U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 1-13890
BUREAU OF ELECTRONIC PUBLISHING, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 22-2894444
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
number)
619 Alexander Road
Princeton, New Jersey 08540 08540
--------------------------- ---------
(Address of principal executive offices) (Zip Code)
(609) 514-1600
(Issuer's telephone number)
141 New Road, Parsippany, New Jersey 07054
(Former Name, Former Address and
Former Fiscal Year, if changed since
last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 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 last 90 days.
YES_ X__ NO____
The number of shares outstanding of the issuer's common stock, par value $ .001
per share as of April 30, 1996 was 2,970,148 shares.
The number of the issuer's common stock purchase warrants outstanding as of
April 30, 1996 was 1,340,476 warrants.
Transitional Small Business Disclosure Format: Yes ____ No __X__
Page __1__ of __14___ pages
BUREAU OF ELECTRONIC PUBLISHING, INC.
FORM 10-QSB
INDEX
Part I FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Balance Sheet as of March 31, 1996 3
Statements of Operations for the three
months ended March 31, 1996 and 1995. 4
Statement of Changes in Shareholders' Equity
for the three months ended March 31, 1996. 5
Statements of Cash Flows for the three
months ended March 31, 1996 and 1995. 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II OTHER INFORMATION
Item 2. Changes in Securities 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
2
<PAGE>
Part I FINANCIAL INFORMATION
Item 1. Financial Statements
BUREAU OF ELECTRONIC PUBLISHING, INC.
BALANCE SHEET
(Unaudited)
ASSETS March 31, 1996
--------------
CURRENT ASSETS
Cash and Cash Equivalents $ 1,428,700
Accounts Receivable, net of allowance
for doubtful accounts
of $200,000 304,094
Inventories 310,368
Prepaid Expenses and Other Current Assets 98,311
-----------
Total Current Assets $ 2,141,473
Property and Equipment, net of accumulated
depreciation of $213,808 $ 326,072
Prepublication Costs, net of accumulated
amortization of $1,074,818 1,006,989
Investment in Joint Venture 250,000
Other Assets 65,497
------
Total Assets $ 3,790,031
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRRENT LIABILITIES
Accounts Payable $ 633,544
Accrued Expenses 126,925
-----------
Total Current Liabilities $ 760,469
SHAREHOLDERS' EQUITY
Preferred Stock, par value $.001 per
share - 2,000,000 shares
authorized, no shares outstanding $ 0
Common Stock, par value $.001 per
share - 7,719,623
shares authorized, 2,964,886
shares issued and outstanding 2,965
Common Stock Purchase Warrants,
1,340,476 warrants issued
and outstanding 335,119
Additional Paid-In Capital 6,252,315
Accumulated Deficit (3,560,837)
-----------
Total Shareholders' Equity $ 3,029,562
-----------
Total Liabilities and
Shareholders' Equity $ 3,790,031
===========
The accompanying notes are an integral part of this balance sheet.
3
BUREAU OF ELECTRONIC PUBLISHING, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
March 31,
1996 1995
---- ----
NET SALES $ 185,968 $ 668,860
COST OF SALES 345,271 311,355
----------- -----------
Gross (Loss) Profit $ (159,303) $ 357,505
SELLING, GENERAL and
ADMINISTRATIVE EXPENSES $ 1,063,708 $ 573,725
----------- -----------
Loss from operations $(1,223,011) $ (216,220)
INTEREST EXPENSE, net 0 253,461
OTHER INCOME 29,141 0
----------- -----------
Loss before income taxes $(1,193,870) $ (469,681)
PROVISION FOR INCOME TAXES 0 0
----------- -----------
Net Loss $(1,193,870) $ (469,681)
=========== ===========
NET LOSS PER COMMON
SHARE OUTSTANDING $ (0.41) $ (0.29)
=========== ===========
COMMON SHARES OUTSTANDING 2,942,606 1,643,446
=========== ===========
The accompanying notes are an integral part of these statements.
4
<PAGE>
BUREAU OF ELECTRONIC PUBLISHING, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THREE MONTHS ENDED MARCH 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
Issued and
Authorized Authorized Issued and Outstanding
Preferred Common Outstanding Common
Shares Shares Common Shares Amount Warrants Amount
------ ------ ------------- ------ -------- ------
<S> <C> <C> <C> <C> <C> <C>
BALANCE - December 31, 1995 2,000,000 7,719,623 2,927,298 $ 2,927 1,340,476 $ 335,119
Issuance of common stock 37,588 38 0 0
Net loss for the three months
ended March 31, 1996 0 0 0 0
- - - -
BALANCE - March 31, 1996 2,000,000 7,719,623 2,964,886 $ 2,965 1,340,476 $ 335,119
========= ========= ========= ======== ========= =============
<CAPTION>
Additional
Paid-in Accumulated
Capital (Deficit) Total
------- -------- -----
BALANCE - December 31, 1995 $6,130,568 $ (2,366,967) $ 4,101,647
Issuance of common stock 121,747 0 121,785
Net loss for the three months
ended March 31, 1996 0 (1,193,870) (1,193,870)
- ----------- -----------
BALANCE - March 31, 1996 $ 6,252,315 $ (3,560,837) $ 3,029,562
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE>
BUREAU OF ELECTRONIC PUBLISHING, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,193,870) $ (469,681)
------------ ----------
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation of property and equipment 22,141 10,834
Provision for doubtful accounts 341,581 0
Amortization of prepublication costs 179,705 76,929
Amortization of financing costs 0 187,500
Changes in operating assets and liabilities-
(Increase) decrease in accounts receivable (87,344) 327,858
Decrease (increase) in inventories 56,826 (58,569)
Decrease in prepaid expenses and
other current assets 6,896 1,462
(Increase) decrease in other assets (7,497) 53,625
Increase in accounts payable,
and accrued expenses 153,331 13,718
----------- -----------
Total adjustments 665,639 613,357
----------- -----------
Net cash (used in) provided by
operating activities (528,231) 143,676
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (147,861) (5,842)
Increase in prepublication costs (269,583) (162,474)
----------- -----------
Net cash used in investing activities (417,444) (168,516)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 121,785 28,220
----------- -----------
Net cash provided by financing activities 121,785 28,220
Net (decrease) increase in cash (823,980) 3,380
CASH and CASH EQUIVALENTS,
beginning of period 2,252,590 52,224
----------- -----------
CASH and CASH EQUIVALENTS, end of period $ 1,428,700 $ 55,604
=========== ===========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Cash paid during the period for interest $ 0 $ 17,671
Cash paid during the period for taxes 50 0
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
6
<PAGE>
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996 AND MARCH 31, 1995
1. Financial Statements
The balance sheet as of March 31, 1996 and the related statements of operations,
shareholders' equity and cash flows for the periods ended March 31, 1996 and
1995 have been prepared by the Company, without audit, in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows of
the Company for the interim periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the December 31, 1995 audited financial statements
and notes thereto. The results of operations for the three month period ended
March 31, 1996 are not necessarily indicative of the operating results for the
full year.
2. Summary of Accounting Policies
Cash and Cash Equivalents-
The Company considers cash on hand, cash on deposit with banks and United
States Treasury Bill investments to be cash equivalents.
Inventories-
Inventories, principally finished goods available for distribution, are
stated at the lower of cost or market. Cost is determined on the first-in,
first-out method. It is the Company's policy to review the composition of
its inventory on an ongoing basis and reserve or dispose of obsolete,
slow-moving or nonsalable inventory. As of March 31, 1996 the Company
maintained an inventory reserve balance of $190,000.
Property And Equipment-
Property and equipment is stated at cost, less accumulated depreciation.
Depreciation is calculated on the straight-line method over the estimated
useful lives of the assets, which ranges from four to seven years.
Prepublication Costs-
Prepublication costs, including editing and design of new CD-ROM titles,
have been capitalized and are being amortized as a component of cost of
sales. Amortization expense is computed on a product-by-product basis
using the greater of (a) the ratio that current period gross revenue bears
to the total of current and anticipated future gross revenues or (b)
straight-line over the estimated economic life of the product (not
exceeding three years). Amortization commences in the period in which the
products are available for general release. Prepublication costs include
salaries and other direct production costs incurred once technological
feasibility is established and licensing rights, if any, are obtained for
the titles. Research and development costs incurred prior to this point
are expensed as incurred. Such costs were not significant for the periods
presented.
7
<PAGE>
The Company evaluates the carrying value of prepublication costs for each
title on an ongoing basis in relation to anticipated future sales and,
where appropriate, provides additional write downs of unamortized balances
or accelerates the amortization rate so that the individual unamortized
title costs do not exceed their net realizable value. During the three
months ended March 31, 1996 and 1995, accelerated amortization of
prepublication costs were approximately $108,000 and $0, respectively.
Investment in Joint Venture-
During August 1995, the Company and the American Management Association
("AMA") formed a joint venture to develop and publish AMA materials on
CD-ROM and the Internet. The new company, AMACOM New Media, Inc., combines
resources of these two publishers and is 50% owned by each party. During
December 1995 the Company contributed $250,000 to the joint venture to
provide initial funding requirements.
Revenue Recognition-
Sales revenue is recognized when products are shipped to customers, since
there are no remaining significant service or support obligations or
warranties associated with the product sale and collectibility of the sale
is probable. Technical support provided to consumers who purchase the
Company's products generally occurs at or shortly after the time of sale.
Such costs are not significant in relation to the product sale and are
expensed as incurred. The effect of this treatment for technical support
costs is not material to the results of operations for all periods
presented. The Company provides a reserve for possible returns from
customers, vendor price protection and discount allowances based upon
historical experience as well as current and anticipated trends. These
reserves are included in the allowance for doubtful accounts.
Guaranty and Warranty Policies-
The Company maintains a 30-day money back guaranty and a one-year
defective product warranty for products that are sold by the Company to
ultimate retail consumers. Product guaranty and warranty expense is not
significant in relation to the product sale and is expensed when incurred.
The effect of this accounting treatment is not material to the results of
operations for any period presented.
Advertising and Catalog Costs-
Advertising and catalog costs associated with distribution of the
Company's products are expensed as incurred.
Income Taxes-
Through September 13, 1994, the Company elected to be taxed as an S
Corporation under the applicable sections of the Internal Revenue Code of
1986 (the "Code"). Under these sections of the Code, the net income (loss)
of the Company was taxed (passed through) to the shareholders for Federal
income tax purposes. Effective September 13, 1994 the Company's S
Corporation election was voluntarily revoked, subjecting the Company to
corporate income taxes subsequent to that date. Accumulated earnings of
approximately $33,000 through September 13, 1994 have been included as a
component of additional paid-in capital.
The Company uses the liability method of computing deferred income taxes.
Deferred taxes are recognized for tax consequences of "temporary
differences" by applying enacted statutory tax rates, applicable to future
years, to differences between the financial reporting and the tax basis of
existing assets and liabilities.
8
<PAGE>
Net Loss Per Common Share
Net loss per common share has been computed by dividing net loss by the
weighted number of common shares outstanding. As required by the
Securities and Exchange Commission rules, all warrants, options and shares
within one year of the public offering at less than the public offering
price are assumed to be outstanding for each year presented for purposes
of the per share calculation. All other warrants and options have not been
considered in the computation of net loss per common share as they would
be anti-dilutive.
3. Shareholders' Equity
On August 11, 1995 the Company sold to the public 1,000,000 shares of the
Company's common stock at a price of $5.00 per share as well as redeemable
common stock purchase warrants (the "Warrants") at a price of $.25 per
Warrant. The Warrants initially permitted the holders thereof to purchase
1,000,000 shares of the Company's common stock in the future at an
exercise price of $7.50 per share. The exercise price of such Warrants was
subsequently reduced by the Company (see note 4). On October 2, 1995 the
Company received net proceeds of $685,125 from the sale of 150,000 shares
of the Company's common stock and 150,000 of the Company's Warrants. These
shares and Warrants were issued upon the exercise of an over-allotment
option granted to the underwriters of the Company's initial public
offering which occurred in August 1995. Net proceeds to the Company after
underwriting commissions, related underwriting expenses, and additional
expenses incurred in connection with the initial public offering were
approximately $4,400,000.
Pursuant to an agreement dated September 9, 1994, 113,337 warrants were
granted to a consultant of the Company at an exercise price of $3.24 per
share, which was based upon the price of the stock sold to a group of
unaffiliated investors in 1994. As of March 31, 1996, 37,588 of these
warrants were exercised. Of the warrants remaining outstanding, 55,749
expire in 1999 and 20,000 expire in the year 2000.
4. Subsequent Events
On April 4, 1996, the Board of Directors of the Company declared a 5%
stock dividend for all holders of record as of April 30, 1996 of the
Company's common stock. The stock dividend will be paid by the Company on
May 24, 1996. The two largest shareholders of the Company, Larry Shiller
and Richard and Georgia Raysman, as joint tenants, have elected not to
receive such stock dividend. Mr. Shiller is a Director, President and
Chief Executive Officer of the Company and Mr. Raysman is a Director of
the Company.
On April 4, 1996, the Company also announced that it had extended the
expiration date of, and reduced the exercise price of, its Warrants that
were issued as part of the Company's initial public offering which was
consummated in August 1995. Each Warrant previously expired on August 10,
1998 and entitled the holder to purchase one share of the Company's common
stock at a price of $7.50 per share. For holders of Warrants of record as
of April 15, 1996, each Warrant will now expire on August 10, 1999 and
will entitle the holder to purchase one share of the Company's common
stock at a price of $6.50 per share. All other terms and provisions of the
Warrants remain unchanged.
On April 15, 1996, 5,262 of the warrants granted to a consultant of the
Company were exercised at an exercise price of $3.24 per share. Such
warrants are discussed in Note 3. Of the warrants remaining outstanding
subsequent to that date, 50,487 expire in 1999 and 20,000 expire in the
year 2000.
9
<PAGE>
Item 2.
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company was incorporated in 1988 as a distributor of titles, drives and
accessories for the CD-ROM (Compact Disc-Read Only Memory) industry. It issued
its first internally developed title in 1990 and by 1993 the Company completed
phase out of third-party titles and marketed and sold solely its own titles.
Fiscal year 1994 was the first full year in which substantially all net sales of
the Company were generated by internally developed titles. During 1995 the
Company entered into a joint venture agreement with the American Management
Association ("AMA") to develop and publish AMA materials on CD-ROM and the
Internet. In addition, the Company entered into an exclusive distribution
arrangement with BVE Products, Inc. for Everything Weather. The Company's
strategy is to internally develop high quality informational and educational
interactive multimedia software based on licenses of existing print and other
media properties primarily in fields that will achieve sustained consumer appeal
and brand name recognition. The Company's products are intended for use by
adults and students in homes, businesses, schools and libraries. The Company
develops and publishes its software on CD-ROMs for use on personal computers
using Windows(TM), Macintosh and MS-DOS based CD-ROM playback systems.
Results of Operations
Three Months ended March 31, 1996 and 1995
Net sales for the three months ended March 31, 1996 were $185,968 as compared to
$668,860 for the comparable period of 1995, or a decrease of $482,892 or 72%.
The decrease is primarily the result of lower sales attributable to lack of new
title releases and sluggishness in the retail channel.
Cost of sales totaled $345,271 or 185.6% of net sales for the first three months
of 1996 as compared to $311,355 or 46.5% of net sales for the first three months
of 1995. The increase as a percentage of net sales is primarily due to higher
software amortization expenses related to the effect of a shorter time period
over which these costs are amortized and higher inventory reserves for packaging
materials. Also included in cost of sales is royalties on titles paid to content
providers which decreased approximately $6,100 from the first quarter 1996
compared to the first quarter of 1995 due to the decrease in sales. As a result
primarily of the increase in the amortization of pre-publication costs and the
higher inventory reserves for packaging materials, the Company's gross profits
as a percentage of net sales were lower in 1996 as compared to 1995. Gross
(losses) profits were (85.6%) of net sales, or ($159,303) in the first three
months of 1996 as compared to 53.4% of net sales or $357,505 during the same
period in 1995.
Selling, general and administrative expenses, totaled $1,063,708 and $573,725
during the first three months of 1996 and 1995, respectively, an increase of
$489,983 or 85.4%. As a percentage of sales, selling, general and administrative
expenses increased to 572% during the first three months of 1996 from 85.8%
during the same period in 1995. The increased efforts to sell older titles led
to increases in certain variable selling expenses such as co-marketing expenses,
which are traditionally shared among the Company and its distributors, plus
higher reserves for doubtful accounts. Also, higher personnel costs due to
staffing increases and higher average salaries contributed to the increase in
selling, general and administrative expenses.
10
<PAGE>
Operating loss for the period ended March 31, 1996 was $1,223,011 or 657.6% of
net sales, as compared to $216,220 or 32.3% of net sales during the same period
in 1995.
Interest expenses for the period ended March 31, 1996 were $0. Interest expenses
for the first three months of 1995 were $253,461 or 37.9% of net sales due to
the November 1994 tranche of the Company's bridge financing ("Bridge Financing")
and the amortization of $187,500 of the value of the common stock and the
redeemable common stock purchase warrants that were issued to the investors in
the Bridge Financing upon the consummation of the Company's initial public
offering in August 1995.
Due to the combination of the preceding factors, pre-tax losses increased
$724,189 to a loss of $1,193,870 or 641.9% of net sales during the three months
ended March 31, 1996, from a loss of $469,681 or 70.2% of net sales during the
comparable period of 1995.
Liquidity and Capital Resources
The Company had a working capital surplus of $1,381,004 at March 31, 1996, which
represented a decrease of $1,295,180 from the working capital surplus of
$2,676,184 at December 31, 1995. The increase in the working capital deficit was
due mainly to a lower level of accounts receivable at the end of the first
quarter of 1996 as compared to year end 1995, the increase in inventory reserves
for packaging materials, the use of cash to fund product development and the
Company's recent relocation to Princeton, New Jersey. The Company's cash
position decreased to $1,428,700 at March 31, 1996 from $2,252,590 at December
31, 1995.
The Company's operating activities (used) or provided cash of ($528,231) and
$143,676 for the first three months of 1996 and 1995, respectively. In the first
three months of 1996 the net loss of $1,193,870 was partly offset, primarily by
the provision for doubtful accounts, the amortization of pre-publication costs,
the increase in inventory reserves for packaging materials, and an increase in
accounts payable and accrued expenses. In addition, cash was used to finance an
increase in inventories. For the first three months 1995, the Company's
operating activities provided cash of $143,676 primarily by a decrease in
accounts receivable.
The Company's investing activities used cash of $417,444, and $168,516 during
the first three months of 1996 and 1995, respectively. The principal use of this
cash was the capitalization of prepublication costs involved in the development
of new titles, and the purchase of property and equipment in connection with the
Company's recent relocation to Princeton, New Jersey.
The Company's financing activities provided cash of $121,785 and $28,220 for the
first three months of 1996 and 1995, respectively, primarily by the issuance of
common stock.
During the first quarter of 1996, the Company experienced negative cash flow of
approximately $275,000 per month. If such rate of negative cash flow continues,
the Company's current cash resources will be sufficient to fund its operations
for only five months. Therefore, the long-term future of the Company is
dependent upon the Company's ability to increase its sales, reduce its expenses
and/or raise additional funds through bank borrowings, lines of credit, new
issuances of its debt and/or equity securities or from other sources. There can
be no assurance that the Company will be able to increase its sales, reduce its
expenses or raise such additional funds.
11
<PAGE>
PART II OTHER INFORMATION
Item 2. Changes in Securities
On April 4, 1996, the Company announced that it had extended the
expiration date of, and reduced the exercise price of, its Warrants
that were issued as part of the Company's initial public offering which
was consummated in August 1995. Each Warrant previously expired on
August 10, 1998 and entitled the holder to purchase one share of the
Company's common stock at a price of $7.50 per share. For holders of
Warrants of record as of April 15, 1996, each Warrant will now expire
on August 10, 1999 and will entitle the holder to purchase one share of
the Company's common stock at a price of $6.50 per share.
All other terms and provisions of the Warrants remain unchanged.
Item 6. Exhibits and Reports on Form 8-K
(a) EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
11 Calculation of Net Loss per Common Share 14
(b) REPORTS ON FORM 8-K
On April 29, 1996, the Company filed a Form 8-K with the Securities and
Exchange Commission. Such Form 8-K disclosed the revisions to the terms
of the Company's Warrants discussed in item 2 above and the declaration
by the Company of a 5% stock dividend to shareholders of record as of
April 30, 1996. The stock dividend will be paid by the Company on May
24, 1996. The two largest shareholders of the Company, Larry Shiller
and Richard and Georgia Raysman, as joint tenants, have elected not to
receive such stock dividend. Mr. Shiller is a Director, President and
Chief Executive Officer of the Company and Mr. Raysman is a Director
of the Company.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
BUREAU OF ELECTRONIC PUBLISHING, INC.
Date: May 14, 1996 By: /s/ Larry Shiller
-----------------
Larry Shiller, President and
Chief Executive Officer
Date: May 14, 1996 By: /s/ Elliott S. Eisenberg
------------------------
Elliott S. Eisenberg, Chief
Operating Officer
13
<PAGE>
EXHIBIT NO. 11
BUREAU OF ELECTRONIC PUBLISHING, INC.
CALCULATION OF NET INCOME (LOSS) PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Three Months
Ended March 31, 1996 Ended March 31, 1995
-------------------- --------------------
<S> <C> <C>
Net loss $ (1,193,870) $ (469,681)
============== ============
Weighted average number of common shares outstanding 2,932,891 1,586,822
Stock options and warrants issued prior to initial public
offering at prices less than initial public offering price 9,715 56,623
============== ============
Other stock options and warrants (a) 0 0
============== ============
Total weighted average common shares and equivalent common
shares 2,942,606 1,643,446
============== ============
Loss per share $ (0.41) $ (0.29)
============== ============
</TABLE>
(a) Stock options and warrants issued subsequent to December 31, 1994 were
not dilutive and accordingly not considered in the calculation above.
14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> DEC-31-1995
<PERIOD-END> MAR-31-1996
<CASH> 1,428,700
<SECURITIES> 0
<RECEIVABLES> 304,094
<ALLOWANCES> 200,000
<INVENTORY> 310,368
<CURRENT-ASSETS> 2,141,473
<PP&E> 326,072
<DEPRECIATION> 213,808
<TOTAL-ASSETS> 3,790,031
<CURRENT-LIABILITIES> 760,469
<BONDS> 0
0
0
<COMMON> 2,965
<OTHER-SE> 3,026,597
<TOTAL-LIABILITY-AND-EQUITY> 3,790,031
<SALES> 185,968
<TOTAL-REVENUES> 185,968
<CGS> 345,271
<TOTAL-COSTS> 345,271
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 341,581
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,193,870)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,193,870)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,193,870)
<EPS-PRIMARY> (0.40)
<EPS-DILUTED> (0.44)
</TABLE>
