<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES ACT OF 1934
For the Quarter Ended June 30, 1995 Commission File No. 0-26068
ACACIA RESEARCH CORPORATION
A California Corporation
IRS Employer Identification No. 95-4405754
12 S. Raymond Avenue, Suite B, Pasadena, California 91105
Telephone (818) 449-6431
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 .
----- -----
At June 30, 1995, 1,577,825 shares of common stock of the Registrant were
outstanding.
<PAGE> 2
[FINOCCHIARO & CO. LETTERHEAD]
Board of Directors
Acacia Research Corporation
The accompanying consolidated balance sheets of Acacia Research Corporation as
of June 30, 1995 and December 31, 1994, and the related statements of operations
for the six months and three months ended June 30, 1995 and 1994, and cash flows
for the six months ended June 30, 1995 and 1994 were not audited by us, and we
do not express an opinion on them.
/s/ FINOCCHIARO & CO.
Pasadena, California
August 16, 1995
2
<PAGE> 3
ACACIA RESEARCH CORPORATION
CONSOLIDATED BALANCE SHEETS
June 30, 1995 and December 31, 1994
<TABLE>
<CAPTION>
June 30, 1995 December 31,1994
------------- ----------------
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents (note 2 and 5) $ 1,106,130 $ 1,000,389
Accounts receivable 21,183 13,577
Inventories (notes 2 and 3) 109,621 28,297
Prepaid expenses 350,107 145,002
Deferred advertising costs 131,000 --
Note receivable - stockholder (note 11) 375,000
----------- -----------
Total current assets 2,093,041 1,187,265
Equipment, furniture, and fixtures, at cost (notes 2 and 4) 106,184 45,832
Other Assets
Investment in Acacia Capital Partners, L.P., at equity (note 15) 350,000 --
Organization costs, net of accumulated amortization of
$2,341 and $1,132 (note 2) 3,400 4,004
Deposits 3,363 3,735
----------- -----------
Total other assets 356,763 7,739
----------- -----------
Total Assets $ 2,555,988 $ 1,240,836
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 98,162 $ 91,996
Convertible note payable (note 9) -- 200,000
Income taxes payable 800 1,636
----------- -----------
Total current liabilities 98,962 291,996
Deferred tax liability (notes 2 and 7) 2,627 2,627
----------- -----------
Total liabilities 101,589 294,623
Commitments and contingencies (note 5)
Minority interest (note 2) 1,694,881 647,201
Stockholders' equity (note 6)
Common stock, no par value, 10,000,000 shares authorized, 1,577,825
shares in 1995 and 1994 issued and outstanding, 177,347 shares
unissued in 1995, 25,000 unissued in 1994 3,014,590 2,147,509
Accumulated deficit (1,681,290) (1,798,497)
Less stock subscriptions receivable (573,782) (50,000)
----------- -----------
Total stockholders' equity 759,518 299,012
----------- -----------
Total Liabilities And Stockholders' Equity $ 2,555,988 $ 1,240,836
=========== ===========
</TABLE>
Unaudited
3
<PAGE> 4
ACACIA RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended June 30, 1995 and 1994 and Three Months Ended June 30, 1995
and 1994
<TABLE>
<CAPTION>
Six months ended Three months ended
June 30, 1995 June 30, 1994 June 30, 1995 June 30, 1994
----------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales-Health care products $1,239,541 $86,186 $ 655,471 $ 33,506
Investment management fees earned 250 0 250 0
----------------------------------------------------------------
Total sales 1,239,791 86,186 655,721 33,506
Cost of goods sold 155,758 9,500 108,338 3,887
----------------------------------------------------------------
Gross profit 1,084,033 76,686 547,383 29,619
Operating expenses
Selling expenses 778,798 151,168 523,128 64,581
Marketing, general and administrative 792,351 383,659 386,501 161,871
----------------------------------------------------------------
Total operating expenses 1,571,149 534,827 909,629 226,452
----------------------------------------------------------------
Net loss from operations (487,116) (458,141) (362,246) (196,833)
Other income (expense)
Gain on sale of Whitewing Labs stock 611,343 0 368,500 0
Realized loss on trading securities 0 (2,800) 0 (2,445)
Unrealized loss on trading securities 0 1,505 0 2,299
Interest, net (65) 5,229 2,687 2,650
----------------------------------------------------------------
Total other income (expense) 611,278 3,934 371,187 2,504
----------------------------------------------------------------
Income (loss) before provision for taxes 124,162 (454,207) 8,941 (194,329)
Provision for taxes (note 7) 5,000 800 4,200 0
----------------------------------------------------------------
Net income (loss) before minority interest 119,162 (455,007) 4,741 (194,329)
Minority interest in net loss (income) (1,955) 10,587 33,029 10,587
----------------------------------------------------------------
Net Income (Loss) $117,207 $(444,420) $37,770 $(183,742)
================================================================
Earnings (loss) per common share (note 9)
Primary $0.05 $(0.20) $0.02 $(0.08)
Fully diluted $0.05 $(0.20) $0.02 $(0.08)
Common equivalent shares outstanding (note 9)
Primary 2,457,050 2,220,225 2,457,050 2,220,225
Fully diluted 2,457,050 2,220,225 2,457,050 2,220,225
</TABLE>
Unaudited
4
<PAGE> 5
ACACIA RESEARCH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended June 30, 1995 and 1994
<TABLE>
<CAPTION>
June 30, 1995 June 30, 1994
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net (loss) income $ 117,207 $(484,420)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 8,187 4,048
Gain on sale of stock of Whitewing Labs (611,343)
Minority interest in net income of subsidiary 1,955 (10,587)
Unrealized gain on trading securities -- (1,505)
Loss on sale of trading securities -- 2,800
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable
inventories, prepaid expenses, and
other assets (425,035) 16,206
Increase (decrease) in accounts payable, accrued
expenses, and other current liabilities 6,637 (6,351)
----------- ---------
Net cash used in operating activities (902,392) (439,809)
Cash Flows From Investing Activities:
Capitalized expenditures (47,346) (6,853)
Purchase of stock of Whitewing Labs -- --
Proceeds from sale of stock of Whitewing Labs 375,000 --
Purchase of interest in Acacia Capital Partners, L.P (350,000) --
Note receivable - stockholder (375,000) --
Decrease (increase) in due from officer -- (2,185)
----------- ---------
Net cash used in investing activities (397,346) (9,038)
Cash Flows From Financing Activities:
Issuance of common stock 390,290 125,000
Proceeds from issuance of common stock warrants 10,000 --
Costs of issuing common stock (56,991) --
Net proceeds from issuance of minority interest
by subsidiary 1,109,435 466,027
Dividends paid by subsidiary (46,926) (1,996)
Payments on lease payable (329) (276)
----------- ---------
Net cash provided by financing activities 1,405,479 588,755
----------- ---------
Increase in cash and cash equivalents 105,741 (139,908)
Cash and cash equivalents, beginning 1,000,389 474,794
----------- ---------
Cash And Cash Equivalents, Ending $ 1,106,130 $ 614,702
=========== =========
</TABLE>
Unaudited
5
<PAGE> 6
ACACIA RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
1. DEVELOPMENT STAGE COMPANY
Acacia Research Corporation (the "Company") was incorporated on January
25, 1993 under the state laws of California. The Company is engaged in
the research and development of mathematical modeling techniques for
investment management. Since its inception, the Company has been
involved in the development of software models, computerized databases,
and product testing of computer-based investment information systems,
as well as raising capital. Since significant revenues have been earned
from the sale of its investment in Whitewing Labs, the Company no
longer is considered a development stage company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation - The accompanying consolidated
financial statements include the accounts of the Company and its
subsidiary, Whitewing Labs. Intercompany transactions and balances have
been eliminated in consolidation. Effective April 15, 1994, Whitewing
Labs began issuing cumulative convertible preferred stock. The holders
of such stock are entitled to all voting rights of common shareholders
on a per share basis. For the period ended June 30, 1995, the Company
maintained a weighted average majority interest of 66.53%, based upon
preferred shares outstanding and additional common stock issued by its
subsidiary.
Cash and cash equivalents - The Company considers all highly
liquid investments with a maturity of ninety days or less when
purchased to be cash equivalents. The Company invests excess cash in
money market accounts.
Trading securities - The Company has adopted the provisions of
SFAS 115 and has classified all its securities as trading securities to
be sold or disposed of in the near term.
Inventories - Inventories are valued at the lower of cost, which is
determined by the first-in, first-out method, or market.
Equipment, furniture, and fixtures - Equipment, furniture, and
fixtures are recorded at cost. Major additions and improvements are
capitalized. The cost and related accumulated depreciation of property
and equipment retired or sold is removed from the account and any
differences between the undepreciated amount and the proceeds from the
sale is charged or credited to income. Depreciation is computed on a
straight-line basis.
Organization costs - Organization costs are recorded at cost
and are amortized on a straight-line basis over a period of five years.
Income taxes - The Company accounts for income taxes in accordance with
SFAS 109, which accounts for deferred tax assets and liabilities based
upon temporary differences between financial and tax reporting. These
differences in accounting methods include depreciation and franchise
tax deductions. Deferred income tax liabilities have been provided for
the tax effect of these differences. The Company and subsidiary do not
file a consolidated income tax return.
6
<PAGE> 7
ACACIA RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
3. INVENTORIES
Inventories at June 30, 1995 consist of the following:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Finished goods $108,086
Shipping supplies 1,535
--------
Total Inventories $109,621
========
</TABLE>
4. EQUIPMENT, FURNITURE, AND FIXTURES
Equipment, furniture, and fixtures consist of the following at
June 30, 1995:
<TABLE>
<CAPTION>
1995
--------
<S> <C>
Computer equipment $ 25,102
Furniture and fixtures 100,969
--------
126,071
Accumulated depreciation (19,887)
--------
Total Equipment, Furniture, and Fixtures $106,184
========
</TABLE>
Depreciation expense for the six months ended June 30, 1995 was $8,187.
5. COMMITMENTS AND CONTINGENCIES
Lease obligations - As of June 30, 1995, the furniture and fixtures
account included assets in the amount of $2,052 financed by a capital
lease agreement which will expire in 1996. Accumulated depreciation
includes $581 of amortization related to assets financed by capital
lease agreements. The amortization of assets under capital lease has
been included in depreciation expense.
The Company leases office facilities under operating leases, through
December 1996, with options to renew the leases at a rate determined by
the Consumer Price Index at the time of renewal. The Company's minimum
monthly lease payment for 1995 is $2,085. Consolidated rent expense for
the six months ended June 30, 1995 was approximately $26,000.
At June 30, 1995, the future minimum lease payments for capital and
operating leases equalled the following:
<TABLE>
<CAPTION>
Capital Operating
------- ---------
<S> <C> <C>
1995 $ 442 $20,074
1996 810 23,852
------ -------
Totals 1,252 43,926
Less interest portion 150 -
------ -------
Minimum lease payments $1,102 $43,926
====== =======
</TABLE>
7
<PAGE> 8
ACACIA RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
5. COMMITMENTS AND CONTINGENCIES (continued)
Restricted cash - Whitewing Labs is required to maintain a reserve cash
account with a balance, at the end of each month, equal to 5.00% of the
preceding six months gross sales volume via credit card transactions or
$5,000, whichever is greater. As of June 30, 1995, $26,348 was
restricted.
Pending litigation - The Company's subsidiary has been named in pending
litigation alleging copyright, trademark infringement, and false
representations by mail, the subsidiary's counsel believes that the
claims are without merit, substantially covered by insurance, and the
Company intends to oppose the actions vigorously.
6. STOCK OPTIONS AND WARRANTS
During 1993, the Company adopted a stock option plan ("the Plan") which
authorizes the granting of both options intended to qualify as
"incentive stock options" under Section 422A of the Internal Revenue
Code of 1986 ("Incentive Stock Options") and stock options which are
not intended to so qualify ("Nonqualified Options") to officers,
directors, employees, consultants, and others expected to provide
significant services to the Company or its subsidiaries. The Plan,
which covers an aggregate of 1,000,000 shares, was approved by the
Board of Directors in October, 1993.
Under the terms of the Plan, options may be exercised upon terms
approved by the Board of Directors of the Company, and expire at a
maximum of ten years from the date of grant. Incentive Stock Options
are granted at prices equal to or greater than fair market value at the
date of grant. Nonqualified Stock Options are granted at prices equal
to or greater than 85% of the fair market value at the date of grant.
The Company's Board granted to officers, directors, and consultants of
the Company stock options to purchase 779,225 shares of the Company's
stock at $1.50 to $4.40 per share, and 550,000 options were granted in
1993 and 229,225 in 1994. These options are fully vested and expire in
1995 and 1999. At June 30, 1995, these options represented the only
options outstanding and exercisable. No options were exercised during
1994 or 1995. The Company issued 100,000 common stock warrants on
January 1, 1995. The warrants grant the holder the option to purchase
100,000 shares of common stock for $4.00 per share. These warrants
expire on January 1, 2000.
7. PROVISION FOR INCOME TAXES
The consolidated provision for income taxes for the six months ended
June 30, 1995 consists of the following:
<TABLE>
<CAPTION>
1995
------
<S> <C>
Current
State $ 800
======
</TABLE>
As of June 30, 1995, the Company has net operating loss carryforwards
of approximately $1,100,000 for federal income tax purposes available
to reduce future federal taxable income through 2009. The Company also
has net operating loss carryforwards of approximately $550,000 for
California state income tax purposes available to reduce future
California state taxable income through 1999.
8
<PAGE> 9
ACACIA RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
7. PROVISION FOR INCOME TAXES (continued)
At June 30, 1995, the Company's subsidiary had net operating loss
carryforwards of approximately $600,000 for Federal income tax purposes
available to reduce future Federal taxable income through 2009. The
subsidiary also had net operating loss carryforwards of approximately
$283,000 for state income tax purposes. Approximately $139,000 and
$144,000 are available to reduce future state taxable income in
California and Arizona, respectively. Such carryforwards expire through
the years 1999 and 2009, respectively. It is anticipated that these
carryforwards will offset any current year taxable income.
The Company's deferred tax benefit from net operating losses of
$242,000, and the subsidiary's deferred benefit of $204,000 have not
been reported in these financial statements, or for the investment in
unconsolidated subsidiary. A valuation allowance in the amount of the
tax benefits as of the balance sheet date has been set up because it
cannot be determined whether the Company will generate future taxable
income to realize any of the tax benefits.
8. EARNINGS (LOSS) PER COMMON SHARE
The registration statement states that the shares will be offered at $6
per share. Pursuant to SEC rules, common stock issued during the twelve
month period before the filing of the registration statement has been
included in the calculation of common equivalent shares, using the
Treasury stock method, as if they had been outstanding for all periods
presented.
Primary and fully diluted earnings per common share for 1995 have been
presented based upon the 1,577,825 common shares outstanding and
879,225 shares determined to be outstanding from the conversion of
stock options and warrants. Primary and fully diluted loss per common
share for 1994 have been presented based upon 1,441,000 shares
outstanding and 779,225 shares determined to be outstanding from the
conversion of stock options.
9. CONVERTIBLE NOTE PAYABLE
As of December 31, 1994, the Company's subsidiary had a $200,000 note
payable, due on October 15, 1995, bearing interest at 10 percent per
annum, which is convertible into 40,000 shares of common stock at $5
per share. The subsidiary has accrued approximately $3,000 of interest
expense related to this agreement.
9
<PAGE> 10
ACACIA RESEARCH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
10. BUSINESS SEGMENTS
The Company's operations are classified into two principal industry
segments, investment management, (Acacia) and distribution of health
care products by direct-mail response (Whitewing). The following is a
summary of segment information for the six months ended June 30, 1995
and 1994:
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
June 30, 1995 June 30, 1994
---------------- ----------------
<S> <C> <C>
Net sales to unaffiliated customers:
Health care products $ 1,239,541 $ 86,186
Investment management 1,250 --
----------- ---------
$ 1,239,791 $ 86,186
=========== =========
Income (loss) from operations:
Health care products $ 14,672 $(176,769)
Investment management (501,788) (281,372)
----------- ---------
(487,116) (458,141)
Other income 611,343 3,934
----------- ---------
Income (loss) before provision for
income taxes $ 124,227 $(454,207)
=========== =========
Identifiable assets:
Health care products $ 1,486,168 $ 444,771
Investment management 1,069,820 361,401
----------- ---------
$ 2,555,988 $ 806,172
=========== =========
Capital Expenditures:
Health care products $ 46,141 $ 1,948
Investment management 1,205 6,523
----------- ---------
$ 47,346 $ 8,471
=========== =========
Depreciation:
Health care products $ 4,186 $ 392
Investment management 3,396 2,970
----------- ---------
$ 7,582 $ 3,362
=========== =========
</TABLE>
10
<PAGE> 11
ACACIA RESEARCH CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
11. NOTE RECEIVABLE - STOCKHOLDER
As of June 30, 1995, the Company holds a promissory note from a
stockholder in the amount of $375,000. The note bears interest at 4%
per annum and is due in September of 1995. The note is secured by
50,000 shares of Whitewing Labs common stock.
12. COMMON STOCK SUBSCRIPTION
As of June 30, 1995, the Company has a $50,000 unsecured promissory
note receivable from an individual. The note was issued in connection
with the purchase of 25,000 shares of common stock which have not been
issued to the individual. The note bears interest at 4% per annum and
is due in April 1995.
13. SUPPLEMENTAL CASH FLOW INFORMATION
As disclosed in Note 5, the Company incurred a capital lease obligation
in 1993 of $2,052. Cash paid for the six months ended June 30, 1995 for
interest was $113. The Company paid cash for income taxes in the amount
of $814 in 1994.
14. SIGNIFICANT RISKS
As described in these financial statements, virtually all operating
revenues earned by the Company are from the sale of health care
products by its subsidiary Whitewing Labs. As of the date of these
financial statements, the Company has not generated any operating
revenue from its proposed investment management services. As of the
date of these financial statements, management believes that its
operating requirements for 1995 can be sustained with its existing
working capital.
On February 27, 1995, the Company invested $250,000 into Acacia Capital
Partners, L.P. This investment was funded, in part, by the 1995 sale of
part of the Company's interest in Whitewing Labs, which resulted in a
gain of approximately $242,000. The Company expects its involvement as
general partner of Acacia Capital Partners, L.P. to provide the
additional working capital necessary to support planned operations of
the Company.
However, the future success of the Company's operations is dependent
upon the ability of the Company, as general partner of Acacia Capital
Partners, L.P.("the Partnership"), to raise capital investment in the
Partnership. As general partner of the Partnership, the Company will
earn a management fee based upon the value of investments held by the
partnership, which will be paid to the Company on a quarterly basis.
Management of the Company believes that unless $25,000,000 is invested
in the partnership, it is likely that the management fees payable to
the Company will not be sufficient to sustain the Company's planned
operations, and the Company would therefore have to rely on capital
raised through the sale of additional common stock. Accordingly, there
can be no assurance that the Company will be able to raise sufficient
capital investment in the Partnership to finance its ongoing
operations, or successfully raise capital through the issuance of
additional shares of common stock.
11
<PAGE> 12
ACACIA RESEARCH CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
15. INVESTMENT IN ACACIA CAPITAL PARTNERS, L.P.
As described in Note 14, the Company has acquired an interest in Acacia
Capital Partners, L.P., from which it will earn a management fee. As of
the date of this financial statement, the Company owns a majority
interest in the partnership. These financial statements reflect this
investment on the equity method, as control, and a majority ownership
percentage is considered temporary.
12
<PAGE> 13
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Position.
A. Consolidated results of operations
Three months ended June 30, 1995 vs. June 30, 1994
The second quarter of 1995 was the second consecutive profitable
quarter for Acacia Research Corporation. The Company earned $0.02 per
common share on net income of $37,770, compared to a net loss for the
same period in 1994 of $183,742, or $0.08 per share. The Company was
able to acheive profitability through the sale of part of its ownership
interest in its subsidiary, Whitewing Labs. Acacia sold a 7.3% interest
in its subsidiary during the second quarter of 1995 for a gain of
$368,500. This gain offset Whitewing Labs reported net loss for the
quarter of approximately $120,000, of which the Company has included
approximately $80,000 in its current consolidated financial statements
based upon its current ownership percentage.
Second quarter sales at the Company's subsidiary, Whitewing Labs, have
increased from $33,506 in 1994 to $655,471 in 1995. The increase in
sales by Whitewing can be attributed to alternative direct response
mailings including the use of magazine advertisements. Whitewing also
experienced larger selling expenses in the second quarter of 1995. This
was in large part due to increased advertising costs associated with
its direct mail products.
Six months ended June 30, 1995 vs. June 30, 1994
For the six months ended the Company's net income rose from a loss of
$444,420 in 1994, to net income of $117,207 in 1995. This resulted in
an increase in per share earnings from a deficit per share of $0.20 in
1994 to earnings per share of $0.05 in 1995. The increase in earning
per share can be attributed to the increased sales volume from
Whitewing Labs from 1994 to 1995, as well as the Company's ability to
sell part of interest in its subsidiary at a reported gain of $611,343.
Outlook
As described in Note 14 of the consolidated financial statements the
Company's ability to continue will be based in large part upon the
ability to raise capital for Acacia Capital Partners, L.P. It is
management's belief that the management fees to be earned by Acacia
Research as general partner of the partnership will increase
significantly in 1996. In addition, the Company's subsidiary is in the
process of making a public offering of its common stock.
B. Consolidated Financial Position
For the first six months of 1995 Acacia has increased its total assets
from $1,240,836 to $2,555,988. This has been accomplished primarily
through the issuance of additional common stock by Whitewing Labs and
Acacia Research, as well as through the sale of part of the Company's
investment in Whitewing Labs at a gain of approximately $614,000.
Consolidated cash and cash equivalents have risen to $1,106,130 at June
30, 1995. The Company has invested $350,000 in Acacia Capital Partners,
L.P., this amount includes $100,000 invested by Whitewing Labs. The
Company has received a note as consideration for its sale of 50,000
shares of Whitewing stock. This note is due in September of 1995 and is
secured by 50,000 shares of Whitewing Labs stock. There is a
significant increase in the amount of prepaid expenses and deferred
advertising costs as of June 30, 1995. These increases can be
attributed to the increased acitivity of the Company's subsidiary
Whitewing Labs.
13
<PAGE> 14
PART II - OTHER INFORMATION
There is no required reportable other information for the quarter ended
June 30, 1995.
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.
ACACIA RESEARCH CORPORATION
By_________________________
Date: August 16, 1995
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) BALANCE
SHEET AND STATEMENT OF OPERATIONS FOR PERIOD ENDED JUNE 30, 1995.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,106
<SECURITIES> 0
<RECEIVABLES> 21
<ALLOWANCES> 0
<INVENTORY> 110
<CURRENT-ASSETS> 2,093
<PP&E> 126
<DEPRECIATION> 20
<TOTAL-ASSETS> 2,556
<CURRENT-LIABILITIES> 99
<BONDS> 0
<COMMON> 3,015
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,556
<SALES> 1,240
<TOTAL-REVENUES> 1,240
<CGS> 156
<TOTAL-COSTS> 156
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 124
<INCOME-TAX> 5
<INCOME-CONTINUING> 119
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 117
<EPS-PRIMARY> 0.05
<EPS-DILUTED> 0.05
</TABLE>
