<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 DECEMBER 31, 1999
or
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission File Number: 0-37159
-------------------------
IOMED, INC.
(Exact name of registrant as specified in its charter)
UTAH 87-0441272
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3385 WEST 1820 SOUTH, SALT LAKE CITY, UTAH 84104
(Address of principal executive offices) (Zip Code)
(801) 975-1191
(Registrant's telephone number, including area code)
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 [ X ] Yes [ ] No.
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. As of JANUARY 31,
2000:
<TABLE>
<CAPTION>
CLASSES OF COMMON STOCK NUMBER OF SHARES OUTSTANDING
- -------------------------- ----------------------------
<S> <C>
Common Stock, no par value 6,507,744
</TABLE>
<PAGE> 2
IOMED, INC.
-------------
INDEX TO FORM 10-Q
PART I -- FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 1. Financial Statements (unaudited)
Condensed Consolidated Balance Sheets --
December 31, 1999 and June 30, 1999...................................... 3
Condensed Consolidated Statements of Operations --
Three months ended December 31, 1999 and 1998
Six months ended December 31, 1999 and 1998.............................. 4
Condensed Consolidated Statements of Cash Flows --
Six months ended December 31, 1999 and 1998.............................. 5
Notes to Condensed Consolidated 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
Not applicable
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders...................... 11
Item 5. Other Information........................................................ 12
Item 6. Exhibits and Reports on Form 8-K......................................... 12
</TABLE>
Page 2 of 14
<PAGE> 3
IOMED, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 1999
------------ ------------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 16,620,000 $ 17,263,000
Accounts receivable 1,591,000 1,292,000
Inventories 922,000 782,000
Prepaid expenses 8,000 43,000
------------ ------------
Total current assets 19,141,000 19,380,000
Equipment and furniture, net 608,000 603,000
Other assets 155,000 171,000
------------ ------------
TOTAL ASSETS $ 19,904,000 $ 20,154,000
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Trade accounts payable $ 110,000 $ 237,000
Accrued expenses and other liabilities 964,000 940,000
Current portion of long-term obligations 84,000 57,000
------------ ------------
Total current liabilities 1,158,000 1,234,000
Long-term obligations 220,000 129,000
Commitments
Shareholders' equity:
Common shares 34,413,000 34,413,000
Convertible preferred shares 6,881,000 6,881,000
Accumulated deficit (22,768,000) (22,503,000)
------------ ------------
Total shareholders' equity 18,526,000 18,791,000
------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 19,904,000 $ 20,154,000
============ ============
</TABLE>
See accompanying notes.
Page 3 of 14
<PAGE> 4
IOMED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
----------------------------- -----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues:
Product sales $ 2,643,000 $ 2,440,000 $ 5,175,000 $ 4,595,000
Contract research revenue, royalties & license
fees 28,000 370,000 73,000 798,000
----------- ----------- ----------- -----------
Total revenues 2,671,000 2,810,000 5,248,000 5,393,000
Operating costs and expenses:
Cost of products sold 905,000 1,040,000 1,829,000 1,987,000
Research and development 848,000 452,000 1,509,000 867,000
Selling, general and administrative 1,342,000 1,433,000 2,646,000 2,830,000
----------- ----------- ----------- -----------
Total costs and expenses 3,095,000 2,925,000 5,984,000 5,684,000
----------- ----------- ----------- -----------
Loss from operations (424,000) (115,000) (736,000) (291,000)
Interest expense 4,000 4,000 8,000 10,000
Interest income and other, net 254,000 224,000 479,000 452,000
----------- ----------- ----------- -----------
Net income (loss) $ (174,000) $ 105,000 $ (265,000) $ 151,000
=========== =========== =========== ===========
BASIC AND DILUTED INCOME (LOSS) PER COMMON SHARE $ (0.03) $ 0.01 $ (0.04) $ 0.02
=========== =========== =========== ===========
</TABLE>
See accompanying notes.
Page 4 of 14
<PAGE> 5
IOMED, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
DECEMBER 31,
1999 1998
------------ ------------
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (265,000) $ 151,000
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 182,000 207,000
Changes in assets and liabilities:
Accounts receivable (299,000) 404,000
Inventories (140,000) (101,000)
Prepaid expenses 35,000 20,000
Trade accounts payable (127,000) (497,000)
Accrued expenses and other liabilities 24,000 (3,000)
------------ ------------
Net cash provided by (used in) operating activities (590,000) 181,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment and furniture (171,000) (116,000)
------------ ------------
Net cash provided by (used in) investing activities (171,000) (116,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options --- 2,000
Proceeds on long-term obligations 145,000 ---
Payments on long-term obligations (27,000) (24,000)
------------ ------------
Net cash provided by (used in) financing activities 118,000 (22,000)
Net increase (decrease) in cash and cash equivalents (643,000) 43,000
Cash and cash equivalents at beginning of period 17,263,000 16,709,000
------------ ------------
Cash and cash equivalents at end of period $ 16,620,000 $ 16,752,000
============ ============
</TABLE>
See accompanying notes.
Page 5 of 14
<PAGE> 6
IOMED, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
IOMED, Inc., a Utah corporation (the "Company"), develops,
manufactures and commercializes controllable drug delivery systems
using proprietary iontophoretic technology. Iontophoresis is a method
of enhancing and controlling the transport of drugs through the skin
utilizing a low-level electrical current.
Basis of Presentation
In the opinion of management, the accompanying condensed
consolidated financial statements contain all normal recurring
adjustments necessary to present fairly the financial position of the
Company as of December 31, 1999, and the results of its operations and
cash flows for the interim periods ended December 31, 1999, and 1998.
The operating results for the interim periods are not necessarily
indicative of the results for a full year. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted. Therefore, these statements should be read in
conjunction with the Company's audited consolidated financial
statements for the year ended June 30, 1999, included in the Company's
Annual Report on Form 10-K, dated September 28, 1999.
Earnings (Loss) Per Share
For all periods presented, basic and diluted earnings per
share are computed in accordance with Statement of Financial Accounting
Standards (SFAS) No. 128 - Earnings per Share.
Net income (loss) as presented in the condensed consolidated
statements of operations represents the numerator used in computing
both basic and diluted earnings per share and the following table sets
forth the computation of the weighted average shares representing the
denominator used in determining basic and diluted earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
DECEMBER 31, DECEMBER 31,
----------------- ------------------
1999 1998 1999 1998
------ ------ ------ ------
(IN THOUSANDS) (IN THOUSANDS)
<S> <C> <C> <C> <C>
Denominator for basic earnings per share -
weighted average shares outstanding......... 6,508 6,501 6,508 6,501
Dilutive securities: preferred stock and
certain stock options....................... --- 903 --- 942
----- ----- ----- -----
Denominator for diluted earnings per share --
adjusted weighted average shares
outstanding and assumed conversions......... 6,508 7,404 6,508 7,443
===== ===== ===== =====
</TABLE>
Page 6 of 14
<PAGE> 7
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At December 31, 1999, the following potentially dilutive
securities were outstanding but were not included in the computation of
diluted earnings per share due to their anti-dilutive effect: options
to purchase approximately 1,247,498 common shares at a weighted average
exercise price of $3.31 per share; and warrants to purchase 339,792
common shares at a weighted average price of $13.70 per share; and
893,801 convertible Series D preferred shares convertible on a
share-for-share basis into common stock.
2. INVENTORIES
Inventories are stated at the lower of cost or market. Cost is
determined using the first-in, first-out method. Inventories consisted
of the following at December 31, 1999 and June 30, 1999:
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 1999
------------ ---------
<S> <C> <C>
Raw materials $662,000 $469,000
Work-in-progress 27,000 25,000
Finished goods 233,000 288,000
======== ========
$922,000 $782,000
======== ========
</TABLE>
Page 7 of 14
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of the financial condition and results of
operations of the Company should be read in conjunction with the Condensed
Consolidated Financial Statements and the related Notes thereto included
elsewhere in this Report. The following Management's Discussion and Analysis of
Financial Condition and Results of Operations contains forward-looking
statements, within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, that involve risks and
uncertainties. The Company's actual results of operations could differ
significantly from those anticipated in such forward-looking statements as a
result of numerous factors including those discussed herein. Additional risks
and uncertainties are described in the Company's most recent Annual Report on
Form 10-K for its fiscal year ended June 30, 1999. This discussion should be
read in conjunction with such report, copies of which are available upon
request.
OVERVIEW
The Company develops, manufactures and commercializes controllable drug
delivery systems using iontophoretic technology. The majority of the Company's
revenues have been generated through the sale of its iontophoretic drug delivery
products in the physical therapy market for use in the delivery of
dexamethasone. The Company introduced its local dermal anesthesia products into
the market place in January 1997 and, to date, has not realized significant
revenue from the sales of such products. Since its inception, the Company has
generally incurred operating losses and may incur additional operating losses
over the next several years as a result of anticipated costs associated with
increases in internally funded research, development and clinical trial
activities relating to new applications for its iontophoretic drug delivery
technologies. As of December 31, 1999, the Company's accumulated deficit was
approximately $22,768,000. The Company's ability to achieve and sustain
profitability will depend on its ability to achieve market acceptance and
successfully expand sales of its existing products; successfully complete the
development of, receive regulatory approvals for, and successfully manufacture
and market its products under development; as well as successfully negotiate and
enter into agreements with collaborative partners, licensors, licensees and
other parties for the development, clinical testing, manufacture, marketing or
sale of certain of its products or products in development, as to which there
can be no assurance.
The Company's results of operations may vary significantly from quarter
to quarter and depend, among other factors, on the signing of new product
development agreements, the timing of contract research revenues and milestone
payments made by collaborative partners, the progress of clinical trials,
product sales levels and costs associated with manufacturing processes. The
timing of the Company's research and development revenues may not match the
timing of the associated expenses. The amount of revenue in any given period is
not necessarily indicative of future revenue.
Page 8 of 14
<PAGE> 9
RESULTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
Revenues. Product sales increased 8% and 13% to $2.6 million and $5.2
million in the three and six months ended December 31, 1999, respectively, from
$2.4 million and $4.6 million in the three and six months ended December 31,
1998, respectively. The increase can be attributed primarily to higher sales of
the Company's iontophoretic drug delivery products for the treatment of local
inflammation resulting from new products, increased market acceptance of
iontophoresis and added distribution.
Contract research revenues, royalties and license fees decreased to
$28,000 and $73,000 in the three and six months ended December 31, 1999,
respectively, from $370,000 and $798,000 in the three and six months ended
December 31, 1998, respectively. This decrease is attributable to the expiration
of the Company's collaborative research and development program with a
Pharmaceuticals Corporation ("Novartis") in December 1998. Without new
collaborative research and product development programs, such revenues, in the
current quarter, are indicative of the Company's expectations for the remainder
of the fiscal year.
Costs of Products Sold. Costs of products sold decreased 13% and 8% to
$905,000 and $1.8 million in the three and six months ended December 31, 1999,
respectively, from $1.0 million and $2.0 million in the three and six months
ended December 31, 1998, respectively. This decrease reflects a more favorable
product mix and improved operating efficiencies during the current periods.
Gross margins on product sales reached 66% and 65% during the current three and
six month periods, respectively, compared to 57% in both three and six month
periods in 1998.
Research and Development Expense. Research and development expenditures
increased 87% to $848,000 for the three months ended December 31, 1999, compared
to $452,000 reported for the three months ended December 31, 1998. Research and
development expenditures of $1.5 million for the six months ended December 31,
1999, were up 74% from the $867,000 reported for the six months ended December
31, 1998. This increase primarily reflects the initiation of the Phase III
clinical studies for IontoDex, a formulation of dexamethasone for the treatment
of acute local inflammatory conditions, as well as increased expenditures in
support of the Company's other product development programs. Last years costs
included expenses incurred in connection with the Novartis program, which were
declining as the project began to wind down.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased 6%, to $1.3 million in the three months ended
December 31, 1999, compared to $1.4 million in the three months ended December
31, 1998. Selling, general and administrative expenses of $2.6 million for the
six months ended December 31, 1999, decreased 6% from the $2.8 million for the
six months ended December 31, 1998. Higher sales and marketing costs in last
year's first and second quarters were primarily attributable to one-time costs
associated with the restructuring of the Company's field sales force and higher
marketing and promotional expenses for the Numby product line. The decrease in
sales and marketing expenses during the current periods were offset, in part, by
increased patent prosecution and maintenance costs and increased costs
associated with legal, professional and related services in connection with
investor relations and SEC compliance.
Other Costs and Expenses. Net interest income and expense increased to
$250,000 and $471,000 in the three and six months ended December 31,
1999,respectively, compared to $220,000 and $442,000 in the same periods last
year. Amounts in both periods reflect interest earnings on the invested cash
balances.
Income Taxes. The Company has substantial net operating loss
carryforwards which, under the current "change of ownership" rules of the
Internal Revenue Code of 1986, as amended, may be subject to substantial annual
limitation. No income tax benefit was recognized for the three and six month
periods ended December 31, 1999, which reflects management's estimate of the
Company's fiscal 2000 tax
Page 9 of 14
<PAGE> 10
position. In addition, no income tax expense was recognized on the Company's
pre-tax income for the three and six month periods ended December 31, 1998.
Net income (loss). The Company recognized a net loss of $174,000 or
$0.03 per share during the three months ended December 31, 1999, compared to net
income of $105,000 or $0.01 per share in the three months ended December 31,
1998. The Company recognized a net loss of $265,000 or $0.04 per share during
the six months ended December 31, 1999, compared to a net income of $151,000 or
$0.02 per share in the six months ended December 31, 1998. During the current
three and six month periods, interest earnings on invested cash balances offset
a loss from operations, in part. With anticipated increases in internally funded
research and development programs, including the IontoDex Phase III clinical
studies, the Company expects to report a net loss for the fiscal year. During
the three and six months ended December 31, 1998, net interest earnings on
invested cash balances more than offset a loss from operations.
LIQUIDITY AND CAPITAL RESOURCES
During fiscal 2000, the Company's operating losses, including its
research and development programs, will be internally funded with cash flows
from operations and existing cash balances. In the prior period such losses were
internally funded with cash flows from operations and from contract research and
development revenues the Company received from Novartis.
In December 1998, The Company's collaborative research and development
agreement with Novartis expired. Accordingly, the Company's contract research
revenues declined during the first six months of fiscal 2000. If successful in
its efforts to enter into new collaborative research and development
arrangements, the Company may earn additional contract research revenues in
fiscal 2000 and in future years.
As of December 31, 1999, the Company had cash and cash equivalents
totaling approximately $16.6 million. Cash in excess of immediate requirements
is invested in a manner which is intended to maximize liquidity and return while
minimizing investment risk, and, whenever possible, the Company seeks to
minimize the potential effects of concentration of credit risk.
The Company consumed $590,000 in cash for operating activities during
the six months ended December 31, 1999, compared to generating $181,000 during
the six months ended December 31, 1998. The increased cash consumption in the
current period can be attributable primarily to the reported net loss during the
six months ended December 31, 1999 and an increased investment in working
capital during the period.
Historically, the Company's operations have not been capital intensive
and investment in property, plant and equipment during the periods presented has
not been significant. However, the Company entered into a master lease agreement
with a bank to provide up to an additional $1 million in lease financing for the
Company's anticipated investments in capital equipment. As of December 31, 1999,
the Company had approximately $145,000 outstanding under the lease agreement,
all of which was classified as long-term debt. The Company intends to use the
available credit under the agreement to fund the majority of its capital
equipment needs during the next 12 months. The Company's expenditures for
equipment and furniture were $171,000 and $116,000 in each of the six months
ended December 31, 1999 and 1998, respectively.
Other uses of cash were $27,000 and $24,000 in principal reductions
under capital lease obligations during the six months ended December 31, 1999
and 1998, respectively. The Company recorded additional proceeds from long-term
obligations of $145,000 in the six-months ended December 31, 1999.
Page 10 of 14
<PAGE> 11
The Company may continue to incur costs associated with its research
and development activities, including clinical trials, and make additional
investments in working capital. The Company anticipates that its existing cash
balances and cash generated from operations will be sufficient to fund the
operations of the Company at least through fiscal 2001. However, the Company may
be required or elect to raise additional capital before that time. The Company's
actual capital requirements will depend on many factors, some of which are
outside the Company's control.
IMPACT OF THE YEAR 2000
The Year 2000 computer issue refers to a condition in computer software
where a two-digit field rather than a four-digit field is used to distinguish a
calendar year. Unless corrected, some computer programs, hardware and
non-information technology systems could be unable to process information
containing dates subsequent to December 31, 1999. As a result, such programs and
systems could experience miscalculations, malfunctions or disruptions.
As of the date of this filing, there have been no internal system
disruptions caused by the changeover from year 1999 to year 2000. The Company's
information systems are operating effectively and the Company has noticed no
third party system failures associated with the Year 2000. The Company will
continue to monitor the situation for any internal or third party system
disruptions, but expects none at this time. However, there can be no assurances
that such disruptions will not be discovered or arise in the future or that the
Company will be able to identify and validate an alternative source for any
service or material which may be affected by such disruptions.
Prior to January 1, 2000, the Company completed detailed programs to
address Year 2000 readiness of its primary operating systems (including its
financial systems, material requirements planning, and production lot tracking
systems) and those of its suppliers and other vendors whose systems might impact
the Company's operations. The custom circuitry and software utilized in the
Company's iontophoretic dose controllers do not include any date driven
functions and therefore have not exhibited any change in performance due to the
arrival of the year 2000. Costs incurred in connection with the Company's Year
2000 efforts have not been material.
PART II -- OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on
November 19, 1999, to consider and vote on the following proposals: (i)
election of two directors to serve a term of three years or until their
successors are duly elected and qualified; (ii) approval of an
amendment to the Company's 1997 Share Incentive Plan to increase the
number of shares reserved for issuance; and (iii) ratification of the
appointment of Ernst & Young LLP as the Company's auditors for the
fiscal year ending June 30, 2000.
Proxies for the Annual Meeting were solicited pursuant to
Regulation 14 under the Securities Exchange Act of 1934. There was no
solicitation in opposition to management's nominees, as listed in the
Company's Proxy Statement, and all nominees were elected with the
following vote:
<TABLE>
<CAPTION>
NUMBER OF VOTES
IN FAVOR WITHHELD
-------- --------
<S> <C> <C>
John W Fara, Ph.D. 5,245,294 503,752
Steven P. Sidwell 5,245,294 503,752
</TABLE>
Page 11 of 14
<PAGE> 12
The following directors' terms of office continued after the
meeting:
<TABLE>
<CAPTION>
DIRECTORS TERM ENDING
--------- -----------
<S> <C>
Michael T. Sember 2000
James R. Weersing 2000
Peter J. Wardle 2001
Warren Wood 2001
</TABLE>
The proposal to approve an amendment to the Company's 1997
Share Incentive Plan to increase the number of shares reserved for
issuance was approved with the following vote:
<TABLE>
<CAPTION>
NUMBER OF VOTES
IN FAVOR AGAINST ABSTAINED NOT VOTED
-------- ------- --------- ---------
<S> <C> <C> <C>
3,540,940 106,770 19,810 2,081,526
</TABLE>
The proposal to ratify the appointment of Ernst & Young LLP as
the Company's auditors was approved with the following vote:
<TABLE>
<CAPTION>
NUMBER OF VOTES
IN FAVOR AGAINST ABSTAINED
-------- ------- ---------
<S> <C> <C>
5,737,196 1,640 10,210
</TABLE>
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
EXHIBITS:
27.1 Financial Data Schedule for the six months ended December 31,
1999.
REPORTS ON FORM 8-K:
No reports were filed on Form 8-K during the period covered by this
report.
Page 12 of 14
<PAGE> 13
IOMED, INC.
------------
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.
IOMED, Inc.
------------------------------
(Registrant)
Date: February 7, 2000 By: /s/ James R. Weersing
--------------------------------
James R. Weersing
President and Chief Executive Officer
Date: February 7, 2000 By: /s/ Robert J. Lollini
--------------------------------
Robert J. Lollini
Vice President, Finance and
Chief Financial Officer
Page 13 of 14
<PAGE> 14
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
- ------- -----------
<S> <C>
27.1 Financial Data Schedule for the six months ended
December 31, 1999.
</TABLE>
Page 14 of 14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AS OF DECEMBER 31, 1999 AND THE
RELATED UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE
SIX-MONTHS ENDED DECEMBER 31, 1999 INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE
PERIOD ENDED DECEMBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1,000
<CASH> 16,620,000
<SECURITIES> 0
<RECEIVABLES> 1,669,000
<ALLOWANCES> 78,000
<INVENTORY> 922,000
<CURRENT-ASSETS> 19,141,000
<PP&E> 3,321,000
<DEPRECIATION> 2,713,000
<TOTAL-ASSETS> 19,904,000
<CURRENT-LIABILITIES> 1,158,000
<BONDS> 220,000
0
6,881,000
<COMMON> 34,413,000
<OTHER-SE> (22,768,000)
<TOTAL-LIABILITY-AND-EQUITY> 19,904,000
<SALES> 5,175,000
<TOTAL-REVENUES> 5,248,000
<CGS> 1,829,000
<TOTAL-COSTS> 5,984,000
<OTHER-EXPENSES> (479,000)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,000
<INCOME-PRETAX> (265,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (265,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (265,000)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
