<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission File No. 1-13818
THE RATTLESNAKE HOLDING COMPANY, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1369616
- ------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3 Stamford Landing, Suite 130, Stamford, CT 06902
- ------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 975-9455
--------------
------------------------------------------------------------------
Former name, former address and former fiscal year, if changed
since last report.
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
----- -----
2,643,734 Common Shares, par value $.001 per share were outstanding as of March
31, 1996.
<PAGE> 2
FORM 10-QSB
THE RATTLESNAKE HOLDING COMPANY, INC.
MARCH 31, 1996
INDEX
<TABLE>
<CAPTION>
Page No.
--------
Part I - Financial Information
------------------------------
<S> <C>
Consolidated Balance Sheets 3
March 31, 1996 (Unaudited) and
June 30, 1995
Consolidated Statements of Operations 4
for the three and nine months ended
March 31, 1996 and 1995 (Unaudited)
Consolidated Statements of Cash Flows for 5
the nine months ended March 31,
1996 and 1995 (Unaudited)
Notes to Consolidated Financial Statements 6
(Unaudited)
Management's Discussion and Analysis 8
Liquidity 11
Part II - Other Information
---------------------------
Item 6: Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
<PAGE> 3
THE RATTLESNAKE HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- -------------------------------
MARCH 31, MARCH 31,
(UNAUDITED) (UNAUDITED)
1996 1995 1996 1995
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Restaurant sales $2,372,121 $1,212,231 $ 6,431,995 $ 3,946,421
Costs and expenses:
Cost of food and beverage sales 720,382 392,986 2,015,321 1,281,623
Restaurant salaries and benefits 798,574 379,680 2,277,975 1,308,871
Occupancy and other 514,660 329,903 1,652,713 964,308
Depreciation and amortization expense 145,662 87,449 424,578 286,961
---------- ---------- ----------- -----------
Total restaurant costs and operating expenses 2,179,278 1,190,018 6,370,587 3,841,763
General and administration 795,314 394,886 2,473,776 1,080,556
Amortization of debt issuance costs - 224,347 - 900,943
Restaurant closing costs - - 143,948 -
Interest expense, net 20,308 79,112 78,445 181,910
Miscellaneous expenses 7,635 2,123 12,250 2,123
---------- ---------- ----------- -----------
Net loss before extraordinary item (630,414) (678,255) (2,647,011) (2,060,874)
Extraordinary item:
Gain on early extinguishment of debt - - 89,710 -
---------- ---------- ----------- -----------
Net loss $ (630,414) $ (678,255) (2,557,301) $(2,060,874)
========== ========== =========== ===========
Per share:
Loss before extraordinary item $ (0.24) $ (0.61) (1.02) $ (1.84)
Extraordinary item - - 0.03 -
---------- ---------- ----------- -----------
Net loss $ (0.24) $ (0.61) (0.99) $ (1.84)
========== ========== =========== ===========
Weighted average number of common
and common equivalent shares
outstanding 2,643,734 1,118,582 2,593,212 1,118,582
========== ========== =========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE> 4
THE RATTLESNAKE HOLDING COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
MARCH 31,
1996 JUNE 30,
ASSETS (UNAUDITED) 1995
----------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 1,573,116 $ 28,316
Accounts receivable, net 51,119 27,138
IPO receivable - 7,260,800
Inventory 92,216 91,334
Pre-opening costs 25,473 18,081
Debt issuance costs - 72,114
Prepaid expenses and other current assets 105,113 9,555
----------- -----------
Total current assets 1,847,037 7,507,338
Property and equipment, net 1,980,332 1,082,873
Intangible assets, net 1,600,676 1,499,478
Other assets, net 208,089 203,538
----------- -----------
$ 5,636,134 $10,293,227
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of notes payable $ 577,852 $ 1,530,572
Accounts payable 446,924 754,186
Accrued expenses 353,355 805,422
Other current liabilities 166,403 350,542
----------- -----------
Total current liabilities 1,544,534 3,440,722
Notes payable, net of current maturities 1,258,891 1,768,301
----------- -----------
Stockholders' equity
Preferred stock, $.10 par value, 5,000,000 shares
authorized, none issued and outstanding - -
Common Stock, $.001 par value - 20,000,000 shares authorized,
2,643,734 and 2,558,563 issued and outstanding, at
March 31, 1996 and June 30, 1995, respectively 2,644 2,559
Additional paid-in capital 9,585,367 9,279,649
Accumulated deficit (6,755,302) (4,198,004)
----------- -----------
2,832,709 5,084,204
$ 5,636,134 $10,293,227
=========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE> 5
THE RATTLESNAKE HOLDING COMPANY., INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------------------
MARCH 31,
(UNAUDITED)
1996 1995
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,557,301) $(2,060,842)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 453,615 1,187,713
Gain on early extinguishment of debt (89,710) -
Restaurant closing costs 143,948 0
Changes in assets and liabilities:
(Increase)/Decrease in accounts receivable (23,981) 640
(Increase)/Decrease in inventory (882) 15,924
(Increase) in pre-opening costs (44,794) -
(Increase) in prepaids and other assets (174,177) (404,829)
Increase in accounts payable and accrued expenses 113,615 673,962
(Decrease) in other current liabilities (110,071) (23,292)
----------- -----------
Net cash used in operating activities (2,289,738) (610,724)
----------- -----------
Cash flows from investing activities:
Capital expenditures (1,268,229) (139,497)
Payments for acquisitions of leaseholds (180,115) -
----------- -----------
Net cash used in investing activities (1,448,344) (139,497)
----------- -----------
Cash flows from financing activities:
Net proceeds from issuance of stock 14,357 -
Net proceeds from debt offering - 865,013
Proceeds from IPO 7,260,800 -
IPO costs (721,020) -
Principal repayment of borrowings (1,271,255) (121,924)
----------- -----------
Net cash provided by financing activities 5,282,882 743,089
----------- -----------
Net increase in cash and cash equivalents 1,544,800 (7,132)
Cash and cash equivalents, beginning of period 28,316 25,402
----------- -----------
Cash and cash equivalents, end of period $ 1,573,116 $ 18,270
=========== ===========
Cash paid during the period for:
Interest $ 106,237 $ 44,380
=========== ===========
Income taxes $ 12,250 $ 2,123
=========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE> 6
THE RATTLESNAKE HOLDING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
(Unaudited)
1. Principles of consolidation
The consolidated financial statements include the accounts of The
Rattlesnake Holding Company, Inc. and subsidiaries (the "Company"). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
2. Consolidated financial statements
The consolidated financial statements as shown in the accompanying
index have been prepared by the Company without audit. In the opinion of
management the accompanying financial statements include all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position, results of operations and cash flows at March 31, 1996, and
for all periods presented.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed, reclassified or omitted. These consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for fiscal year end June 30, 1995. The results of operations
for the period ended March 31, 1996 are not necessarily indicative of the
operating results which may be achieved for the full year.
3. Financing arrangements
On June 29, 1995, the Company completed an initial public offering
("IPO") of 1,300,000 shares of common stock and 195,000 additional shares
pursuant to the exercise of the over-allotment option by the underwriter at
$5.50 per share. The net proceeds of the offering, after deducting
underwriter's commissions and fees of $986,700 and offering costs of $721,020
were $6,539,780 and were received on July 7, 1995. The proceeds from this
offering are being used for working capital, marketing and advertising, the
implementation of the Company's expansion strategy and to repay subordinated
debt as described below.
In July 1995, the Company re-negotiated the terms of the $1,800,000 of
9% subordinated notes payable (the "Notes"). Immediately, $225,000 of the
Notes were redeemed and the remaining principal amount outstanding of
$1,575,000 was restructured as follows:
Each $25,000 principal amount of Notes was exchanged for:
(i) $8,334 in cash (the "First Payment") (for an aggregate
redemption of $517,000); and (ii) a 9% $8,333 Series A Note
(the "Series A Notes") due August 6, 1996, and (iii) a 9%
$8,333 Series B Note (the "Series B Notes") due five years
after the First Payment. Each Series B Note is convertible
into common stock 13 months after issuance at a conversion
price equal to 70% of the IPO price of the common stock sold,
with piggy-back registration rights for the shares underlying
each Series B Note. Each Series B Note is redeemable with 30
days prior written notice at any time after the closing that
the bid price of
<PAGE> 7
the common stock is 150% of the conversion price for the 10
consecutive trading days ending within 15 days of the date of
notice of redemption.
An extraordinary gain of $89,710, net of the write-off of the
remaining debt issuance cost of $72,114, has been recorded in the accompanying
consolidated statement of operations for the nine month period ended March 31,
1996 relating to the early extinguishment of debt associated with the above
mentioned restructuring.
4. Restaurant closing costs
On December 31, 1995, the Board of Directors authorized the closing of
the Rattlesnake Southwestern Grill restaurant located in Hamden, Connecticut.
The facility was closed on January 7, 1996. A majority of the fixed assets at
this facility have been removed to be utilized at existing or new facilities.
All remaining fixed assets and leasehold improvements have been abandoned. A
loss of $143,948 was recorded at December 31, 1995.
5. Weighted average number of shares
The Company calculated the weighted average number of shares
outstanding for the three and nine months ended March 31, 1995 pursuant to
Securities and Exchange Commission Staff Accounting Bulletin Topic 4D,
excluding the weighted average number of shares relating to the IPO. For the
three and nine months ended March 31, 1996, a weighted average number of shares
was not calculated for options and warrants outstanding due to their
anti-dilutive effect on the Company's net loss per share calculation.
<PAGE> 8
MANAGEMENT DISCUSSION AND ANALYSIS
The following discussion of the results of operations and financial
condition should be read in conjunction with the Company's audited consolidated
financial statements and notes thereto.
The Company's strategy of aggressive growth, utilizing a low cost
restaurant conversion concept, adaptable to different leasehold configurations
in a short construction timetable, has been accomplished consistently for
existing properties. The Company has been able to identify additional
similarly acceptable sites for development during the next fiscal year.
However, there can be no assurance that in the future the Company will be able
to continue to identify suitable locations or open new restaurants on a
consistent basis within the historical time frames or cost levels.
As projected, the Company has progressively increased its corporate staff
and marketing efforts as integral components of its expansion program
disproportionate in the short term to current levels of revenue. For example,
the Company has added positions in administration, accounting and operations to
react to the growth and in anticipation of the projected expansion. The Company
has made further investments in its computer systems in order to improve its
point-of-sale and restaurant operations information systems. The Company has
also significantly increased its promotional expenditures to support new and
existing restaurant locations and to further its strategy of building brand
equity regionally. In February 1996, the Company implemented an Operations
Action Plan which was designed to concentrate on improving the performance of
the units. The Company refocused the unit manager's attention to controllable
costs, improved service and uniformity in product preparation and presentation.
This Action Plan has been a key factor in reducing controllable costs on a unit
by unit level and improving unit performance, as evidenced by a 45% reduction
in net loss for the three months ended March 31, 1996 as compared to the three
months ended December 31, 1995.
OPERATING RESULTS FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1996 AS
COMPARED WITH MARCH 31, 1995
Restaurant sales increased 63.0% to $6,431,995 for the nine months ended
March 31, 1996 from $3,946,421 for the nine months ended March 31, 1995 and
increased by $1,159,890 or 95.7% for the three months ended March 31, 1996 as
compared to the same three months in 1995. For the three and nine months
ended March 31, 1995, there were four Rattlesnake Southwestern Grill
restaurants operating. The number of operating restaurants increased from four
to seven for the period ended March 31, 1996, prior to the closing of the
Hamden Connecticut facility in January 1996. The three new restaurants are
located in White Plains, New York; Danbury, Connecticut and Flemington, New
Jersey. Of the three new restaurants, only White Plains has been operating for
the full nine months presented in 1996. Danbury and Flemington were opened in
September and November 1995, respectively. For the three restaurants operating
for the three month period ended March 31, 1996 and 1995, same store sales
decreased 1.5% from $1,004,251 for the period ended March 31, 1995 to $989,587
for the same period ended March 31, 1996. Same store sales for these three
restaurants decreased from $3,321,360 to $2,886,398 for the nine months ended
March 31, 1995 and 1996, respectively. The severe weather conditions
experienced in the Country's northeastern region had a dramatic affect on sales
during the second and third quarters of fiscal year 1996. Twenty of the
ninty-one sales days in the third quarter ended March 31, 1996 were affected by
snow and many others were affected by rain or ice. The Company believes its
decrease in same store sales during this period was less than such decreases
experienced by the industry generally in the Northeast during this period due
to the severe winter conditions.
Food and beverage costs decreased as a percentage of restaurant sales to
31.3% for the nine months ended March 31, 1996 as compared to 32.5% for the nine
months ended March 31, 1995. For the three months ended March 31, 1996 and
1995, respectively, food and beverage costs decreased as a percentage of
restaurant sales to 30.4% from 32.4%. The overall decrease can be attributed to
the reconfiguration of the Rattlesnake Menu. These reductions in food and
beverage costs are also a result of tighter controls over the purchase, use and
reporting of inventory.
Restaurant salaries and fringe benefits, which consist of direct salaries
of restaurant managers, hourly employee wages and related fringe benefits,
increased as a percentage of sales to 33.7% for the three months and 35.4% for
the nine months ended March 31, 1996 as compared to 31.3% and 33.2% for the
three and nine months
<PAGE> 9
ended March 31, 1995, respectively. This increase is attributable to the
opening of the new locations, turnover of store personnel in response to
performance reviews by management and a decline in same store sales. As is
traditional with the opening of new restaurant sites, the start up period of 90
to 120 days reflects salary ratios at higher than normal operating levels due to
the lack of experience of the new personnel which results in higher payroll
costs until the staff becomes experienced. The Company has hired additional
managers and kitchen personnel in anticipation of the opening of new restaurants
as described in its expansion plan. These new hires are being trained and
utilized in existing locations. The Company believes that restaurant salaries
and fringe benefit costs will moderate prospectively as a result of management
efforts to refine training practices and increase productivity.
Occupancy and other related expenses, which include linen, repairs,
maintenance, utilities, rent, insurance and other occupancy related expenses,
as a percentage of sales decreased to 21.7% from 27.2% for the three months
ended March 31, 1996 and 1995, respectively. For the nine months ended March
31, 1996 and 1995, occupancy and other related expenses increased to 25.7% from
24.4%, respectively. This increase for the nine month period is attributable
to several factors, including rent paid in the pre-opening periods of new
restaurants, significant pre- opening supply purchases for new locations needed
to support operations and a decline in same store sales. Since two of the new
locations were only in operation for a few months, these ratios are not
representative of expected normal performance. As evidenced by the decrease in
the occupancy and other related expenses for the three months ended March 31,
1996, these costs have began to moderate.
Depreciation and amortization expenses, including the amortization of
pre-opening store expenses, decreased slightly as a percentage of restaurant
sales to 6.1% and 6.6% for the three and nine months ended March 31, 1996, from
7.2% and 7.3% for the three and nine months ended March 31, 1995. These
expenses increased to $145,662 and $424,578 in the three and nine months ended
March 31, 1996 from $87,449 and $286,961 for the three and nine months ended
March 31, 1995. This increase is primarily attributable to the opening of new
restaurants, the expansion of the point-of-sale computer system and other
capital expenditures. The Company anticipates that the operating cost ratios
for depreciation and amortization will continue to moderate as the Company's
expansion plan continues to be implemented in fiscal 1996 and 1997.
General and administrative expenses increased as a percentage of sales to
33.5% and 38.5% for the three and nine months ended March 31, 1996 from 32.6%
and 27.4% for the three and nine months ended March 31, 1995. General and
administrative expenses increased $400,428 or 101.4% for the three months ended
March 31, 1996 as compared to the same period in 1995. For the nine months
ended March 31, 1996, these expenses increased $1,393,220 or 128.9%. The overall
increase in general and administrative expenses is due primarily to additions to
corporate personnel which will enable the Company to implement its expansion
plan, offset by other staff reductions whose responsibilities were
redistributed to other personnel. The Company believes that these costs will
remain relatively constant as the expansion plan progresses. Also contributing
to the increased general and administrative costs are the increased cost of
insurance, professional fees, advertising, printing, office rent and supplies.
Operating general and administrative expenses were also higher in the period as
a result of the pre- opening costs of the new restaurants which have not been in
operation for a relatively short period of time. These increases as a
percentage of sales are also attributed to the decreased same store sales and
the elimination of Hamden sales.
During the nine months ended March 31, 1995, the Company recorded
$900,943 for the amortization of debt issuance costs associated with the
Company's $1,800,000 private placement of 9% subordinated notes, which were
partially redeemed and the remaining principal balance was restructured in June
1995. All related deferred financing costs were written off in the quarter
ended September 30, 1995, as a result of this restructuring.
Interest expense decreased 74.3% to $20,308 for the three months ended
March 31, 1996 from $79,112 for the three months ended March 31, 1995 and 56.9%
to $78,445 from $181,910 for the nine months ended March 31, 1996 and 1995,
respectively. The decrease in interest expense is attributable to reduced debt
outstanding, as a result of the Company's partial repayment and restructuring
of the remaining principal outstanding associated with the $1,800,000 private
placement of 9% subordinated notes payable, the repayment of other outstanding
notes and the increased interest income earned on IPO proceeds.
<PAGE> 10
The net loss decreased from $678,255 in the three months ended March 31,
1995 to $630,414 for the three months ended March 31, 1996. This decrease is
attributed to the Company's Action Plan, focusing attention on controllable
costs. These efforts to decrease costs were hampered by the severe weather
experienced in the third quarter of fiscal year 1996 resulting in decreased
sales. The net loss for the nine months ended March 31, 1995 as compared to
1996 increased from $2,060,874 to $2,557,301, respectively. The increased net
loss is attributable to a variety of factors, including decreased restaurant
operating profits, higher general and administrative expenses and restaurant
closing costs associated with the elimination of the Company's restaurants at
Hamden, Connecticut. Operating losses at this location site combined with
closing costs attributed $348,784 of the total net loss for the nine month
period ended March 31, 1996.
<PAGE> 11
LIQUIDITY
On June 29, 1995, the Company completed an initial public offering of
1,300,000 shares of its common stock and 195,000 additional shares pursuant to
the exercise of the over-allotment option by the Underwriter at $5.50 per
share. The net proceeds of the offering, after deducting underwriters'
commissions and fees of $986,700 and offering costs of $721,020, was
$6,539,780.
The Company's cash position increased by $1,544,800 during the nine months
ended March 31, 1996, principally as a result of the net proceeds received from
the June 1995 initial public offering, offset by the repayment of debt, capital
expenditures associated with the development of new restaurant locations and
funding of operating losses.
Net cash used in operating activities was $2,289,738, principally relating
to the Company's net loss before extraordinary item, increase in prepaid and
other assets, increase in pre-opening costs, increase in accounts receivable
and decrease in current liabilities, offset by depreciation and amortization
expenses, restructuring costs and increase in accounts payable and accrued
expenses. The Company utilized $1,448,344 for investing activities,
principally for capital expenditures and lease acquisition costs. The Company
generated $5,282,882 from financing activities, principally relating to the
receipt of initial public offering proceeds, offset by reductions of
outstanding indebtedness and principal payments associated with the
restructuring of the Company's $1,800,000, 9% subordinated notes payable.
In September 1995, the Company purchased a leasehold interest and certain
assets for $365,000, consisting of $265,000 in cash and a $100,000 five year
note, bearing interest at prime plus 1%. The Company also entered into a
related seven year lease agreement for this property, for an annual rental of
$80,400, and additional rent equal to a percentage of gross sales above a
specified level. The Company opened a new restaurant at this site in late
November 1995.
The Rattlesnake Southwestern Grill located in Hamden, Connecticut did not
meet the Company's performance standards. In response to this poor performance,
the Company closed this facility.
The Company has incurred losses over the periods presented. Management has
implemented an aggressive marketing and advertising promotion to increase sales
in the units. Operations has implemented an Operational Action Plan which
focuses on profits on a unit by unit basis, controlling costs and corporate
management's involvement in the units. This involvement includes the Chief
Operating Officer and the Vice President of Operations being actively involved
in the day to day operations and food preparation in the units. Management
believes that this reemphasized focus on the units and reinforced compliance
will build a cash flow positive position for each of the current operating
units. However, there can be no assurance that the Company will be able to
generate positive cash flow in the foreseeable future.
The Company intends to continue to develop Rattlesnake Southwestern Grill
restaurants in fiscal 1996. Additionally, the Company anticipates significantly
increased expenditures in marketing, advertising and promotional programs.
Future debt service requirements include the payment of $516,667 for the Series
A notes issued as part of the $1.8 million debt restructuring. The Company
believes it has sufficient capital to pay the Series A Notes as required. The
Company has made a $15,000 deposit to exercise its option to purchase the
Fairfield facility for $425,000, the financing of which will be determined at
the end of the lease term. The Company also has an option to purchase the
building at the Danbury facility for $1,365,000.
The Company has entered into a letter of intent with an investment banker to
assist the Company in arranging approximately $5,000,000 of private financing.
There can be no assurance that the financing will be completed. However, if the
financing is completed, the Company intends to use the proceeds to develop
additional Rattlesnake Southwestern Grill restaurants. In the event no
additional financing is obtained, the Company will not be able to develop
additional restaurants at the present time.
<PAGE> 12
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Forms 8-K.
(b) Reports on Form 8-K
During the quarter ended March 31, 1996, the Company filed no reports on
Form 8-K.
<PAGE> 13
SIGNATURES
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 RATTLESNAKE HOLDING COMPANY, INC.
(Registrant)
By: /s/William J. Opper
-----------------------------
William J. Opper
Chairman of the Board
By: /s/David C. Sederholt
-----------------------------
David C. Sederholt
Chief Financial Officer
Date: May 10, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 1,573,116
<SECURITIES> 0
<RECEIVABLES> 51,119
<ALLOWANCES> 0
<INVENTORY> 92,216
<CURRENT-ASSETS> 1,847,037
<PP&E> 1,980,332
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,636,134
<CURRENT-LIABILITIES> 1,544,534
<BONDS> 1,258,891
0
0
<COMMON> 2,644
<OTHER-SE> 2,830,065
<TOTAL-LIABILITY-AND-EQUITY> 5,636,134
<SALES> 6,431,995
<TOTAL-REVENUES> 6,431,995
<CGS> 2,015,321
<TOTAL-COSTS> 4,355,266
<OTHER-EXPENSES> 2,708,419
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,647,011)
<DISCONTINUED> 0
<EXTRAORDINARY> 89,710
<CHANGES> 0
<NET-INCOME> (2,557,301)
<EPS-PRIMARY> (.99)
<EPS-DILUTED> 0
</TABLE>
