<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended September 30, 1996
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ________ to ________
Commission file number 0-25992
NetVantage, Inc.
- -------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 95-4324525
- -------------------------------------------------------------------------------
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation)
201 Continental Boulevard, El Segundo, California 90245
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(310) 726-4130
- -------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
- -------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
Check whether the issuer: (1) filed all reports to be filed by Section 13 or
15(d) of the 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
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: October 31, 1996 - 5,829,323 Class A
Common Shares
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
With the exception of historical information, the matters discussed or
incorporated by reference in this Quarterly Report on Form 10-Q are
forward-looking statements that involve risks and uncertainties including, but
not limited to, economic conditions, product demand and industry capacity,
competitive products and pricing, manufacturing efficiencies, new product
development, ability to enforce patents, availability of raw materials and
critical manufacturing equipment, new plant startups, the regulatory and trade
environment, and other risks indicated in filings with the Securities and
Exchange Commission.
1
<PAGE> 3
NETVANTAGE, INC.
(A Development Stage Enterprise)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------ ------------
ASSETS (unaudited)
<S> <C> <C>
Current assets:
Cash $ 289,809 $ 482,535
Accounts receivable, net of allowance of $10,000 and $3,117 7,526,163 84,835
Inventory 5,757,725 1,010,563
Prepaid expenses and other assets 237,831 24,426
------------ ------------
Total current assets 13,811,528 1,602,359
Property, plant and equipment 1,362,166 337,705
Other assets 409,711
------------ ------------
Total assets $ 15,583,405 $ 1,940,064
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Bank line of credit $ 4,351,983 $ -
Accounts payable 6,939,846 510,780
Accrued expenses 452,428 108,791
Due to related parties 231,786 18,479
------------ ------------
Total current liabilities 11,976,043 638,050
------------ ------------
Commitments and contingencies
Stockholders' equity (deficit)
Preferred stock, par value $0.01 per share,
5,000,000 shares authorized, none issued
Class A Common Stock, par value $0.001 per share,
17,000,000 shares authorized, 3,237,200 and 1,890,000
issued and outstanding, respectively 3,237 1,890
Class B Common Stock, convertible into class A common
stock, par value $0.001 per share, 1,800,000 shares
authorized, 367,502 and 541,029 issued 368 541
Class E Common Stock, convertible into Class B common
stock, par value $0.001 per share, 1,200,000 shares
authorized, 1,082,057 issued; all shares are held in escrow 1,082 1,082
Additional paid-in-capital - Other 18,694,366 11,647,739
Additional paid-in capital - Issuance of warrants 1,152,185 1,152,185
Deficit accumulated during the development stage (16,243,876) (11,501,423)
------------ ------------
Total stockholders' equity (deficit) 3,607,362 1,302,014
------------ ------------
Total liabilities and stockholders' equity (deficit) $ 15,583,405 $ 1,940,064
============ ============
</TABLE>
See accompanying notes to the financial statements
2
<PAGE> 4
NETVANTAGE, INC.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Period from
Three Months Ended March 12, 1991
September 30, (inception) to
----------------------------- September 30,
1995 1996 1996
----------- ----------- --------------
<S> <C> <C> <C>
Revenues:
Sales of product $ 56,977 $ 9,554,918 $ 16,860,589
Services 31,268 116,561
----------- ----------- ------------
56,977 9,586,186 16,977,150
Costs and expenses:
Cost of revenue 7,916,305 16,063,344
Research and development 87,972 1,221,788 7,302,496
Marketing and selling 549,817 651,963 3,264,822
General and administrative 305,720 514,545 5,320,375
Licensee fee to CircuitPath Networks
Systems Corporation 580,000
----------- ----------- ------------
1,657,863 10,304,601 32,531,037
----------- ----------- ------------
Loss from operations (1,600,886) (718,415) (15,553,887)
Interest income 38,207 7,913 189,044
Interest expense (56,381) (404,801)
----------- ----------- ------------
Loss before extraordinary item (1,562,679) (766,883) (15,769,645)
Extraordinary item: Extinguishment
of debt (474,231)
----------- ----------- ------------
Net Loss $(1,562,679) $ (766,883) $(16,243,876)
=========== =========== ============
Net Loss Per Share $ (0.69) $ (0.22)
=========== ===========
Weighted average number of shares outstanding 2,266,028 3,565,217
=========== ===========
</TABLE>
See accompanying notes to the financial statements
3
<PAGE> 5
NETVANTAGE, INC.
(A Development Stage Enterprise)
STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1995 1996
----------- -----------
<S> <C> <C>
Revenues:
Sales of product $ 1,138,270 $15,345,347
Services 30,000 31,268
----------- -----------
1,166,270 15,376,615
Costs and expenses:
Cost of revenue 820,871 14,328,133
Research and development 1,245,344 2,851,387
Marketing and selling 1,042,743 1,340,553
General and administrative 1,128,972 1,613,122
Licensee fee to CircuitPath Networks
Systems Corporation 580,000
----------- -----------
4,817,930 20,133,194
----------- -----------
Loss from operations (3,651,660) (4,756,579)
Interest income 83,338 70,507
Interest expense (263,611) (58,381)
----------- -----------
Loss before extraordinary item (3,841,933) (4,742,453)
Extraordinary item: Extinguishment
of debt (474,231)
----------- -----------
Net Loss $(4,316,164) $(4,742,453)
=========== ===========
Net Loss Per Share:
Loss before extraordinary item $ (2.63) $ (1.43)
=========== ===========
Extraordinary item: Extinguishment of debt $ (0.32)
=========== ===========
Net Loss $ (2.95) $ (1.43)
=========== ===========
Weighted average number of shares outstanding 1,461,632 3,311,251
=========== ===========
</TABLE>
See accompanying notes to the financial statements
4
<PAGE> 6
NETVANTAGE, INC.
(A Development Stage Enterprise)
STATEMENT OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Period from
Nine Months Ended March 12, 1991
September 30, (Inception) to
------------- September 30,
1995 1996 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net Loss $ (4,316,164) $(4,742,453) $(16,243,877)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 60,556 286,692 500,627
Amortization and write off of deferred rent 40,993 273,900
Amortization of debt discount and deferred
debt issue costs including write off
upon extingishment 691,639 718,034
Accrued interest, long term 66,346
Allowance for returns and doubtful accounts 49,934 20,904
Compensation recorded upon issuance of options 27,000
Common stock and warrants issued for goods
and services 155,513
Changes in current assets and liabilities:
Accounts receivable (55,128) (7,441,328) (7,547,067)
Inventory (1,540,757) (4,747,162) (5,757,725)
Prepaid expenses and other assets 17,532 (213,405) (237,831)
Accounts payable (10,879) 6,429,067 6,939,847
Accrued expenses 19,196 343,637 452,428
Due to related parties (218,074) 213,307 703,900
----------- ----------- ------------
Net cash used in operating activities (5,261,152) (9,871,645) (19,928,000)
----------- ----------- ------------
Investing activities:
Purchase of property, plant and equipment (286,001) (1,276,961) (1,828,601)
Other (43,899) (43,899)
----------- ----------- ------------
(286,001) (1,320,860) (1,872,500)
----------- ----------- ------------
Financing activities:
Bank line of credit 4,351,983 4,351,983
Proceeds from issuance of bridge notes payable
and related warrants, net of debt issue costs 340,500 862,500
Proceeds from issuance of convertible notes payable 1,523,000
Proceeds from issuance of common stock 7,952,690 6,647,796 16,352,826
Payment of bridge notes (1,000,000) (1,000,000)
----------- ----------- ------------
Net cash provided by financing activities 7,293,190 10,999,779 22,090,309
----------- ----------- ------------
Increase (decrease) in cash 1,746,037 (192,726) 289,809
Cash at beginning of period 199,630 482,535
----------- ----------- ------------
Cash at end of period $ 1,945,667 $ 289,809 $ 289,809
=========== =========== ============
</TABLE>
See accompanying notes to the financial statements
5
<PAGE> 7
NETVANTAGE, INC.
(A Development Stage Enterprise)
NOTES TO INTERIM FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - THE COMPANY
NetVantage, Inc. ("NetVantage" or the "Company") is engaged in the
development, manufacture and sale of Ethernet switching devices designed to
increase the information handling capacity of Local Area Networks.
Interim Financial Data
The interim financial information is unaudited; however in the opinion
of the Company, the interim data includes all material adjustments, consisting
only of normal recurring adjustments, necessary for a fair statement of the
results of the interim periods. The interim financial information should be
read in conjunction with the financial statements and notes thereto for the
year ended December 31, 1995, included in the Company's Annual Report on Form
10-KSB and the quarterly reports on Form 10-QSB for the three months ended
March 31, 1996 and June 30, 1996,as restated.
Revenue Recognition and Sales to Major Customers
Revenue from shipments to OEMs is recognized upon shipment to OEMs.
Revenue from shipments to distribution channels is recognized when the Company
is able to determine that successful sellthrough to end users will occur.
Sales to four customers amounted to 48%, 12%, 10% and 10%,
respectively, of net sales for the three month period ended September 30, 1996.
NOTE 2 - NET LOSS PER SHARE
The Company's net loss per share was computed based on the weighted
average number of shares of common stock outstanding during the nine months
ended September 30, 1996, and excludes all shares of Class E Common Stock
outstanding, or subject to option, because all such shares of stock are subject
to escrow and the conditions for the release from escrow were not satisfied at
September 30, 1996.
Pursuant to Securities and Exchange Commission Staff Accounting
Bulletin No. 83, all options and warrants granted and common shares issued
since September 30, 1993 through the date of the public offering, and not
included in the escrow arrangement have been included as outstanding for all
periods prior to the public offering using the treasury stock method and the
public offering price per share.
6
<PAGE> 8
NOTE 3 - PUBLIC OFFERING
On May 3, 1995, the Company completed an initial public offering of
1,500,000 units and on June 5, 1995, the Company completed an offering of the
underwriter's overallotment of 225,000 units. The offering price was $5.00 per
unit for total gross proceeds of $8,825,000 or $7,503,750 after Underwriters
commission. Each unit comprises one share of the Company's Class A Common Stock,
one Class A warrant and one Class B warrant (the "Units"). Upon exercise, the
Class A warrants entitle the holder to purchase one share (adjusted to 1.05
shares as of January 10, 1996) of Class A Common Stock for $6.50 (adjusted to
$6.21 as of January 10, 1996) and receive one Class B warrant. Class B warrants
entitle the holder to purchase one share (adjusted to 1.05 shares as of January
10, 1996) of Class A Common Stock for $7.75 (adjusted to $7.41 as of January 10,
1996).
In addition, the Underwriter purchased for nominal consideration a
Unit Purchase Option to purchase up to 150,000 units at an exercise price of
$6.75 per Option Unit.
In anticipation of the public offering the Company completed, in
January 1995, a private placement of $1,000,000 in promissory notes. These
notes were repaid from the proceeds of the public offering in May 1995. As a
part of the issuance of the promissory notes the Company issued 500,000 Class A
warrants to the note holders which are identical in all respects to the
warrants issued in the public offering.
As a condition of the initial public offering, all shares of the
Company's Class B and E Common Stock and all shares of Class B and E Common
Stock issuable upon exercise of outstanding options are subject to an escrow
agreement. With respect to the Class B Common Stock and related options, the
shares were released from escrow on June 3, 1996. With respect to the Class E
Common Stock and related options, the shares are released from escrow upon the
attainment of certain earnings levels or market price targets (Note 6). On
October 17, 1996, the market price levels for release of 541,062 shares of the
Company's Class E Common from escrow were met. Upon release the shares of Class
E Common were converted to Class B Common.
NOTE 4 - PRIVATE PLACEMENTS AND OTHER EQUITY TRANSACTIONS
On July 25, 1995, the Company completed a private sale of 165,000
shares of its Class A Common Stock to UB Networks for $5.25 per share, the fair
market price, for total proceeds of $866,250. At the same time UB Networks and
the Company signed an OEM agreement for certain products under development by
the Company.
On January 10, 1996, the Company completed a private sale of 854,993
previously unissued shares of its Class A Common Stock to two individuals for
$5.848 per share, the fair market price based on the average closing bid and
ask prices preceding the transaction date, for net proceeds of $5,000,000.
On April 30, 1996, the Company acquired all of the outstanding capital
stock of MultiMedia LANs, Inc., a North Carolina corporation, in exchange for
53,334 shares of the Company's previously authorized but unissued Class A
Common Stock. The closing price of the Company's Class A Common Stock at April
30, 1996 was $7.50 per share, for accounting purposes the acquisition has been
treated as a purchase. At the date of the closing MultiMedia LANs merged into
the Company.
7
<PAGE> 9
On June 3, 1996, the Company's Class B Common Stock was released from
Escrow (See Note 3). At the option of the holder Class B Common shares can be
exchanged for Class A Common shares on a one share for one share basis. As of
October 31, 1996 approximately 308,650 shares of Class B Common had been
exchanged for Class A Common.
NOTE 5 - INVENTORY
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
---- ----
<S> <C> <C>
Finished goods $1,594,882 $ 178,800
Work in process 1,404,327
Parts and materials 2,758,516 831,763
---------- ----------
$5,757,725 $1,010,563
========== ==========
</TABLE>
NOTE 6 - CLASS E COMMON STOCK ESCROW ARRANGEMENT
In connection with the initial public offering of Units of the Company
securities, all outstanding shares of Class E Common Stock were placed into
escrow by existing stockholders. On October 17, 1996, 541,061 Class E Common
Stock in escrow were released from escrow as a result of the Company's Class A
Common Stock having reached certain market price levels. The remaining shares
of Class E Common Stock placed in escrow, including those shares which may be
issued upon exercise of options ("Escrowed Contingent Shares"), approximating
600,000 shares are not transferable (but may be voted) and will be released
from escrow in the event net income before provision for income taxes, and
exclusive of any extraordinary earnings or charges and the compensation charges
discussed in the next paragraph, exceeds $5.3 million, $7.1 million, or $8.9
million in fiscal year 1996, 1997 or 1998, respectively); or if commencing 18
months after the effective date and ending 36 months after the effective date,
the bid price averages in excess of $23.50 for 30 consecutive business days.
Any options to purchase common stock shall be deemed converted into similar
options to acquire Class B and E Common Stock in the same proportion that
outstanding Class E common is converted upon attaining the specified earnings
or market price levels.
The release of the Escrowed Contingent Shares held by employees,
officers, directors, consultants and their relatives will be deemed
compensatory and, accordingly, will result in charges to earnings equal to the
fair market value of the Escrowed Contingent Shares recorded ratably over the
period beginning on the date when management determines that any of the
specified events are likely to occur and ending on the date on which the
securities are released. At the time a goal is attained, compensation expense
will be recorded in a one-time charge to reflect the then fair market value of
the shares released from escrow. As a result of the October 17, 1996, release
of Class E Common Stock, referred to above, a non-cash charge to earnings will
be recorded in the fourth quarter ending December 31, 1996 of approximately
$4,082,000. Should the remaining Class E Common Stock, be released a charge,
calculated in the same manner, could substantially reduce the Company's net
income or increase the Company's loss for financial reporting purposes in the
period such charge is recorded.
All Escrowed Contingent Shares that have not been released from escrow
by March 31, 1999 will be redeemed by the Company at a redemption price of $.01
per share. Any dividends or other distributions made with respect to Escrowed
Contingent Shares not released from escrow will be forfeited and contributed to
the capital of the Company.
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
NETVANTAGE, INC.
(A Development Stage Enterprise)
General
In mid 1994, the Company introduced its 8 port NV7500 10/10 Ethernet
Switch and began commercial shipments of this product in late 1994. In 1995,
the Company attempted to market this product through both distribution channels
and to Original Equipment Manufacturers ("OEMs"). Late in the third quarter of
1995, the Company changed its strategic marketing emphasis to OEM customers and
discontinued its efforts to market through distribution channels. In the first
quarter of 1996 the Company completed its second product, a 16 port Ethernet
switch with uplink capability. In the first quarter of 1996 the production and
sale of the 8 port NV7500 product was discontinued. During the third quarter
the Company began selling an 8 port Ethernet switch with a 100 Base T uplink.
Substantially all of the revenue in the nine months ended September 30, 1996,
is from the 16 port Ethernet products including 100 Base T and 100 VG uplinks.
Same quarter comparisons with 1995 are not generally meaningful due to the
strategic shift in the Company's sales and marketing activities and the
introduction in 1996 of the 16 port Ethernet switch products. Therefore the
analysis provided below will generally compare the third quarter ended
September 30, 1996 with the second quarter ended June 30, 1996 unless a prior
year comparison is considered helpful to the reader. This Management Discussion
and Analysis of Financial Condition and Results of Operations contains certain
forward-looking statements. Actual results could differ materially.
Results of Operations
Sales of the Company's 16 port and 8 port 10/100 Ethernet switch
products for the three months ended September 30, 1996, were $9,554,918
compared to sales $4,784,527 for the three months ended June 30, 1996, an
increase of 100%. Sales for the three months ended March 31, 1996 were
$1,005,902. Sales to a major customer in the quarters ended March 31, June 30,
and September 30 of 1996 were 49%, 69% and 48%, respectively. Sales in the
three months ended September 30, 1995 were $56,977, all of which were sales of
Company's previous 8 port NV7500 10/10 Ethernet switch. The increase in sales
from quarter to quarter in 1996 reflects the acceptance in the market place of
the Company's 10/100 Ethernet switch products.
Cost of revenue in the three months ended September 30, 1996, was
$7,916,305 or 83% of revenue for the quarter. Restated cost of revenue in the
second quarter ended June 30, 1996 was $5,513,479 or 115% of revenue for the
second quarter. The decline in the cost of revenue was due to greater sales of
higher margin product to the Company's largest customer and volume discounts on
purchased components. Partially offsetting these factors were increased costs
of manufacturing overhead as additional staff were added to manage the
increased sales volume; manufacturing staff at June 30, 1996 were 12 increasing
to 15 at September 30, 1996. It is expected that increases in manufacturing
overhead staffing over the next several quarters costs will be nominal as the
current staffing is believed to be adequate to handle projected sales demand.
Research and development expenses in the third quarter ended September
30, 1996 were $1,221,788 compared to $$778,443 in the second quarter ended June
30, 1996, an increase of
9
<PAGE> 11
57%. This increase was due to the addition of engineers for ASIC design and the
development of new products. At June 30, 1996 the engineering department
consisted of 19 people while at September 30, 1996 the number had increased to
21.
Marketing selling expenses for the third quarter ended September 30,
1996 were $651,963 compared to $444,335 in the second quarter ended June 30,
1996, an increase of 47%. This increase is due to sales commissions on higher
sales and the addition of one person to the sales and marketing staff in the
quarter.
General and administrative expense for the third quarter ended
September 30, 1996 was $514,545 compared to $663,469 in the second quarter
ended June 30, 1996, a decrease of 22%. This decrease was primarily due to the
absence of moving expenses and associated costs, cost of the 1995 annual report
and Delaware tax on capital incurred in the second quarter which were not
present in the third.
Interest expense in the third quarter ended September 30, 1996 was
$56,381 compared to $30,362 in the second quarter ended June 30, 1996, an
increase of 86%. This increase was due to higher usage of the Company's bank
line of credit to finance increased accounts receivable and inventry associated
with the increased revenue.
The net loss for the third quarter ended September 30, 1996 was
$766,883 or $0.22 per share compared to a net loss for the quarter ended June
30, 1996 of $1,561,686 or $0.46 per share. The net loss declined between the
second and the third quarters of 1996 by $794,803 or 51% as a result of higher
sales and improved margins. The weighted average number of shares outstanding,
used in the per share calculations, increased from the 3,407,619 used in the
second quarter of 1996 to 3,565,217 used in the third quarter of 1996, a
difference of 157,598 or 5%. This increase was primarily due to the voluntary
exercise in the third quarter of Class A Warrants resulting in the issuance of
265,346 additional Class A Common shares.
Liquidity and Capital Resources
The Company has incurred losses for the period from March 12, 1991
(inception) through September 30, 1996 of $16,243,867. The Company may to
continue to incur losses until such time as sufficient sales volume at adequate
gross margins is achieved to cover indirect operating costs.
Cash at September 30, 1996, was $289,809, representing an decrease of
$192,726 compared to December 31, 1995. Working capital at September 30, 1996,
increased $871,175 or 90%, compared to December 31, 1995. The working capital
increase was due to higher receivable and inventory balances partially offset
by higher payables and the use of the bank line of credit.
Accounts receivable at September 30, 1996, were $7,526,163, an
increase of $7,441,328 compared to December 31, 1995 and $3,162,980 compared to
June 30, 1996. The increase between both periods is due to higher sales.
Inventory at September 30, 1996 was $5,757,725, an increase of
$4,747,162 compared to December 31, 1995 and $3,173,959 compared to June 30,
1996. The inventory increase was in support of orders for fourth quarter
shipments.
10
<PAGE> 12
At September 30, 1996, accounts payable were $6,939,847 compared to
$510,780 at December 31, 1995. At September 30, 1996 the bank line of credit
balance was $4,351,983.
On October 24, 1996, the Company completed the redemption of its Class
A Warrants which resulted in the exercise of 99.9% of the Class A Warrants and
the issuance of 2,335,568 shares of Class A Common stock. In addition, as of
October 24, 1996, 368,360 Class B Warrants were voluntarily exercised resulting
in the issuance of 386,778 Class A Common shares. Total proceeds from the
exercise of all warrants at October 24, 1996 was approximately $17,368,000. On
November 3, 1996, the Company repaid the bank line of credit.
The Company believes that its existing cash and the unused bank line
of credit are sufficient to meet the current liquidity requirements of the
Company. However, because of the rapid growth in revenues the Company may need
to seek additional credit, alternative financing and/or further equity
investment. The sources of such credit or equity investment may include
increased lines of credit and/or exercise of outstanding warrants; however,
there can be no assurances that these sources will be available. The Company
may also seek additional public offerings and/or private placements of its
securities. There can be no assurance, however, that additional funds will be
available from any of the foregoing or other sources on favorable terms, if at
all. The Company's future capital requirements will depend upon numerous
factors, including the progress of the Company's cost reductions efforts for
its existing products, the success or lack thereof of its new product
development, the amount of resources devoted to manufacturing and marketing,
technological advances, the status of competitors and the success or lack
thereof of the Company's marketing activities.
11
<PAGE> 13
NETVANTAGE, INC.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
For the quarter ended September 30, 1996 the Registrant filed two
reports on Form 8-K. The first report was dated September 6, 1996, and
contained the Notice of Redemption of Warrants To Purchase Common Stock. This
notice was to registered holders of Class A Warrants and stated the Registrants
intention to redeem the warrants effective October 3, 1996. The second report
was dated September 26, 1996 and contained an Amended Notice of Redemption of
Warrants To Purchase Common Stock which extended the redemption period to
October 24, 1996.
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
authoried.
NetVantage, Inc.
Date: November 12, 1996 /s/ Stephen R. Rizzone
---------------------- -------------------------------------
Stephen R. Rizzone, President & CEO
Date: November 12, 1996 /s/ Thomas V. Baker
---------------------- -------------------------------------
Thomas V. Baker, Vice President & CFO
(Principal Financial and Accounting
Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 289,809
<SECURITIES> 0
<RECEIVABLES> 7,526,163
<ALLOWANCES> 10,000
<INVENTORY> 5,757,725
<CURRENT-ASSETS> 13,811,528
<PP&E> 1,823,916
<DEPRECIATION> 461,750
<TOTAL-ASSETS> 15,583,405
<CURRENT-LIABILITIES> 11,976,043
<BONDS> 0
0
0
<COMMON> 4,687
<OTHER-SE> 3,602,675
<TOTAL-LIABILITY-AND-EQUITY> 15,583,405
<SALES> 9,554,918
<TOTAL-REVENUES> 31,268
<CGS> 7,916,305
<TOTAL-COSTS> 10,304,601
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 56,381
<INCOME-PRETAX> (766,883)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (766,883)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> 0
</TABLE>
