U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997.
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM ____________________ TO ___________________
Commission File No. 0-21946
HI-RISE RECYCLING SYSTEMS, INC.
-------------------------------
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0222933
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16255 NW 54th AVENUE
MIAMI, FLORIDA 33014
----------------------------------------
(Address of principal executive offices)
(305) 624-9222
--------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes [X] No [ ]
The number of shares outstanding of the Issuer's Common Stock, $.01 Par Value,
as of May 12, 1997 was 6,318,532.
Transitional small business disclosure format:
Yes[ ] No [X]
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
FORM 10-QSB
INDEX
PART 1. FINANCIAL INFORMATION PAGE
- ------- --------------------- ----
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1996 and 3
March 31, 1997
Consolidated Statements of Operations for the three months 4
ended March 31, 1996 and 1997
Consolidated Statement of Changes in Shareholders' Equity 5
for the three months ended March 31, 1997
Consolidated Statements of Cash Flows for the three months ended 6
March 31, 1996 and 1997
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 13
2
<PAGE>
<TABLE>
<CAPTION>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND MARCH 31, 1997
ASSETS (UNAUDITED)
DECEMBER 31, MARCH 31,
1996 1997
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,711,752 $ 848,828
Investments 597,973 --
Accounts receivable, net of allowance
for doubtful accounts of $147,299 and $120,559 in 1996
and 1997, respectively 765,024 2,294,705
Inventory 1,117,883 1,612,575
Other assets 329,738 352,494
------------ ------------
Total current assets 4,522,370 5,108,602
============ ============
Property and equipment, net 757,370 1,309,040
Note receivable from related party 33,223 33,223
Net investment in sales type leases 3,157,812 3,390,210
Deferred acquisition costs 62,281 --
Goodwill 1,448,237 2,542,331
============ ============
Total assets $ 9,981,293 $ 12,383,406
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 193,507 $ 629,633
Revolving line of credit 1,584,814 2,633,723
Current portion of long term debt 150,000 300,000
Unearned service agreement revenue 22,564 19,030
------------ ------------
Total current liabilities 1,950,885 3,582,386
------------ ------------
Long-term debt 150,000 720,000
------------ ------------
Total liabilities 2,100,885 4,302,386
------------ ------------
Shareholders' equity:
Common stock, $.01 par value; 10,000,000 shares authorized; 6,231,119 and
6,318,532 shares issued and outstanding at December 31, 1996 and March 31,
1997, respectively 62,311 63,185
Additional paid-in capital 13,776,320 14,158,780
Accumulated deficit (5,958,223) (6,140,945)
------------ ------------
Total shareholders' equity 7,880,408 8,081,020
------------ ------------
Total liabilities and shareholders' equity $ 9,981,293 $ 12,383,406
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
(UNAUDITED)
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1997
-------------- --------------
Revenues:
Equipment sales $ 300,767 $ 1,046,071
Trash chute sales -- $ 563,102
Shared savings contract revenue 96,333 114,226
Service/Parts revenue 130,263 150,641
----------- -----------
Total revenues 527,363 1,874,040
----------- -----------
Operating Expenses:
Cost of equipment sold, including
direct costs of service/parts 298,212 1,098,823
Selling and marketing 387,655 375,043
General and administrative 475,729 476,420
Product development 9,526 31,954
Shared savings contract expense 74,179 98,344
----------- -----------
Total operating expenses 1,245,301 2,080,584
----------- -----------
Operating loss (717,938) (206,544)
----------- -----------
Other income (expense):
Interest income 121,487 91,088
Interest expense (48,507) (67,266)
----------- -----------
Total other income 72,980 23,822
----------- -----------
Net loss $ (644,958) $ (182,722)
=========== ===========
Net loss per share $ (0.17) $ (0.03)
=========== ===========
Weighted average common
shares outstanding 3,748,465 6,282,306
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
<PAGE>
<TABLE>
<CAPTION>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED
MARCH 31, 1997
SHARES OF ADDITIONAL TOTAL
COMMON COMMON PAID-IN ACCUMULATED SHAREHOLDERS'
STOCK STOCK CAPITAL DEFICIT EQUITY
------------- ------------- -------------- --------------- -----------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1996 6,231,119 $ 62,311 $ 13,776,320 $ (5,958,223) $ 7,880,408
Issuance of common stock (unaudited) 87,413 874 382,460 383,334
Net loss (unaudited) (182,722) (182,722)
------------- ------------- -------------- --------------- -----------------
Balance at March 31, 1997 6,318,532 $ 63,185 $ 14,158,780 $ (6,140,945) $ 8,081,020
============= ============= ============== =============== =================
</TABLE>
The accompanying notes are an integral part of these financial statements
5
<PAGE>
HI-RISE RECYCLING SYSTEMS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1997
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (644,958) $ (182,722)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 40,000 50,174
Changes in assets and liabilities, net of acquisitions:
Accounts receivable (147,024) (722,164)
Inventory (248,448) 36,496
Other assets 13,063 (22,756)
Net investment in sales type leases 30,103 (232,398)
Accounts payable and accrued liabilities (92,623) 378,342
Unearned service agreement revenue (1,970) (3,534)
Note receivable from related party (800) --
----------- -----------
Net cash used in operating activities (1,052,657) (698,562)
----------- -----------
INVESTING ACTIVITIES:
Purchase of business net of cash acquired -- (986,748)
Maturity of investments 180,171 597,973
Purchase of property and equipment (175,739) (17,725)
----------- -----------
Net cash provided by (used in) investing activities 4,432 (406,500)
----------- -----------
FINANCING ACTIVITIES:
Payments under credit line (120,419) (165,085)
Draws from line of credit -- 475,000
Payment of long-term debt (70,000) (67,777)
----------- -----------
Net cash provided by (used in) financing activities (190,419) 242,138
----------- -----------
Net decrease in cash and cash equivalents (1,238,644) (862,924)
Cash and cash equivalents, beginning of year 5,717,560 1,711,752
----------- -----------
Cash and cash equivalents, end of quarter $ 4,478,916 $ 848,828
----------- -----------
*Purchase of business, net of cash acquired
Working capital, other than cash $ -- $(1,280,921)
Property, plant and equipment -- (573,618)
Cost in excess of net assets acquired, net -- (1,082,209)
Revolving line of credit -- 750,000
Current portion of long term debt -- 180,000
Long term debt -- 720,000
Common stock issued -- 300,000
----------- -----------
Net cash used to acquire business $ -- $ (986,748)
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying unaudited consolidated financial statements, which
are for interim periods, do not include all disclosures provided in the
annual consolidated financial statements. These unaudited consolidated
financial statements should be read in conjunction with the
consolidated financial statements and the footnotes thereto contained
in the Annual Report on Form 10-KSB for the year ended December 31,
1996 of Hi-Rise Recycling Systems, Inc. (the "Company"), as filed with
the Securities and Exchange Commission. The December 31, 1996 balance
sheet was derived from audited consolidated financial statements, but
does not include all disclosures required by generally accepted
accounting principles.
2. In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (which are of
a normal recurring nature) necessary for a fair presentation of the
financial statements. The results of operations for the three months
ended March 31, 1997 are not necessarily indicative of the results to
be expected for the full year.
3. Per share data was computed by dividing net loss by the weighted
average number of shares outstanding during the period. Common stock
equivalents have not been included because their effect is
anti-dilutive.
4. For financial reporting purposes, the Company reports revenues from
sales type leases as equipment sales. Revenue from sales and sales type
equipment leases is generally recognized when equipment is installed.
5. Net investment in sales type leases consists of the following at
March 31, 1997:
Minimum Lease Payments $4,293,845
Unearned Income (1,119,325)
Estimated Residual Value on
Leased Systems 215,690
----------
Total $3,390,210
----------
6. In February 1997, the Company, through a newly formed wholly-owned
subsidiary now known as Wilkinson Company, Inc. ("Wilkinson"), acquired
substantially all of the assets other than real property (the
"Wilkinson Assets") and assumed certain of the liabilities of
Wilkinson Company Inc., an Ohio corporation (the "Wilkinson Seller").
The aggregate purchase price for the Wilkinson Assets of approximately
$2,786,000, subject to adjustment, consisted of approximately
$2,486,000 in cash and 76,272 shares of the Company's common stock
valued at $300,000. The Wilkinson Seller was engaged in the sale,
manufacture, distribution and installation of sheet metal fabrication
products, multiple chute systems and recycling systems. The Company,
through Wilkinson, is continuing the business previously conducted by
the Wilkinson Seller. The Company's results of operations for the three
months ended March 31, 1997 include the results of Wilkinson from
February 3, 1997, while the Company's result of operations for the
three months ended March 31, 1996 do not include the results of
Wilkinson.
7. During October 1996, a former employee of the Company filed a
lawsuit against the Company alleging that the Company had defrauded
and breached an employment contract with the former employee. In
general, the lawsuit alleges that the Company made written and verbal
representations to become general manager and part owner of the
Company's Midwest subsidiary. The former employee seeks compensatory
damages of $600,000 and punitive damages for an unstated amount. The
Company denies the allegations and intends to contest vigorously the
claims in the lawsuit.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
GENERAL
The Company is engaged primarily in the business of marketing a proprietary
automated system known as the "hi-rise system" designed to collect and separate
recyclable and other solid waste in multistory buildings. As part of its
strategy to (i) expand its network of independent distributors, (ii) offer a
fully integrated waste disposal system for multi-story buildings and (iii)
commence manufacturing the components of the Company's systems, on February 3,
1997, the Company, through its newly-formed wholly-owned subsidiary now known as
Wilkinson Company, Inc. ("Wilkinson"), acquired substantially all of the assets
other than real property (the "Wilkinson Assets") and assumed certain
liabilities of Wilkinson Company, Inc., an Ohio corporation (the "Wilkinson
Seller"). The Wilkinson Seller was engaged in the sale, manufacture,
distribution and installation of sheet metal fabrication products. The Company,
through Wilkinson, is continuing the business previously conducted by the
Wilkinson Seller. Goodwill which resulted from this business combination is
being amortized over twenty years. The Company's results of operations for the
three months ended March 31, 1997 include the results of Wilkinson from February
3, 1997, while the Company's results of operations for the three months ended
March 31, 1996 do not include the results of Wilkinson.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 COMPARED TO THREE MONTHS ENDED
MARCH 31, 1996.
Total revenue during the three months ended March 31, 1997 was $1,874,040, an
increase of $1,346,677 compared to total revenue of $527,363 during the prior
comparable quarter. One of the primary reasons for the increase is the inclusion
of two months of sales for Wilkinson in this quarter in the amount of $636,009.
In addition, revenue from equipment sales, consisting of sales of hi-rise
systems and trash compaction systems, increased by $745,304 to $1,046,071 during
the three months ended March 31, 1997, from $300,767 during the prior comparable
quarter. Hi-rise system sales for the current quarter were $668,762, compared to
$49,900 for the previous comparable quarter. The increase was a result of the
installations during the current quarter of systems for which the Company
executed sales contracts during 1995 and 1996. In 1995 and 1996, the Company's
marketing efforts were focused on equipment sales in new construction buildings
which resulted in increased backlog. In the case of new building sales, the
period of time between the execution of a sales contract and installation of the
hi-rise system typically ranges from six to twenty months. The Company does not
recognize revenue until the installation of the system. As a result, the backlog
balance at March 31, 1997 was $5,558,319. This included backlog for Wilkinson of
$1,815,812. Revenue from shared savings agreements increased by $17,893 to
$114,226 during the three months ended March 31, 1997, compared to $96,333
during the prior comparable quarter. Pursuant to the shared savings agreements,
the Company manages the customer's solid waste disposal in order to reduce the
waste hauling bill, in return for a percentage of the savings achieved by the
Company. The Company had 34 shared saving agreements in effect at March 31,
1997. Revenue from
8
<PAGE>
service and parts increased by $20,378 to $150,641 during the three months ended
March 31, 1997, compared to $130,263 during the prior comparable quarter.
During the three months ended March 31, 1997, the Company had interest income of
$91,088, a decrease of $30,399, compared to $121,487 during the prior comparable
period. The decrease in interest income is primarily attributable to decreased
interest realized from investments.
Total operating expenses during the three months ended March 31, 1997 were
$2,080,584 an increase of $835,283 compared to total operating expenses of
$1,245,301 during the prior comparable quarter. A primary reason for the
increase was the inclusion of two months cost of sales for Wilkinson in this
quarter in the amount of $472,964. The other primary reason for the increase was
the increase in sales of hi-rise systems and increased costs related to those
sales. Cost of equipment sold increased by $800,611 from $298,212 during the
three months ended March 31, 1996 to $1,098,823 during the current three months.
As a percentage of equipment sales, trash chute sales and service and parts
revenue, cost of equipment sold decreased to 62.4% during the three months ended
March 31, 1997 from 69.2% during the prior comparable period. The decrease in
cost of equipment sold as a percentage of revenue was primarily attributable to
the increase of Hi-rise system sales in this quarter compared to the comparable
quarter last year. The cost of hi-rise systems sold as a percentage of its
revenues is typically lower than the cost of equipment sold of IDC compactors
and trash chute sales, as a percentage of their revenues. Wilkinson cost of
sales in the quarter was 74.4% as a percentage of total sales. The Company
anticipates that the cost of sales for Wilkinson will continue to range between
70%-75% and will result in an increase in overall cost of sales for the Company,
as a percentage of its revenue. The Company intends to consolidate manufacturing
and engineering of all of the Company's products at Wilkinson's manufacturing
facility in Stow, Ohio. The Company has begun configuring the facility to
allocate space for new manufacturing. The Company believes that by consolidating
manufacturing of its products, it will be able to reduce the costs of sales of
its hi-rise and trash compaction systems. Selling and marketing expenses during
the three months ended March 31, 1997 were $375,043, a decrease of $12,612,
compared to selling and marketing expenses of $387,655 during the prior
comparable period. Selling and marketing expenses for the three months ended
March 31, 1997 include approximately $16,000 of additional expenses for
Wilkinson for the two months of 1997. General and administrative expenses during
the three months ended March 31, 1997 were $476,420, an increase of $691,
compared to general and administrative expenses of $475,729 during the prior
comparable period. In addition, general and administrative expenses for the
three months ended March 31, 1997 include approximately $61,000 of such expenses
for Wilkinson. Interest expense increased by $18,759 to $67,266 as compared to
the prior comparable period, as a result of increased borrowings under the
Company's lines of credit to finance the acquisition of the Wilkinson Assets.
9
<PAGE>
As a result, the Company incurred a net loss of $182,722 during the three months
ended March 31, 1997, compared to a net loss of $644,958 during the three months
ended March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997, the Company had working capital of $1,526,216 and cash and
cash equivalents aggregating $848,828 compared to working capital of $2,571,485
and cash and cash equivalents of $1,711,752 at December 31, 1996.
The Company's primary sources of working capital are the net proceeds from the
sale of Series A Preferred Stock in November 1995 and a $2.0 million line of
credit with Ocean Bank for its lease financing arrangements.
Under the Ocean Bank line of credit, the Company may borrow up to 75% of the
present value of eligible leases of the hi-rise systems entered into since
January 1994. The line of credit is collateralized by leases of the Company's
hi-rise system, bears interest at a rate per annum equal to Citibank's prime
rate plus 2% and is payable on demand. The line was increased from $1.5 million
to $2.0 million on or about September 30, 1996. As of March 31, 1997, the
outstanding balance under this line of credit was $1,894,719.
In order to fund the cash portion of the purchase price for the Wilkinson
Assets, in February 1997, the Company obtained an $850,000 line of credit and a
$900,000 five-year term loan from Ocean Bank. The line of credit and the term
loan bear interest at a rate per annum equal to Citibank's prime rate plus 2%.
The line of credit is due in February 1998. The term loan is payable in monthly
installments of principal and interest.
On November 13, 1995, the Company sold 720 shares of newly created Series A
Preferred Stock in an offshore private placement for an aggregate purchase price
of $7,200,000. In connection with this private placement, the Company received
proceeds net of expenses of approximately $6,368,000.
Net cash used in operating activities was $698,562 and $1,052,657, during the
quarters ended March 31, 1997 and 1996, respectively. The decrease was primarily
attributable to a net loss of $462,236 less than the prior quarter. In addition,
accounts receivable increased by $722,164 and accounts payable increased by
$378,642. The increase in accounts receivable is the result of the installation
of three large sales of hi-rise systems at the end of the first quarter.
Accounts payable increased as a result of purchases of equipment in March 1997
for systems installed in the second quarter the revenues from which will be
booked in the second quarter. Net cash provided by financing activities was
$242,138 during the quarter ended March 31, 1997. This is mainly the result of
draws on the lines of credit in order to provide working capital and to fund the
cash portion of the purchase price for the Wilkinson Assets. During the quarter
ended March 31, 1996, the Company used cash in financing activities of $190,419
to repay indebtedness. Net cash used in investing activities was $406,500 during
the quarter ended March 31, 1997 relating to the purchase of the Wilkinson
Assets. The Company provided net cash in investing activities of $4,432 in the
quarter ended March 31,1996 as purchases of property and equipment were offset
by the receipt of proceeds from the maturity of investments.
10
<PAGE>
The Company currently has no outstanding material commitments for capital
expenditures. The Company's primary requirements for capital will be the cost of
systems sold, leased and rented, strategic acquisitions, marketing and sales
costs associated with the Company's national and international expansion into
new target markets and efforts to establish a nationwide distribution network
and general and administrative expenses associated with the Company's plan for
expansion.
CAUTIONARY STATEMENT RELATING TO FORWARD-LOOKING STATEMENTS
The foregoing Management's Discussion and Analysis contains various
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended, which represent the Company's expectations and beliefs concerning
future events. The Company cautions that these statements are further qualified
by important factors that could cause actual results to differ materially from
those in the forward-looking statements, including, without limitation, the
following: decline in demand for the Company's products; increases in costs of
sales; and the effect of general economic conditions generally and factors
affecting the waste hauling and construction industries. These statements by
their nature involve substantial risks and uncertainties and actual events or
results may differ as a result of these and other factors.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
11
<PAGE>
(A) EXHIBITS:
EXHIBITS DESCRIPTION
11 Statement re: computation of loss per share
27 Financial Data Schedule
(B) REPORTS ON FORM 8-K:
During the quarter ended March 31, 1997, the Company filed a
Current Report on Form 8-K dated February 3, 1997 with respect
to Item 2 reporting the acquisition (the "Wilkinson
Acquisition") by the Company of the Wilkinson Assets. Filed
with or incorporated by reference in the Current Report on
Form 8-K, as amended, were (i) the audited financial
statements of Wilkinson Company, Inc. as of and for the year
ended September 30, 1996 and (ii) the unaudited pro forma
condensed consolidated balance sheet of the Company as of
December 31, 1996 reflecting the consolidated financial
position of the Company after giving effect to the Wilkinson
Acquisition as if it had been consummated as of December 31,
1996 and the unaudited pro forma condensed consolidated
statement of operations of the Company reflecting the
Wilkinson Acquisition as if it had been consummated at
January 1, 1996.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HI-RISE RECYCLING SYSTEMS, INC.
Date: May 12, 1997 By: /s/ DONALD ENGEL
------------------------------
Donald Engel, Co-Chairman of the
Board and Chief Executive Officer
(Principal Executive Officer)
Date: May 12, 1997 /s/ BRADLEY HACKER
----------------------------
Brad Hacker, Controller
(Principal Financial and Accounting
Officer)
<PAGE>
EXHIBIT INDEX
EXHIBIT
- -------
11 Statement re: computation of loss per share
27 Financial Data Schedule
EXHIBIT 11
HI-RISE RECYCLING SYSTEMS, INC.
COMPUTATION OF LOSS PER COMMON SHARE
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1997
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1996 MARCH 31, 1997
-------------- --------------
Shares outstanding 5,427,150 6,318,352
Weighted average shares outstanding 3,748,465 6,282,306
Net loss $ (644,958) $(182,722)
============ =========
Net loss per share $ (0.17) $ (0.03)
============ =========
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1997
<CASH> 848,828
<SECURITIES> 0
<RECEIVABLES> 2,294,705
<ALLOWANCES> (147,299)
<INVENTORY> 1,612,575
<CURRENT-ASSETS> 5,108,602
<PP&E> 1,309,040
<DEPRECIATION> (274,203)
<TOTAL-ASSETS> 12,383,406
<CURRENT-LIABILITIES> 3,582,386
<BONDS> 0
0
0
<COMMON> 63,185
<OTHER-SE> 14,158,780
<TOTAL-LIABILITY-AND-EQUITY> 12,383,406
<SALES> 1,874,040
<TOTAL-REVENUES> 1,874,040
<CGS> 1,098,823
<TOTAL-COSTS> 1,098,823
<OTHER-EXPENSES> 981,761
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67,266
<INCOME-PRETAX> (182,722)
<INCOME-TAX> 0
<INCOME-CONTINUING> (182,722)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (182,722)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
