SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly period ended June 30, 1996.
/ / 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: 0-25334
THE GREAT AMERICAN BACKRUB STORE, INC.
(Exact name of Small Business Issuer as specified in the charter)
New York 13-3729043
(State of Incorporation) (I.R.S. Employer Identification No.)
425 Madison Avenue, Suite 605, New York, NY 10017
(Address of principal executive offices)
Registrant's telephone number, including area code: (212) 750-7046
Check whether the issuer: (1) filed all reports required by Section
13 or 15 (d) of the Securities Exchange Act during the past 12 months (or for
such period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes / X / No / /
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding at August 14, 1996
----- ------------------------------
Common Stock, $.001 par value 2,014,342
Transitional Small Business Disclosure Format(check one):
Yes / / No / X /
<PAGE>
THE GREAT AMERICAN BACKRUB STORE, INC.
(A Development Stage Company)
PART 1
FINANCIAL INFORMATION
Item 1. UNAUDITED FINANCIAL STATEMENTS
Condensed Balance Sheet 3
Condensed Statements of Operations 4
Statements of Cash Flows 5
Notes to unaudited Financial Statements 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
---------------------------------------------
PART II
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K 12
Signature Page 13
Exhibit Index 14
Exhibit 11: Statement re: Computation of per share earnings 15
Exhibit 27: Financial Data Schedule 16
Page 2
<PAGE>
Part 1: Financial Information
Item 1: Financial Statements
THE GREAT AMERICAN BACKRUB STORE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED BALANCE SHEET
(UNAUDITED)
AS OF JUNE 30, 1996
ASSETS
Current assets:
Cash and cash equivalents $ 348,810
Certificate of deposit 1,000,000
Prepaid expenses 453,242
Inventory 184,757
------------
Total current assets 1,986,809
------------
Property and equipment:
Furniture and fixtures 312,238
Leasehold improvements 640,704
Purchased lease 120,000
Computer equipment 33,318
------------
1,106,260
Less, Accumulated depreciation ( 101,996)
-------------
1,004,264
------------
Other assets:
Deferred offering costs 37,500
Lease and equipment deposits 203,537
Total other assets 241,037
------------
Total assets $ 3,232,110
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 146,578
Accrued expenses 273,343
Deferred revenue 68,072
------------
Total current liabilities 487,993
------------
Deferred rent 145,323
------------
Commitments and contingencies:
Stockholders' equity:
Common stock, par value $0.001 per share,
10,000,000 shares authorized, 2,014,342
shares issued and outstanding 2,014
Additional paid in capital 7,819,741
Deficit accumulated during the development stage ( 5,222,961)
------------
Total commitments and contingencies 2,598,794
------------
Total liabilities and stockholders' equity $ 3,232,110
============
See accompanying notes to financial statements
Page 3
<PAGE>
THE GREAT AMERICAN BACKRUB STORE, INC.
(A DEVELOPMENT STAGE COMPANY)
CONDENSED STATMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Six months ended December 18, 1992
June 30, June 30,
-------- -------- (Inception) to
1996 1995 1996 1995 June 30, 1996
---- ---- ---- ---- -------------
<S> <C> <C> <C> <C> <C>
Revenues:
Services $ 542,419 $ 150,303 $ 929,596 $ 288,218 $ 2,395,452
Products 138,947 23,562 267,287 53,117 770,184
Royalties, franchise fees and other -- -- -- 2,034 46,558
---------- ---------- ---------- ---------- ----------
Total 681,366 173,865 1,196,883 343,369 3,212,194
---------- ---------- ---------- ---------- ----------
Operating expenses:
Salaries and wages 321,208 193,533 617,591 230,243 2,500,666
Cost of products sold, buying and occupancy 107,956 22,309 218,476 39,299 596,039
Rental expense 146,209 60,777 285,185 119,588 957,008
Advertising and promotion 23,642 8,346 43,979 16,675 339,651
Non-cash financial advisory fees 131,250 -- 218,750 -- 218,750
General and administrative 385,064 433,672 834,898 703,369 3,086,677
Depreciation 20,400 5,681 40,800 11,362 130,388
Waived salaries -- -- -- 30,000 350,000
---------- ---------- ---------- ---------- ----------
Total 1,135,729 724,318 2,259,679 1,150,536 8,179,179
---------- ---------- ---------- ---------- ----------
Net loss from operations (454,363) (550,453) (1,062,796) (807,167) (4,966,985)
---------- ---------- ---------- ---------- ----------
Other income (expense):
Interest Income 6,822 55,788 16,030 99,070 165,720
Interest expense -- -- -- (313,696) (421,696)
---------- ---------- ---------- ---------- ----------
Total 6,822 55,788 16,030 (214,626) (255,976)
---------- ---------- ---------- ---------- ----------
Net loss ($ 447,541) ($ 494,665) ($1,046,766) ($1,021,793) ($5,222,961)
---------- ---------- ---------- ---------- ----------
Weighted average number of
shares outstanding during the period 1,825,782 1,750,000 1,790,553 1,386,250
---------- ---------- ---------- ----------
Net loss per common share and equivalents $ (0.25) $ (0.28) $ (0.58) $ (0.74)
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to financial statements
Page 4
<PAGE>
THE GREAT AMERICAN BACKRUB STORE, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six months ended Six months ended December 18, 1992
June 30, June 30,
-------- -------- (Inception) to
1996 1995 June 30, 1996
----- ----- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss ($ 1,046,766) ($ 1,021,793) ($ 5,222,961)
------------ ------------ ------------
Adjustments to reconcile net loss to net cash used
by operating activities:
Depreciation and amortization 40,800 11,362 115,735
Salaries waived by officers - 30,000 350,000
Warrant financing costs - 306,500 412,500
Options granted as compensation 525,000 - 631,830
Common stock issued to former franchisee and
consultant - - 66,915
(Increase) decrease in:
Accounts receivable 9,054 29,000 -
Prepaid expenses ( 343,554) ( 79,231) ( 453,242)
Inventory 32,952 ( 54,016) ( 184,757)
Other assets ( 76,224) 159,573 ( 241,037)
Increase (decrease) in:
Accounts payable and accrued expenses ( 218,240) 143,161 419,921
Deferred revenues and rent ( 62,526) ( 20,840) 213,395
Accrued officer expenses - ( 67,040) -
------------ ------------ ------------
Total adjustments ( 92,738) 458,469 1,331,260
------------ ------------ ------------
Net cash used in operating activities ( 1,139,504) ( 563,324) ( 3,891,701)
------------ ------------ ------------
Cash flows from investing activities:
Purchase of certificate of deposit - - ( 1,000,000)
Purchased lease - - ( 120,000)
Purchase of property and equipment ( 179,173) ( 72,137) ( 986,260)
------------ ------------ ------------
Net cash used in investing activities ( 179,173) ( 72,137) ( 2,106,260)
------------ ------------ ------------
Cash flows from financing activities:
Net proceeds from the issuance of common stock 445,750 5,127,732 6,346,771
Proceeds from issuance of bridge notes and short-term debt - - 605,000
Payment of bridge notes and short-term debt - ( 605,000) ( 605,000)
Payment of officer loan payable - ( 15,000) -
------------ ------------ ------------
Net cash provided by financing activities 445,750 4,507,732 6,346,771
------------ ------------ ------------
Net increase (decrease) in cash and cash equivalents ( 872,927) 3,872,271 348,810
Cash and cash equivalents, beginning of period 1,221,737 81,044 -
------------ ------------ ------------
Cash and cash equivalents, end of period $ 348,810 $ 3,953,315 $ 348,810
------------ ------------ ------------
Supplemental disclosures of cash flow information:
Cash paid during the period
for:
Interest $ - $ 13,696 $ 20,892
------------ ------------ ------------
Income taxes $ 1,500 $ 1,375 $ 2,875
------------ ------------ ------------
</TABLE>
See accompanying notes to financial statements
Page 5
<PAGE>
THE GREAT AMERICAN BACKRUB STORE, INC.
( A Development Stage Company)
NOTES TO UNAUDITED FINANCIAL STATEMENTS
DESCRIPTION OF BUSINESS
The Great American Backrub Store, Inc. (the "Company"), formerly American
Pleasure, Inc., is an owner/operator of retail stores which provide seated,
fully clothed back rubs and sell back related products. The Company,
incorporated on December 28, 1992, began operations in August, 1993 and opened
its first store for business in October, 1993. As of June 30, 1996, the Company
has nine locations, eight in New York City and one in White Plains, NY at the
"Westchester" mall.
Management believes that the Company's planned principal operations, the
establishment of Company-owned stores and franchised stores throughout the
country, have not yet commenced. The initial nine stores have been used to
continue to develop and modify the Company's retail concept. Accordingly, the
accompanying financial statements have been presented as a development stage
company, in accordance with Statement of Financial Accounting Standards (SFAS)
No. 7.
NOTE 1 - INITIAL PUBLIC OFFERING
In an initial public offering completed on March 7, 1995, the Company sold
1,250,000 shares of common stock for approximately $6,250,000 which, after
commissions and fees, provided the Company with net proceeds of approximately
$5,127,732.
NOTE 2 - CONDENSED FINANCIAL STATEMENTS
The condensed balance sheet as of June 30, 1996 and the condensed statements of
operations and cash flows for the six month periods ended June 30, 1996 and
1995, and the period December 18, 1992 (inception) to June 30, 1996 have been
prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations, and changes in
cash flows at June 30, 1996 and for all periods presented, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These condensed financial statements should be
read in conjunction with the financial statements and notes thereto of the
Company as of December 31, 1995.
The results of operations for the six month periods ending June 30, 1996 and
1995 are not necessarily indicative of the operating results for the full year.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent all amounts held in banks and money market
accounts and short term investments such as United States Treasury Bills with
original maturities of three months or less.
Page 6
<PAGE>
NOTE 3 - EARNINGS PER SHARE
Net loss per common share for the six month period ended June 30, 1996 is
computed by dividing net loss by the weighted average common shares outstanding
during the period. The assumed exercise of common share equivalents was not
utilized since the effect was anti-dilutive.
Net loss per common share for the six month period ended June 30, 1995 is
computed by dividing net loss by the weighted average number of common shares
and common share equivalents outstanding, adjusted for the effects of applying
Securities and Exchange Commission Staff Accounting Bulletin No. 83, using the
treasury stock method.
NOTE 4 - STOCK OPTIONS
At the Company's 1994 annual meeting of shareholders held on July 18, 1994, the
Company's shareholders approved the Employee Plan. The purpose of the Employee
Plan is to promote the success of the Company by providing a method whereby
eligible employees of the Company and its subsidiaries, as defined therein, may
be awarded additional remuneration for services rendered, thereby increasing
their personal interest in the Company. The Employee Plan is also intended to
aid in attracting persons of suitable ability to become employees of the Company
and its subsidiaries. The plan covers an aggregate of 75,000 shares of the
Company's Common Stock. As of June 30, 1996, options to purchase 8,500 shares of
Common Stock were outstanding under the plan.
In December 1994, the Company granted ten-year options to purchase 120,000
shares of Common Stock to each of Messrs. Zanker, Murray, and Steven Thompson,
then the Company's Chief Financial Officer. Such options are exercisable at a
price of $3.75 per share. One-third of such options became exercisable in March,
1995, one-third became exercisable in December 1995 and one-third become
exercisable in December 1996. In July 1995, the Company granted five-year
options to purchase 100,000 shares of Common Stock to each of Messrs. Zanker and
Murray. Such options are exercisable at a price of $1.875 per share. All such
options are currently exercisable. In July 1995, the Company granted options to
purchase 10,000 shares of Common Stock to Mr. Dee. Such options are exercisable
at a price of $2.5625 per share. Options to purchase 5,000 shares vest and
become exercisable in July 1996 and options to purchase an additional 5,000
shares vest and become exercisable in July 1997. All such options expire on the
day before the 5-year anniversary of vesting. In December 1995, the Company
granted options to purchase 90,000 shares of Common Stock to Mr. Dee. Such
options are exercisable at a price of $2.375 per share. Options to purchase
45,000 shares are currently exercisable and options to purchase an additional
45,000 shares vest and become exercisable in December 1996. All such options
expire on the day before the 5-year anniversary of vesting. In March 1995, the
Company granted ten-year options to purchase 100,000 shares of Common Stock to a
consultant to the Company. Such options are exercisable at a price of $5.00 per
share. All such options are currently exercisable. In July 1995, the Company
granted five-year options to purchase 25,000 shares of Common Stock to a
consultant to the Company. Such options are exercisable at a price of $4.00 per
share. All such options are currently exercisable. In August 1995, the Company
granted three-year options to purchase 100,000 shares of Common Stock to a
consultant to the Company, of which options to purchase 14,000 shares have been
exercised to date. Such options are exercisable at a price of $2.375 per share.
All such options are currently exercisable. In February, 1996, the Company
granted warrants to purchase 300,000 shares of Common Stock to a financial
advisor and consultant to the Company, 100,000 of which are exercisable at a
price of $1.00 per share, all of which have been exercised, and 200,000 of which
are exercisable at a price of $2.50 per share, of which 100,000 have been
exercised.
Page 7
<PAGE>
NOTE 5 - LEASES
The Company leases retail stores and office equipment. All of the retail stores
are leased under noncancelable agreements which expire at various dates through
the year 2005. The agreements, which have been classified as operating leases,
require the Company to pay insurance, taxes and other maintenance costs.
Rent expense amounted to $146,209 and $60,777 for the three month periods ended
June 30, 1996 and 1995, respectively. Rent expense amounted to $285,185 and
$119,588 for the six month periods ended June 30, 1996 and 1995, respectively.
Rent expense from December 18, 1992(inception) to June 30, 1996 was $957,008.
NOTE 6 - FINANCIAL ADVISORY AND CONSULTING AGREEMENT
On February 7, 1996, the Company entered into a financial advisory and
consulting agreement with an investment banking firm to, among other things,
advise the Company on the possible sale of additional securities, as well as to
introduce and assist in the evaluation of potential merger and partnering
opportunities.
The agreement is for a period of one year commencing as of February 1, 1996 and
includes (i) a $100,000 retainer paid on the execution of the agreement (ii)
warrants to purchase 100,000 shares of the Company's Common Stock at an exercise
price of $1.00 per share excercisable from the date of agreement to and
including January 31, 1997(all of which have been exercised) and (iii)warrants
to purchase 200,000 shares of the Company's Common Stock at an exercise price of
$2.50 per share exercisable from the date of the agreement to and including
January 31, 1998(100,000 of which have been exercised).
Such warrants have resulted in a non-cash charge of $131,250 for the three month
period ended June 30, 1996 and $218,750 for the six month period ended June 30,
1996.
Page 8
<PAGE>
ITEM 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
Company's unaudited financial statements and the related notes thereto included
elsewhere herein.
GENERAL
The Company's revenues are derived from the service of seated, fully clothed
back rubs and the sale of stress reducing products. The Company began operations
in August, 1993, and opened its first store for business in October, 1993. The
Company currently owns and operates ten locations, nine in New York City and one
in White Plains, NY at the "Westchester" mall.
The Company is actively negotiating for several additional locations, primarily
in the New York metropolitan area, to continue its expansion plans. For the
three month period ended June 30, 1996, the Company successfully reached an
agreement on one addition location and opened a new store on May 18, 1996 in
Brooklyn, New York. The tenth Great American BackRub Store opened for business
on July 20, 1996.
RESULTS OF OPERATIONS
THREE MONTH PERIOD ENDED JUNE 30, 1996 COMPARED TO THREE MONTH PERIOD ENDED JUNE
30, 1995 AND SIX MONTH PERIOD ENDED JUNE 30, 1996 COMPARED TO SIX MONTH PERIOD
ENDED JUNE 30, 1995
The Company is in the development stage and has not had significant revenues
since the commencement of its retail store operations in October, 1993. From
this time through June 30, 1996, the Company has generated cumulative revenue of
$3,212,194 while incurring a cumulative loss of $5,222,961. The losses to date
have been primarily associated with the Company's establishment of a corporate
and administrative infrastructure to position itself to open additional retail
stores. For the three month period ended June 30, 1996, overall retail store
operations were profitable. The Company anticipates this trend to continue as
existing stores mature and new stores are opened. The Company does, however,
expects to incur additional operating losses for the next twelve months and
possibly longer as it embarks on its planned expansion.
The Company presently sells services in the form of its back rubs, and products,
in the form of a variety of massage and stress reduction products, in its retail
stores. Since inception, sales of services have accounted for 75% of total
revenue, products for 24% and the remaining 1% from other sources. Since the
Company is still a development stage enterprise, it is not clear whether these
percentages are indicative of future ratios in a larger operation.
Page 9
<PAGE>
RESULTS OF OPERATIONS- CONT'D
For the three months ended June 30, 1996, revenues from services and products at
the Company's stores increased 292% to $681,366 from the corresponding 1995
period. This increase was mainly attributed to increased traffic and the opening
of additional stores as compared to the corresponding 1995 period. Operating
expenses were $1,135,729 for the three month period ended June 30, 1996 as
compared to $724,318 for the same period in the prior year, an increase of 57%.
This increase was primarily due to the development of a management team,
operational systems, marketing and design plans in the implementation of the
Company's expansion plans and non cash charges relating to the issuance of
options of approximately $130,000. Of these amounts, approximately $508,870 was
related to corporate overhead expenses and $626,859 to store level operations
for the three month period ended June 30,1996. However, the net loss for the
three month period ended June 30, 1996 decreased to $447,541 compared to
$494,665 for the prior year. This decrease was primarily due to the Company's
overall retail store operations being profitable for the three month ended June
30, 1996. For the period, store level profitably was approximately $52,000. The
Company expects that store level profitability will improve and that its
operating losses will continue to narrow as existing stores mature and new
stores are opened. No provision for income taxes was required during either
period due to the Company's incurrence of net operating losses.
For the six months ended June 30,1996, revenues from services and products at
the Company's stores increased 249% to $1,196,883 from the corresponding 1995
period. This increase was mainly attributed to increased traffic and the opening
of additional stores as compared to the corresponding 1995 period. Operating
expenses were $2,259,679 for the six month period ended June 30, 1996 as
compared to $1,150,536 for the same period in the prior year, an increase of
96%. This increase was primarily due to the development of a management team,
operational systems, marketing and design plans in the implementation of the
Company's expansion plans and non cash charges relating to the issuance of
options of approximately $220.000. As a result of the increased operating
expenses, net loss for the six month period ended June 30, 1996 increased to
$1,046,766 compared to $1,021,793 for the prior year. No provision for income
taxes was required during either period due to the Company's incurrence of net
operating losses.
While general and administrative expenses are expected to increase due to the
need for additional management and administrative support for the Company's
expanding operations, these expenses as a percentage of total revenue are
expected to decline as total revenue increases. Other expense items, such as
advertising and promotion, salaries and wages, cost of products, however, are
related to retail operations themselves and their relative percentages to total
revenues are likely to remain fairly constant in the near term but should
decrease as the Company streamlines it operations.
LIQUIDITY AND CAPITAL RESOURCES
The Company had $1,498,816 in working capital as of June 30, 1996, compared with
working capital of $3,758,199 as of June 30, 1995. The decrease is primarily due
to amounts spent on property, equipment and leasehold improvements to fund the
Company's initial nine stores and amounts spent on operations in the development
of a corporate infrastructure in anticipation of the Company's growth strategy.
From inception to June 30, 1996, the Company has used cash for operating
activities of $3,891,701 and spent an additional $2,106,260 for the purchase of
property, equipment, purchased leases, leasehold improvements and investments.
These expenditures have been offset by the net cash provided by financing
activities, principally from the Company's October, 1993 private placement of
Common Stock, aggregating $870,000, the December, 1994 Bridge Financing in the
principal amount of $275,000, the Company's March 1995 public offering of Common
Stock resulting in the net proceeds of approximately $5,127,732 and the issuance
of Common Stock to warrant and option holders of approximately $445,000. See
"Statement of Cash Flows" included in the Company's unaudited financial
statements.
Page 10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES- CONT'D
Inasmuch as the Company continues to have a high level of operating expenses and
will be required to make significant up-front expenditures in connection with
its proposed expansion, the Company anticipates that losses will continue for at
least the next 12 months and until such time, if ever, as the Company is able to
generate significant revenues or achieve profitable operations. As a result, in
their report of the Company's financial statements as of December 31, 1995, the
Company's independent certified public accountants have included an explanatory
paragraph that describes factors raising substantial doubt about the Company's
ability to continue as a going concern.
Page 11
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
Exhibit 11: Statement re: Computation of per share earnings
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K
None
Page 12
<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.
THE GREAT AMERICAN BACKRUB STORE, INC.
--------------------------------------
Registrant
Date: August 14, 1996
/s/Keith R. Dee
---------------
Keith R. Dee, Chief Financial Officer
(duly authorized officer and principal
financial officer and principal
accounting officer) and Secretary
Page 13
<PAGE>
EXHIBIT INDEX
EXHIBITS DESCRIPTION
11 Statement re: Computation of per share earnings
27 Financial Data Schedule
EXHIBIT 11
THE GREAT AMERICAN BACKRUB STORE, INC.
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Six Months' Three Months
Six Months Ended Three Months Ended Weighting Factor
June 30, June 30, (in months) (in months)
-------- -------- ----------- ----------
1996 1995 1996 1995 1996 1995 1996 1995
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock, June 1993 375,000 375,000 375,000 375,000 6 6 3 3
Sale of common stock, October 1993 125,000 125,000 125,000 125,000 6 6 3 3
Sale of common stock, March 1995
1,250,000 shares 1,250,000 833,333 1,250,000 1,250,000 6 4 3 3
Shares issued upon exercise of options and warrants 40,553 -- 75,782 -- see below see below
SAB 83 shares - see below -- 52,917 -- -- 6 2 0 0
--------- --------- --------- ---------
Common stock and equivalents 1,790,553 1,386,250 1,825,782 1,750,000
========= ========= ========= =========
</TABLE>
COMPUTATION OF WEIGHTED AVERAGE NUMBER OF SHARES ISSUED
UPON EXERCISE OF OPTIONS AND WARRANTS:
Six months' Three months'
weighting factor weighting factor
Shares (in days) (in days)
Date Issued 1996 1996
---- ------ ---- ----
5/1/96 12,500 4,167 8,333
6/1/96 200,000 33,333 66,667
6/3/96 12,500 1,875 563
6/7/96 4,000 511 131
6/18/96 4,000 267 36
6/18/96 6,000 400 53
------ ------
Total 40,553 75,782
====== ======
SAB 83 Calculation (treasury stock method)
JUNE, 1995
<TABLE>
<CAPTION>
Incremental
Options/Warrants Price/Share Proceeds Shares
---------------- ----------- -------- ------
<S> <C> <C> <C> <C>
Options issued in December, 1994 360,000 $ 3.75 1,350,000
---------
IPO price 5.00
Shares assumed repurchased 270,000 90,000
Warrants issued in December, 1994 137,500 $ 2.50 343,750
IPO price 5.00
Shares assumed repurchased 68,750 68,750
------
Total SAB 83 shares considered outstanding 158,750
=======
</TABLE>
Page 15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-QSB FOR THE THREE MONTH PERIOD ENDED JUNE 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,348,810
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 184,757
<CURRENT-ASSETS> 1,986,809
<PP&E> 1,106,260
<DEPRECIATION> 101,996
<TOTAL-ASSETS> 3,232,110
<CURRENT-LIABILITIES> 487,993
<BONDS> 0
0
0
<COMMON> 2,014
<OTHER-SE> 7,819,741
<TOTAL-LIABILITY-AND-EQUITY> 3,232,110
<SALES> 138,947
<TOTAL-REVENUES> 681,366
<CGS> 107,956
<TOTAL-COSTS> 599,015
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (454,363)
<INCOME-TAX> 0
<INCOME-CONTINUING> (454,363)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (447,541)
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.25
</TABLE>
