<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the Quarterly Period Ended: SEPTEMBER 30, 1997
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND
EXCHANGE ACT.
Commission File Number: 0-25602
TECH SQUARED INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1591872
(State or other jurisdiction of incorporation) (IRS Employer
Identification No.)
5198 WEST 76TH STREET
EDINA, MINNESOTA 55439
(Address of principal executive offices)
(612) 832-5622
(Registrant's telephone number)
Indicate whether the registrant (1) has filed all reports required 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 ___
As of the close of business on September 30, 1997, 10,374,870 shares
of Common Stock, no par value, of the Company were outstanding.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
TECH SQUARED INC.
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheets at September 30, 1997
(unaudited) and December 31, 1996 3
Consolidated Statements of Operations (unaudited) for the three
months and nine months ended September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows (unaudited) for the nine
months ended September 30, 1997 and 1996 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosure About Market Risk 10
PART II. OTHER INFORMATION
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 12
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
TECH SQUARED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
--------------- --------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 93,043 $ 898,558
Available-for-sale securities 502,250 940,000
Accounts receivable, net of allowance
for doubtful receivables of $400,000
and $306,000 respectively 2,883,025 2,879,200
Inventories 2,016,539 1,906,546
Prepaids and other current assets 345,239 435,755
--------------- --------------
TOTAL CURRENT ASSETS 5,840,096 7,060,059
Property and equipment, net 318,777 476,283
Receivable from officer/stockholder 201,512 201,512
Mining Assets 748,276 748,276
Patents and organization costs, net - 133,488
Investment in Digital River 789,532 -
--------------- --------------
$7,898,193 $8,619,618
--------------- --------------
--------------- --------------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Revolving line of credit $ 171,350 $ 279,697
Current maturities of long term debt 80,000 1,108,750
Accounts payable 3,941,353 4,416,419
Accrued compensation and benefits 163,589 187,650
Accrued expenses 744,080 425,516
Dividends payable to officer/shareholder 264,257 491,977
--------------- --------------
TOTAL CURRENT LIABILITIES 5,364,629 6,910,009
Dividends payable to officer/shareholder 284,587 200,000
Long term debt, less current maturities 35,000 97,970
Redeemable preferred stock, 12% cumulative convertible,
$1 par value; 1,000,000 shares authorized; 160,000
shares issued and outstanding 197,500 197,500
STOCKHOLDERS' EQUITY:
Common stock: no par value; 25,000,000 shares authorized
10,374,870 issued and outstanding - -
Additional paid-in capital 2,723,223 3,189,103
Retained earnings (deficit) (634,996) (2,114,964)
Unrealized gain/(loss) on available-for-sale securities (71,750) 140,000
--------------- --------------
TOTAL STOCKHOLDERS' EQUITY 2,016,477 1,214,139
--------------- --------------
$7,898,193 $8,619,618
--------------- --------------
--------------- --------------
</TABLE>
Note: The consolidated statement of financial position at December 31, 1996 has
been derived from the audited financial statements at that date.
See accompanying notes to financial statements.
3
<PAGE>
TECH SQUARED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------------- ---------------------------------
September 30, September 30, September 30, September 30,
1997 1996 1997 1996
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net Sales $8,973,227 $9,254,257 $27,421,266 $26,513,926
Cost of sales 7,850,190 8,229,814 24,145,836 23,588,335
---------------- ---------------- ---------------- ----------------
GROSS PROFIT 1,123,037 1,024,443 3,275,430 2,925,591
Selling and marketing
expenses 486,967 497,406 1,430,357 1,711,492
General and administrative
expenses 503,956 579,607 1,615,919 1,582,945
Research & development
expenses - 54,821 - 142,369
---------------- ---------------- ---------------- ----------------
Total Operating Expenses 990,923 1,131,834 3,046,276 3,436,806
---------------- ---------------- ---------------- ----------------
INCOME (LOSS) FROM
OPERATIONS 132,114 (107,391) 229,154 (511,215)
Interest expense, net (25,801) (18,841) (78,971) (22,925)
Investment income 1,090 3,600 35,728 9,000
Equity in losses of Digital
River (317,367) - (897,304) -
Minority interest in losses - 81,003 - 128,544
---------------- ---------------- ---------------- ----------------
NET LOSS ($209,964) ($41,629) ($711,393) (396,596)
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Net loss per common share ($0.02) ($0.00) ($0.07) ($0.04)
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
Weighted average shares
outstanding 10,374,870 10,374,874 10,374,870 10,374,870
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
TECH SQUARED, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------------
September 30, September 30,
1997 1996
------------- -------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Loss ($711,393) ($396,596)
Non-cash items included in loss:
Depreciation and amortization 167,858 160,726
Equity in losses of Digital River 897,304 -
Gain on sale of available-for-sale securities (26,438) -
Minority interest in Digital River - (128,544)
Changes In Operating Assets And Liabilities:
Accounts receivable, net (3,825) (502,118)
Inventories (109,993) 1,128,913
Prepaid and other current assets 16,484 (109,316)
Accounts payable (332,622) (538,219)
Accrued compensation and benefits (24,060) -
Other accrued expenses 245,039 87,497
--------------- --------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 118,353 (297,657)
Cash Flows From Investing Activities:
Purchases of property and equipment (116,493) (166,008)
Increase in patents and organization costs - (7,731)
Proceeds from sale of available-for-sale
securities 236,438 -
Decrease in cash due to deconsolidation
of Digital River (799,721) -
Change in officer/stockholder receivable - 6,533
--------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (679,776) (167,206)
Cash Flows From Financing Activities:
Dividends paid (135,745) (165,603)
Preferred stock redemption - (37,500)
Net change in revolving line of credit (108,347) 172,377
Expenses incurred on issuance of common stock - (18,863)
--------------- --------------
NET CASH USED IN FINANCING ACTIVITIES (244,092) (49,589)
--------------- --------------
NET DECREASE IN CASH (805,515) (514,452)
CASH AT BEGINNING OF PERIOD 898,558 867,370
--------------- --------------
CASH AT END OF PERIOD $93,043 $352,918
--------------- --------------
--------------- --------------
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
TECH SQUARED INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1997
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three and nine
month periods ended September 30, 1997 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1997. The
accompanying consolidated financial statements and notes should be read in
conjunction with the audited financial statements and notes thereto included
in the Company's 1996 annual report on Form 10-KSB.
As of December 31, 1996 and for periods prior thereto, the Consolidated
financial statements include the accounts of Tech Squared Inc. and its wholly
owned subsidiaries (the "Company"), and Digital River, Inc. ("Digital
River"), which the Company controlled through its bargain purchase option.
In March 1997, Digital River converted all of its outstanding debentures, and
in January 1997 through September 1997, issued additional common stock
pursuant to a private placement which reduced Tech Squared's effective
control from 60% at December 31, 1996 to approximately 37% at September 30,
1997. As a result of the reduction in Tech Squared's ownership percentage,
the financial results of Digital River, are no longer consolidated with those
of the Company effective January 1, 1997. The Company now accounts for its
investment in Digital River using the equity method of accounting (see Item
2. Management's Discussion and Analysis of Financial Condition).
NOTE 2 - INVENTORIES
The Company's inventories consist primarily of goods held for resale and are
stated at the lower of cost or market. Cost is determined using the first-in,
first-out method.
NOTE 3 - DIGITAL RIVER
In December 1995 the Company obtained a bargain purchase option to acquire
600,000 shares of Digital River common stock from the Company's majority
stockholder and chief executive officer, representing at the time a 60%
ownership of Digital River. The option is exerciseable at any time through
December 31, 2000 for a total exercise price of $1.00. Digital River has
developed and is operating a proprietary system which allows the secure sale
and delivery of software, fonts and images on-line, via the internet.
Digital River's first on-line software sale and delivery occurred in August,
1996.
During the period from December 1996 through September 1997, Digital River
completed various private placements of its common stock which resulted in
net proceeds of approximately $4,300,000 and issuance of 625,000 new shares
of its common stock, thereby reducing the Company's effective ownership of
Digital River to approximately 37% as of September 1997. Beginning January
1, 1997 the Company began accounting for its investment in Digital River
using the equity method of accounting. For the nine month period ended
September 30, 1997 the Company recorded gain on issuance of stock by Digital
River of approximately $1,682,000 which was recorded through the Company's
stockholder's equity.
The working capital requirements of Digital River will exceed the available
cash resources currently in the subsidiary. Digital River plans to address
the need for additional capital by raising additional funds in the form of
either equity or debt. There is no assurance that this will be completed at
terms favorable to existing shareholders of Digital River, or to the Company.
6
<PAGE>
Summarized unaudited condensed financial information of Digital River is as
follows: (000's)
<TABLE>
<CAPTION>
BALANCE SHEET INFORMATION
SEPTEMBER 30, DECEMBER 31,
1997 1996
------------- ------------
<S> <C> <C>
Current assets $1,914 $ 171
Total assets 2,893 409
Current liabilities 748 110
Stockholders' equity 2,140 299
</TABLE>
<TABLE>
<CAPTION>
OPERATING INFORMATION
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 682 $ 30 $1,144 $ 30
Operating expenses 1,545 222 3,205 351
Net loss ($842) (203) ($2,018) ($322)
</TABLE>
NOTE 4 - SFAS 128
During March, 1997, the Financial Accounting Standards Board released
Statement of Financial Accounting Standards No. 128 ("SFAS 128"), "Earnings
per Share", which requires the disclosure of basic earnings per share and
diluted earnings per share. The Company expects to adopt SFAS 128 at the end
of fiscal 1997 and anticipates it will not have a material impact on
previously reported earnings per share.
7
<PAGE>
TECH SQUARED INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Certain statements contained herein are forward-looking statements within the
meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934
that involve a number of risks and uncertainties. Such forward-looking
information may be indicated by words such as will, may be, expects or
anticipates. In addition to the factors discussed herein, among the other
factors that could cause actual results to differ materially are the
following: business conditions and growth in the personal computer industry
and the general economy; competitive factors such as rival computer and
peripheral product sellers and price pressures; availability of vendor
products at reasonable prices; inventory risks due to shifts in market
demand; and risks presented from time to time in reports filed by the Company
with the Securities and Exchange Commission, including but not limited to the
annual report on Form 10-KSB for the year ended December 31, 1996.
The Company sells computer and peripheral products targeted at the graphic
arts market, which currently includes primarily Macintosh related products.
The Company markets through direct marketing channels, and to value added
resellers.
The following is a summary of the operating results for Tech Squared Inc.,
excluding Digital River, and Tech Squared Inc. consolidated for the three and
nine months ended September 30, 1997 and 1996, respectively:
Tech Squared Tech Squared Inc.,
excluding Digital River Consolidated
----------------------- ------------
1997 1996 1997 1996
---------- ---------- ---------- ---------
Net income/(loss) for the
three months ending
September 30, $107,000 $80,000 $(210,000) $(42,000)
Per Share $0.01 $0.01 $(0.02) $(0.00)
Net income/(loss) for the
nine months ending
September 30, $186,000 $(204,000) $(711,000) $(397,000)
Per Share $0.02 $(0.02) $(0.07) $(0.04)
RESULTS OF OPERATIONS
NET SALES
Net sales for the Company's third quarter ended September 30, 1997 totaled
$8,973,000 compared to $9,254,000 for the corresponding period of 1996. The
decrease in sales of 3.0% is due primarily to a 12% decline in sales to the
Company's distribution customers, partially offset by a small increase in DTP
Direct catalog sales. Net sales for the first nine months of 1997 totaled
$27,421,000 compared to $26,514,000 for the same period in 1996. The
increase is due to a 9.0% increase in the sales to the Company's DTP Direct
catalog customers, offset by a 7.3% decrease in sales to the Company's
distribution customers.
Fluctuations in the Company's net sales from period to period can be expected
due to a number of factors, including the timing of new product introductions
by the Company's major vendors and their competitors, seasonal cycles
commonly experienced in computer-related industries, and changes in product
mix and product pricing. As a result, the operating results for any
particular period are not necessarily indicative of the results of any future
period.
GROSS PROFIT
Gross profit for the quarter ended September 30 was $1,123,000 or 12.5% of
net sales compared to $1,024,000 or 11.1 % of net sales for the comparable
period of 1996. Gross profit for the nine month period ended September 30,
1997 was $3,275,000 or 11.9% of net sales compared to $2,926,000 or 11.0% of
net sales for the same period in 1996. The increase in gross profit
percentages in both the three month and nine month period ended September
30, 1997 is the result of several factors, including increased margins in
DTP Direct catalog sales, a reduction in variable overhead expenses, and an
increase in DTP Direct catalog sales, which generally carry higher margins,
as a percentage of total sales, partially offset by a substantial decline in
margins to the Company's distribution customers. The Company expects ongoing
competitive pressure on gross margins, and, consequently, changes in pricing
and product configuration will be necessary in order to remain competitive.
8
<PAGE>
SELLING AND MARKETING EXPENSES
Selling and marketing expenses totaled $487,000 during the quarter ended
September 30, 1997 compared to $497,000 during the corresponding period of
1996. For the nine month period ending September 30, 1997 selling and
marketing expenses were $1,430,000 compared to $1,711,000 for the same period
in 1996. This decrease was mainly attributable to the reduction in net
marketing costs related to the development, production and distribution of
catalogs. As a percentage of sales, selling and marketing expenses for the
third quarter were essentially flat at 5.4% of net sales, and for the first
nine months of 1997 decreased to 5.2% of net sales from 6.5% of net sales for
the same period in 1996.
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses for the third quarter ended September 30,
1997 were $504,000 compared to $580,000 for the comparable period of 1996.
The decrease is primarily attributable to general and administrative expenses
which were incurred by Digital River and consolidated with those of the
Company in 1996. For the nine month period ended September 30, 1997 general
and administrative expenses were $1,616,000 compared to $1,583,000 for the
same period in 1996. Excluding general and administrative expenses incurred
by Digital River and consolidated in 1996, general and administrative
expenses actually increased by $197,000 or 14% for the year to date period
primarily due to an increase in payroll and related costs including the
addition of a new President and COO, along with an increase in credit card
fees as a result of increased sales to the Company's DTP Direct catalog
customers.
INVESTMENT INCOME
Investment income for the third quarter ended September 30, 1997 was
approximately $1,000 compared to $4,000 for the same period of 1996. For
the nine month period ended September 30, 1997 investment income was $36,000
compared to $9,000 for the same period in 1996. The $36,000 includes $26,000
realized gain from the sale of a portion of the Company's available-for-sale
securities.
NET INTEREST EXPENSE
Net interest expense for the third quarter ended September 30, 1997 was
$26,000 compared to $19,000 for the same period in 1996. Interest expense
for the nine month period ended September 30, 1997 was $79,000 compared to
$23,000 for the same period in 1996. The increase is primarily due to an
increase in the average outstanding balance on the Company's line of credit
and to a lesser degree an increase in the interest rate.
INCOME TAXES
The Company recorded no income tax provision in 1997 due to the
availability of net operating loss carryforwards from prior years to offset
the current years tax expense.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of liquidity at September 30, 1997, consisted
of liquid funds, a revolving line of credit agreement with First Bank
National Association ("First Bank"), and vendor trade credit lines.
The Company has a Revolving Line of Credit Agreement with First Bank through
June 1999. Borrowings under the $2,500,000 agreement, are payable on demand,
limited by eligible percentages of accounts receivable and inventory and bear
interest at the prime rate plus 1.75%. Borrowings under the agreement are
secured by substantially all the Company's assets, and are personally
guaranteed up to $500,000 by the Company's Chairman & CEO. As of September
30, 1997, the Company had unused availability under the line of credit of
approximately $1,589,000 and outstanding borrowings of $171,000.
As of September 30, 1997 the Company had working capital of $475,000. This
has been reduced by the current portion of the remaining balance of a
dividend declared in April 1995, but not yet paid in the amount of $264,000.
The dividend payable is subordinated to the Revolving Line of Credit which
stipulate that the aggregate payout cannot exceed $200,000 in any calendar
year. Through September 1997, approximately $136,000 has been paid.
The Company's working capital includes $502,000 relating to its investment in
Cam Design, Inc. ("Cam Design") which is valued at the closing market price
on September 30, 1997. As part of a settlement agreement, the Company is
required to hold shares of Cam Design stock with an escrow agent. The number
of escrowed shares will be adjusted downward and released from escrow as
payments set forth in the agreement are made. Of the 144,000 total shares of
Cam Design stock, 46,000 shares remained with the escrow agent as of
September 30, 1997. The trading market for the Cam Designs shares may be
limited and there can be no assurance that the Company will be able to
realize a market value equal to or in excess of the value stated herein. The
Company may have to bear the economic risk of the entire investment for an
indefinite period.
Inventories decreased from $2,390,000, as of September 30, 1996 to
$2,017,000 as of September 30,1997. Capital expenditures totaled $30,000 in
the third quarter of 1997 compared to $91,000 in the third quarter of 1996.
For the nine month period ended September 30, 1997 capital expenditures were
approximately $116,000 compared to $166,000 for the same period in 1996.
The Company believes that funds generated from management of receivable and
inventory levels, advances under its line of credit, further expansion of
lines with trade creditors, the cash on hand and proceeds from the sale of
its investments, will be sufficient to fund its operations through the end of
1998. However, maintaining an adequate level of working capital through the
end of 1998 and thereafter depends in part on the success of the Company's
sales and marketing efforts and the Company's ability to control operating
expenses. Furthermore, funding of the Company's operations in future periods
may require additional investments in the Company in the form of equity or
debt. There can be no assurance that the Company will achieve desired levels
of sales or profitability or that future capital infusions will be available.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
None
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
HANOVER GOLD LITIGATION
In March 1996, and as amended in April 1996, the Company entered into an
Asset Purchase Agreement for the sale of substantially all of its mining
properties and rights in the Alder Gulch area of the Virginia City Mining
District in southwest Montana (the "Property") in exchange for 525,000 shares
of Hanover Gold Company, Inc. ("Hanover") common stock (the "Hanover
Shares"). Under Terms of the Agreement, the Property and 400,000 of the
Hanover Shares were to be held in escrow pending completion of a
registration statement covering the resale of the Hanover Shares and consent
by the Company.
In October, 1996 Hanover filed a registration statement covering the Hanover
Shares and filed suit against the Company in the United States District Court
Eastern District of Washington. The complaint seeks to force the Company to
break escrow and release title to its Montana Gold mining properties in
exchange for 400,000 Hanover Shares held in escrow, along with certain other
damages. The Company has filed a counter-claim which included claims of fraud
and violation of Securities Laws.
In April, 1997 Hanover filed a Notice of Motion and Motion for Partial
Summary Judgment, which the Company answered on April 13, 1997. On September
23, 1997 Hanover withdrew the motion for partial summary judgment.
The ultimate outcome of the lawsuit cannot be determined at this time,
however, it could significantly impact the carrying value and nature of the
mining assets currently recorded in the Company's Consolidated Statement of
Financial Position.
Reference is made to the Company's annual report on form 10-KSB for the year
ended December 31, 1996 and forms 10-Q for the quarters ended March 31, 1997
and June 30, 1997 which are on file with the Securities and Exchange
Commission. During the quarter ended September 30, 1997, the Company was not
a party to any material newly instituted legal proceedings and, except as
described above, there were no material developments to existing legal
proceedings.
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
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
10.51 Amendment #1 to Tech Squared Inc. 1995 Stock Option
Plan (Effective July 25, 1997)
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
None
11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TECH SQUARED INC.
/s/ Joel Ronning
------------------------------
November 10, 1997 Joel Ronning, Chief Executive
Officer and Chief Financial Officer (principal
executive officer and principal
financial officer)
12
<PAGE>
EXHIBIT INDEX
Exhibit Index DESCRIPTION
- ------------- -----------
10.51 Amendment #1 to Tech Squared Inc. 1995 Stock Option Plan
(Effective July 25, 1997)
27.1 Financial Data Schedule
13
<PAGE>
AMENDMENT #1 TO
TECH SQUARED INC.
1995 STOCK OPTION PLAN
(EFFECTIVE JULY 25, 1997)
Section 4.(a) of the Tech Squared Inc. 1995 Stock Option Plan (the "Plan") is
hereby amended to increase the maximum number of shares of Common Stock that
will be available for issuance under the Plan from 2,500,000 to 4,000,000
shares of Common Stock.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 93
<SECURITIES> 502
<RECEIVABLES> 2,883<F1>
<ALLOWANCES> 0
<INVENTORY> 2,017
<CURRENT-ASSETS> 5,840
<PP&E> 319<F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,898
<CURRENT-LIABILITIES> 5,365
<BONDS> 0
198
0
<COMMON> 0
<OTHER-SE> 2,016
<TOTAL-LIABILITY-AND-EQUITY> 7,898
<SALES> 27,421
<TOTAL-REVENUES> 27,421
<CGS> 24,146
<TOTAL-COSTS> 24,146
<OTHER-EXPENSES> 3,046
<LOSS-PROVISION> 167
<INTEREST-EXPENSE> 79
<INCOME-PRETAX> (711)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (711)
<EPS-PRIMARY> (.07)
<EPS-DILUTED> (.07)
<FN>
<F1>AMOUNTS REPORTED FOR ACCOUNTS RECEIVABLE AND PROPERTY PLANT & EQUIPMENT ARE NET
AMOUNTS.
</FN>
</TABLE>
