<PAGE>
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 June 30, 1996.
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 0-19155
STATE OF THE ART, INC.
(Exact name of registrant as specified in its charter)
CALIFORNIA 95-3664592
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
56 TECHNOLOGY
IRVINE, CALIFORNIA 92718
(Address of principal executive offices) (Zip Code)
(714) 753-1222
(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 periods 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 CORPORATE ISSUERS:
Indicate the number or shares outstanding of the issuer's classes of common
stock, as of the latest practicable date.
As of August 1, 1996 the issuer had 11,121,947 shares of common stock, no par
value, outstanding.
<PAGE>
FORM 10-Q
STATE OF THE ART, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
June 30, 1996 and December 31, 1995 2
Condensed Consolidated Statements of Income
Three and six months ended June 30, 1996
and June 30, 1995 3
Condensed Consolidated Statements of Cash Flows
Six months ended June 30, 1996
and June 30, 1995 4
Notes to Condensed Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6(a). Exhibits 10
Item 6(b). Reports on Form 8-K 10
SIGNATURES 11
1
<PAGE>
PART I. FINANCIAL INFORMATION Form 10-Q
Item 1. Financial Statements
STATE OF THE ART, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -----------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,390 $16,681
Short-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17,477 17,102
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,362 5,175
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,281 1,086
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,026 768
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 283 237
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43,819 41,049
----------- -----------
Property and equipment, net. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,157 4,357
Capitalized software development costs, net. . . . . . . . . . . . . . . . . . . . 1,291 1,398
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 792 828
----------- -----------
$51,059 $47,632
----------- -----------
----------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,682 $1,965
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,525 1,270
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,324 1,165
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249 769
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 11
----------- -----------
Total current liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . 5,790 5,180
----------- -----------
Accrued rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 219 195
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
----------- -----------
Total liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,009 5,382
----------- -----------
Shareholders' equity:
Preferred stock, 1,000,000 shares authorized, none issued and outstanding. . . . --- ---
Common stock, no par value; 25,000,000 shares authorized; 11,020,297
and 10,923,436 shares issued and outstanding at June 30, 1996 and
December 31, 1995, respectively. . . . . . . . . . . . . . . . . . . . . . . . 17,110 16,460
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27,940 25,790
----------- -----------
Total shareholders' equity . . . . . . . . . . . . . . . . . . . . . . . . . . 45,050 42,250
----------- -----------
$51,059 $47,632
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
<PAGE>
FORM 10-Q
STATE OF THE ART, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
------------------------- -------------------------
June 30, June 30, June 30, June 30,
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net revenues . . . . . . . . . . . . . $14,203 $9,893 $25,385 $20,196
Cost of revenues . . . . . . . . . . . 2,742 2,391 5,010 4,666
---------- ---------- ---------- ----------
Gross profit . . . . . . . . . . . . . 11,461 7,502 20,375 15,530
Operating expenses:
Sales and marketing. . . . . . . . . 5,062 3,621 9,450 7,200
Research and development . . . . . . 3,139 1,588 5,923 3,201
General and administrative . . . . . 1,106 938 2,386 2,033
---------- ---------- ---------- ----------
Total operating expenses . . . . . . . 9,307 6,147 17,759 12,434
---------- ---------- ---------- ----------
Operating income . . . . . . . . . . . 2,154 1,355 2,616 3,096
Interest income. . . . . . . . . . . . 345 306 691 588
---------- ---------- ---------- ----------
Income before income taxes . . . . . . 2,499 1,661 3,307 3,684
Provision for income taxes . . . . . . 874 581 1,157 1,289
---------- ---------- ---------- ----------
Net income . . . . . . . . . . . . . . $1,625 $1,080 $2,150 $2,395
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net income per share (Note 2). . . . . $ 0.14 $ 0.10 $ 0.19 $ 0.21
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Weighted average common shares
and equivalents (Note 2) . . . . . . 11,791 11,272 11,621 11,208
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE>
FORM 10-Q
STATE OF THE ART, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six months ended
June 30,
--------------------
1996 1995
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,150 $2,395
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . . . . . . . . . 1,177 1,123
Provision for deferred income taxes. . . . . . . . . . . . . . . . . . . . . (46) 58
(Loss)Gain on sale of property and equipment . . . . . . . . . . . . . . . . (11) 1
Changes in assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . . . . . . . (2,187) (549)
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (195) (265)
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (258) (316)
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 (618)
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 717 684
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 255 (1,344)
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159 (23)
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . (402) (25)
Notes payable. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1) ---
Accrued rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 (93)
Other noncurrent liabilities . . . . . . . . . . . . . . . . . . . . . . . (7) (6)
-------- --------
Net cash provided by operating activities . . . . . . . . . . . . . . 1,411 1,022
Cash flows from investing activities:
Purchase of short-term investments. . . . . . . . . . . . . . . . . . . . . . . (375) (359)
Proceeds from sale of property and equipment. . . . . . . . . . . . . . . . . . 11 1
Capital expenditures -- property and equipment. . . . . . . . . . . . . . . . . (1,632) (1,331)
Capital expenditures -- software development costs. . . . . . . . . . . . . . . (238) (390)
-------- --------
Net cash used in investing activities . . . . . . . . . . . . . . . . (2,234) (2,079)
Cash flows from financing activities:
Proceeds from sale of common stock under stock option plan. . . . . . . . . . . 532 556
-------- --------
Net cash provided by financing activities . . . . . . . . . . . . . . 532 556
-------- --------
Net decrease in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . (291) (501)
Cash and cash equivalents at beginning of period. . . . . . . . . . . . . . . . . . 16,681 13,506
-------- --------
Cash and cash equivalents at end of period. . . . . . . . . . . . . . . . . . . . . $16,390 $13,005
-------- --------
-------- --------
Supplemental disclosures of cash flow information:
Interest paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $7 $1
-------- --------
-------- --------
Income taxes paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,605 $1,194
-------- --------
-------- --------
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE>
FORM 10-Q
STATE OF THE ART, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Basis of Presentation:
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and with
the instructions to Form 10-Q and Article 10 of Regulation S-X for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring accruals) considered necessary
for a fair presentation have been included. The operating results for the three
month and six month periods ended June 30, 1996 are not necessarily indicative
of the results that may be expected for the year ending December 31, 1996. For
further information, refer to the consolidated financial statements and related
notes included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
2. Net Income Per Share:
Net income per share was computed based on the weighted average number of
common shares and equivalents outstanding during the three and six month periods
ended June 30, 1996, as well as the similar periods ended June 30, 1995.
Primary and fully diluted net income per share are approximately the same. The
number of shares used in the calculations for these periods was 11,791,000,
11,621,000, 11,272,000 and 11,208,000 respectively. The Company has granted
certain stock options which have been treated as common share equivalents in
computing net income per share.
The computations of the weighted average common shares and equivalents
outstanding follows (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
---------------- ----------------
1996 1995 1996 1995
------ ------ ------ ------
Weighted average common shares
outstanding during the period . . . . . 10,997 10,501 10,979 10,454
Incremental shares assumed to
be outstanding related to stock
options granted . . . . . . . . . . . . 794 771 642 754
------ ------ ------ ------
Weighted average common shares
and equivalents outstanding . . . . . . 11,791 11,272 11,621 11,208
------ ------ ------ ------
------ ------ ------ ------
5
<PAGE>
FORM 10-Q
PART I. ITEM 2.
STATE OF THE ART, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
OVERVIEW:
Net income for the Company increased 50% to $1,625,000 or $0.14 per share on net
revenues of $14,203,000 for the second quarter ended June 30, 1996 as compared
to net income of $1,080,000 or $0.10 per share on net revenues of $9,893,000 for
the corresponding quarter of the prior year. For the six month period ended
June 30, 1996 the Company's net income decreased 10% to $2,150,000 or $0.19 per
share on net revenues of $25,385,000 as compared to $2,395,000 or $0.21 per
share on net revenues of $20,196,000 for the six month period ended June 30,
1995.
FORWARD LOOKING INFORMATION:
This Quarterly Report on Form 10Q contains certain forward looking statements
that involve risks and uncertainties, which could cause actual results to differ
from those projected.
RESULTS OF OPERATIONS:
Net revenues for the second quarter and six month period ended June 30, 1996
were $14,203,000 and $25,385,000, respectively. This constituted a $4,310,000
or 44% increase for the second quarter over second quarter 1995, and a
$5,189,000 or 26% increase for the six month period over the same six month
period of the prior year. The revenues for both periods increased as a result
of increased sales of software licenses, support services and business forms.
Software license revenues from the Company's Acuity Financials, MAS 90 for
Windows, MAS 90 EVOLUTION/2 and Business Works product lines increased
$4,015,000 or 52% for the second quarter as compared to the same quarter of the
previous year and $4,709,000 or 30% for the six month period over the same six
month period of 1995. This increase was primarily due to the introduction of
the Company's MAS 90 for Windows product line in June 1996. MAS 90 for Windows
revenue for the second quarter of 1996 was $4,864,000. The majority of this
revenue increase was the result of the purchase of demonstration reference
libraries by resellers and upgrades to the existing MAS 90 DOS installed
customer base. Revenues from the Company's Apple products of FlexWare and
MacP&L declined $44,000 or 17% for the second quarter as compared to the second
quarter of the previous year and $109,000 or 23% for the six month period over
the same six month period of 1995. The Company sold the Apple product lines of
FlexWare and MacP&L in the second quarter of 1996.
6
<PAGE>
FORM 10-Q
Software license revenues from the Company's MAS 90 product line increased
approximately $3,954,000 or 64% in the second quarter over second quarter 1995
and accounted for 71% of the Company's total revenues for the quarter as
compared to 62% of the Company's total revenues in the same quarter of the
previous year. For the six month period, MAS 90 license revenues increased
$4,520,000 or 36% over the same six month period of the prior year and accounted
for 67% of the total Company's revenues for the six month period, as compared to
62% of the total Company's revenues for the same six month period in the prior
year. These increases were principally due to the release of the MAS 90 for
Windows product in June 1996. Business Works software license revenues
decreased 6% or $100,000 for the quarter as compared to the second quarter of
1995, and increased 1% or $29,000 for the six month period over the comparable
six month period in the prior year. The Company attributes the decline in the
Business Works revenue in the second quarter of 1996 to reduced upgrade sales.
The Company had a major enhancement to the product in the second quarter of 1995
and there was no similar enhancement in the current quarter.
The Company's support services experienced revenue gains of 30% or $301,000 in
the second quarter and 22% or $441,000 for the six month period as compared to
similar periods of the prior year. Business forms revenue grew 4% or $38,000 in
the second quarter and 8% or $148,000 for the six month period as compared to
the same periods of the prior year.
Quarterly revenues can fluctuate significantly when compared to similar periods
of the prior year due to the timing of product introductions, enhancements,
upgrades, commencement of sales and marketing promotions and general economic
conditions. As a result, one quarter's performance as compared to a comparable
period in the prior year is not necessarily indicative of the Company's expected
performance in subsequent quarters or the year. For example, revenues for the
second quarter of 1996 increased as a result of the release in that quarter of
the MAS 90 for Windows product. Future revenue increases from sales of this new
product line to new customers and the existing installed end-user base depends
on a number of factors which are uncertain at this time, and could possibly
result in lower revenues in future periods if the product does not achieve
market acceptance.
Furthermore, the Company operates with minimal backlog because orders are
generally shipped on an immediate basis. As a result, the Company's quarterly
revenues and operating results are difficult to forecast since they are
dependent upon the volume and timing of orders received during any period.
Historically, the revenue volume for the first, second and third quarters of the
year have been lower than the fourth quarter. The historically higher revenue
volume in the fourth quarter has been largely due to two factors: higher end-
user demand for the Company's software products and the release of the Company's
annual payroll tax update program. Management believes this pattern will
continue into the fourth quarter of 1996.
7
<PAGE>
FORM 10-Q
Cost of revenues in the second quarter of 1996 was 19% as a percentage of
revenue, in comparison to 24% in the second quarter of the prior year. For the
six month period ended June 30, 1996, cost of revenues was 20% as a percentage
of revenue, as compared to 23% for the same period of the prior year. The
decrease in cost of revenues is primarily due to the higher prices for the MAS
90 for Windows products. The Company continues to pursue cost reduction
opportunities whenever practicable, however there can be no assurance that it
will be able to maintain its current level of cost of revenues when expressed as
a percentage of revenues for the remainder of 1996.
Operating expenses, when expressed as a percentage of net revenues, for the
second quarter increased four percentage points to 66% as compared to 62% for
the second quarter of the prior year, and increased eight percentage points to
70% for the six month period ended June 30, 1996 in comparison to the same
period of the prior year. Total operating expense for the second quarter and
six month period ended June 30, 1996 increased 51% or $3,160,000 and 43% or
$5,325,000, respectively, over comparable periods of the prior year. The
increase in operating expenses as compared with the comparable periods of the
prior year consisted of sales and marketing expense increases of 40% or
$1,441,000 for the quarter and 31% or $2,250,000 for the six month period;
research and development expense increases of 98% or $1,551,000 for the quarter
and 85% or $2,722,000 for the six month period; and general and administrative
expense increases of 18% or $168,000 for the quarter and 17% or $353,000 for the
six month period.
The increase in sales and marketing expenses can be attributed to higher
headcount and personnel related costs in addition to increased direct marketing
and advertising costs as a result of the Company's release of two new major
product lines, MAS 90 for Windows and Acuity Financials, both of which began to
ship in the second quarter of 1996. The increase in research and development
expenses can be attributed to higher headcount and personnel related costs as a
result of the Company's release of the two new major product lines noted above.
The increase in general and administrative expense is primarily the result of
increased costs related to amortization and depreciation as a result of the
Company's capital expenditures in the areas of computer, telephone and
management information systems.
The Company continues to project a trend toward higher personnel and related
costs in future quarters. The Company's introduction of MAS 90 for Windows and
Acuity Financials product lines will result in additional expenditures in future
quarters in the areas of product support, sales and marketing and research and
development. If the Company is not able to increase its revenue over the second
quarter 1996 level, the projected increase in expenditures could result in lower
profitability.
Interest income for the second quarter of 1996 increased $39,000 or 13% to
$345,000 or 2% of net revenues as compared to $306,000 or 3% of net revenues in
the second quarter of 1995 primarily due to higher cash balances.
8
<PAGE>
FORM 10-Q
LIQUIDITY AND CAPITAL RESOURCES:
Working capital at June 30, 1996, totaled $38.0 million, an increase of $2.1
million or 6% as compared to $35.9 million as of December 31, 1995.
On February 22, 1995, the Company entered into an agreement whereby it may
borrow, on a revolving credit line basis, up to $10,000,000. The revolving line
is unsecured. The Company has the option to pay interest on the revolving
credit line at the bank's prime interest rate, or LIBO rate plus 1.5 percent.
The agreement requires the Company to maintain certain compensating balances and
has certain restrictive covenants. The agreement expires March 15, 1997. As of
June 30, 1996, there are no outstanding balances on this revolving credit line.
The Company has historically funded its operations primarily through positive
cash flows from operations. The Company believes that funds generated from
operations and existing cash balances and the available bank credit lines will
be sufficient to finance the Company's operations for at least the next twelve
months.
9
<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held its Annual Meeting of Shareholders on April 25, 1996. Proxies
for the Annual Meeting were solicited pursuant to Regulation 14 under the
Securities Exchange Act of 1934. The first matter voted upon was the election
of the Company's Board of Directors. The terms of office of all incumbent
members of the Board expired at the Annual Meeting. There was no solicitation
in opposition to management's nominees as listed in the proxy statement, and all
of management's nominees were elected. The following is a tabulation of the
votes received by each nominee:
<TABLE>
<CAPTION>
Votes Broker
Nominee Votes For Against Withheld Abstentions Non-votes
- ---------- --------- ------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
James H. Clement, Jr. 8,562,828 600 9,500 0 2,407,082
W. Frank King 8,563,328 100 9,000 0 2,407,082
Susan L. Rasinski 8,563,228 200 9,100 0 2,407,082
David W. Hanna 8,562,428 1,000 9,900 0 2,407,082
George Riviere 8,563,428 0 8,900 0 2,407,082
</TABLE>
The second matter voted upon was the amendment of the State Of The Art, Inc.,
1994 Incentive Stock Option, Nonqualified Stock Option and Restricted Stock
Purchase Plan, which amendment will subject an additional 1,000,000 shares of
the Company's common stock to that plan. The following is a tabulation of the
votes received:
Votes For Votes Against Withheld Abstentions Broker Non-Votes
- --------- ------------- -------- ----------- ----------------
4,772,879 730,345 88,400 11,319 5,376,467
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits: None filed with this report.
(b) Reports on Form 8-K: The Company has not filed any reports on Form
8-K during the quarter for which this report is filed.
10
<PAGE>
FORM 10-Q
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.
STATE OF THE ART, INC.
----------------------
Registrant
Date: August 14, 1996 By: DAVID W. HANNA
-------------------------------------------
David W. Hanna
Chairman of the Board of Directors
Date: August 14, 1996 By: JOSEPH R. ARMSTRONG
-------------------------------------------
Joseph R. Armstrong
Chief Financial Officer
(Principal Financial Officer)
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE CONDENSED CONSOLIDATED BALANCE SHEETS, CONDENSED STATEMENTS OF
CASH FLOWS, AND NOTES THERETO AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 16390
<SECURITIES> 17477
<RECEIVABLES> 7509
<ALLOWANCES> 147
<INVENTORY> 1281
<CURRENT-ASSETS> 43819
<PP&E> 5157
<DEPRECIATION> 153
<TOTAL-ASSETS> 51059
<CURRENT-LIABILITIES> 5790
<BONDS> 0
0
0
<COMMON> 17110
<OTHER-SE> 27940
<TOTAL-LIABILITY-AND-EQUITY> 51059
<SALES> 25385
<TOTAL-REVENUES> 25385
<CGS> 5010
<TOTAL-COSTS> 17759
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3307
<INCOME-TAX> 1157
<INCOME-CONTINUING> 2150
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2150
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
</TABLE>
