,977
Accessories 611,489 756,425
----------- -----------
Total at cost 8,809,002 8,575,433
Reserve for excess and obsolete inventory (2,168,097) (1,987,585)
----------- -----------
Total $ 6,640,905 $ 6,587,848
=========== ===========
</TABLE>
4. DISPOSALS
On October 1, 1998, the Company sold its operating rights and certain
inventories and fixed assets in Italy to an unrelated group of investors.
Consideration totalled $633,476, with $50,000 being paid at closing.
Additional payments of $183,476 are due on or before October 1, 1999, with
the balance payable over the following six years and bearing interest at a
rate of 7% per annum.
5
<PAGE> 8
5. SUBSEQUENT EVENT
On November 13, 1998, the Company's Board of Directors approved a
one-for-2,400 reverse split of the Company's common stock, $.05 par value
(the "Common Stock"). Pursuant to the proposed reverse stock split, the
number of authorized shares of Common Stock shall be reduced from
100,000,000 shares to 41,666 shares, $120.00 par value (the "New Common
Stock"), and the Company's shareholders shall receive a cash payment of
$1-1/8 per share of the currently outstanding Common Stock in lieu of the
issuance of any resulting fractional shares of New Common Stock. The
Company's Board of Directors will submit the proposed reverse stock split
to the Company's shareholders for approval at an annual and special
meeting of the Company's shareholders scheduled for January 26, 1999.
6
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Management's discussion should be read in conjunction with the Consolidated
Financial Statements and the discussion of NSA International, Inc.'s (the
"Company") business and other detailed information appearing elsewhere herein.
All information is based on the Company's fiscal quarter ended October 31.
RESULTS OF OPERATIONS
Net Revenue
<TABLE>
<CAPTION>
Second Quarter Six Months
--------------------------------- ------------------------------------
1999 Change 1998 1999 Change 1998
------ ------ ------- -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Net revenues $6,684 20.56% $ 5,544 $ 13,798 14.13% $ 12,090
Cost and expenses 6,668 2.73% 6,491 13,970 3.30% 13,524
Percentage of net revenues 99.76% 117.08% 101.25% 111.86%
Net income (loss) 16 (947) (172) (1,434)
Earnings (loss) per share Nil $ (.20) $ (.04) $ (.30)
</TABLE>
The 1999 second quarter increase in net revenues of approximately
$1,140,000 resulted from an increase in domestic sales to NSA.
The increase in the first six months net revenues of approximately
$1,708,000 for 1999 versus 1998 resulted primarily from continued domestic sales
growth. This six month revenue increase was partially offset by approximately
$200,000 as a result of the sale of the Company's Italian direct selling
operations effective October 1, 1998 and the first quarter closure of the
Company's office in France.
Cost and Expenses
<TABLE>
<CAPTION>
Second Quarter Six Months
--------------------------------- ------------------------------------
1999 Change 1998 1999 Change 1998
------ ------ ------- -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Dealer/Distributor commissions
and allowances $422 (27.37%) $ 581 $1,150 (13.60%) $ 1,181
Percentage of net revenues 6.31% 10.48% 8.33% 9.77%
Cost of products sold 4,835 13.58% 4,257 9,536 9.01% 8,898
Percentage of net revenues 72.34% 76.78% 69.11% 73.60%
</TABLE>
The decrease in the 1999 second quarter and the first six months
dealer/distributor commissions and allowances principally resulted from the
decline of the Company's sales in Italy and the 1999 first quarter closure of
the Company's office in France.
The decrease in percentage of cost of products sold for the 1999 second
quarter and first six months resulted from increased sales volumes that reduced
product cost, slight increases in the sales price of certain products, and
changes in product mix.
The 1999 second quarter and first six months increase in cost of product
sold primarily resulted from the increase in sales volume.
7
<PAGE> 10
<TABLE>
<CAPTION>
Second Quarter Six Months
--------------------------------- ------------------------------------
1999 Change 1998 1999 Change 1998
------ ------ ------- -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Operating Expenses $1,540 (17.91%) $1,876 $3,340 (15.19%) $3,938
Percentage of net revenues 23.04% 33.84% 24.21% 32.57%
</TABLE>
The Company's 1999 second quarter and first six months decline in operating
expenses reflect certain cost and expense reductions resulting from the sale and
closure of certain direct selling operations and offices during the 1999 fiscal
year coupled with the 1998 closure of the Company's central European office in
Amsterdam.
<TABLE>
<CAPTION>
Second Quarter Six Months
--------------------------------- ------------------------------------
1999 Change 1998 1999 Change 1998
------ ------ ------- -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest income $ 86 (54.50%) $ 190 $ 179 (48.56%) $ 348
</TABLE>
The decrease in the 1999 second quarter and first six months interest
income resulted primarily from the exchange of approximately $2,100,000 notes
receivable for preferred stock in the 1998 second quarter.
<TABLE>
<CAPTION>
Second Quarter Six Months
--------------------------------- ------------------------------------
1999 Change 1998 1999 Change 1998
------ ------ ------- -------- ------ --------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Management fees
to NSA, Inc. $ 13 (40.91%) $ 22 $ 44 (22.81%) $ 57
Percentage of net revenues .19% .40% .32% .47%
</TABLE>
The decrease in the 1999 second quarter and first six months management
fees is primarily due to the sale of certain of the Company's direct selling
operations.
<TABLE>
<CAPTION>
Second Quarter Six Months
------------------------------- ---------------------------------
1999 1998 1999 1998
------ ------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Other income (expense) $ 56 $ 56 $ (79) $ 202
Percentage of net revenues .84% 1.01% (.57%) 1.67%
</TABLE>
The 1999 first six months decrease in other income resulted primarily
from losses in the foreign currency hedging program and in foreign currency
translation adjustments totaling approximately $290,000.
<TABLE>
<CAPTION>
Second Quarter Six Months
--------------------------------- ---------------------------------
1999 1998 1999 1998
------ ------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Provision for income taxes 0 $ 0 0 $ 0
Effective tax rate 0% 0% 0% 0%
</TABLE>
There were no income tax provisions for the second quarters and first
six months of 1999 and 1998 primarily due to the Company's overall operating
loss carry-forward position.
8
<PAGE> 11
Net Loss
<TABLE>
<CAPTION>
Second Quarter Six Months
--------------------------------- ------------------------------------
1999 1998 1999 1998
------ ------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Net Income (loss) $ 16 $ (947) $ (172) $ (1,434)
Earnings (loss) per share Nil $ (.20) $ (.04) $ (.30)
</TABLE>
The 1999 second quarter income primarily resulted from the increase in
net revenues coupled with the decrease in the Company's product costs and
operating expenses.
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
Six Months Ended October 31
------------------------------
1999 1998
------- -------
(Dollars in thousands)
<S> <C> <C>
Cash and cash equivalents $ 3,006 $ 4,440
Short-term investments 1,243 155
Working capital 1,339 3,706
Cash used by operating activities (1,286) (1,355)
Cash provided (used) by investing activities 542 (17)
Cash provided by financing activities 1,630 40
</TABLE>
The Company has sufficient cash on-hand to finance current operations
and does not anticipate requiring additional funding in excess of the current
cash balances and cash flow generated from operations. If required, management
believes additional funding will be available from financial institutions or NSA
at satisfactory terms.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is party to various claims and matters of litigation that
arise in the normal course of its business. Management of the Company believes
the resolution of these matters will not have a material adverse effect on the
results of operations or the financial condition of the Company.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
9
<PAGE> 12
ITEM 5. OTHER INFORMATION.
On October 1, 1998, the Company sold substantially all of the assets of
the Company's wholly-owned subsidiary, NSA S.r.l., an Italian corporation, to
NSA Italia S.r.l., an Italian corporation (the "Buyer"). The Buyer's obligations
arising out of the sale are guaranteed by its parent company, Direct Net
International Limited, a limited liability company registered in England
("DNI"), the existing Master Distributor for the Company's products in the
United Kingdom, Republic of Ireland, Belgium and the Netherlands. The aggregate
purchase price for the assets was $633,476 (U.S.), based on the approximate book
value of the assets. The Buyer paid $50,000 of the purchase price at closing,
and the Buyer and DNI are obligated to make additional payments of $183,476 on
or before October 1, 1999 in accordance with the terms of the Buyer's and DNI's
non-interest bearing promissory notes in such principal amounts. The balance of
the purchase price is due and payable in accordance with the terms of the
Buyer's and DNI's promissory note in the principal amount of $400,000 bearing
interest at 7% per annum over a six year period beginning November 1, 1999. The
promissory notes are secured by certain of the assets of the Buyer and DNI.
Additionally, the Company entered into a distribution agreement with the Buyer
that provides for the continued distribution of the Company's products in Italy.
On November 13, 1998, the Company's Board of Directors approved a
one-for-2,400 reverse split of the Company's common stock, $.05 par value (the
"Common Stock"). Pursuant to the proposed reverse stock split, the number of
authorized shares of Common Stock shall be reduced from 100,000,000 shares to
41,666 shares, $120.00 par value (the "New Common Stock"), and the Company's
shareholders shall receive a cash payment of $1 1/8 per share of the currently
outstanding Common Stock in lieu of the issuance of any resulting fractional
shares of New Common Stock. The Company's Board of Directors will submit the
proposed reverse stock split to the Company's shareholders for approval at an
annual and special meeting of the Company's shareholders scheduled for January
26, 1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (SS. 249.308 OF THIS CHAPTER).
(a) Exhibits.
27 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K.
None.
10
<PAGE> 13
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.
NSA INTERNATIONAL, INC.
Date: December 14, 1998 By: /s/ Stan C. Turk
--------------------------------------
Stan C. Turk, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF NSA INTERNATIONAL, INC. FOR THE MONTHS ENDED OCTOBER 31,
1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-START> AUG-01-1998
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1
<CASH> 3,006
<SECURITIES> 1,242
<RECEIVABLES> 4,236
<ALLOWANCES> (200)
<INVENTORY> 6,641
<CURRENT-ASSETS> 15,583
<PP&E> 936
<DEPRECIATION> (792)
<TOTAL-ASSETS> 19,010
<CURRENT-LIABILITIES> 14,245
<BONDS> 0
0
0
<COMMON> 235
<OTHER-SE> 3,473
<TOTAL-LIABILITY-AND-EQUITY> 19,010
<SALES> 6,442
<TOTAL-REVENUES> 6,684
<CGS> 4,835
<TOTAL-COSTS> 5,256
<OTHER-EXPENSES> 1,521
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 16
<INCOME-TAX> 0
<INCOME-CONTINUING> 16
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
