SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 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 0-24030
THE PANDA PROJECT, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0323354
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 YAMATO ROAD
BOCA RATON, FLORIDA 33431
(Address of principal executive offices)
(561) 994-2300
(Registrant's telephone number)
5201 CONGRESS AVENUE, C-100
BOCA RATON, FL 33487
(Former name, former address and former fiscal year,
if changed since last report.)
INDICATE BY CHECK MARK WHETHER THE REGISTRANT: (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS. YES X NO____.
APPLICABLE ONLY TO ISSUERS INVOLED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
INDICATE BY CHECK MARK WHETHER THE REGISTRANT FILED ALL DOCUMENTS AND REPORTS
REQUIRED TO BE FILED BY SECTION 12, 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN CONFIRMED BY A
COURT. YES____ NO____.
APPLICABLE ONLY TO CORPORATE ISSUERS
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE: AS OF NOVEMBER 12, 1996, THE
PANDA PROJECT, INC. HAD 10,073,808 SHARES OF COMMON STOCK OUTSTANDING.
<PAGE>
THE PANDA PROJECT, INC.
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Cash Flows 5
Notes to Financial Statements 6-7
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 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 Vote of Security Holders 11-12
Item 5 - Other Information 12
Item 6 - Exhibits and Reports on Form 8-K 12
SIGNATURES 13
<PAGE>
THE PANDA PROJECT, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1996 1996
(UNAUDITED)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $7,988,591 $10,731,540
Accounts receivable-trade (net of allowance of
$208,245 at September 30, 1996 and $171,943
at March 31, 1996) 386,139 311,375
Inventory 914,615 1,616,022
Other receivables 321,613 488,556
Prepaid expenses and other current assets 161,360 246,942
---------- -----------
Total current assets 9,772,318 13,394,435
---------- -----------
Property and equipment, net 4,241,665 4,315,199
Restricted cash 900,000 750,000
Other assets 102,568 98,047
---------- -----------
Total assets $15,016,551 $18,557,681
========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,079,796 $2,904,690
Accrued compensation and employee benefits 77,226 266,148
Other current liabilities 2,303,610 519,252
---------- -----------
Total current liabilities 3,460,632 3,690,090
---------- -----------
Commitments and contingencies -- --
Stockholders' Equity:
Common Stock, $.01 par value, 50,000,000
shares authorized, 10,065,108 shares at September 30, 1996
and 8,680,488 shares at March 31, 1996 issued and
outstanding 100,651 86,805
Additional paid-in capital 58,335,201 47,822,586
Accumulated deficit (46,879,933) (33,041,800)
---------- -----------
Total stockholders' equity 11,555,919 14,867,591
---------- -----------
Total liabilities and stockholders' equity $15,016,551 $18,557,681
========== ===========
</TABLE>
The Balance Sheet at March 31, 1996 has been derived from the audited financial
statements of the Company at that date.
See Notes to the Financial Statements.
3
<PAGE>
THE PANDA PROJECT, INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Gross revenues $837,359 $17,120 $1,433,928 $17,120
Less sales returns and allowances (19,746) -- (183,204) --
---------- ---------- ----------- ----------
Net revenues 817,613 17,120 1,250,725 17,120
Operating expenses:
Cost of sales--Note 2 1,398,674 16,275 2,188,780 16,275
Research and development 1,923,880 1,897,955 3,460,948 3,520,426
Selling, general and administrative 3,690,933 4,669,518 8,243,769 7,040,893
Costs associated with asset
impairments 1,471,026
---------- ---------- ----------- -----------
Total operating expenses 7,013,487 6,567,473 15,364,523 10,561,319
---------- ---------- ----------- -----------
Operating loss (6,195,874) (6,566,628) (14,113,798) (10,560,474)
Interest income 140,452 337,601 267,858 436,644
Other income 5,402 691 7,807 691
---------- ---------- ----------- -----------
Net loss ($6,050,020) ($6,228,336) ($13,838,133) ($10,123,139)
========== ========== =========== ===========
Net loss per common share ($0.61) ($0.79) ($1.48) ($1.39)
========== ========== =========== ===========
Weighted average number of
shares of common stock and
common stock equivalents
outstanding 9,898,465 7,889,376 9,364,640 7,286,462
========== ========== =========== ===========
</TABLE>
See Notes to the Financial Statements.
4
<PAGE>
THE PANDA PROJECT, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
1996 1995
<S> <C> <C>
Net cash used by operating activities ($12,698,354) ($10,880,205)
----------- -----------
Cash flows from investing activities:
Additions to property and equipment (571,056) (1,882,570)
----------- -----------
Net cash used by investing activities (571,056) (1,882,570)
----------- -----------
Cash flows from financing activities:
Payment of stock issuance costs (596,784) (1,018,420)
Proceeds from issuance of stock 11,123,245 29,574,473
----------- -----------
Net cash provided by financing activities 10,526,461 28,556,053
----------- -----------
Net (decrease) increase in cash and cash equivalents (2,742,949) 15,793,278
Cash and cash equivalents at beginning
of period 10,731,540 8,481,300
----------- -----------
Cash and cash equivalents at end of period $7,988,591 $24,274,578
=========== ===========
</TABLE>
During the six months ended September 30, 1996, the Company sold certain
products to a software developer in exchange for certain licenses to use the
developer's software for internal purposes valued at approximately $326,000
(recorded in property and equipment); consulting and training services valued at
$100,000 (recorded in research and development expenses); and services
associated with the certification of the Company's 4s server to use the software
developer's CAD program and porting the software onto the 4s product. These
services were valued at approximately $570,000 and are reflected equally between
research and development expense and selling, general and administrative
expenses. Revenues of approximately $326,000 and $874,000 were recorded during
the three and six months ended September 30, 1996 as a result of this
transaction.
See Notes to the Financial Statements.
5
<PAGE>
THE PANDA PROJECT, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
1. BASIS OF PRESENTATION
The accompanying condensed financial statements of The Panda Project, Inc. ("the
Company") have been prepared in accordance with generally accepted accounting
principles on a basis consistent in all material respects with those applied in
the Annual Report on Form 10-K for the year ended March 31, 1996. The interim
financial information is unaudited, but reflects all normal and recurring
adjustments which are, in the opinion of management, necessary to provide a fair
statement of results of operation for the interim periods presented. The interim
financial statements should be read in connection with the financial statements
in the Company's Annual Report on Form 10-K for the year ended March 31, 1996.
2. INVENTORY
SEPT 30, 1996 MARCH 31, 1996
------------- --------------
Raw materials $449,686 $937,388
Work in process 42,954 225,872
Finished goods 421,975 452,762
-------- ----------
$914,615 $1,616,022
Inventory is valued at net realizable value, which is net of obsolescence
reserves of approximately $695,000 and $128,000 at September 30, 1996 and March
31, 1996, respectively.
During the quarter ended September 30, 1996, approximately $547,000 was charged
to cost of sales in connection with the write down of certain inventory to net
realizable value, and the recognition of scrap and rework charges associated
with certain engineering changes made to existing products.
3. STOCKHOLDERS' EQUITY
In July 1996, the Company completed the sale of 1,087,833 shares of its common
stock in a private placement to accredited investors. The Company received
proceeds of approximately $9.2 million, net of expenses of approximately
$600,000. Of this amount, $1.8 million was received and recorded by the Company
as of June 30, 1996.
In addition to the shares of common stock purchased by each investor in the
placement, each investor received a warrant to purchase an equal number of
shares of common stock at an exercise price of $11 per share. The warrants
expire in July 2001 and are callable by the Company whenever the Company's
common stock trades at a price of $26 or more for thirty consecutive trading
days. No value has been separately allocated to these warrants.
In addition, during the quarter ended September 30, 1996, options to purchase
51,100 shares of common stock were exercised for which the Company received
proceeds of approximately $255,500. For the six months ended September 30, 1996,
options to purchase 296,787 shares of common stock were exercised for which the
Company received proceeds of approximately $1,332,500.
6
<PAGE>
THE PANDA PROJECT, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
In July 1996, the Company granted certain designees of Southeast Research
Partners ("SRP") warrants to purchase an aggregate of 52,183 shares of common
stock at a purchase price of $10.80 per share in connection with the private
placement. The warrants expire July 2001 and are callable by the Company
whenever the Company's common stock trades at a price of $26 per share or more
for thirty consecutive trading days. No value has been allocated to these
warrants.
In August 1996, at the annual meeting, the shareholders approved an amendment to
the Company's Amended and Restated Articles of Incorporation increasing the
authorized number of Common Stock from 20 million shares to 50 million shares.
In addition, the shareholders approved the 1995 Employee Stock Incentive Plan.
The maximum number of shares issuable pursuant to the plan shall not exceed
500,000.
During August, the Board of Directors approved the grant of options to purchase
65,000 and 197,750 shares of the Company's common stock under the 1995 Employee
Stock Incentive Plan and the 1993 Performance Incentive Plan, respectively, to
various employees of the Company. Under both plans, the option exercise price
for all stock options is the closing bid price at the date of grant and the
options expire no more than ten years from the date of grant.
In September 1996, the Company entered into an agreement with Mallory Factor
Inc. ("MFI"), pursuant to which MFI will serve as an investor relations counsel
to the Company. The agreement provides for a minimum monthly fee of $3,500 plus
payment of expenses for the term of one year. In connection with this agreement
the Company granted the principal of MFI, Mallory Factor, a warrant to purchase
400,000 shares of the Company's common stock at an exercise price of $8.00 per
share. The warrant has a term of 10 years and is exercisable (i) as to 100,000
shares at any time during the term of the warrant, and (ii) as to the remaining
300,000 shares, upon attainment of certain milestones specified in the warrant.
4. RESTRICTED CASH
In August 1996, the standby letter of credit of $900,000 used as security for
payment of orders placed by the Company and for performance under a
manufacturing agreement, was renewed with an expiration date of December 31,
1996.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
The Company was incorporated in April 1992 to design, develop, and license
products incorporating the Company's proprietary semiconductor packaging and
interconnect technology (the "Archistrat Technology Products") and to develop,
manufacture and market a line of powerful, modular computers (the "Archistrat
Computers"). The Company's fiscal year ends March 31. Prior to January 1, 1996,
the Company was considered a "development stage enterprise" as defined by
Statement of Financial Accounting Standards No. 7 (FAS 7), ACCOUNTING AND
REPORTING BY DEVELOPMENT STAGE ENTERPRISES, and the Company's financial
statements for all periods prior to that date were prepared on the basis
specified in FAS 7. The Company emerged from development stage status as of
January 1, 1996.
This Report on Form 10-Q contains forward-looking statements. For this purpose
any statements contained herein that are not statements of historical fact may
be deemed to be forward-looking statements. Without limiting the foregoing, the
words "believes", "anticipates", "plans", "expects" and similar expressions are
intended to identify forward-looking statements. There are a number of important
factors that could cause the Company's actual results to differ materially from
those indicated by such forward-looking statements. These factors, include,
without limitation, delays in product development, competitive pressures,
manufacturing risks, general economic conditions and the risk factors detailed
from time to time in the Company's periodic reports and registration statements
filed with the Securities and Exchange Commission.
RESULTS OF OPERATIONS - SECOND QUARTER OF 1997 COMPARED TO SECOND QUARTER OF
1996
Net revenues from the sale of Archistrat Computers increased to $817,613 during
the quarter ended September 30, 1996 (the "second quarter of fiscal 1997") and
$1,250,725 for the six months ended September 30, 1996, compared to revenues of
only $17,120 during the quarter (the "second quarter of fiscal 1996") and six
months ended September 30, 1995. The Company will continue to actively market
and sell its Archistrat Computers and believes the revenue stream will continue
to increase over the remainder of the current year.
In August, the Company and its president, Stanford W. Crane, Jr., entered into a
licensing agreement with Sun Precision Works, Pvt. ("Sun") whereby Sun was
granted the non-exclusive rights to use the Compass Connector Technology owned
by Mr. Crane and certain enhanced Compass Connector Technology owned by the
Company in its products for the term of the patents covered by the license
agreement. The Company is entitled to receive a royalty on the sale of products
incorporating the licensed technology.
In September, the Company entered into a license agreement with Pantronix
Corporation ("Pantronix") under which Pantronix was granted the non-exclusive
right to manufacture and market the Company's VSPA product. Unless otherwise
terminated as provided in the agreement, the license shall continue in effect
until the last to expire of the patents covered by the agreement. The Company is
entitled to receive royalties on sales by Pantronix or its affiliates of
products incorporating the licensed products.
8
<PAGE>
In October, the Company and Mr. Crane entered into a licensing agreement with LG
Cable and Machinery Ltd. ("LG") whereby LG was granted a non-exclusive license,
for a term of ten years or until the expiration of the last to expire of the
patents covered by the agreement, whichever is later, with respect to the
Compass Connector Technology owned by Mr. Crane and certain enhanced Compass
Connector Technology owned by the Company. In connection with this agreement,
the Company earned $500,000 as a license fee upon signing the agreement which is
payable as follows: $100,000 within 15 days after execution of the agreement and
$100,000 on each of the first four anniversaries of the agreement. In addition,
the Company is entitled to receive royalties on sales of the Compass Connector
products by LG or its affiliates.
Selling, general and administrative (SG&A) expenses for the quarter ended
September 30, 1996 decreased approximately $1 million to $3.7 million as
compared to $4.7 million for the corresponding quarter of the previous year. The
decrease (23%) in SG&A expenses is due principally to the streamlining of
operations, including a decrease in tradeshow expenses, consulting fees and
contracted services. For the six months ended September 30, 1996, SG&A expenses
increased $1.2 million to $8.2 million as compared to $7 million for the
corresponding period of the previous year. This increase is primarily due to the
increase in the average number of employees in the six month period from 84 at
September 30, 1995, to 133 at September 30, 1996. As a result, employee
compensation and related expenses, amounted to approximately $3.7 million for
the six months ended September 30, 1996, as compared with approximately $2.0
million for the corresponding six months of the previous year. As of October 1,
1996, the Company has reduced its number of full-time employees to approximately
93 and does not expect to significantly increase that number during the
remainder of the current fiscal year. For the six months ended September 30,
1996, professional fees, such as legal services, accounting and auditing, and
various other consulting services, increased approximately $681,000 compared to
the corresponding period of the preceding year. Facility rent and insurance
expense increased approximately $282,000 compared to the corresponding six month
period of the preceding year.
Research and development (R&D) expenses totaled approximately $1.92 million for
the second quarter of fiscal 1997, representing a slight increase as compared to
$1.90 million for the second quarter of fiscal 1996. For the six months ended
September 30, 1996, R&D expenses totaled approximately $3.5 million representing
no change from the corresponding period in the previous year. The Company
believes that its level of R&D spending is appropriate to support current
operations and to continue to maintain strong efforts to enhance development of
VSPA, Compass PGA, and the Archistrat Computers and related technologies. During
the quarter ended September 30, 1996, research and development activities
included continued testing and qualification of VSPA; development of initial
production tooling for VSPA; development of Compass PGA, and the development of
a new processor boards utilizing DEC's Alpha microprocessor and Intel's Pentium
Pro.
Depreciation expense increased to $363,727 in the second quarter of fiscal 1997
from $193,794 in the second quarter of fiscal 1996. For the six months ended
September 30, 1996, depreciation expense increased to $767,089 from $264,504.
This increase is primarily due to the acquisition of computer equipment and
office furniture and equipment resulting from the hiring of additional full-time
personnel, and the acquisition near the end of fiscal 1996 of machinery and
equipment necessary to develop the internal capability and capacity to
manufacture VSPA as well as the Compass Connectors.
Interest and other income for the second quarter of fiscal 1997 decreased to
$145,854 from $338,292 from the second quarter of fiscal 1996 and to $275,633
from $37,336 for the six months ended September 30, 1996 as a result of a net
decrease in cash and cash equivalents.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has primarily been dependent upon the proceeds of sales of
its securities to fund its activities. The Company expects that increased
shipments of Archistrat Computers and the related revenue, as well as licensing
revenue from the arrangements with AMP, Sun Precision Works, Pantronix, LG Cable
and other potential licensees, will provide additional resources to partially
fund its activities during the remainder of the current fiscal year. However,
sales of Archistrat Computers to date have been limited, and there has been only
limited licensing revenue realized as of the date of this report.
In July 1996, the Company completed the sale of 1,087,833 shares of its common
stock in a private placement to accredited investors at a price of $9.00 per
share. The Company received proceeds of approximately $9.2 million, net of
expenses of approximately $600,000. In addition to the shares of common stock
purchased by each investor in the placement, such investor received a warrant to
purchase an equal number of shares of common stock at an exercise price of $11
per share. The warrants expire in July 2001 and are callable by the Company
whenever the Company's common stock trades at a price of $26 or more for thirty
consecutive trading days. In connection with the private placement, the Company
entered into a Registration Rights Agreement with the purchasers, under which
the purchasers are entitled to cause the Company to effect the registration
under the Securities Act of the shares of common stock (including shares
issuable upon exercise of warrants) acquired in the private placement upon the
terms and conditions set forth in the agreement.
In October 1996, the Company entered into a cooperative development agreement
with the Defense Advanced Research Projects Agency (DARPA) to develop the
Company's VSPA electronic package whereby the government will contribute
approximately $1.8 million to the project over a period of 12 months. It is
anticipated that the funds derived from this agreement will be sufficient, as
supplemented by the Company's contributions, to complete the development of the
multi-chip module version of the VSPA product; however, there can be no
assurances in this regard.
As of September 30, 1996, the Company had working capital of approximately $6.3
million. The Company anticipates, based on its plans and assumptions relating to
its operations, that the amount of working capital at September 30, 1996, as
augmented by proceeds from anticipated revenues from the sale of Archistrat
Computers, limited licensing revenue, and proceeds under the DARPA agreement
will be sufficient to satisfy the Company's anticipated cash requirements
through at least the end of its current fiscal year.
10
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In August 1996, Joseph Sarubbi, a former director of the Company, filed a
suit against the Company in the Circuit Court of the 15th Judicial Circuit
in Palm Beach County, Florida. The suit alleges that the Company breached
an oral agreement to waive the exercise price on certain options granted
to Mr. Sarubbi during 1993 and 1994 and that it failed to cause the
Company's counsel to timely issue a Rule 144 letter which would have
allowed him to sell the stock in a timely manner. At this time the Company
cannot determine the liability, if any, that may be assessed in this
matter. The Company believes Mr. Sarubbi's claims are without merit and
intends to defend the suit vigorously.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to Vote of Security Holders
(a) The annual meeting of shareholders was held on August 16, 1996.
(b) The following directors were elected at the meeting to serve
one-year terms:
Stanford W. Crane, Jr.
Robert C. Butler
James T.A. Wooder
Claud L. Gingrich
Rao R. Tummala
(c) The matters voted upon at the meeting and results of the voting
with respect to those matters were as follows:
1) Election of Directors: For Against
Stanford W. Crane, Jr. 5,965,426 206,120
Robert C. Butler 6,109,586 61,960
James T.A. Wooder 6,133,254 38,292
Claud L. Gingrich 6,133,254 38,292
Rao R. Tummala 6,133,254 38,292
<TABLE>
<CAPTION>
2) Approve the Company's 1995 Broker Held
Employee Stock Incentive Plan: For Against Abstained Non-Voted
<S> <C> <C> <C> <C>
3,843,798 160,317 61,106 2,106,265
</TABLE>
11
<PAGE>
3) Amend the Company's Amended
and Restated Articles of
Incorporation to increase the
authorized number of shares of
<TABLE>
<CAPTION>
Common Stock from 20,000,000 Broker Held
shares to 50,000,000 shares: For Against Abstained Non-Voted
<S> <C> <C> <C> <C>
5,756,436 289,362 8,948 116,800
4) Ratification of Price Waterhouse LLP
as the Company's independent
auditors for fiscal year 1997: For Against Abstained
6,141,712 21,334 8,500
</TABLE>
The foregoing matters are described in detail in the Registrant's
definitive proxy statement dated August 16, 1996, for the Annual Meeting
of Shareholders held on August 16, 1996.
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K.
(a) See the Exhibit Index included immediately preceding the Exhibit
to this report, which is incorporated herein by reference.
(b) Reports on Form 8-K:
A current report on Form 8-K dated July 15, 1996 was filed on July
19, 1996 reporting the sale of common stock of the Registrant in a
private placement, an event reported under Item 5 - Other Events.
12
<PAGE>
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.
THE PANDA PROJECT, INC.
Date: November 13, 1996
By: /s/ C. Daryl Hollis
-------------------
C. Daryl Hollis, Chief Financial Officer
(On behalf of the Registrant and as Principal
Financial and Accounting Officer)
13
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF EXHIBIT PAGE
4.1 Amended and Restated Articles of Incorporation
of the Company, as amended (filed as Exhibit 3.1
to the Company's Registration Statement on
Form S-3 (File No. 333-14931) *
4.2 Amended and Restated By-Laws of the Company
(filed as Exhibit 3.2 to the Company's Registration
Statement on Form SB-2 (File No. 33-76694-A)) *
4.3 Specimen Certificate of Common Stock of the
Company (filed as Exhibit 4.1 to the Company's
Registration Statement on Form SB-2 (File No.
33-76694-A) *
27 Financial Data Schedule 15
* Incorporated herein by reference
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 7,988,591
<SECURITIES> 0
<RECEIVABLES> 594,384
<ALLOWANCES> 208,245
<INVENTORY> 914,615
<CURRENT-ASSETS> 9,772,318
<PP&E> 5,536,997
<DEPRECIATION> 1,295,332
<TOTAL-ASSETS> 15,016,551
<CURRENT-LIABILITIES> 3,460,632
<BONDS> 0
0
0
<COMMON> 100,651
<OTHER-SE> 11,455,268
<TOTAL-LIABILITY-AND-EQUITY> 15,016,551
<SALES> 1,250,725
<TOTAL-REVENUES> 1,250,725
<CGS> 2,188,780
<TOTAL-COSTS> 2,188,780
<OTHER-EXPENSES> 13,175,743
<LOSS-PROVISION> 36,302
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (13,838,133)
<INCOME-TAX> 0
<INCOME-CONTINUING> (13,838,133)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (13,838,133)
<EPS-PRIMARY> (1.48)
<EPS-DILUTED> (1.48)
</TABLE>
