UNITED STATES 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 period ended September 30, 1998.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________________ to ____________________.
Commission file number 0-29098
NAVIDEC, INC.
(Exact name of small business issuer as specified in its charter)
COLORADO 33-0502730
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation or organization)
14 INVERNESS DRIVE, SUITE F-116, ENGLEWOOD, CO 80112
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 303-790-7565
Check whether the issuer (1) 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 required for the past 90 days. Yes X No ___
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of October 31, 1998, the Registrant had 3,606,221 shares of common
stock outstanding
NAVIDEC, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets as of September 30, 1998 and December 31,
1997
Statements of Operations, Three and Nine months ended
September 30, 1998 and 1997
Statements of Cash Flows, Nine months September 30, 1998
and 1997
Notes to Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
NAVIDEC, INC.
BALANCE SHEETS
September 30, December 31,
1998 1997
ASSETS
CURRENT ASSETS:
<S> <C> <C>
Cash and cash equivalents $395,000 $369,000
Accounts Receivable:
Trade net of $50,000 allowance
for doubtful accounts 1,523,000 726,000
Retainage 0 21,000
Cost and estimated earnings in
excess of billing 325,000 106,000
Notes Receivable 23,000 60,000
Inventory 502,000 549,000
Prepaid expenses and other
current assets 247,000 86,000
____________ ___________
Total current assets $3,015,000 $1,917,000
PROPERTY AND EQUIPMENT, net 808,000 713,000
OTHER ASSETS
Restricted certificate of deposit 0 300,000
Intangibles, net 84,000 169,000
____________ ___________
Total Assets $3,907,000 $3,099,000
============ ===========
LIABILITIES AND STOCKHOLDERS EQUITY
CURRENT LIABILITIES
Current portion of capital
lease obligations $36,000 $37,000
Notes payable 803,000 63,000
Accounts payable 1,032,000 778,000
Payable to factor 202,000 190,000
Other accrued liabilities 245,000 171,000
____________ ___________
Total current liabilities $2,318,000 $1,239,000
CAPITAL LEASE OBLIGATIONS,
net current portion 69,000 95,000
NOTES PAYABLE,
net current portion 0 215,000
STOCKHOLDERS EQUITY
Common stock, no par value;
20,000,000 shares authorized
3,606,221 and 3,201,000 shares
issued and outstanding $8,319,000 $6,768,000
Accumulated deficit (6,799,000) (5,218,000)
Total stockholders
equity $1,520,000 $1,550,000
____________ ___________
TOTAL LIABILITIES and
STOCKHOLDERS EQUITY $3,907,000 $3,099,000
============ ===========
</TABLE>
See accompanying notes to these financial statements.
NAVIDEC, INC.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------------- ---------------------
1998 1997 1998 1997
--------- -------- ------- ------
<S> <C> <C> <C> <C>
NET SALES $2,139,000 $1,926,000 $5,678,000 $4,877,000
Cost of sales 1,394,000 1,308,000 3,733,000 3,234,000
-------------- ------------- ------------ -----------
GROSS MARGIN 745,000 618,000 1,945,000 1,643,000
Operating expense 1,266,000 968,000 3,496,000 2,959,000
-------------- ------------ ----------- -----------
OPERATING INCOME
(LOSS) (521,000) (350,000) (1,551,000) (1,316,000)
OTHER INCOME (EXPENSE):
Interest, net (22,000) (9,000) (26,000) (255,000)
Other 1,000 0 (4,000) 1,000
-------------- ------------ ---------- ----------
Other, Net (21,000) (9,000) (30,000) (254,000)
-------------- ------------ ---------- ----------
NET INCOME (LOSS) $(542,000) $(359,000) $(1,581,000)$(1,570,000)
============== ============ ========== ==========
NET LOSS PER
SHARE (Basic) $(.15) $(.12) $(.47) $(.60)
NET LOSS PER
SHARE (Diluted) $(.15) $(.12) $(.47) $(.60)
========= ======== ========= =========
WEIGHTED AVERAGE COMMON
SHARES AND EQUIVALENTS
OUTSTANDING 3,606,000 2,943,000 3,335,000 2,610,000
=========== ========== ========== ==========
</TABLE>
See accompanying notes to these financial statements.
<TABLE>
<CAPTION>
NAVIDEC, INC.
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $(1,581,000) $(1,570,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 422,000 233,000
(Increase) Decrease in:
Accounts receivable (776,000) (800,000)
Costs and estimated earnings in
excess of billings (219,000) (153,000)
Inventories 47,000 (105,000)
Other assets (161,000) (66,000)
Increase (decrease) in:
Accounts payable and accrued
liabilities 254,000 (536,000)
Other liabilities 74,000 (227,000)
------------ ------------
Net cash used in operating activities (1,940,000) (3,224,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in Notes Receivable 37,000 0
Capital expenditures for property and
equipment (432,000) (403,000)
Cash acquired in acquisition of
TouchSource 0 7,000
Release of restricted CD 300,000 0
------------ -----------
Net cash used in investing activities (95,000) (396,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from factoring of accounts
receivable 1,059,000 240,000
Payment to factor (1,047,000) (747,000)
Proceeds from issuance of common
stock 1,551,000 5,349,000
Proceeds from issuance of notes payable 800,000 300,000
Proceeds from notes payable related
parties 40,000 0
Payment on notes payable-related parties (40,000) 0
Payment on notes payable and capital leases (302,000) (1,202,000)
Payment for deferred financing cost 0 (38,000)
------------- ----------
Net cash provided by financing activities 2,061,000 3,902,000
INCREASE IN CASH AND CASH EQUIVALENTS 26,000 282,000
CASH AND CASH EQUIVALENTS,
beginning of period 369,000 231,000
------------- ----------
CASH AND CASH EQUIVALENTS, end of period $395,000 $513,000
=========== ===========
SUPPLEMENTAL SCHEDULE OF CASH
FLOW INFORMATION:
Cash payments for interest $18,000 $231,000
=========== ===========
Debentures converted to common stock $ -- $1,437,000
=========== ===========
</TABLE>
See accompanying notes to these financial statements.
NAVIDEC, INC.
NOTES TO FINANCIAL STATEMENTS
Unaudited Financial Statements
The unaudited financial statements and related notes to the financial
statements presented herein have been prepared by the Company pursuant to the
rules and regulations of the Securities and Exchange Commission. Accordingly,
certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations. The
accompanying financial statements were prepared in accordance with the
accounting policies used in the preparation of the Company's audited financial
statements included in its Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997, and should be read in conjunction with such financial
statements and notes thereto.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary for a fair presentation of
operating results for the interim periods presented have been made.
Stockholders' Equity
Public Stock Offering - On February 14, 1997, the Company completed an initial
public stock offering of 1,000,000 Units (comprised of 1,000,000 shares of
common stock and warrants for the purchase of 1,000,000 shares of common
stock) which provided gross proceeds to the Company of approximately
$4,555,000. Simultaneous with the offering convertible debenture holders
converted $1,438,000 in convertible notes into common stock and warrants.
Included in the 1,000,000 Units are 245,000 shares of common stock offered by
the holders of the unsecured subordinated convertible promissory notes. Each
warrant allows the holder to purchase one share of common stock at an exercise
price of $7.20 for a period of five years after the date of the offering. The
warrants are redeemable by the Company at $.05 per warrant upon 30 days notice
if the market price of the common stock for 20 consecutive trading days within
the 30-day period preceding the date the notice is given equals or exceeds
$8.40. The Company also sold to the underwriter at the close of the public
offering underwriters warrants, at a price of $0.001 per warrant, to purchase
100,000 shares of common stock exclusive of the over-allotment. The
underwriters warrants are exercisable for 4 years beginning in February 1998
at $7.38 per share.
Stock Split - During 1996, the Company declared a 1 for 2 reverse stock split
and 510.2041 to 1 stock split. The Company also declared a .85 for 1 reverse
stock split which became effective upon the initial public offering in
February 1997. All common stock reflected in the financial statements and
accompanying notes reflect the effect of the split and reverse split.
Private Placement From November 1997 to April 1998, the Company raised
additional capital in a private placement offering of 594,500 units at $4.50
per unit (comprised of 594,500 shares of common stock and warrants for the
purchase of 594,500 shares of common stock) which provided gross proceeds to
the Company of approximately $2,229,750. Each warrant allows the holder to
purchase one share of common stock at an exercise price of $7.20 for a period
extending through February 10, 2002. The warrants are redeemable by the
Company at $.05 per warrant upon 30 days notice if the market price of the
Company's common stock for 20 consecutive trading days within the 30 day
period preceding the date the notice is given equals or exceeds $8.40.
Offering costs associated with the private placement included sales
commissions and non-accountable expenses totaling 13% of the proceeds of the
offering, as well as placement agent warrants to purchase 59,450 units for 5
years from the date of closing at $4.50 per unit. In addition, the Company
agreed to issue any broker or registered agent who placed four or more units
(consisting of 6,000 units or $27,000 each) one broker warrant for each $20
sold. During the private placement the Company issued 121,613 warrants to
brokers or registered agents. This offering was made pursuant to Rule 506 of
Regulation D under the Securities Act of 1933, as amended, as an offering not
involving any public offering solely to accredited and not more than 35
sophisticated investors.
COMPREHENSIVE INCOME
In June, 1997 the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No 130, Reporting Comprehensive Income ("FAS
130"). FAS 130, which is effective for fiscal years beginning after December
15, 1997, defines comprehensive income as all changes in shareholder equity
exclusive of transactions with owners, such as capital investments.
Comprehensive income includes net income or loss, changes in certain assets
and liabilities that are reported directly in equity such as translation
adjustments on investments in foreign subsidiaries, and certain changes in
minimum pension liabilities. The Company's comprehensive income (loss) was
equal to its net income (loss) for the three and nine month periods ended
September 30, 1998 and 1997.
NOTES PAYABLE
Notes payable at September 30, 1998, consists of the following:
Note payable to a VSI Holdings Inc at 9% per annum due and
Payable upon maturity on December 31, 1998,
collateralized by the assets of the company. $800,000
Note payable to officer/director /shareholder,
principal along with interest at 10% per annum
due on December 31, 1998. $3,000
<PAGE>
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Statement Regarding Forward Looking Statements. The matters
discussed here and elsewhere in this report, when not historical matters, are
forward looking statements that involve a number of risks and uncertainties
that could cause actual results to differ materially from projected results.
Such factors include, among other things, the rapidly developing and
unpredictable nature of the Internet, intense competition in all of the
Company's markets, obsolescence of products and technological changes, the
need for management of growth and the dependence on relationships of the
Company with its customers and suppliers, as well as other risk factors
described elsewhere in this report.
Overview
The Company was organized as ACI Systems, Inc. in July 1993 and changed
its name to NAVIDEC, Inc. in July 1996 when it acquired Interactive Planet,
Inc. ("IPI"), a designer and developer of Internet World Wide Web sites. The
Company's principal sources of revenue are from the resale of computer
equipment, high technology peripherals and electronic components manufactured
by independent vendors (Product Distribution) and services related to
Internet/Intranet Solutions, license fees from recurring lead revenue from
the Wheels solution. The Company issued an aggregate of 678,877 shares of
Common Stock to the shareholders of IPI and a promissory note in the amount of
$75,000 to one shareholder of IPI in exchange for all of the issued and
outstanding stock of IPI. The Company acquired TouchSource, Inc. ("TS"), a
designer and developer of interactive Kiosks, in July 1997. The Company issued
an aggregate of 207,000 shares of Common Stock to the shareholders of TS and
TS was merged into the Company in exchange for all of the issued and
outstanding stock of TS. The merger and acquisition were consummated in order
to expand the Company's business model of combined expertise in traditional
marketing and distribution and Internet/ Intranet technology. On August 5,
1998 the Company signed a letter of intent to merge with VSI Holdings
("VSIH")in an anticipated stock for stock exchange that was scheduled to be
completed during the fourth quarter of 1998. On August 20, 1998 the Company
canceled its letter of intent to merge with VSIH based on Management's and the
Board of Directors belief that the merger was not in the best interest of the
shareholders.
The Company's strategy is to increase revenue generated by its three core
competencies: (1) NetSolutions (Internet/Intranet Solutions), which are
focused in five major market areas, including software and services, computer
and network infrastructure equipment, content aggregation, electronic
commerce and order fulfillment, (2) Automotive Solutions which includes the
company's Wheels Solution and software and services, and (3) Product
Distribution. The Company has built and intends to continue to build an
infrastructure that assumes this strategy will succeed. Management believes
that, based on the current product mix, the Company's new Wheels solution will
provided for the majority of its increased revenues in 1999 and years to
follow. The Wheels solution combines two of the Company's core competencies
of NetSolutions and product distribution. Wheels is designed on a state of
the art platform that allows it to distribute electronic information out to
consumers through regional wheels web sites, individual dealer web sites,
remote automotive kiosks and also in mobile sales laptops. The failure of the
Company to achieve this strategy could have a material adverse effect on the
Company's business, financial condition and results of operations.
The Company recognizes revenue upon delivery of its NetSolutions,
Automotive Solutions and Product Distribution goods. NetSolutions generally
begin with consulting arrangements that are billed on an hourly basis and
progress to a bid for a proposed project. Deposits are then taken upon
acceptance of the bid. Most of the Company's customers elect to update and
expand their solution frequently, and clients are billed monthly on a time
and materials basis for these services. Additional sources of ongoing revenue
include revenue from advertising sold by the Company on clients Web sites,
revenue from sales of merchandise and services over clients Web sites and
revenue from maintenance and hosting of client Web sites.
From August through October, 1996, the Company raised net proceeds of
approximately $1,233,000 from the sale of 10% Unsecured Subordinated
Convertible Promissory Notes (the "Bridge Promissory Notes") in a private
placement (the "Bridge Private Placement"). These notes were converted by
their terms into an aggregate of 349,126 Units upon consummation of the
Company's public offering described below. These Units were identical to the
Units offered in the 1997 public offering.
On February 14, 1997, the Company consummated a public offering of
1,000,000 Units consisting of one share of Common Stock and one Common
Stock purchase warrant ("Warrant"). Each Warrant entitles the holder to
purchase one share of Common Stock at a price of $7.20 per share until
February 10, 2002. The Warrants are redeemable at the option of the Company,
at $.05 per Warrant, at any time on or after February 10, 1998 or such earlier
date as may be determined by Joseph Charles & Associates ("JCA"). Of the
1,000,000 shares of Common Stock and 1,000,000 Warrants included in the
offering, 755,000 shares of Common Stock and 1,000,000 Warrants were sold by
the Company, for net proceeds of approximately $3,436,000 (after subtracting
the underwriting discount and other expenses of the offering). The remaining
255,000 shares of Common Stock were sold by the investors in the Bridge
Private Placement.
From November 1997 to April 1998, the Company raised net proceeds of
approximately $2,229,750 from the issuance of 594,500 shares of commons stock
and warrants in a private placement. Each Warrant entitles the holder to
purchase one share of Common Stock at a price of $7.20 per share until
February 10, 2002. The Warrants are redeemable at the option of the Company,
at $.05 per Warrant, at any time on or after February 10, 1998 when the
Company's Common Stock on 20 consecutive trading days has a closing market
price above $8.40 per share and there is an effective registration statement
on file with the Securities and Exchange Commission.
Results of Operations
The following tables set forth for the periods indicated the percentage
of net sales represented by certain line items included in the Company's
statements of operations.
<TABLE>
Three Months Ended Nine Months Ended
Sept 30 September 30
1998 1997 1998 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales
Net Solutions $1,399,000 65% $822,000 43% $3,121,000 55% $2,065,000 42%
Wheels 177,000 8 25,000 1 806,000 14 25,000 1
Product 563,000 26 1,079,000 56 1,751,000 31 2,787,000 57
Net Sales $2,139,000 100% $1,926,000 100% $5,678,000 100%$4,877,000100%
Cost of Sales 1,394,000 65 1,308,000 68 3,733,000 66 3,234,000 66
Gross Profit 745,000 35 618,000 32 1,945,000 34 1,643,000 34
Oper Expenses 1,266,000 59 968,000 50 3,496,000 62 2,959,000 61
Oper (Loss) (521,000)(24) (350,000)(18)(1,551,000)(27)(1,316,000)(27)
Other (21,000) (1) (9,000) (1) (30,000) (1) (254,000) (5)
Net (Loss) $(542,000)(25)% $(359,000)(19)$(1,581,000)(28)%$(1,570,000)(32)%
</TABLE>
Net sales for the nine months ended September 30, 1998 were $5,678,000
which represents an increase of $801,000 or 16% over net sales of $4,877,000
for the first nine months of 1997. Net sales were $2,139,000 for the three
months ended September 30, 1998 an increase of $213,000 or 11% over sales of
$1,926,000 for the three months ending September 30, 1997. The increase is
primarily attributed to increased sales of NetSolutions (Internet/Intranet
solutions), which accounted for $3,121,000 or 55% of total sales for the first
nine months of 1998, an increase of $1,056,000 or 51% over net sales of
$2,065,000 during the first nine months of 1997. NetSolutions sales were
$1,399,000 for the three months ending September 30, 1998 an increase of
$577,000 or 70% over sales of $822,000 for the three months ending September
30, 1997. Sales of the Company's Wheels solution, increased from $25,000 in
1997 to $806,000 for the nine months ended September 30,1998 and accounted for
14% of the total sales same period. The increase in net sales in both
categories was primarily attributable to increased marketing activities,
greater market acceptance and greater market penetration.
Net sales in Product division were $1,751,000 for the first nine months
of 1998 a decrease of 37% from net sales of $2,787,000 during the first nine
months of 1997. Net sales in Products were $563,000 for the three months ended
September 30, 1998 a decrease of 48% from net sales of $1,079,000 for the
three months ended September 30, 1997. The decrease in sales is attributed to
the discontinuation of products that did not have strong gross profit and or
recurring sales.
Gross margin was 35% during three months ending September 30, 1998, an
decrease of 3% over a gross margin of 32% during the same period in 1997. The
Company's gross margin continues to remain strong which is attributed to
management's elimination of several distribution products that carried low
gross margin and the strong gross margin on NetSolutions and Wheels.
Operating expenses for the first nine months of 1998 were $3,496,000 or
62% of sales compared with $3,234,000 or 64% for the same period in 1997. The
increase in operating expenses was primarily the result of an increase in
staff and marketing activities associated with expanding the Wheels product
and its market area. Operating expenses are expected to remain stable as the
Company continues to invest in the development of high end Internet/Intranet
Solutions.
Net interest expense for first nine months of 1998 was $30,000 compared
with $254,000 for the first nine months of 1997. The decrease was a result of
the Bridge Promissory Notes that were converted into common stock in February
of 1997. The Company expects interest expense to increase due to the use of
debt to finance growth during the remainder of 1998.
Liquidity and Capital Resources
Through September 30, 1998, the Company funded its operations primarily
through equity financing, from the Company's IPO and subsequent Private
Placement that was completed in April of 1998, and revenues generated from
operations, lines of credit and factoring arrangements made available to it by
banks, and other institutions. On September 30, 1998 the Company had cash
and cash equivalents of $395,000 and a net working capital of $589,000
compared to cash and cash equivalents of $369,000 and a net working capital of
$678,000 as of December 31, 1997.
Cash used in operating activities for the Company totaled $1,940,000 and
$3,224,000 for first nine months of 1998 and 1997, respectively. Cash used
in investing activities consisted of expenditures for property and equipment.
Capital expenditures increased to $432,000 in first nine months of 1998 from
$403,000 during first nine months of 1997.
Cash from financing activities in fiscal 1998 consisted of advances from
factoring arrangements of $1,059,000 net of repayments of $1,047,000, proceeds
from the issuance of common stock of $1,551,000. This compares to 1997
repayments of Notes of $1,437,000 from the Bridge Private Placement, $226,000
in loans from shareholders and employees and $71,00 in repayment of factoring
arrangements.
The Company has not recorded a deferred tax asset as it cannot conclude
to date that it is more likely than not that the deferred tax asset will be
realized.
Year 2000
Computer programs or other embedded technology that have been written using two
digits (rather than four) to define the applicable year and that have time-
sensitive logic may recognize a date using "00" as the Year 1900 rather than the
Year 2000, which could result in widespread miscalculations or system failures.
Both information technology ("IT") systems and non-IT systems using embedded
technology may be affected by the Year 2000.
The Company has initiated an enterprise-wide program to prepare the Company's IT
systems and applications for the Year 2000. The Company has not completed the
assessment phase of its Year 2000 program, but expects to incur internal staff
costs as well as consulting and other expenses related to the Company's Year
2000 program. In addition, the Company has not completed the process of
verification of whether vendors, suppliers and significant customers with
which the Company has material relationships are Year 2000 compliant. If the
Company and such third parties are unable to address Year 2000 issues in a
timely manner, it could result in material financial risk to the Company,
including the loss of revenue and substantial unanticipated costs.
Accordingly, the Company plans to devote all resources necessary to resolve
significant Year 2000 issues in a timely manner. In addition, the Company
plans to develop a Year 2000 contingency plan.
The Company currently is not able to determine the total costs for its Year 2000
program or whether the Year 2000 will have a material effect on the Company's
financial condition, results of operations or cash flows.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
See "Notes to Financial Statements Private Placement"
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
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
During the quarter for which this report is filed. The
Company did not file any Reports on Form 8-K.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NAVIDEC, INC.
Date: November 16, 1998
By: /s/ RALPH ARMIJO
Ralph Armijo
President and CEO
By:/s/ PAT MAWHINNEY
Pat Mawhinney
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 395,000
<SECURITIES> 0
<RECEIVABLES> 1,573,000
<ALLOWANCES> 50,000
<INVENTORY> 502,000
<CURRENT-ASSETS> 3,015,000
<PP&E> 1,487,000
<DEPRECIATION> 679,000
<TOTAL-ASSETS> 3,907,000
<CURRENT-LIABILITIES> 2,318,000
<BONDS> 0
0
0
<COMMON> 8,319,000
<OTHER-SE> (6,799,000)
<TOTAL-LIABILITY-AND-EQUITY> 3,907,000
<SALES> 5,678,000
<TOTAL-REVENUES> 5,678,000
<CGS> 3,733,000
<TOTAL-COSTS> 3,496,000
<OTHER-EXPENSES> 4,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,000
<INCOME-PRETAX> (1,581,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,581,000)
<EPS-PRIMARY> (.47)
<EPS-DILUTED> (.47)
</TABLE>
