U.S. 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 PERIOD ENDED
SEPTEMBER 30, 1997.
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________
TO _________ .
Commission File Number: 0-29020
MULTIMEDIA ACCESS CORPORATION
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 75-2528700
-------- ----------
(State or other Jurisdiction of (I.R.S. Employer Incorporation
Incorporation or Organization Identification No.)
2665 Villa Creek Drive, Suite 200, Dallas, TX 75234
--------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
972/488-7200
------------
(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 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
As of November 7, 1997, 8,731,958 shares of the Registrant's common stock were
outstanding.
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
INDEX TO FORM 10-QSB
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets at December 31, 1996 and
September 30, 1997 (Unaudited)......................................3
Consolidated Statements of Operations for the Three Months
ended September 30, 1996 and 1997 (Unaudited) and the Nine
Months ended September 30, 1996 and 1997 (Unaudited)................4
Consolidated Statement of Stockholders' Equity (Deficit) for
the Nine Months ended September 30, 1997 (Unaudited)................5
Consolidated Statements of Cash Flows for the Nine Months
ended September 30, 1996 and 1997 (Unaudited).......................6
Notes to Consolidated Financial Statements.............................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................9
PART II. OTHER INFORMATION .............................................12
SIGNATURES ...............................................................13
2
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30,
ASSETS 1996 1997
------------------- ------------------
(Unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 18,539 $ 67,613
Accounts receivable, less allowance for doubtful accounts of
$43,000 at December 31, 1996 and $38,000 at September 30, 1997 185,564 794,636
Inventory 310,133 1,641,787
Prepaid expenses 46,239 91,216
Deferred charges 504,295 -
------------------- ------------------
Total current assets 1,064,770 2,595,252
Property and equipment, net 460,895 785,270
Software development costs, net 147,321 150,000
Deposits 18,272 23,657
------------------- ------------------
Total assets $ 1,691,258 $ 3,554,179
=================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 682,689 $ 1,041,519
Accrued compensation 239,707 286,574
Deferred revenue 15,591 3,135
Other accrued liabilities 857,260 214,906
Short-term debt, officer 533,089 311,243
Short-term debt, other 1,966,202 13,266
Current portion of long-term debt 3,177,550 -
------------------- ------------------
Total current liabilities 7,472,088 1,870,643
Commitments
Stockholders' equity (deficit):
Preferred stock, $.0001 par value:
Authorized shares - 5,000,000
Issued shares - none - -
Common stock, $.0001 par value:
Authorized shares - 20,000,000
Issued and outstanding shares - 5,315,811 at December 31, 1996
and 8,643,455 at September 30, 1997 532 864
Additional paid-in capital 6,602,572 18,461,850
Accumulated deficit (12,372,028) (16,767,272)
Treasury stock, 261,497 shares at December 31, 1996 and
September 30, 1997 (11,906) (11,906)
------------------- ------------------
Total stockholders' equity (deficit) (5,780,830) 1,683,536
------------------- ------------------
Total liabilities and stockholders' equity (deficit) $ 1,691,258 $ 3,554,179
=================== ==================
</TABLE>
Note:The balance sheet at December 31, 1996 has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
See accompanying notes.
3
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
---------------------------------- ----------------------------------
1996 1997 1996 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
NET SALES $ 223,727 $ 1,158,682 $ 900,446 $ 1,992,783
Cost of goods sold 50,057 596,688 315,437 1,007,451
---------------- ---------------- ---------------- ----------------
GROSS PROFIT 173,670 561,994 585,009 985,332
Operating expenses:
Selling, general and administrative 582,946 1,119,971 1,712,494 2,981,568
Research and development 447,147 773,095 1,457,001 2,017,455
Depreciation and amortization 51,728 85,884 153,035 220,551
---------------- ---------------- ---------------- ----------------
Total operating expenses 1,081,821 1,978,950 3,322,530 5,219,574
---------------- ---------------- ---------------- ----------------
OPERATING LOSS (908,151) (1,416,956) (2,737,521) (4,234,242)
Other income (expense):
Dividend and interest income 10 4,871 69 54,682
Interest expense (114,784) (12,096) (343,630) (239,910)
Other - 7,346 - 24,226
---------------- ---------------- ---------------- ----------------
Total other income (expense) (114,774) 121 (343,561) (161,002)
---------------- ---------------- ---------------- ----------------
NET LOSS $ (1,022,925) $ (1,416,835) $ (3,081,082) $ (4,395,244)
================ ================ ================ ================
NET LOSS PER SHARE $ (0.17) $ (0.18) $ (0.51) $ (0.58)
================ ================ ================ ================
WEIGHTED AVERAGE NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES OUTSTANDING 6,139,491 8,026,197 6,000,010 7,523,947
================ ================ ================ ================
</TABLE>
See accompanying notes.
4
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON STOCK PAID-IN ACCUMULATED
SHARES PAR VALUE CAPITAL DEFICIT
--------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1996 5,315,811 $ 532 $ 6,602,572 $ (12,372,028)
Sale of Common Stock and Public
Warrants, net of expenses 1,610,000 161 5,427,077 -
Exchange of short-term and
long-term debt for Common Stock
and Public Warrants 1,241,977 124 5,713,003 -
Fair market value of warrants issued
for inducement of debt - - 66,500 -
Exercise of options and warrants, net 475,667 47 652,698 -
Net loss - - - (4,395,244)
=============== ============= ================ =================
BALANCE, SEPTEMBER 30, 1997 8,643,455 $ 864 $18,461,850 $ (16,767,272)
=============== ============= ================ =================
</TABLE>
<TABLE>
<CAPTION>
TOTAL
TREASURY STOCKHOLDERS'
STOCK EQUITY (DEFICIT)
--------------- -----------------
<S> <C> <C>
Balance, December 31, 1996 $ (11,906) $ (5,780,830)
Sale of Common Stock and Public
Warrants, net of expenses - 5,427,238
Exchange of short-term and
long-term debt for Common Stock
and Public Warrants - 5,713,127
Fair market value of warrants issued
for inducement of debt - 66,500
Exercise of options and warrants, net - 652,745
Net loss - (4,395,244)
=============== =================
BALANCE, SEPTEMBER 30, 1997 $ (11,906) $ 1,683,536
=============== =================
</TABLE>
See accompanying notes.
5
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For the Nine Months Ended
September 30,
------------------------------------------
1996 1997
------------------ -------------------
OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (3,081,082) $ (4,395,244)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation of fixed assets 114,929 163,001
Amortization of software development costs 38,106 57,549
Non-cash charges to interest expense 69,165 155,667
Changes in operating assets and liabilities:
Accounts receivable (124,191) (609,072)
Inventory (179,844) (1,331,654)
Prepaid expenses (51,296) (44,977)
Due from debt holder 315,300 -
Deferred charges (363,368) 415,128
Deposits (75) (5,385)
Accounts payable 151,185 358,830
Accrued compensation (124,220) 46,867
Deferred revenue (48,422) (12,456)
Other accrued liabilities 420,490 (261,372)
------------------ -------------------
Net cash used in operating activities (2,863,323) (5,463,118)
------------------ -------------------
INVESTING ACTIVITIES:
Purchase of property and equipment (111,080) (487,376)
Software development costs (11,000) (60,228)
------------------ -------------------
Net cash used in investing activities (122,080) (547,604)
------------------ -------------------
FINANCING ACTIVITIES:
Net proceeds from issuance of short-term
and long-term debt 2,085,000 210,202
Net repayment of short-term debt-officer - (235,000)
Other (6,733) 4,611
Net proceeds from the exercise of options and warrants 652,745
Net proceeds from sale of common stock and warrants 912,054 5,427,238
------------------ -------------------
Net cash provided by financing activities 2,990,321 6,059,796
------------------ -------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,918 49,074
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 16,605 18,539
------------------ -------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 21,523 $ 67,613
================== ===================
</TABLE>
See accompanying notes.
6
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements
include the accounts of MultiMedia Access Corporation and its wholly-owned
subsidiaries, Viewpoint Systems, Inc., VideoWare, Inc. and Osprey Technologies,
Inc. (collectively, the Company). All material inter-company accounts and
transactions have been eliminated in consolidation.
The interim financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and nine month periods ended September
30, 1997 are not necessarily indicative of the results that may be expected for
the year ending December 31, 1997. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-KSB filed March 28, 1997.
2. INVENTORIES
Inventory is comprised primarily of purchased electronic components
and computer system products, along with related documentation manuals and
packaging materials and consists of the following:
DECEMBER 31, SEPTEMBER 30,
1996 1997
----------------- ----------------
(UNAUDITED)
Purchased materials $ 180,149 $ 967,072
Finished Goods 129,984 674,715
----------------- ----------------
$ 310,133 $ 1,641,787
================= ================
3. SALE OF COMMON STOCK
In February 1997, the Company completed an underwritten initial public
offering of 1,400,000 shares of its Common Stock and 1,400,000 Redeemable Common
Stock Purchase Warrants (Public Warrants). The shares of Common Stock and the
Public Warrants were sold on the basis of one Public Warrant for each share of
Common Stock at a unit price to the public of $4.60, and were separately
transferable immediately upon issuance. In March 1997, the Company issued an
additional 210,000 shares of Common Stock and Public Warrants upon exercise of
the underwriter's over-allotment option. The Company received net proceeds of
$5,427,000 during February and March 1997 related to this sale. The proceeds,
net of expenses related to the offering, are being used primarily for marketing
activities in connection with the Company's products, to complete the
development of additional product and software applications, for repayment of
certain loans and to fund its working capital requirements.
7
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
4. EXERCISE OF WARRANTS
In August 1997, the Company registered, in a Registration Statement on
Form SB-2, 2,981,573 shares of Common Stock underlying private warrants that had
previously been issued by the Company at various times between June 1995 and
February 1997 in connection with various financing transactions. Each such
private warrant entitles the holder to purchase one (1) share of Common Stock at
prices ranging from $1.00 to $3.00 per share at any time commencing immediately
upon issuance through and including three years from the date of issuance. The
Company will not receive any of the proceeds of the sale of such shares of
Common Stock, but will receive proceeds of up to $7,529,719 from the exercise of
the private warrants, to the extent the warrants are exercised. Such proceeds
will be used for working capital and general corporate purposes, and possible
future acquisitions.
In September 1997, the Company received net proceeds of $640,745 upon
the exercise of 471,667 private warrants at prices ranging from $1.00 to $3.00
per share.
5. NET LOSS PER SHARE
Net loss per share is computed based on the weighted average number of
common and common equivalent shares outstanding. The Company has computed common
and common equivalent shares in determining the number of shares used in
calculating earnings per share for the three and nine month periods ended
September 30, 1996 pursuant to the Securities and Exchange Commission Staff
Accounting Bulletin (SAB) No. 83. SAB No. 83 requires the Company to include all
common shares and all common share equivalents issued in the 12 month period
preceding the filing date of the initial public offering in its calculation even
if anti-dilutive. Net loss per share for the three and nine month periods ended
September 30, 1997 has been computed in accordance with Accounting Principles
Board Opinion No. 15 and does not include common share equivalents since their
effect is anti-dilutive.
The FASB has issued Statement of Financial Accounting Standards No.
128, Earnings per Share, which is effective for financial statements issued
after December 15, 1997. Early adoption of the new standard is not permitted.
The new standard eliminates primary and fully diluted earnings per share and
requires presentation of basic and diluted earnings per share together with
disclosure of how the per share amounts were computed. Because the application
of SAB No. 83 in calculation of per share amounts under FAS 128 is presently
uncertain, the Company is unable to determine the effect of this standard on its
historical per share amounts.
8
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
MultiMedia Access Corporation develops, manufactures and markets
standards-based video communications systems that provide enterprise-wide
solutions for business customers. The Company's Viewpoint VBX(TM) video
distribution and switching system, Osprey(R) line of video peripheral products
and video compression-decompression cards and the ViewCast(R) line of Internet
Web-video servers deliver videocom applications, including desktop
videoconferencing, video broadcasting, video-based training, distance learning,
telemedicine, surveillance and Internet and intranet video communications.
This Form 10-QSB contains forward-looking statements which involve
risks and uncertainties. The Company's actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, product demand and
market acceptance risks, the impact of competitive products and pricing, product
development, commercialization and technological difficulties, capacity and
supply constraints or difficulties, general business and economic conditions,
the effect of the Company's accounting policies and other risks detailed in the
Company's Annual Report on Form 10-KSB and other filings with the Securities and
Exchange Commission.
RESULTS OF OPERATIONS
Nine Months Ended September 30, 1997 compared to Nine Months Ended September 30,
1996.
Net Sales. Net sales for the nine months ended September 30, 1997
increased 121.3% to $1,992,783 from $900,446 reported for the same period last
year. This increase can be attributed to a significant increase in sales of both
video peripheral products and video systems during the first nine months of 1997
compared to the same period last year, offset in part by a decline in custom
programming and design revenue between the same periods.
During the first nine months of 1997, sales of video peripheral
products increased 184.2% over the same period in 1996 and represented
approximately 71% of total 1997 revenues, compared to approximately 55% of total
revenues in 1996. Sales of video systems increased 355.3% for the first nine
months of 1997, compared to the same period in 1997 and represented
approximately 27% of total 1997 revenues, compared to approximately 13% of total
revenues in 1996. While sales of video peripheral products are expected to
continue to increase for the balance of 1997 as new products are developed and
marketed and new contracts are finalized, the percentage of peripheral product
sales to total sales is expected to decline as the Company also expects to see a
significant increase in video systems revenue for the balance of 1997. The
Company introduced a new product family during the third quarter of 1997, the
ViewCast line of Web-video servers, that is expected to begin generating sales
during the fourth quarter of 1997.
Cost of Goods Sold. Cost of goods sold increased $692,014 to
$1,007,451 for the nine months ended September 30, 1997 compared to the same
period last year, primarily due to the increase in net sales described above.
Gross profit margin for the first nine months of 1997 was 49.4%, representing a
decline from the 65.0% margin during the same period last year. This decline in
gross margin can be attributed to custom programming and design revenue in 1996
that was substantially greater than the same period in 1997, which have little
or no associated costs.
9
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
Selling, General and Administrative Expense. Selling, general, and
administrative expense increased to $2,981,568 for the first nine months of 1997
from $1,712,494 for the same period last year primarily due to a significant
expansion of the Company's sales, marketing and customer support efforts in
1997. By the end of the first quarter of 1997, the Company had filled six sales
positions and three customer support positions that did not exist during the
same period of 1996. During the second quarter of 1997 a fourth customer support
position was added. Also contributing to the increase are expenses related to
being a public company that were incurred subsequent to the Company's initial
public offering in February 1997, including significant increases in insurance,
investor relations, travel, legal and professional fees.
Research and Development Expense. Research and development expense
increased $560,454 to $2,017,455 for the nine months ended September 30, 1997
compared to the same period in 1996, primarily due to an increase in the
Company's development staff, contract consultants and manufacturing staff during
1997. The new staff and consultants were principally involved in the continued
development of the Company's Viewpoint VBX system, Osprey video products and the
newly announced ViewCast Web-video servers.
Other Income (Expense). For the nine months ended September 30, 1997,
other income (expense) decreased $182,559 to $161,002, primarily as a result of
an increase in interest income and a decrease in interest expense during the
period. The changes to other expense can be attributed to the Company's initial
public offering in February 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company successfully completed an initial public offering (IPO) of
its Common Stock and Public Warrants on February 7, 1997 and on March 13, 1997
sold the over-allotment option, raising a total of $5,427,000 of net proceeds.
During 1997, with the proceeds of the IPO, the Company is endeavoring to build
an effective marketing and sales organization, develop a network of independent
resellers and achieve market acceptance of its products at prices and volumes
which will, in the future, result in profitable operations. However, the Company
expects operating losses to continue until such time as gross margins from the
sales of its products exceed its development, selling, administrative and
financing costs.
In August 1997, the Company registered, in a Registration Statement on
Form SB-2, 2,981,573 shares of Common Stock underlying private warrants that had
previously been issued by the Company at various times between June 1995 and
February 1997 in connection with various financing transactions. Each such
private warrant entitles the holder to purchase one share of Common Stock at
prices ranging from $1.00 to $3.00 per share at any time commencing immediately
upon issuance through and including three (3) years from the date of issuance.
The Company will not receive any of the proceeds of the sale of such shares of
Common Stock, but will receive proceeds of up to $7,529,719 from the exercise of
the private warrants. As of September 30, 1997 private warrants to purchase
471,667 shares of Common Stock had been exercised, resulting in net proceeds to
the Company of $640,745. In October 1997, additional private warrants to
purchase 350,000 shares of Common Stock were exercised, resulting in gross
proceeds to the Company of $1,050,000. These proceeds and additional proceeds
will be used for working capital and general corporate purposes and possible
future acquisitions.
10
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS - (CONTINUED)
Until the completion of its IPO on February 7, 1997, the Company was
dependent upon loans from its principal stockholders, as well private placements
of its debt and equity securities, to finance its working capital requirements.
It is anticipated that the remaining proceeds from the IPO plus anticipated
proceeds from the exercise of private warrants and public warrants will be
sufficient to fund the operations of the Company through at least the end of
1998. In the event that the Company's plans change or its assumptions change or
prove to be inaccurate or such proceeds prove to be insufficient to fund
operations (due to unanticipated expenses or difficulties or otherwise), the
Company may be required to seek additional financing sooner than currently
anticipated or could be required to curtail its activities.
The Company has had preliminary discussions with several potential
sources of additional financing, and may seek additional financing to provide
working capital in the future. Such financing may include convertible debt,
loans, lines of credit and/or secured capital financing through the issuance of
convertible preferred stock or other equity securities and could include
factoring agreements. Although the Company has no current firm arrangements with
respect to any additional financing, it is currently considering various
proposals by several potential investors relating to the issuance of convertible
debt, convertible preferred stock or other equity in exchange for a cash
investment in the Company. There can be no assurance that any such additional
financing will be available to the Company on acceptable terms, or at all.
Additional equity financing, including the issuance of convertible preferred
stock, may involve substantial dilution to the Company's then existing
stockholders.
At September 30, 1997, the Company had working capital of $724,609 and
had no material commitments for capital expenditures.
11
<PAGE>
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
OTHER INFORMATION
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
(None)
Item 5. Other Information
(None)
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits filed with this report:
Exhibit 11: Computation of Earnings Per Share
Exhibit 27: Financial Data Schedule
12
<PAGE>
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.
MultiMedia Access Corporation
-----------------------------
(registrant)
BY:
Date: November 7, 1997 /s/ WILLIAM S. LEFTWICH
---------------- -----------------------
William S. Leftwich
Chief Financial Officer
Principal Financial Officer
13
EXHIBIT 11
MULTIMEDIA ACCESS CORPORATION AND SUBSIDIARIES
STATEMENT RE: CALCULATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------------- ----------------------------------
LOSS PER SHARE DATA: 1996 1997 1996 1997
---------------- ---------------- ---------------- ----------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
NET LOSS AS REPORTED IN THE FINANCIAL STATEMENTS $ (1,022,925) $ (1,416,835) $ (3,081,082) $ (4,395,244)
---------------- ---------------- ---------------- ----------------
Weighted average number of common shares
outstanding 5,054,314 8,026,197 4,774,326 7,523,947
Common and common equivalent shares issued
in the twelve month period preceding the filing
date of the initial public offering as required by
SAB No. 83:
Common stock - - 140,507 -
Incentive stock options 266,356 - 266,356 -
Non-qualified stock options 40,208 - 40,208 -
Warrants 778,613 - 778,613 -
---------------- ---------------- ---------------- ----------------
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING AS REPORTED IN THE
FINANCIAL STATEMENTS 6,139,491 8,026,197 6,000,010 7,523,947
---------------- ---------------- ---------------- ----------------
LOSS PER SHARE AS REPORTED IN THE FINANCIAL
STATEMENTS $ (0.17) $ (0.18) $ (0.51) $ (0.58)
================ ================ ================ ================
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1
<CASH> 67,613
<SECURITIES> 0
<RECEIVABLES> 832,636
<ALLOWANCES> (38,000)
<INVENTORY> 1,641,787
<CURRENT-ASSETS> 2,595,252
<PP&E> 1,273,798
<DEPRECIATION> (488,528)
<TOTAL-ASSETS> 3,554,179
<CURRENT-LIABILITIES> 1,870,643
<BONDS> 0
0
0
<COMMON> 864
<OTHER-SE> 1,682,672
<TOTAL-LIABILITY-AND-EQUITY> 3,554,179
<SALES> 1,888,645
<TOTAL-REVENUES> 1,992,783
<CGS> 1,007,451
<TOTAL-COSTS> 1,007,451
<OTHER-EXPENSES> 2,238,006
<LOSS-PROVISION> 40,239
<INTEREST-EXPENSE> 239,910
<INCOME-PRETAX> (4,395,244)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,395,244)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,395,244)
<EPS-PRIMARY> (0.58)
<EPS-DILUTED> (0.58)
</TABLE>
