<PAGE> 1
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, 1997
[ ] Transition report under Section 13 or 15(d) of the Exchange Act.
For the transition period from ___________ to ___________
Commission File Number: 0-21975
ECO SOIL SYSTEMS, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
NEBRASKA 47-0709577
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
10890 THORNMINT ROAD
SAN DIEGO, CALIFORNIA 92127
(Address, Including Zip Code, of Principal Executive Offices)
(619) 675-1660
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.005 PAR VALUE
(Title of Class)
Check 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.
YES X NO
----- -----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of August 5, 1997, 11,425,896
shares of the Registrant's Common Stock, $.005 par value per share, were
outstanding.
Transitional Small Business Disclosure Format (check one):
YES NO X
----- -----
<PAGE> 2
ECO SOIL SYSTEMS, INC.
FORM 10-QSB INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of June 30, 1997
(unaudited) and December 31, 1996 3
Condensed Consolidated Statements of Operations (unaudited) for the Three
Months and Six Months Ended June 30, 1997 and
June 30, 1996 4
Consolidated Statements of Cash Flows (unaudited) for the Six
Months Ended June 30, 1997 and June 30, 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 9
Item 5. Other Information 9
Item 6. Exhibits and Reports on Form 8-K 12
</TABLE>
2
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Eco Soil Systems, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
-------- --------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 17 $ 150
Accounts receivable, net 7,841 2,193
Inventories 11,091 2,047
Prepaid expenses and other current assets 909 289
-------- --------
Total current assets 19,858 4,679
Property and equipment, net 2,456 1,981
Intangible assets, net 6,214 5,663
Other assets 332 563
-------- --------
Total assets $ 28,860 $ 12,886
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 7,241 $ 2,743
Accrued expenses 1,262 734
Current portion of long-term debt 3,692 7,266
Current portion of advances from shareholders -- 348
Current portion of capital lease obligations -- 22
-------- --------
Total current liabilities 12,195 11,113
Long-term debt, net of current portion 732 1,826
Advances from shareholders, net of current portion -- 21
-------- --------
Total liabilities 12,927 12,960
Shareholders' equity (deficit):
Preferred stock
$.005 par value; 5,000,000 shares authorized; -- --
none issued and outstanding
Common stock
$.005 par value; 20,000,000 shares authorized; 57 33
11,416,048 and 6,606,590 issued and outstanding at
June 30, 1997 and December 31, 1996, respectively
Additional paid-in capital 28,710 12,730
Warrants 242 242
Note receivable from shareholder (192) (192)
Accumulated deficit (12,884) (12,887)
-------- --------
Total shareholders' equity (deficit) 15,933 (74)
-------- --------
Total liabilities and shareholders' equity (deficit) $ 28,860 $ 12,886
======== ========
</TABLE>
See accompanying notes.
Note: The Balance Sheet at December 31, 1996 is derived from the audited
financial statements at that date but does not include all of the disclosures
required by generally accepted accounting principles.
3
<PAGE> 4
Eco Soil Systems, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30, Ended June 30,
------------------------------- -------------------------------
1997 1996 1997 1996
------------ ------------ ------------ ------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Proprietary products $ 2,788 $ 1,467 $ 3,932 $ 2,430
Distributed products 8,512 1,560 11,297 1,709
------------ ------------ ------------ ------------
Total revenues 11,300 3,027 15,229 4,139
Cost of revenues:
Proprietary products 543 641 757 1,141
Distributed products 6,460 1,076 8,500 1,188
------------ ------------ ------------ ------------
Total cost of revenues 7,003 1,717 9,257 2,329
Gross profit 4,297 1,310 5,972 1,810
Operating expenses:
Selling, general and administrative 2,798 1,697 5,085 2,671
Research and development 12 234 147 275
------------ ------------ ------------ ------------
Income (loss) before interest,
depreciation and amortization 1,487 (621) 740 (1,136)
Depreciation 75 164 143 268
Amortization of intangibles 127 14 344 22
------------ ------------ ------------ ------------
Income (loss) from operations 1,285 (799) 253 (1,426)
Interest expense 83 136 250 192
------------ ------------ ------------ ------------
Net income (loss) 1,202 (935) 3 (1,618)
============ ============ ============ ============
Net income (loss) per share $ .08 $ (.15) $ .00 $ (.27)
------------ ------------ ------------ ------------
Shares used in calculating net income
(loss) per share 14,656,000 6,174,000 12,315,000 5,980,000
============ ============ ============ ============
</TABLE>
See accompanying notes.
4
<PAGE> 5
Eco Soil Systems, Inc.
Condensed Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Six Months
Ended June 30,
-----------------------
1997 1996
-------- --------
(unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 3 $ (1,618)
Adjustments to reconcile net income (loss) to net cash used in
operating activities:
Depreciation and amortization 487 290
Changes in operating assets and liabilities, net of effect of
acquired businesses:
Accounts receivable (5,648) 21
Inventories (8,560) (67)
Prepaid expenses and other assets (389) (176)
Goodwill (21) --
Accounts payable 4,498 (497)
Accrued liabilities 528 (326)
-------- --------
Net cash used in operating activities (9,102) (2,373)
-------- --------
INVESTING ACTIVITIES
Cash received in acquisitions -- 1,656
Payments related to acquired businesses (1,289) --
Purchase of property and equipment (578) (714)
Proceeds from note receivable -- 595
-------- --------
Net cash (used in) provided by investing activities (1,867) 1,537
-------- --------
FINANCING ACTIVITIES
Advances from shareholders (369) 120
Proceeds from long-term debt 2,572 1,717
Repayments of long-term debt (5,236) (202)
Repayments on capital lease obligations (22) (48)
Net proceeds from sale of common stock 13,891 408
-------- --------
Net cash provided by financing activities 10,836 1,995
-------- --------
Net increase (decrease) in cash and cash equivalents (133) 1,159
Cash and cash equivalents at beginning of period 150 --
-------- --------
Cash and cash equivalents at end of period $ 17 $ 1,159
======== ========
</TABLE>
5
<PAGE> 6
Notes to Condensed Consolidated Financial Statements
1. ORGANIZATION AND PRINCIPLES OF CONSOLIDATION
ORGANIZATION
Eco Soil Systems, Inc. (the "Company") develops, markets, sells and
supports a proprietary line of biologically-produced, environmentally safe
products designed to address a variety of problems in the turf maintenance,
agricultural crop, soil redemption and water quality management industries. The
Company has developed two patented delivery systems that enable the Company to
ferment microorganisms at the customer's site and then dispense the appropriate
amount of cultured product directly into the customer's irrigation system, pond
or lake. Additionally, the Company has developed a patented, comprehensive soil
amendment system. The Company sells various products produced by third parties
through its Turf Partners sales group to the turf and ornamental industries.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
In the opinion of the Company, all adjustments, consisting only of
normal recurring adjustments, necessary for the fair statement of the results
for the three-month and six-month periods ended June 30,1997 and 1996 have been
made. The results of operations for the three-month and six-month periods ended
June 30, 1997 are not necessarily indicative of the results to be expected for
the full fiscal year.
The accompanying consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1996.
2. NET INCOME (LOSS) PER SHARE
Net loss per share is computed using the weighted average number of
shares of common stock outstanding during those periods. Net income per share is
computed using the weighted average of common shares outstanding for the period
after giving effect to stock options and warrants considered to be dilutive
common stock equivalents using the treasury stock method. Fully diluted income
per share is not materially different from primary income per share. Common
stock equivalents were not included in computing net loss per share since the
effect would have been antidilutive, except that, pursuant to the requirements
of the Securities and Exchange Commission, shares of common stock issued during
the twelve months immediately preceding the initial public offering, plus the
number of common equivalent shares under stock options granted or warrants
issued during such period, have been included in the calculation of the shares
used in computing net loss per share as if they were outstanding through the
date of the initial public offering (using the treasury stock method).
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, Earnings Per Share, (FAS
128). FAS 128 is effective for financial statements issued for periods ending
after December 15, 1997. FAS 128 replaces Accounting Principles Board Opinion
15, Earnings Per Share, (APB 15) and requires dual presentation of basic and
diluted earnings per share by entities with complex capital structures. Basic
earnings per share includes no dilution and is computed by dividing net earnings
(loss) by the weighted average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution of securities
that could share in the earnings of the entity. The impact of adopting FAS 128
on the calculation of net earnings (loss) per share on the periods presented
herein, using the basic earnings per share calculation method, may be
material as the Company has a large number of common stock equivalents which
are currently included in the calculation of primary earnings per share. Under
FAS 128, such shares will not be included in the calculation of basic earnings
per share, and therefore basic earnings (loss) per share will be higher under
the new standard. Diluted earnings per share and loss per share under the new
standard is not anticipated to be materially different than as presented herein.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements contained in this Management's Discussion and Analysis that
are not related to historical results are forward looking statements. Actual
results may differ materially from those projected or implied in the forward
statements. Further, certain forward looking statements are based upon
assumptions of future events which may not prove to be accurate. These forward
looking statements involve risks and uncertainties including but not limited to
those referred to below. See "Item 5. Other Items. Factors That Could Affect
Future Performance."
This information should be read in conjunction with the financial statements and
notes thereto included in Item 1 of this report for the quarter ended June 30,
1997. Additionally, the financial statements and notes thereto and Management's
Discussion and Analysis in the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1996 will provide additional information.
The Company's revenues for the second quarter were $11.3 million, up 273% over
the second quarter of 1996. The increase in revenues reflects an increase in
both distributed and proprietary revenues. The increase in distributed revenues
reflects the Company's acquisition of both Turf Products and Turf Specialty on
May 31, 1996, and the acquisition of Turfmakers and opening of a Turf Partners
branch in San Diego in the first quarter of 1997.
For the first half of 1997 the Company reported revenues of $15.2 million as
compared to $4.1 million during the first six months of 1996, an increase of
271%. The increase in revenues reflects an increase in both distributed and
proprietary revenues. The increase in distributed revenues reflects the
Company's acquisition of both Turf Products and Turf Specialty on May 31, 1996
and the acquisition of Turfmakers and opening of a Turf Partners branch in San
Diego in the first quarter of 1997.
Proprietary revenues increased by 90% in the second quarter of 1997 versus the
second quarter of 1996. BioJect related revenues increased by 155% during the
second quarter of 1997 as compared to the second quarter of 1996. Revenues of
the Company's Aspen Consulting subsidiary increased by 22% during the second
quarter of 1997 versus the second quarter of 1996. In addition, the Company's
proprietary revenues were increased by international sales of approximately
$434,000 during the second quarter. The proprietary revenue increases were
partially off set by declines in both the Company's ClearLake and CleanRack
products.
The Company's gross margin for the second quarter of 1997 was 38% versus 43% for
the second quarter of 1996. The decline in the gross margin for the second
quarter was due to the addition of the sales of distributed products which carry
a lower margin. The gross margin on distributed products was 25% during the
second quarter of 1997 as compared to 31% during the second quarter of 1996. The
gross margin on the Company's proprietary products was 81% during the second
quarter of 1997 as compared to 56% during the second quarter of 1996. The
proprietary products gross margin for the second quarter of 1997 was favorably
impacted by the product mix during the second quarter as the Company has chosen
to focus on its BioJect product line. The gross margin for BioJect-related
revenues was 87% during the second quarter.
The Company's gross margin for the first half of 1997 was 39% versus 44% for the
first half of 1996. The decline in the gross margin for the first half was due
to the addition of the sales of distributed products which carry a lower margin.
The gross margin on distributed products was 25% during the first half of 1997
as compared to 30% during the first half of 1996. The proprietary products gross
margin for the first half of 1997 was 73% as compared to 53% during the first
half of 1996. The proprietary products gross margin for the first half of 1997
was favorably impacted by the product mix during the first half as the Company
has chosen to focus on its BioJect product line. The gross margin for
BioJect-related revenues was 88% during the first half of 1997.
7
<PAGE> 8
SG&A expenses for the second quarter were $2.8 million. The increase in SG&A
expense was due to costs of the previously discussed acquisitions. During the
second quarter of 1997 Eco incurred approximately $127,000 of amortization
expense associated with goodwill and other intangible assets.
SG&A expenses for the first half of 1997 were $5.3 million. The increase in SG&A
expense was due to costs of the previously discussed acquisitions. During the
first half of 1997 Eco incurred approximately $344,000 of amortization expense
associated with goodwill and other intangible assets.
Interest expense during the second quarter of 1997 was $83,000 and reflects
borrowings under the Company's line of credit as well as notes which were not
repaid with the proceeds of the Company's initial public stock offering which
occurred on January 16, 1997.
For the second quarter of 1997 the Company had net income of $1.2 million or
$.08 per share as compared to a net loss of $935,000 or $.15 per share during
the second quarter of 1996. For the first half of 1997 Eco had net income of
$3,000 or $.00 per share as compared to a net loss of $1.6 million or $.27 per
share during the first half of 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations from revenues from sales of its
products, sales of its Common Stock, borrowing from its principal shareholders
and bank financing. The Company's operating and investment activities used cash
of $4.3 million during the second quarter of 1997 and $11.0 million during the
first half of 1997.
On July 1, 1997 the Company entered into a sale/leaseback of certain of its
proprietary products which totaled $4.25 million. In addition, the Company
expanded its line of credit with Imperial Bank to $5.0 million. The Company
believes that it has sufficient resources to finance its operations and future
growth for at least the next nine months.
The Company intends to fund its future operations and growth through a
combination of product revenues, the proceeds of the sale lease back,
borrowings available under the line of credit, and public or private debt or
equity financing. However, there can be no assurance that such financing
alternatives will be available under favorable terms, if at all.
8
<PAGE> 9
PART II
OTHER INFORMATION
ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS
On June 3, 1997, the Company held an Annual Meeting of Shareholders
at which the following proposals were voted on by shareholders:
1. Election of two directors for a three-year term to expire at the
2000 Annual Meeting of Shareholders. The votes cast for, against
or withheld as to each nominee are set forth below.
There were no abstentions or broker non-votes.
Nominee For Against Withheld
------- --- ------- --------
Bradley K. Edwards 8,675,397 none 31,700
S. Bartley Osborn 8,697,897 none 9,200
2. To amend the 1992 Stock Option Plan to increase the number of
shares available for issuance thereunder:
For Against Abstained
--- ------- ---------
8,020,269 none 95,865
ITEM 5. OTHER INFORMATION
FACTORS THAT COULD AFFECT FUTURE PERFORMANCE
This report contains certain forward looking statements about the
business and financial condition of the Company, including various statements
contained in "Management's Discussion and Analysis or Plan of Operation." The
actual results of the Company could differ materially from any forward looking
statements contained herein. The following information sets forth certain
factors that could cause the actual results to differ materially from those
contained in the forward looking statements. For a more detailed discussion of
the factors that could cause actual results to differ, see "Item 1: Business --
Factors That Could Affect Future Performance" in the Company's Form 10-KSB for
the fiscal year ended December 31, 1996.
At June 30, 1997 the Company had an accumulated deficit of $12.9
million. This is the first quarter that the Company has generated net income.
The Company has been principally engaged in organizational activities, research
and development, licensing activities, product introductions and the
establishment of a sales and marketing organization. The Company's recent losses
have resulted in part from expenditures for product development, U.S. patent
protection and sales and marketing expenses, including the costs of the
Company's recent dealer acquisitions.
In order to expand its business and achieve significant growth in
sales, the Company must continue to broaden its sales and marketing capability
and increase the size of its customer base, in part through the acquisition of
independent dealers and distributors. Although sales of certain of the Company's
products are growing, the Company's products and operations remain in the early
stages of market introduction and are subject to the risks inherent in the
commercialization of new product concepts. These risks include unforeseen
9
<PAGE> 10
problems, delays, expenses and complications frequently encountered in the early
phases of research, development and commercialization of products, and expenses
associated with hiring and training additional sales, marketing and customer
service personnel.
Distribution and sales of the Company's products have historically
occurred through direct sales efforts and independent dealers and distributors.
The Company has initiated a strategy of attempting to establish a nationwide
distribution system for its products through the acquisition of various
independent dealers and distributors. Any failure to identify acquisition
candidates properly, any large expenditures on acquisitions that prove to be
unprofitable, or any inability to sell the Company's proprietary products
through the acquired distribution system could have a material adverse effect on
the Company's business, financial position and results of operations.
The Company's success will be dependent in large measure upon its
ability to obtain and enforce patent protection for its products, maintain
confidentiality of its trade secrets and know-how and operate without infringing
upon the proprietary rights of third parties. Despite precautions taken by the
Company, it may be possible for a third party to copy or otherwise obtain or use
the Company's products or technology without authorization, or to develop
similar products or technology independently.
The Company plans to acquire the rights to additional microbial
products. The Company does not engage in its own research and development with
respect to microbial products. Although the Company is actively seeking to
obtain licenses for additional microbial products, there can be no assurance
that the Company will be successful in obtaining any such licenses on terms
acceptable to the Company, if at all.
The Company may be exposed to liability resulting from the commercial
use of its products. Such liability might result from claims made directly by
customers or others manufacturing such products on behalf of the Company. The
Company currently carries a product liability insurance policy with an aggregate
limit of $2,000,000. There can be no assurance, however, that such product
liability insurance will adequately protect the Company against any product
liability claim. A product liability or other claim with respect to uninsured
liabilities or in excess of insured liabilities could have a material adverse
effect on the business and prospects of the Company.
Some states have laws imposing liability on certain parties for the
release of fertilizers and other agents into the environment in certain manners
or concentrations. Such liability could include, among other things,
responsibility for cleaning up the damage resulting from such a release. In
addition, the federal Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), commonly known as the "Superfund" law, and other
applicable laws impose liability on certain parties for the release into the
environment of hazardous substances, which might include fertilizers and water
treatment chemicals. The Company is also subject to certain other environmental
laws, including the Environmental Protection Act, the Toxic Substance Control
Act, the Resource Conservation and Recovery Act, the Clean Air Act and the Clean
Water Act and may be subject to other present and potential future federal,
state or local regulations. The Company does not currently maintain insurance
for any environmental claims which might result from the release of its products
into the environment in a manner or in concentrations not permitted by law.
Thus, a claim for environmental liability could have a material adverse effect
on the Company.
The Company competes for market share with a number of companies that
manufacture and market chemical compounds. In addition, a number of companies
are developing biological and organic products for turf maintenance. Many of
these competitors have substantially greater capital resources, research and
development staffs and facilities than the Company, and many of these
competitors have extensive experience in turf maintenance. The fields of
biotechnology and related technologies in which the Company is engaged have
undergone rapid and significant technological changes. The Company expects that
the technologies associated with its research and development will continue to
develop rapidly. There can be no assurance that
10
<PAGE> 11
the Company will be able to establish itself in such fields or, if established,
that it will be able to maintain a competitive position. Further, there can be
no assurance that the development by others of new or improved processes or
products will not make the Company's products and processes less competitive or
obsolete.
The Company is dependent upon the active participation of William B.
Adams, its Chairman of the Board and Chief Executive Officer, and Douglas M.
Gloff, its President and Chief Operating Officer. The loss of the services of
either of these individuals could have a material adverse effect upon the
Company's future operations. The Company's success depends in large part on its
ability to attract and retain qualified scientific and management personnel. The
Company faces competition for such persons from other companies, academic
institutions, government entities and other organizations. There can be no
assurance that the Company will be successful in recruiting or retaining
personnel of the requisite caliber or in adequate numbers to enable it to
conduct its business as proposed.
11
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
11.1 Computation of net income (loss) per share
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed with the SEC during the period ended
June 30, 1997.
12
<PAGE> 13
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.
Eco Soil Systems, Inc.
Date: August 8, 1997 By: /s/ William B. Adams
--------------------------------
William B. Adams
Chairman and Chief Executive
Officer
Date: August 8, 1997 By: /s/ L. Jean Dunn, Jr.
---------------------------------
L. Jean Dunn, Jr.
Chief Financial Officer
13
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EXHIBIT 11.1. COMPUTATION OF NET INCOME (LOSS) PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30 ENDED JUNE 30
---------------------------- ----------------------------
1997 1996 1997 1996
---------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net income (loss) $1,202,000 $(935,000) $ 3,000 $(1,618,000)
========== ========= =========== =========
Weighted average common shares outstanding 11,405,000 5,180,000 9,199,000 4,986,000
Adjustment to reflect requirements of
the Securities and Exchange Commission
(Effect of SAB 83) -- 994,000 -- 994,000
Net effect of dilutive common share equivalents
based on the treasury stock method 3,251,000 -- 3,251,000 --
---------- --------- ---------- ---------
Shares used in computing net income
(loss) per share 14,656,000 6,174,000 12,315,000 5,980,000
========== ========= ========== =========
Net income (loss) per share
$ 0.08 $ (0.15) $ 0.00 $ (0.27)
========== ========= ========== =========
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 17
<SECURITIES> 0
<RECEIVABLES> 7,841
<ALLOWANCES> 0
<INVENTORY> 11,091
<CURRENT-ASSETS> 19,858
<PP&E> 2,456
<DEPRECIATION> 0
<TOTAL-ASSETS> 28,860
<CURRENT-LIABILITIES> 12,927
<BONDS> 0
0
0
<COMMON> 57
<OTHER-SE> 15,876
<TOTAL-LIABILITY-AND-EQUITY> 28,860
<SALES> 11,300
<TOTAL-REVENUES> 11,300
<CGS> 7,003
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 3,095
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,202
<INCOME-TAX> 0
<INCOME-CONTINUING> 1,202
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,202
<EPS-PRIMARY> .08
<EPS-DILUTED> .08
</TABLE>
