<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-25992
NETVANTAGE, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 95-4324525
(State or Other Jurisdiction of Incorporation) (IRS Employer Identification No.)
201 Continental Blvd. Suite 201, El Segundo, CA 90245
(Address of Principal Executive Offices)
(310) 726-4130
(Registrant's Telephone Number, Including Area Code)
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 [ ]
The number of shares outstanding of each of the Registrant's classes of
Common Stock as of April 30, 1997: 9,889,287 shares of Class A Common Stock,
468,564 shares of Class B Common Stock and 540,995 shares of Class E Common
Stock.
<PAGE>
NETVANTAGE, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
INDEX
<TABLE>
<CAPTION>
PAGE
NO.
----
<S> <C>
PART I. FINANCIAL INFORMATION 3
Item 1. Financial Statements: 3
Balance Sheet -- March 31, 1997 and December 31, 1996 3
Statement of Operations -- Three Months Ended March 31, 1997 and
December 31, 1996 4
Statement of Cash Flows -- Three Months Ended March 31, 1997 and
December 31, 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II. OTHER INFORMATION 11
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures
Exhibit Index
</TABLE>
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NETVANTAGE, INC.
BALANCE SHEET
AS OF MARCH 31, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
(UNAUDITED)
MARCH 31, DECEMBER 31,
1997 1996
------------- ------------
ASSETS
<S> <C> <C>
Current assets:
Cash $ 22,367,254 $ 2,787,593
Accounts receivable, net of allowance of $75,000 at
March 31, 1997 and $50,000 at December 31, 1996 7,220,420 8,667,627
Accounts receivable - other 122,000 740,975
Due from related parties 354,710 100,000
Inventory 11,298,712 7,440,038
Prepaid expenses and other assets 75,035 121,134
------------ ------------
Total current assets 41,438,131 19,857,367
Deferred warrant call costs - 157,500
Property, plant and equipment, net 1,633,605 1,572,804
Goodwill and other intangibles, net 339,568 376,099
------------- ------------
Total assets $ 43,411,304 $ 21,963,770
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Accounts payable $ 1,684,927 $ 3,081,664
Accrued expenses 699,408 829,484
Due to related parties 11,738 342,505
------------ ------------
Total current liabilities 2,396,073 4,253,653
------------ ------------
Commitments and contingencies
Stockholders' Equity:
Preferred Stock, par value $0.01 per share,
5,000,000 shares authorized, none issued - -
Class A Common Stock, per value $0.001 per share,
17,000,000 shares authorized, 9,867,112 issued and
outstanding at March 31, 1997 (5,941,523 at December 31, 1996) 9,867 5,941
Class B Common Stock, convertible into Class A Common
Stock, par value $0.001 per share, 1,800,000 shares
authorized, 490,739 issued and outstanding at March 31, 1997
(689,701 at December 31, 1996) 491 690
Class E Common Stock, convertible into Class B Common
Stock, par value $0.001 per share, 1,200,000 shares
authorized, 540,995 issued, all shares are held in escrow 541 541
Additional paid-in-capital - Other 63,114,442 37,638,720
Additional paid-in-capital - Issuance of warrants 1,574,910 1,462,185
Accumulated deficit (23,685,020) (21,397,960)
------------ ------------
Total stockholders' equity 41,015,231 17,710,117
------------ ------------
Total liabilities and stockholders' equity $ 43,411,304 $ 21,963,770
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
NETVANTAGE, INC.
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------- -------------
<S> <C> <C>
Revenue $ 3,302,586 $ 1,005,902
Cost of revenue 2,448,697 898,348
------------- -------------
Gross margin 853,889 107,554
Operating expenses:
Research and development 1,457,573 851,156
Marketing and selling 703,896 244,255
General and administrative 1,139,873 435,108
------------- -------------
3,301,342 1,530,519
------------- -------------
Loss from operations (2,447,453) (1,422,965)
Interest income, net 120,388 32,232
Other income 40,005 -
------------- -------------
Net loss $ (2,287,060) $ (1,390,733)
============= =============
Net loss per share $ (0.22) $ (0.47)
============= =============
Weighted average number of
shares outstanding 9,994,072 2,934,216
============= =============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
NETVANTAGE, INC.
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1997 1996
------------ ------------
<S> <C> <C>
Net Loss $ (2,287,060) $ (1,390,733)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 197,557 118,853
Allowance for returns and doubtful accounts 25,000 -
Compensation recorded upon issuance of warrants 112,725 -
Provision for obsolete inventory 400,000 -
Changes in current assets and liabilities:
Accounts receivable 1,422,207 (876,120)
Accounts receivable - other 618,975 -
Due from related parties (254,710) -
Inventory (4,258,674) (1,007,081)
Prepaid expenses and other assets 46,099 (4,363)
Accounts payable (1,396,737) 327,268
Accrued expenses (130,076) (13,801)
Due to related parties (330,767) -
------------ ------------
Net cash used in operating activities (5,835,461) (2,845,977)
------------ ------------
Investing activities:
Purchase of property, plant and equipment (221,828) (342,282)
Financing activities:
Proceeds from issuance of B warrant call 26,233,120 -
Issuance costs on warrant call (596,170)
Proceeds received from private placement - 5,000,000
------------ ------------
Net cash provided by financing activities 25,636,950 5,000,000
------------ ------------
Net increase in cash 19,579,661 1,811,741
Cash at beginning of period 2,787,593 482,535
------------ ------------
Cash at end of period $ 22,367,254 $ 2,294,276
============ ============
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
NETVANTAGE, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
NetVantage, Inc. (the "Company") is a leading provider of Ethernet
Workgroup switching products which increase the information handling capacity of
new and installed Local Area Networks ("LANs"). Other applications for the
Company's switching products include connecting LANs to each other to extend the
network's scope and power and to provide installed networks with the ability to
connect to networking devices incorporating new technologies such as
Asynchronous Transfer Mode or "ATM," and Gigabit Ethernet. The Company's
switching products require no special skills to install, and require no changes
to existing user network equipment, wiring, hub equipment, software protocols or
applications.
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information pursuant to the rules and regulations of the Securities and Exchange
Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The unaudited financial statements reflect, in the opinion
of management, all adjustments, all of which are of a normal recurring nature,
necessary to present fairly the financial position of the Company as of March
31, 1997, the results of operations for the three months ended March 31, 1997
and 1996, and its cash flows for the three months ended March 31, 1997 and 1996.
The unaudited financial statements should be read in conjunction with the
Company's audited annual financial statements and notes included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
2. INVENTORY
The Company's inventory as of March 31, 1997 and December 31, 1996 was
comprised of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ ------------
<S> <C> <C>
Finished goods $ 1,219,566 $ 108,030
Work in process 1,574,391 -
Parts and materials 8,504,755 7,332,008
------------ ------------
$ 11,298,712 $ 7,440,038
============ ============
</TABLE>
Work in process and finished goods inventories consisted of material and direct
labor costs associated with the manufacturing process.
3. NET LOSS PER SHARE
Net loss per share was computed based on the weighted average number of
the Company's common shares outstanding and excludes the shares of Class E
Common Stock held in escrow because the conditions for the release of these
shares from escrow have not been satisfied. Common Stock equivalents were not
considered in the net loss per share calculation because the effect on the net
loss would be antidilutive.
In February 1997, the Financial Accounting Standards Board issued the
Statement on Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings per
Share", which is required to be adopted on December 31, 1997. At that time, the
Company will be required to change the method currently used to compute earnings
per share and to restate all prior periods. Under the new requirements for
calculating primary earnings per share, the dilutive effect of common stock
equivalents will be excluded. The impact of SFAS 128 on the calculation of
earnings per share is not expected to be material.
6
<PAGE>
4. STOCKHOLDERS' EQUITY
Class E Escrow Arrangement
In connection with the public offering of the units (comprised of one
share of the Company's Class A Common Stock, one Class A Warrant and one Class B
Warrant) on May 3, 1995, all outstanding shares of Class E Common Stock were
placed in escrow by existing stockholders. All shares of Class E Common Stock
placed into escrow, including those shares which may be issued upon exercise of
options, ("Escrowed Contingent Shares") are not transferable (but those issued
and outstanding may be voted).
These shares are to be released from escrow in the event that net
income before provision for income taxes, and exclusive of any extraordinary
earnings or charges and the compensation charges discussed in the next
paragraph, reaches certain targets during the next three years (the first
600,000 shares will be released if pretax income exceeds $4.3 million, $5.8
million or $7.2 million in fiscal years 1996, 1997 or 1998, respectively, and
the remaining 600,000 will be released if pretax income exceeds $5.3 million,
$7.1 million, or $8.9 million in fiscal years 1996, 1997 or 1998, respectively);
or the market price of the common stock reaches specified levels over the next
three years (the first 600,000 shares will be released if, commencing at May 3,
1995 and ending November 3, 1996, the bid price of the Company's common stock
averages in excess of $13.33 per share for 30 consecutive business days, or
commencing November 3, 1996 and ending May 3, 1998, the bid price averages
$16.67 per share for 30 consecutive business days and the remaining 600,000
shares will be released if, commencing at May 3, 1995 and ending November 3,
1996, the bid price of the Company's common stock averages in excess of $18.50
per share for 30 consecutive business days or commencing November 3, 1996 and
ending May 3, 1998, 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 Class E Common Stock in
the same proportion that outstanding Class E Common Stock is converted upon
attaining the specified earnings or market price levels.
On October 17, 1996, the criteria for the release of certain Escrowed
Contingent Shares were met and on that date, 600,000 shares, including 541,062
shares held by employees, officers, directors, consultants and their relatives,
were released from escrow. The release of 541,062 shares was deemed compensatory
and, accordingly, resulted in a charge to earnings in the fourth quarter of 1996
equal to the fair market value of the Escrowed Contingent Shares on release.
The release of Escrowed Contingent Shares held by individuals that have
not had any relationship with the Company, other than that of a common
stockholder, have been deemed not to be compensatory.
All Escrowed Contingent Shares that have not been released from escrow
by March 31, 1999 are subject to redemption by the Company at a redemption price
of $0.01 per share.
Warrants
The Company redeemed its Class B Warrants on January 10, 1997, pursuant
to its November 27, 1996 notice of redemption. Prior to the redemption date,
approximately $3.5 million or greater than 99% of the outstanding Class B
Warrants were exercised, resulting in gross proceeds to the Company of
approximately $26,233,000. After the warrant exercise, approximately 9.9 million
shares of Class A Common Stock were outstanding.
7
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Except for the historical information contained herein, the matters
discussed in this report are forward-looking statements that involve certain
risks and uncertainties that could cause the actual results to differ materially
from the forward-looking statements. Potential risks and uncertainties include,
without limitation, those mentioned in this report, in the Company's Annual
Report on Form 10-K for the year ended December 31, 1996 (including those listed
under the heading "Risk Factors") and other factors described from time to time
in other filings made by the Company with the Securities and Exchange
Commission.
The following discussion should be read in conjunction with the
unaudited financial statements and accompanying notes, included in Part I - Item
1 of this Quarterly Report, and the audited financial statements and
accompanying notes and Management's Discussion and Analysis of Financial
Condition and Results of Operations contained in the Company's Annual Report on
Form 10-K for the year ended December 31, 1996.
GENERAL
In mid-1994, the Company introduced its first 8 port Ethernet switch
and began commercial shipments of this product in late 1994. In 1995, the
Company attempted to market this product both through distribution channels and
to Original Equipment Manufacturers ("OEMs"). Late in the third quarter of 1995,
the Company focused its marketing efforts on OEM customers and discontinued its
marketing through distribution channels. In the first quarter of 1996,
production and sale of the original 8 port product was discontinued and the
Company began commercial shipments of its second product, a 16 port Ethernet
switch with a 100 Base T uplink capability. During the third quarter of 1996,
the Company added an 8 port Ethernet switch with a 100 Base T uplink capability
to its product line. Revenues in the first quarter of 1996 and the first quarter
of 1997 were primarily from sales of either the 8 or the 16 port Ethernet
products which include 100 Base T, 100 Base FX and 100 VG uplinks.
In 1996, the Company began development of its first Application
Specific Integrated Circuit ("ASIC"). Development and testing of this component,
code named "Coyote", has recently been completed and commercial shipments of
product containing the Coyote ASIC are expected to begin in the second quarter
of 1997. Significant internal investment has been made in ASIC technology and in
building a strong engineering knowledge base as ASIC-based products provide
higher levels of component integration resulting in significant manufacturing
cost reductions. The Company has also started development of two new ASIC-based
families of Ethernet switches which contain high feature content and low
manufacturing costs.
RESULTS OF OPERATIONS
Revenue for the three months ended March 31, 1997 was $3,303,000
compared to $1,006,000 for the three months ended March 31, 1996. The difference
of $2,297,000 between these quarters was primarily due to significant growth in
the LAN switching market, the acceptance of the Company's 8 and 16 port Ethernet
switching products in the marketplace and the Company's ongoing investment in
its marketing and sales efforts. However, revenue levels decreased from
$11,168,000, for the three months ended December 31, 1996 to $3,303,000 for the
three months ended March 31, 1997. This decrease was primarily due to delays in
the introduction and acceptance of the Company's new 8 and 16 port Coyote ASIC
switch product lines of which shipments are expected to begin in the second
quarter of 1997. As testing of the Company's new Coyote ASIC component neared
completion, OEM customers significantly curtailed orders of older products in
the first quarter of 1997 in anticipation of the release of the new Coyote ASIC
switch products.
8
<PAGE>
Cost of revenue for the three months ended March 31, 1997 was
$2,449,000 or 74% of revenue compared to $898,000 or 89% of revenue for the
three months ended March 31, 1996. The gross margin was 26% for the quarter
ended March 31, 1997 compared to 11% for the quarter ended March 31, 1996. The
increase in the gross margin is primarily attributable to cost reductions in
manufacturing components and in product design enhancements, as well as
increased production costs during the first quarter of 1996. During the three
months ended March 31, 1996, the Company began production and shipment of its 16
port units which resulted in additional early production costs and increased
manufacturing personnel costs in anticipation of increased product demand.
In the future, the Company's gross margins may be affected by several
factors, including the mix of products sold, the price of products sold, price
competition, manufacturing volumes, fluctuations in material costs, changes in
other components of cost of revenue and the technological innovativeness of
products sold. Timing and new product introductions may impact gross margins and
result in excess or obsolete inventories.
Research and development expenses for the three months ended March 31,
1997 increased 71% to $1,458,000, or 44% of revenue, compared to $851,000, or
85% of revenue, for the three months ended March 31, 1996. A significant portion
of the increase was due to the addition of new personnel and related incentive
and recruitment costs, depreciation on new equipment, and higher expenditures on
prototypes and increased costs associated with the development of new products.
The increases in research and development expenses in absolute dollars reflect
the Company's continuing commitment to invest in new products. The Company's
research and development costs are expensed as incurred.
Marketing and selling expenses for the three months ended March 31,
1997 increased 188% to $704,000, or 21% of revenue, compared to $244,000, or 24%
of revenue, for the three months ended March 31, 1996. The increase in these
expenses are a result of an increase in the size of the Company's direct sales
force and related commissions, as well as additional incentives offered to OEMs
to expand the Company's product distribution network and increase market share.
General and administrative expenses for the three months ended March
31, 1997 increased 162% to $1,140,000, or 35% of revenue, compared to $435,000,
or 43% of revenue, for the three months ended March 31, 1996. This increase was
primarily attributable to additional legal, accounting and consulting costs due
primarily to the resignation of the Company's Chief Financial Officer in January
1997, additional costs from increased public relations activity, increases in
employee benefits, and the issuance of warrants to a key executive.
Interest income, net, increased from $32,000 for the three months ended
March 31, 1996 to $120,000 for the three months ended March 31, 1997 due to
interest earned on higher cash and cash equivalent balances as a result of the
redemption of the Company's Class B warrants in the first quarter of 1997.
The net loss for the three months ended March 31, 1997 increased by 64%
to $2,287,000 from $1,391,000 for the three months ended March 31, 1996. The
increase in the net loss for the quarter ended March 31, 1997 is primarily due
to sales levels which were not sufficient to cover increases in research and
development expenses, marketing and selling expenses, and general and
administrative expenses as described above. The lower sales volume in the first
quarter of 1997 when compared to the fourth quarter of 1996 as described above
was a result of delays in the introduction and acceptance of the Company's new 8
and 16 port Coyote ASIC switch product lines of which shipments are expected to
begin in the second quarter of 1997. In addition, as testing of the Company's
new Coyote ASIC component neared completion, OEM customers significantly
curtailed orders of older products in the first quarter of 1997 in anticipation
of the release of the new Coyote ASIC switch products.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Since its inception in March 1991, the Company has financed its
operations and capital resources through a combination of an initial public
offering completed in 1995 and private transactions involving the issuance of
common stock for cash, convertible notes, bridge notes and the exercise of stock
options and warrants. For the period from March 12, 1991 to March 31, 1997, the
Company raised $64,700,000 from such sources. In October 1996, the Company
completed the redemption of its Class A Warrants which resulted in the issuance
of 2,335,568 shares of Class A Common Stock and the same number of Class B
Warrants. In addition, in October 1996, Class B Warrants to purchase 368,360
shares of Class A Common Stock were voluntarily exercised. Total proceeds from
the exercise of all Class A and Class B Warrants was approximately $17,368,000.
On January 10, 1997, the Company redeemed its Class B Warrants pursuant to its
November 27, 1996 notice of redemption. Prior to the redemption date,
approximately $3.5 million or greater than 99% of the outstanding Class B
Warrants were exercised, resulting in gross proceeds to the Company of
approximately $26,233,000. After the warrant exercise, approximately 9.9 million
shares of Class A Common Stock were outstanding.
The Company's cash and cash equivalents increased by $19,579,000 during
the quarter to $22,367,000 at March 31, 1997 from $2,788,000 at December 31,
1996. This increase was primarily due to proceeds from the redemption of Class B
Warrants of $26,233,000 partially offset by the net loss of $2,287,000 and an
increase in inventory of $3,859,000 during the quarter ended March 31, 1997.
Inventories increased 52% from $7,440,000 at December 31, 1996 to
$11,299,000 at March 31, 1997. This increase is primarily due to purchases of
material and labor costs for the Company's new 8 and 16 port Coyote ASIC switch
product lines for which shipments are expected to begin in the second quarter of
1997.
At March 31, 1997, the Company had working capital of $39,042,000. The
Company requires substantial working capital to fund its business, particularly
to finance inventories and accounts receivable as revenues increase and for
capital expenditures. The Company's future capital requirements will depend on
many factors, including the rate of revenue growth, the timing and extent of
spending to support product development and sales and marketing efforts, the
timing of introductions of new products and enhancements to existing products,
and market acceptance of the Company's products.
In July 1996, the Company secured a revolving line of credit with a
bank, which provides for borrowings of up to $5,000,000. Borrowings under the
line of credit bear interest at the bank's prime rate plus 2%. The line of
credit agreement requires the Company to comply with certain financial
covenants. The Company is in compliance with these covenants as of March 31,
1997. The line of credit expires in June 1997 and is currently unused.
The Company believes that its existing cash and the unused bank line of
credit are sufficient to meet the liquidity requirements of the Company at least
for the current year. However, due to the continuing investments in research and
development and operating losses, 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
issuance of additional securities. There can be no assurance, however, that
additional funds from equity or debt sources will be available on favorable
terms or at all. The Company's future capital requirements will depend upon
numerous factors, including the progress of the Company's cost reduction 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.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Not applicable.
ITEM 2. Changes in Securities
None.
ITEM 3. Defaults upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
None.
ITEM 5. Other Information
In July 1995, the Company completed a private sale of 165,000 shares
of Class A Common Stock to Ungermann-Bass Networks, Inc. ("UB"), a
customer of the Company. In accordance with the stock purchase
agreement with UB, for the two year period following the date of the
agreement, UB has the right to designate one candidate to the Board
of Directors of the Company. On May 1, 1997, Newbridge Networks
Corporation ("Newbridge"), the parent company of UB, designated Rick
Tinsley as such candidate. On the same day, the Company's Board of
Directors appointed Mr. Tinsley to fill a vacancy on the Board.
Mr. Tinsley joined Newbridge in September 1993 as Director of
Marketing and in February 1994 became Assistant Vice President of
Product Management. In June 1995, Mr. Tinsley became Vice President
and General Manager of the Video, Voice, Image, and Data ("VIVID")
business unit at Newbridge. Prior to joining Newbridge, Mr. Tinsley
served as Director of Marketing at Transwitch Corporation from June
1992 to July 1993. Prior to joining Newbridge, he was Business
Development Manager at Texas Instruments from January 1989 through
May 1992.
ITEM 6. Exhibits and Reports on Form 8-K
Exhibits:
Exhibit 27 Financial Data Schedule
Reports on Form 8-K
None
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
Date: May 15, 1997 NetVantage, Inc.
/s/ STEPHEN R. RIZZONE
By:___________________________________
Stephen R. Rizzone,
Chairman of the Board, Chief Executive
Officer and acting
Chief Financial Officer
/s/ KIM ROGERS
By:___________________________________
Kim Rogers,
Acting Chief Accounting Officer
EXHIBIT INDEX
27 Financial Data Schedule
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET INCOME STATEMENT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 22,367,254
<SECURITIES> 0
<RECEIVABLES> 7,697,130
<ALLOWANCES> (75,000)
<INVENTORY> 11,298,712
<CURRENT-ASSETS> 41,438,131
<PP&E> 1,633,605
<DEPRECIATION> 197,557
<TOTAL-ASSETS> 43,411,304
<CURRENT-LIABILITIES> 2,396,073
<BONDS> 0
0
0
<COMMON> 10,899
<OTHER-SE> 64,689,352
<TOTAL-LIABILITY-AND-EQUITY> 43,411,304
<SALES> 3,302,586
<TOTAL-REVENUES> 3,302,586
<CGS> 2,448,697
<TOTAL-COSTS> 5,750,039
<OTHER-EXPENSES> (193,706)
<LOSS-PROVISION> 25,000
<INTEREST-EXPENSE> 33,313
<INCOME-PRETAX> (2,287,060)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,287,060)
<EPS-PRIMARY> (0.22)
<EPS-DILUTED> 0
</TABLE>
