<PAGE>
- --------------------------------------------------------------------------------
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 April 5, 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 000-22221
FIELDWORKS, INCORPORATED
(Exact name of registrant as specified in its charter)
Minnesota 41-1731723
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7631 Anagram Drive
Eden Prairie, Minnesota 55344
(Address of principal executive offices)
(Zip Code)
(612) 974-7000
(Registrant's telephone number, including area code)
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.
Yes [X] No [ ]
The number of shares of the registrant's Common Stock, $.001 par value,
outstanding as of May 11, 1998 was 8,800,926.
- --------------------------------------------------------------------------------
<PAGE>
PART I. FINANCIAL INFORMATION
- -----------------------------
ITEM 1. FINANCIAL STATEMENTS
FIELDWORKS, INCORPORATED AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 5, JANUARY 4,
1998 1998
------------ ------------
ASSETS (UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents .................................. $ 3,387,402 $ 3,218,759
Accounts receivable, net of allowance for doubtful
accounts of $373,100 and $384,600 ........................ 4,214,797 6,402,023
Inventories ................................................ 5,505,774 5,009,137
Prepaid expenses and other ................................. 244,682 186,298
------------ ------------
Total current assets ................................. 13,352,655 14,816,217
------------ ------------
PROPERTY AND EQUIPMENT:
Computers and equipment .................................... 1,923,485 1,628,949
Furniture and fixtures ..................................... 508,805 378,821
Leasehold improvements ..................................... 345,530 184,446
Less: Accumulated depreciation ............................. (1,046,183) (913,918)
------------ ------------
Property and equipment, net .......................... 1,731,637 1,278,298
DEPOSITS AND OTHER ASSETS, net ................................ 27,087 25,555
------------ ------------
$ 15,111,379 $ 16,120,070
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable ........................................... $ 1,223,441 $ 1,489,982
Accrued compensation and benefits .......................... 419,907 410,758
Accrued warranty and other ................................. 1,289,713 1,350,610
Current maturities of capitalized lease obligations ........ 34,431 47,409
------------ ------------
Total current liabilities ............................ 2,967,492 3,298,759
CAPITALIZED LEASE OBLIGATIONS, less current maturities ........ 18,350 22,693
------------ ------------
Total liabilities .................................... 2,985,842 3,321,452
------------ ------------
SHAREHOLDERS' EQUITY:
Common stock, $.001 par value, 30,000,000 shares authorized;
8,788,526 and 8,725,426 issued and outstanding ........... 8,789 8,725
Common stock warrants ...................................... 150,640 150,640
Additional paid-in capital ................................. 20,049,638 19,966,602
Accumulated deficit ........................................ (8,083,530) (7,327,349)
------------ ------------
Total shareholders' equity ........................... 12,125,537 12,798,618
------------ ------------
$ 15,111,379 $ 16,120,070
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
balance sheets.
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
--------------------------
APRIL 5, APRIL 6,
1998 1997
----------- -----------
NET SALES ................................... $ 5,385,802 $ 5,117,168
COST OF SALES ............................... 3,213,521 3,058,123
----------- -----------
Gross profit ....................... 2,172,281 2,059,045
----------- -----------
OPERATING EXPENSES:
Sales and marketing .................... 1,439,604 1,164,679
General and administrative ............. 836,435 774,260
Research and development ............... 708,930 397,681
----------- -----------
Total operating expenses ........... 2,984,969 2,336,620
----------- -----------
Operating loss ..................... (812,688) (277,575)
INTEREST INCOME (EXPENSE) AND OTHER, net .... 56,507 (420,351)
----------- -----------
NET LOSS .................................... $ (756,181) $ (697,926)
=========== ===========
BASIC AND DILUTED EARNINGS (LOSS) PER SHARE:
Net loss per common share ................ $ (.09) $ (.10)
=========== ===========
Weighted average common shares outstanding 8,765,615 6,880,416
=========== ===========
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
APRIL 5, APRIL 6,
1998 1997
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ..................................................... $ (756,181) $ (697,926)
Adjustments to reconcile net loss to net cash used for
operating activities-
Depreciation and amortization ........................... 132,911 399,363
Change in operating items:
Accounts receivable ................................ 2,187,226 (1,062,284)
Inventories ........................................ (496,637) (1,562,358)
Prepaid expenses and other ......................... (60,562) 122,670
Accounts payable ................................... (266,541) 1,172,046
Accrued expenses ................................... (51,748) 535,765
------------ ------------
Net cash provided by (used for) operating activities 688,468 (1,092,724)
------------ ------------
INVESTING ACTIVITIES:
Purchase of property and equipment ........................... (585,604) (74,412)
Collection of loan to related party .......................... -- 92,175
------------ ------------
Net cash (used for) provided by investing activities .... (585,604) 17,763
------------ ------------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock ....................... 83,100 11,891,827
Payment of notes payable to related parties .................. -- (1,350,000)
Payment of capitalized lease obligations ..................... (17,321) (12,055)
------------ ------------
Net cash provided by financing activities ............... 65,779 10,529,772
------------ ------------
INCREASE IN CASH AND CASH EQUIVALENTS ............................. 168,643 9,454,811
CASH AND CASH EQUIVALENTS, beginning of period .................... 3,218,759 2,132,089
------------ ------------
CASH AND CASH EQUIVALENTS, end of period .......................... $ 3,387,402 $ 11,586,900
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURE:
Cash paid for interest ....................................... $ 2,121 $ 88,353
============ ============
NONCASH INVESTING AND FINANCING ACTIVITIES:
Property and equipment acquired under capital leases ......... $ -- $ 7,154
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
FIELDWORKS, INCORPORATED AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION:
The accompanying unaudited consolidated financial statements of FieldWorks,
Incorporated (FieldWorks or the Company), should be read in conjunction with the
consolidated financial statements and notes thereto filed with the Securities
and Exchange Commission in the Company's Annual Report on Form 10-K, for the
fiscal year ended January 4, 1998. In the opinion of management, the
accompanying consolidated financial statements reflect all adjustments
(consisting only of normal recurring adjustments) considered necessary to
present fairly the financial results for the interim periods presented. The
results of operations for the interim periods are not necessarily indicative of
the results to be expected for the entire fiscal year.
2. INVENTORIES:
Inventories are stated at the lower of cost or market value, as determined
by the first-in, first-out cost method, and consisted of the following:
APRIL 5, JANUARY 4,
1998 1998
---------- ----------
Raw materials ...................................... $4,032,079 $3,268,558
Work in process..................................... 687,317 859,172
Finished goods ..................................... 786,378 881,407
---------- ----------
Total ......................................... $5,505,774 $5,009,137
========== ==========
3. INITIAL PUBLIC OFFERING:
In March 1997, the Company completed an initial public offering (IPO) of
2,125,000 shares of common stock with proceeds of approximately $11.8 million,
net of related offering costs. The Company used $6.4 million of the proceeds to
repay bridge financing arrangements and the remaining proceeds will be used to
fund capital expenditures and for working capital purposes. In connection with
the offering, the Company issued warrants to the underwriter to purchase 212,500
shares of common stock at an exercise price of $7.80 per share. At the
completion of the IPO, the Company's articles of incorporation were amended to
authorize 30 million shares of common stock, $.001 par value, and five million
shares of undesignated preferred stock, $.001 par value.
4. EARNINGS (LOSS) PER SHARE:
The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" (SFAS No. 128) effective in the quarter and year ended
January 4, 1998. SFAS No. 128 establishes accounting standards for computing and
presenting earnings (loss) per share (EPS). Basic EPS is computed by dividing
net income by the weighted average number of shares of common stock outstanding
during the period. No dilution for potentially dilutive securities is included.
Diluted EPS is calculated using the treasury stock method and reflects the
dilutive effect of outstanding options, warrants and other securities. In the
Company's calculations, the impact of common stock equivalents has been excluded
from the computation of weighted average common shares outstanding as the effect
would be antidilutive. As a result, basic and diluted EPS are equal for all
periods presented in the accompanying Statements of Operations.
<PAGE>
5. RECLASSIFICATIONS
Certain amounts in the 1997 financial statements have been reclassified to
conform to the 1998 presentation, with no effect on previously reported net loss
or shareholders' equity.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains 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. When used in
this Form 10-Q and in future filings by the Company with the Securities and
Exchange Commission, in the Company's press releases and in oral statements made
with the approval of an authorized executive officer, the words or phrases
"believes," "anticipates," "expects," "intends," "estimates," "should," "may" or
similar expressions are intended to identify such forward-looking statements,
but are not the exclusive means of identifying such statements. These
forward-looking statements involve risks and uncertainties that may cause the
Company's actual results to differ materially from the results discussed in the
forward-looking statements. Factors that might cause such differences include,
but are not limited to, the following: risks associated with the development of
new products, market acceptance of new products, technological obsolescence,
dependence on third-party manufacturers and suppliers, risks associated with the
Company's dependence on proprietary technology, and the long customer sales
cycle. The Company wishes to caution readers not to place undue reliance on any
such forward-looking statements, which speak only as of the date made. The
Company undertakes no obligation to revise any forward-looking statements in
order to reflect events or circumstances after the date of such statements.
Readers are urged to carefully review and consider the various disclosures made
by the Company in this report and in the Company's other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and factors that may affect the Company's business. The Company's
forward-looking statements are qualified in their entirety by the cautions and
risk factors set forth under the "Cautionary Statement" filed as Exhibit 99.1 to
its Form 10-K for the year ended January 4, 1998.
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth certain financial data expressed as a
percentage of net sales for the periods indicated:
FOR THE THREE MONTHS ENDED
--------------------------
APRIL 5, APRIL 6,
1998 1997
---- ----
Net sales .............................................. 100% 100%
Cost of sales .......................................... 60 60
---- ----
Gross profit ...................................... 40 40
Operating expenses:
Sales and marketing ............................... 27 23
General and administrative ........................ 15 15
Research and development .......................... 13 8
---- ----
Total operating expenses ..................... 55 46
---- ----
Operating loss ......................................... (15) (6)
Interest income (expense) and other, net................ 1 (8)
---- ----
Net loss ............................................... (14)% (14)%
==== ====
NET SALES. The Company's net sales increased 5% from $5.1 million in the
first quarter of fiscal 1997 to $5.4 million for the comparable period in 1998.
The increase was primarily due to an increase in the average selling prices of
the 7000 Series and 5000 Series products, as a result of customers purchasing
more options and accessories. Unit volumes were comparable for the first quarter
of 1998 and 1997. Sales of the 5000 Series represented 43% and 42% of net sales
for the quarters ended April 5, 1998 and April 6, 1997, respectively.
International sales increased from 23% of net sales for the first quarter
of 1997 to 34% for the first quarter of 1998 as the Company realized benefits
from existing customer relationships. The majority of international sales,
approximately 55%, are in Europe. The Company believes that international sales
as a percentage of total net sales will be in the mid to upper 20% range for the
remainder of 1998, with little impact on the Company's results of operations or
liquidity.
GROSS PROFIT. Gross profit of $2.2 million or 40.3% for the first quarter
of 1998 was comparable to the first quarter of 1997 of $2.1 million or 40.2%.
The Company has enhanced its standard features on the 5000 and 7000 Series
platforms as well as reduced pricing on the highest performance standard
configuration by 7%. These actions were taken to upgrade its platforms with
current technology, improve performance and reliability and increase sales. The
pricing actions are not anticipated to have a significant impact on gross profit
margins in the future as the Company expects customers to purchase more options
and accessories. In addition, with improvements in manufacturing efficiencies,
specifically due to enhanced manufacturing processes at the Company's new
manufacturing facility, outsourcing of several key assembly components, and
anticipated unit volume increases, the Company believes it will maintain gross
profit margins in the high 30% to 40% range during 1998.
Gross profit for the first quarter of 1998 and 1997 reflect the Company's
reclassification of certain warranty related costs from cost of goods sold to
sales and marketing expense. The impact of this reclassification was to decrease
cost of goods sold and increase gross profit by $214,000 and 4.0% for the
quarter ended April 5, 1998 and by $176,000 and 3.4% for the quarter ended April
6, 1997.
SALES AND MARKETING. Sales and marketing expenses include salaries, sales
commissions, travel and related expenses for the Company's marketing, sales and
technical support personnel, as well as programs aimed at increasing revenues,
such as advertising and trade shows. In addition, these expenses include the
costs related to maintaining the Company's standard one year warranty on its
products. Sales and marketing expenses increased
<PAGE>
from $1.2 million or 23% of net sales for the first quarter of 1997 to $1.4
million or 27% of net sales for the comparable period in 1998. The increase was
due primarily to increased staffing and travel as the Company continued to
expand its direct sales force. This increase was partially offset by a decrease
in warranty expenses due to efficiencies gained in the repair of units under
warranty. The Company expects to continue to invest in the promotion and
marketing of its products in order to expand its vertical marketing strategy and
enhance its competitive position. Accordingly, increases in sales and marketing
expenditures are anticipated in future periods, although expenses are projected
to remain relatively consistent as a percentage of net sales.
GENERAL AND ADMINISTRATIVE. General and administrative expenses include the
Company's finance, human resources, contracts and other administrative
management operations. These expenses were comparable at $0.8 million and 15% of
net sales in the first quarters of both years. Additional compensation expenses
as the Company added to its general and administrative infrastructure and
expenses incurred for moving into a larger facility during the fourth quarter of
1997 and the first quarter of 1998 were offset by reduced bad debt allowances,
as the Company continued to have excellent collection results. The Company
anticipates holding the growth of general and administrative expenses to a level
less than the growth of sales in the future.
RESEARCH AND DEVELOPMENT. Research and development expenses are incurred in
the development and testing of new or enhanced products and customized computing
platforms for special applications. These costs are expensed as incurred.
Research and development expenses increased from $0.4 million or 8% of net sales
during the first quarter of 1997 to $0.7 million or 13% of net sales for the
first quarter of 1998. The increase was primarily due to salaries and supplies
and services used in the product development process. The Company's development
effort during the first quarter of 1998 was primarily attributed to enhancements
of the 5000 and 7000 Series. The Company has introduced the 5000 Series II,
which has increased processor speed, memory and other standard feature
enhancements. Additionally, the 5000 Series II has a new technology module
designed to improve reliability of the platform. Standard features on the 7000
Series have also been upgraded. The Company expects research and development
expenses to increase for the foreseeable future as it continues to expands its
technical resources to develop new platforms and enhance existing product lines.
As a percentage of net sales, research and development expenses are expected to
remain relatively stable.
INTEREST INCOME (EXPENSE) AND OTHER, NET. Interest expense was
approximately $420,000 for the first quarter of 1997 compared to interest income
of $57,000 for the comparable period in 1998. This was primarily due to the
repayment of debt in March and April of 1997 using initial public offering
proceeds and the subsequent investment of the remaining proceeds. The Company
expects to continue reporting net interest income for the foreseeable future.
LIQUIDITY AND CAPITAL RESOURCES
From inception to March 1997, the Company primarily financed its operations
and capital expenditures through the private sale of equity and debt securities,
loans and bank lines of credit. In the first quarter of 1997, the Company
completed an initial public offering of common stock and received net proceeds
of $11.8 million from the sale of 2,125,000 shares. From the proceeds, the
Company repaid $1.4 million of $6.4 million of loans outstanding during the
first quarter of 1997. The Company repaid the remaining $5.0 million in the
second quarter of 1997. There were no loans outstanding or bank credit
facilities open as of April 5, 1998.
The Company's cash balance as of April 5, 1998 was $3.4 million as compared
to the January 4, 1998 balance of $3.2 million. Cash provided by operating
activities totaled $0.7 million for the first quarter of 1998. The Company's
accounts receivable decreased $2.2 million from $6.4 million at January 4, 1998
to $4.2 million at April 5, 1998, primarily due to collections from increased
sales in the fourth quarter of 1997. Inventories increased $0.5 million to $5.5
million at April 5, 1998. This was mainly due to purchases of long lead time
items for anticipated sales in the first quarter, which were not realized. The
Company expects to utilize these inventories during 1998.
<PAGE>
During the first quarter of 1998, the Company purchased $0.6 million of
property, plant and equipment. The expenditures related primarily to equipment
and furniture and fixtures for the new facility as well as manufacturing tooling
expenditures. The Company anticipates property, plant and equipment expenditures
relating to tooling to increase in the foreseeable future as it expands its
product line offerings and enhances existing platforms.
The Company has requested proposals relating to a line of credit to
supplement cash availability and expects to have a facility in place during
1998. The Company believes that this planned line of credit, together with
existing cash, interest expected to be earned thereon, anticipated operating
cash flows, and potential financing to be sought through borrowings or other
arrangements, will be sufficient to fund its operations at least through fiscal
1998. Cash requirements for periods during and beyond the next twelve months
depend on the Company's profitability, its ability to manage working capital
requirements and its rate of growth, among other factors.
YEAR 2000
The Company's internal information systems were upgraded during the first
quarter of 1998 to ensure year 2000 compliance. The total cost of the
implementation was not significant. Management believes its current products are
year 2000 compliant and is offering updated configuration software for products
shipped in prior periods. Associated costs will not be material. The Company's
operations with respect to the year 2000 may also be affected by other entities
with which the Company transacts business. The Company is currently unable to
determine the potential consequences, if any, that could result from such
entities' failure to effectively address this issue.
PART II. OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
The Company is involved in legal actions in the ordinary course of its
business. Although the Company cannot predict the outcome of any such legal
actions, management believes that there is no pending legal proceeding against
or involving the Company for which the outcome is likely to have a material
adverse effect upon the Company's financial position, results of operations or
cash flows.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
USE OF PROCEEDS
The Company's registration statement on Form S-1, file number 333-18335,
was declared effective on March 19, 1997. The Company registered an aggregate of
2,443,750 shares of common stock, $.001 par value (including 316,250 shares
covered by a registration statement filed pursuant to Rule 462(m) on March 20,
1997, file number 333-23637) with R.J. Steichen & Company as the managing
underwriter. The offering commenced on March 20, 1997, and on March 25, 1997,
the Company closed on aggregate proceeds of $13,812,500 from the sale of
2,125,000 of these shares. The remainder of the shares registered were subject
to an underwriters' over-allotment option that subsequently expired unexercised.
<PAGE>
The following expenses were incurred in connection with the issuance and
distribution of the securities:
Underwriters discount and commission $ 967,000
Expenses paid to underwriters 276,000
Other expenses 809,000
------------
Total expenses $ 2,052,000
============
Net offering proceeds $ 11,760,000
============
The net offering proceeds have been used as follows as of April 5, 1998:
Construction of plant, building and $ 235,000
facilities
Purchase of machinery and equipment 1,112,000
Repayment of indebtedness 6,597,000
Working capital 1,183,000
Temporary investment in Norwest
Advantage Cash Investment Account 2,633,000
------------
$ 11,760,000
============
All such amounts were direct payments to third parties. The Company has
spent $1.3 million on capital expenditures since its initial public offering as
compared to $1.0 million estimated at the time of the offering. This difference
is mainly due to the level of expenditures for leaseholds and other costs
related to the Company's move into its new facility.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 3.1 Second Amended and Restated Articles of
Incorporation of the Company (incorporated by
reference to Exhibit 3.2 to the Company's
Registration Statement filed on Form S-1, File No.
333-18335)
Exhibit 3.2 Second Amended and Restated Bylaws of the Company
(incorporated by reference to Exhibit 3.4 to the
Company's Registration Statement filed on Form S-1,
File No.
333-18335)
Exhibit 11.1 Statement Re Computation of Per Share Earnings (filed
herewith)
Exhibit 27.1 Financial Data Schedule (filed herewith)
Exhibit 27.2 Restated Financial Data Schedule for the three month
period ended April 6, 1997 (filed herewith)
(b) Reports on Form 8-K
None.
<PAGE>
SIGNATURE
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.
FIELDWORKS, INCORPORATED
Date: May 18, 1998 /s/ Karen L. Engebretson
------------------------------------------
Karen L. Engebretson, Vice President of
Finance and CFO (as authorized officer and
principal financial officer)
<PAGE>
Exhibit 11.1
FIELDWORKS, INCORPORATED AND SUBSIDIARIES
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
FOR THE THREE MONTHS ENDED
--------------------------
APRIL 5, APRIL 6,
1998 1997
----------- -----------
BASIC AND DILUTED
Net loss ................................... $ (756,181) $ (697,926)
=========== ===========
Weighted average common shares outstanding . 8,765,615 6,411,270
Effect of conversion of preferred shares (1) -- 469,146
----------- -----------
8,765,615 6,880,416
=========== ===========
NET LOSS PER COMMON SHARE ..................... $ (.09) $ (.10)
=========== ===========
(1) Gives effect to preferred shares which converted to common shares
concurrent with the company's initial public offering.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-03-1999
<PERIOD-START> JAN-05-1998
<PERIOD-END> APR-05-1998
<CASH> 3,387,402
<SECURITIES> 0
<RECEIVABLES> 4,214,797
<ALLOWANCES> 0
<INVENTORY> 5,505,774
<CURRENT-ASSETS> 13,352,655
<PP&E> 2,777,820
<DEPRECIATION> 1,046,183
<TOTAL-ASSETS> 15,111,379
<CURRENT-LIABILITIES> 2,967,492
<BONDS> 0
0
0
<COMMON> 8,789
<OTHER-SE> 12,116,748
<TOTAL-LIABILITY-AND-EQUITY> 15,111,379
<SALES> 5,385,802
<TOTAL-REVENUES> 5,385,802
<CGS> 3,213,521
<TOTAL-COSTS> 3,213,521
<OTHER-EXPENSES> 708,930
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56,507
<INCOME-PRETAX> (756,181)
<INCOME-TAX> 0
<INCOME-CONTINUING> (756,181)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (756,181)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-04-1998
<PERIOD-START> JAN-06-1997
<PERIOD-END> APR-06-1997
<CASH> 11,586,900
<SECURITIES> 0
<RECEIVABLES> 3,070,977
<ALLOWANCES> 0
<INVENTORY> 5,979,680
<CURRENT-ASSETS> 20,937,305
<PP&E> 1,430,904
<DEPRECIATION> 658,936
<TOTAL-ASSETS> 21,736,736
<CURRENT-LIABILITIES> 8,661,000
<BONDS> 0
0
0
<COMMON> 8,684
<OTHER-SE> 12,998,603
<TOTAL-LIABILITY-AND-EQUITY> 21,736,736
<SALES> 5,117,168
<TOTAL-REVENUES> 5,117,168
<CGS> 3,058,123
<TOTAL-COSTS> 3,058,123
<OTHER-EXPENSES> 397,681
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 420,351
<INCOME-PRETAX> (697,926)
<INCOME-TAX> 0
<INCOME-CONTINUING> (697,926)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (697,926)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
