- --------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark one)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended MARCH 31, 1998
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. 0-21324
TRINITECH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 06-1344888
(State of incorporation) (I.R.S. Employer identification number)
333 LUDLOW STREET, STAMFORD, CONNECTICUT 06902
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (203) 425-8000
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 / /
8,663,530 shares of Common Stock were issued and outstanding as of April 24,
1998.
<PAGE>
Trinitech Systems, Inc.
FORM 10-Q
For the quarterly period ended March 31, 1998
CONTENTS PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed consolidated balance sheets at March 31, 1998
(unaudited) and December 31, 1997 3
Condensed consolidated statements of operations (unaudited)
for the three months ended March 31, 1998 and 1997 4
Condensed consolidated statements of cash flows
(unaudited) for the three months ended
March 31, 1998 and 1997 5
Notes to condensed consolidated financial statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION 14
2
<PAGE>
TRINITECH SYSTEMS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, December 31,
ASSETS 1998 1997
- ------ ---------- --------------
(Unaudited) (a)
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $1,112,143 $2,141,307
Accounts receivable - less allowance of $144,000 and $144,000 1,601,286 1,859,301
Inventories - less allowance of $82,000 and $82,000 1,328,484 1,208,373
Prepaid expenses and other current assets 257,833 102,500
Receivable from officers 91,713 91,597
---------- ----------
Total Current Assets 4,391,459 5,403,078
EQUIPMENT - net of accumulated depreciation of $842,508 and $714,759 1,541,651 1,361,707
OTHER ASSETS - net of accumulated amortization of $1,141,408
and $1,040,952 913,938 782,478
---------- ----------
TOTAL $6,847,048 $7,547,263
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 760,635 $ 927,672
Accrued expenses 240,333 389,174
Current portion of term loans payable 43,773 47,709
Advance billings 227,802 171,414
Payroll and other taxes payable 117,740 63,706
---------- ----------
Total Current Liabilities 1,390,283 1,599,675
TERM LOANS PAYABLE 36,904 45,855
---------- ----------
Total Liabilities 1,427,187 1,645,530
---------- ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
10% Convertible preferred stock - par value $1.00; 1,000,000 shares authorized;
-0- issued and outstanding - -
Common stock - par value $.001; 15,000,000 authorized; 8,663,530 and
8,524,530 shares issued and outstanding 8,664 8,525
Additional paid-in capital 10,884,499 10,419,763
Accumulated deficit (5,037,555) (4,096,555)
Due from officers (435,747) (430,000)
---------- ----------
Total Stockholders' Equity 5,419,861 5,901,733
---------- ----------
TOTAL $6,847,048 $7,547,263
========== ==========
</TABLE>
(a) The balance sheet at December 31, 1997 has been derived from the audited
financial statements at that date.
See accompanying notes.
3
<PAGE>
TRINITECH SYSTEMS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Three
Months Ended Months Ended
March 31, March 31,
1998 1997
--------- ----------
REVENUES:
Recurring contracts $631,475 $259,433
Sales 408,801 1,550,144
--------- ---------
Total Revenues 1,040,276 1,809,577
COST OF RECURRING CONTRACTS and SALES 463,314 831,431
--------- ---------
GROSS PROFIT 576,962 978,146
--------- ---------
EXPENSES:
Selling, general and administrative 1,458,524 1,041,164
Depreciation 80,881 38,164
Amortization 4,595 9,210
--------- ---------
Total Expenses 1,544,000 1,088,538
--------- ---------
LOSS FROM OPERATIONS (967,038) (110,392)
OTHER INCOME - NET 26,038 24,993
--------- ---------
NET LOSS $(941,000) $(85,399)
========= =========
NET LOSS PER COMMON SHARE ($0.11) ($0.01)
========= =========
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 8,594,030 7,777,530
========= =========
See accompanying notes.
4
<PAGE>
TRINITECH SYSTEMS, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Three
Months Ended Months Ended
March 31, March 31,
1998 1997
------------ ------------
<S> <C> <C>
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES $(900,546) $713,709
INVESTING ACTIVITIES:
Payments for equipment, net of retirements (348,689) (128,546)
Payments for other assets (231,917) (80,228)
------------ ------------
Net cash used in investing activities (580,606) (208,774)
------------ ------------
FINANCING ACTIVITIES:
Repayment of borrowings (12,887) (751,422)
Issuance of common stock 464,875 3,527,500
------------ ------------
Net cash provided by financing activities 451,988 2,776,078
------------ ------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (1,029,164) 3,281,013
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 2,141,307 1,198,730
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,112,143 $ 4,479,743
============ ============
</TABLE>
See accompanying notes.
5
<PAGE>
TRINITECH SYSTEMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions
to Form 10-QSB and ITEM 310 (b) of Regulation S-B. 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 considered necessary for a
fair presentation have been included. All such adjustments are of a
normal recurring nature. Operating results for the three month period
ended March 31, 1998 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1998. For further
information, refer to the consolidated financial statements and
footnotes thereto included in the Company's annual report on Form
10-KSB for the year ended December 31, 1997.
2. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market. Inventories consisted of the following:
March 31, December 31,
1998 1997
----------- ------------
Parts $892,098 $ 875,822
Finished goods 518,386 414,551
Less allowance for obsolescence 82,000 82,000
---------- ----------
Total $1,328,484 $1,208,373
========== ==========
6
<PAGE>
3. EQUIPMENT
Equipment consists of the following:
March 31, December 31,
1998 1997
---------- ------------
Computer software $ 340,964 $ 331,668
Leasehold improvements 89,624 81,957
Furniture and equipment 955,553 878,518
Subscription and service bureau equipment 998,018 784,323
---------- ------------
Subtotal 2,384,159 2,076,466
Less accumulated depreciation 842,508 714,759
---------- ------------
Total $1,541,651 $1,361,707
========== ============
4. PER SHARE INFORMATION
In 1997, the Financial Accounting Standards Board issued Statement No. 128,
"Earning Per Share". Statement 128 replaced the calculation of primary and fully
diluted earnings per share with basic and diluted earnings per share. Unlike
primary earnings per share, basic earnings per share excludes any dilutive
effects of options, warrants and convertible securities. Diluted earnings per
share is very similar to the previously reported fully diluted earnings per
share. Diluted earning per share is not presented in either period because the
effect of the Company's common stock equivalents (employee stock options and
warrants) is antidilutive. All earnings per share amounts for all periods have
been presented, and restated to conform to the Statement 128 requirements.
5. COMMITMENTS
In January 1998, the Company entered into a seven and one-half year operating
lease for its facilities in New York City. Monthly payments under such lease
aggregate approximately $12,100 for the first five years and approximately
$12,500 thereafter.
7
<PAGE>
6. IMPACT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In October 1997, the American Institute of Certified Public Accountants issued
Statement of Position 97-2, "Software Revenue Recognition," which supercedes
SOP-91-1 and clarifies the existing guidance regarding revenue recognition of
certain computer software products. The Company adopted SOP 97-2 in the first
quarter of 1998 and the effect is not material to the Company's operations or
financial position taken as a whole.
In June 1997, the Financial Accounting Standards board issued FASB Statement No.
131, "Disclosures about Segments of an Enterprise and Related Information."
Statement 131 requires that segment data be disclosed based on how management
makes decisions about allocating resources to segments and measuring their
performance. While the Company is studying the application of the disclosure
provisions, it does not expect this statement to materially affect its financial
position or results of operations. This Statement is effective for the year
ended December 31, 1998.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The management discussion and analysis in this Form 10-QSB contains certain
forward-looking statements regarding the Company's future plans, objectives and
expected performance. Those statements are based on assumptions that the Company
believes are reasonable, but are subject to a wide range of risks and
uncertainties, and a number of factors could cause the Company's actual results
to differ materially from those expressed in the forward looking statements
referred to above. These factors include, among others, the Company's ability to
further penetrate the financial services market with a full range of the
Company's products and the highly competitive market in which the Company
operates.
The following discussion and analysis should be read in conjunction with the
consolidated financial statements and notes thereto. Historical results and
percentage relationships are not necessarily indicative of the operating results
for any future period.
The Company develops and markets advanced electronic trading systems to
brokerage firms, international banks and global exchanges trading in equities,
futures & options, and currencies. The Company's NYFIX Network, a combined FIX
and Exchange Access Network, enables users to electronically communicate trade
data among the buy-side, sell-side, and exchange floor environments. The
Company's goal is to become the leading provider of real-time electronic trade
entry and routing systems to the global financial services industry. The Company
is headquartered in Stamford, Connecticut and maintains operations in New York,
Chicago, and London.
The Company commenced its present business operations in January 1991 through
the acquisition of a software license for its Guided-Input(R) Touchpad system.
The Company is in process of transforming its business from that of traditional
capital equipment sales to that of licensing-based and subscription-based
revenue. The Company is currently offering its trading products together with
linkage through its data-center. Subscription revenue contracts are generally
for an initial period of one year with one to three year renewal periods.
Initial annual revenues range from $15,000 to over $100,000 per contract. The
Company begins recording subscription revenue once installation is complete.
Most contracts provide the customer with a basic system or infrastructure, via
the Company's data-center and are entered into by the customer with the
intention to expand the level of services subscribed to, once the basic system
and infra-structure is operational. Although subscription-based revenue has the
short-term negative impact of reduced revenues in the early stage, management
believes that the change will have a long-term positive impact on the future
revenue growth of the Company. Management is of the opinion that this change
will result in additional new orders and increased market share that it
otherwise would not have had, as well as longer-term predictable revenues per
customer.
THREE MONTHS ENDED MARCH 31, 1998 COMPARED TO THREE MONTHS ENDED MARCH 31, 1997
REVENUES
The decrease in revenues for the three months ended March 31, 1998 over the
comparable 1997 period was principally due to the Company's strategy of
transforming its operations from capital equipment sales to subscription based
sales, specifically for the Company's FIXtalk software system. Recurring
contracts are comprised of subscription revenue and service revenue. Recurring
contractual revenue for the Company increased by 143% in the three months ended
March 31, 1998 (from $259,433 to $631,475) over the comparable 1997 period.
During the three month period ended March 31, 1998, subscription contracts and
service contracts were approximately 53% and 47% of recurring contractual
revenue, respectively, as compared to 10% and 90%, respectively, during the
three-month period ended March 31, 1997. The increase in recurring contractual
revenue
9
<PAGE>
is due principally to the Company's strategy of transforming its operations from
capital equipment sales to subscription based sales coupled with increased
service agreements. Sales revenue is comprised of capital equipment sales and
software sales. Sales revenue for the Company decreased by approximately 74% in
the three months ended March 31, 1998 over the comparable 1997 period (from
$1,550,144 to $408,801). During the three month period ended March 31, 1998,
capital equipment sales and software revenue were approximately 44% and 56% of
sales revenues, respectively as compared to 64% and 36%, respectively during the
three month period ended March 31, 1997.) The decrease in sales (capital
equipment and software) is due to the Company's strategy of transforming its
operations from capital equipment sales to subscription based sales. Revenue
from export sales approximated $8,000 (less than 1% of revenue) during the three
month period ended March 31, 1998 as compared to approximately $1,221,000 (67%
of revenue) during the comparable period in 1997. Foreign operation revenues
amounted to approximately $405,000 and $640,000 for the three-month periods
ended March 31, 1998 and 1997, respectively.
COST OF RECURRING CONTRACTS AND SALES AND GROSS PROFIT
The Company's cost of recurring contracts and sales is principally comprised of
labor, materials, overhead, amortization of capitalized product enhancement
costs and depreciation of subscription based equipment. Gross profit as a
percentage of total revenue was approximately 55% and 54% during the three-month
periods ended March 31, 1998 and 1997, respectively. The slight increase in
gross profit percentage experienced by the Company during the three month period
ended March 31, 1998 principally resulted from an increase in the amount of
higher margin subscription contracts and service fees on existing contracts
which were offset by lower margins associated with the Company's touch vending
terminal products. The Company obtains its materials and supplies from a variety
of vendors in the U.S. and Far East. Included in cost of sales is amortization
expense for product enhancement costs of approximately $96,000 and $79,500 for
the three month periods ended March 31, 1998 and 1997, respectively. Also
included in cost of sales is depreciation expense for subscription based
equipment of approximately $55,000 for the three month period ended March 31,
1998.
SELLING, GENERAL AND ADMINISTRATIVE
During the three months ended March 31, 1998, selling general and administrative
expenses increased 47% (from $1,041,164 to $1,526,375) when compared to the
three months ended March 31, 1997. Such increases reflect the continued
expansion of the development teams both in the U.S. and in London. The expansion
in development efforts relates to the Company's plans of providing an increased
number of new additional services. These services relate to offering
subscription and transaction based order-routing, via the Company's data-center,
to multiple exchange-floors and between the "Buy-side" and "Sell-side" industry.
As a result, the Company experienced increases in salaries and related personnel
costs, travel expenses, recruiting fees and various office expenses. The Company
added personnel principally to its technical programming, service, support and
sales staff. The Company's recruitment effort, which began during 1993,
continues to strengthen the Company's infrastructure and position the Company to
respond to increasing market and revenue opportunities. Included in selling,
general & administrative expenses is rent expense for the Company's offsite data
center and equipment in such data center of approximately $72,900 for the
three-month period ended March 31, 1998. Also included in selling, general and
administrative
10
<PAGE>
expenses is utility expense of approximately $67,900 for frame relay circuits to
various stock exchange floors for the three-month period ended March 31, 1998.
The Company, during the past several years, has committed considerable resources
to developing a variety of "trader desk-top" and "exchange-floor" trading
systems. Management believes that the investment in development of the new
data-center, and its services, are designed to better leverage the existing
products together with providing additional sources of revenue. The Company has
continued its marketing programs in the first quarter of 1998 primarily focusing
on public relations activities, production of various product brochures, and
representation at technological exhibitions. Research and development (new
explorative research) expenses for the three months ended March 31, 1998 and
1997 were approximately $168,600 and $61,600, respectively, (an increase of
approximately 174%) and are included in selling, general and administrative
expenses.
OTHER INCOME
Other income consists principally of interest earned on cash balances and
sublease income earned. Interest income in the three months ended March 31, 1998
and 1997 approximated $26,000 and $15,000, respectively. The increase in
interest income principally results from interest earned on higher cash balances
maintained by the Company during the three months ended March 31, 1998. The
Company previously leased a portion of its corporate office facility under a
three-year sublease which expired on April 30, 1997. Due to the continuing
expansion of operations, (See "Selling, General and Administrative" above) the
Company decided not to renew the sublease and incorporated such space into its
existing corporate facility. Sublease rental income earned during the three
months ended March 31, 1997 approximated $9,800.
NET LOSS
Net loss for the three months ended March 31, 1998 was $941,000 ($0.11 per
share) as compared to a net loss of $85,399 ($0.01 per share) for the three
months ended March 31, 1997. The increase in net loss, principally resulted from
1) decrease in "capital sales" type revenue resulting from the Company moving to
a subscription-based revenue model which presently is in its early stage of
growth, and 2) increase in selling, general and administrative expenses. See
"Revenues", "Cost of sales and Service and Gross Profit" and "Selling, General
and Administrative" above.
Management has made a considerable effort with respect to an expansion of its
operations, development of various trading systems which began in 1993 and
continues into 1998 and changes to its business model to that of a
subscription-based product offering. The Company believes that this expansion of
personnel, facilities, product portfolio and subscription-based model will
better position the Company and facilitate its future growth. However, in spite
of its optimism, management is also cautioning that the Company's aggressive
conversion from a capital sales model to subscription-based model is causing
revenue recognition from subscription-based orders to be realized over a longer
period of time than the previous capital sales model.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity has been equity capital. Since the
commencement of operations, the Company has raised approximately $9.8 million of
working capital through various private placements of its securities. During
March 1997, the Company completed a private placement of 800,000 shares of
Common Stock at a price of $4.50 per share, for an aggregate value of
$3,600,000. Costs related to this offering amounted to approximately $85,000
resulting in net proceeds to the Company of approximately $3,515,000. At March
31, 1998, cash balances decreased to $1,112,143 from $2,141,307 at December 31,
1997.
The Company's current assets at March 31, 1998 exceeded its current liabilities
by approximately $3 million. The Company at March 31, 1998 had long-term debt
totaling approximately $93,600 which represents secured term loans (three at
March 31, 1998) on the purchase of development equipment. Interest on these
loans vary from 7.95% to 9.0%. In addition, at March 31, 1998, the Company had
no material commitments for capital expenditures or inventory purchases. The
Company has available a maximum one million dollar bank line of credit facility
for the purpose of financing accounts receivable. At March 31, 1998, the Company
had not drawn down on the line of credit facility. The line of credit, which is
secured by accounts receivable and inventory, expires on June 30, 1999. The line
of credit is subject to certain limitations on the accounts receivable as
defined in the line of credit agreement. As of April 30, 1998, the Company had
approximately $500,000 available on its line of credit facility. Interest on the
line of credit is based on the bank's prime rate plus one percent. The bank
agreements and line of credit agreement require the Company, among other things,
to maintain minimum tangible net worth and a minimum current ratio.
The Company believes that with its available capital, including the proceeds
from the March 7, 1997 private placement, the line of credit facility and its
intention to finance future equipment purchases it will be able to fund its cash
needs through the end of 1998. The Company intends to internally finance its
continuing research and development activities. If and when used, the Company's
line of credit facility is primarily utilized to finance equipment purchases.
The Company intends to reduce its existing line of credit facility and finance
the equipment for its subscription contracts and data center through longer
term equipment financing arrangements. The Company has held preliminary
conversations with financial institutions for such financing. The Company is
considering numerous alternatives to finance its anticipated sales growth and
growing infrastructure. The Company's financial requirements and its ability to
meet them thereafter will depend largely on its future financial performance.
However, in the event the Company's operations do not generate cash to the
extent currently anticipated by management of the Company and grow more rapidly
than anticipated, it is possible that the Company could require additional funds
beyond 1998. At this time, the Company does not know what sources, if any would
be available to it for such funds, if required.
In addition, at March 31, 1998, the Company has warrants outstanding for the
purchase of 263,837 shares of its Common Stock. Assuming the exercise of all
such outstanding Warrants, the Company would receive approximately $926,600 in
gross proceeds.
WORKING CAPITAL
At March 31, 1998 and December 31, 1997, the Company had working capital of
approximately $3,000,000 and $3,803,000, respectively. The Company's present
capital resources include
12
<PAGE>
proceeds from its March 7, 1997 private placement of Common Stock and available
borrowing capacity under its bank credit facility. The Company has held
preliminary conversations with financial institutions to finance equipment for
its subscription contracts and data center. Through March 31, 1998, 139,000
stock options and warrants to purchase common stock were exercised with the
Company receiving proceeds of approximately $465,000.
CASH USED IN OPERATING ACTIVITIES
During the three months ended March 31, 1998, net cash used in operations was
approximately $901,000 as compared to cash provided by operations in for the
three-month ended March 31, 1997 of approximately $714,000. The decline is
primarily attributable to the Company's increasing losses as previously
discussed.
CASH USED IN INVESTING ACTIVITIES
During the three months ended March 31, 1998 and 1997, net cash used in
investing activities was approximately $580,600 and $209,000, respectively, and
principally represents payments for the purchases of equipment and payments
related to product enhancement costs for the Company's product portfolio.
PROCEEDS FROM FINANCING ACTIVITIES
During the three months ended March 31, 1998 and 1997, proceeds from financing
activities were approximately $452,000 and $2,776,000, respectively. The
decrease is primarily attributable to there being no equity offering during the
three months ended March 31, 1998 as there was in the three months ended March
31, 1997.
YEAR 2000 COMPLIANCE
The Company believes its information systems are in compliance with year 2000
information technology requirements.
SEASONALITY
The Company believes that its operations are not significantly effected by
seasonality.
NEW ACCOUNTING PRONOUNCEMENTS
In October 1997, the American Institute of Certified Public Accountants issued
Statement of Position 97-2, "Software Revenue Recognition," which supercedes
SOP-91-1 and clarifies the existing guidance regarding revenue recognition of
certain computer software products. The Company adopted SOP 97-2 in the first
quarter of 1998 and the effect is not material to the Company's operations or
financial position taken as a whole.
In June 1997, the Financial Accounting Standards board issued FASB Statement No.
131, "Disclosures about Segments of an Enterprise and Related Information."
Statement 131
13
<PAGE>
requires that segment data be disclosed based on how management makes decisions
about allocating resources to segments and measuring their performance. While
the Company is studying the application of the disclosure provisions, it does
not expect this statement to materially affect its financial position or results
of operations. This Statement is effective for the year ended December 31, 1998.
PART II OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Not applicable
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
Not applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable
Item 5. OTHER INFORMATION
Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
27 Financial Data Schedule, which is submitted electronically to the
Securities and Exchange Commission for information purposes only and
not filed.
(b) REPORTS ON FORM 8-K
None
14
<PAGE>
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.
TRINITECH SYSTEMS, INC.
(Registrant)
By: /s/ Kevin C. Cassidy
-------------------------------
Kevin C. Cassidy
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
Dated: May 14, 1998
-3-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FORM 10-QSB FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,112,143
<SECURITIES> 0
<RECEIVABLES> 1,745,286
<ALLOWANCES> 144,000
<INVENTORY> 1,410,484
<CURRENT-ASSETS> 4,391,459
<PP&E> 2,384,159
<DEPRECIATION> 842,508
<TOTAL-ASSETS> 6,847,048
<CURRENT-LIABILITIES> 1,390,283
<BONDS> 0
0
0
<COMMON> 8,664
<OTHER-SE> 5,411,197
<TOTAL-LIABILITY-AND-EQUITY> 6,847,048
<SALES> 408,801
<TOTAL-REVENUES> 1,040,276
<CGS> 463,314
<TOTAL-COSTS> 2,007,314
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,194
<INCOME-PRETAX> (941,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (941,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (941,000)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
