Form 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1999
( ) 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 ___________0-8174________
Conolog Corporation
(Exact name of registrant as specified in its charter)
Delaware 52-0853566
(State or other jurisdiction of (I. R. S. Employer
organization) Identification No.)
5 Columbia Road, Somerville, NJ 08876
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (908) 722-8081
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 report(s), and (2) has
been subject to such filing requirement for the past 90 days.
YES X NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PROCEEDING FIVE YEARS.
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13, or 15 (d) of the
Securities Exchange Act of 1934 subsequently to the distribution of
securities under a plan confirmed by a court.
YES ______ NO ________
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock, par value $1.00 per share; 4,357,773 shares outstanding
as of June 8, 1999 (inclusive of Treasury Stock).
Conolog Corporation
BALANCE SHEETS
April 30, 1999 July 31, 1998
ASSETS (Unaudited) (Audited)
Current Assets:
Cash $ 889,005 $1,108,581
Accounts Receivable, less
allowances of $6,000 556,041 44,477
Inventories 3,316,465 3,210,268
Other Current Assets 122,938 36,347
------------ ----------
Total Current Assets $ 4,884,449 $4,399,673
Property, Plant and Equipment 89,339 409,988
less accumulated depreciation
of $1,588,663 and $1,944,822
respectively
Goodwill 136,075 0
Other Assets 13,326 9,803
------------ -----------
Total Assets $ 5,123,189 $4,819,464
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 63,342 60,845
Accrued Payroll 68,242 30,950
Other Accrued Expenses 82,463 115,337
------------ ----------
Total Current Liabilities $ 214,047 $ 207,132
------------ ----------
CONOLOG CORPORATION
BALANCE SHEETS
April 30, 1999 July 31, 1998
Stockholders' Equity
Preferred Stock, par value $.50;
Series A; 4% cumulative; 162,000
shares authorized;155,000 shares
issued and outstanding 77,500 77,500
Preferred Stock, par value $.50;
Series B; $.90 cumulative; 50,000
shares authorized issued and
outstanding 1,197 shares 597 597
Common Stock; par value $1.00;
20,000,000 shares authorized;
issued 4,357,773 shares, including
8,776 shares held in Treasury 4,357,773 3,724,773
Contributed Capital 9,448,537 9,643,215
Retained Earnings (Deficit) (8,843,531) (8,702,019)
Treasury Shares at Cost (131,734) (131,734)
------------ -----------
Total Stockholders' Equity $ 4,909,142 $ 4,612,332
Total Liabilities and
Stockholders' Equity $ 5,123,189 $ 4,819,464
============ ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS ENDED
APRIL 30, APRIL 30,
1999 1998 1999 1998
REVENUES $924,476 $276,071 $ 1,833,153 $629,688
COSTS OF GOODS SOLD 627,086 50,353 1,503,518 215,049
--------- --------- ---------- ---------
GROSS MARGIN 297,390 225,718 329,635 414,639
SELLING, GENERAL AND
ADMINISTRATIVE
EXPENSES 205,891 194,433 878,796 552,949
--------- --------- ---------- ---------
OPERATING INCOME
/(LOSS) 91,499 31,285 (549,161) (138,310)
OTHER INCOME-GAIN ON
SALE OF BLDG. 0 0 413,789 0
INTEREST EXPENSE 0 12 0 22,459
--------- --------- ---------- ---------
INCOME/(LOSS) BEFORE
TAXES 91,499 31,273 (135,372) (160,769)
PROVISION FOR TAXES 0 2,142 2,960 4,402
--------- --------- ---------- ----------
NET INCOME/(LOSS) $ 91,499 $ 29,131 $(138,332) $(165,171)
========= ========== ========== ===========
EARNINGS/(LOSS) PER SHARE $.02 $ .00 $(.03) $(.04)
========= ========= ========== =========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
FOR THE NINE MONTHS
ENDED APRIL 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) $ (138,332) $(165,171)
Adjustments to Net Income to Reconcile to
Net Cash Provided by Operating Activities:
Depreciation and amortization 36,540 42,864
Gain on Sale of Building (413,789) 0
(Increase)/Decrease in Accounts Receivable (511,564) (28,206)
(Increase)/Decrease in Inventories (106,197) (503,155)
(Increase)/Decrease in Other Current Assets
(86,591) (4,627)
(Increase)/Decrease in Deferred Offering
Costs 0 113,813
Increase/(Decrease) in Accounts Payable (2,497) (126,208)
Increase/(Decrease) in Accrued Expenses
and other liabilities 4,418 (82,637)
--------- ---------
Net Cash Provided/(Used) in Operating
Activities (1,218,012) (753,327)
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Equipment (9,911) (64,421)
Sale of Property & Plant 720,060 0
Purchase of Assets of Atlas Design (146,900) 0
----------- ---------
Net Cash Provided/(Used) in Investing
Activities 563,249 (64,421)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in Capital Lease Obligations 0 (3,802)
Issuance of Common Stock 633,000 882,598
Contributed Capital (194,678) 1,945,065
Dividends (3,135) (3,135)
Bridge Loan (Repayments) 0 (200,000)
Repayments to Investors 0 (916,235)
----------- ---------
Net Cash Provided/(Used) by Financing
Activities 435,187 1,704,491
---------- ---------
NET INCREASE/(DECREASE) IN CASH $(219,576) $ 886,743
CASH AT BEGINNING OF YEAR 1,108,581 503,217
---------- -----------
CASH AT END OF PERIOD $889,005 $1,389,960
========== ===========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 0 $ 12
Income Taxes 2,960 2,142
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
CONOLOG CORPORATION
NOTES TO INTERIM FINANCIAL STATEMENTS
NOTE 1 - Computation of Earnings Per Share:
For the Nine Months Ended
April 30,
1999 1998
Weighted Average Number of Shares
Outstanding: 4,357,773 3,544,773
COMMON STOCK
Reserve for Conversion:
Series A Preferred Stock* 155,000
Series B Preferred Stock (1 to 20
conversion factor) 0 0
Common Stock Equivalents
(Warrants)** 5,135,750 5,135,750
--------- ---------
Total 9,493,523 8,680,523
Gain/(Loss) Per Share:
Total Gain/(Loss) $(138,332) $(165,171)
Pro-rata Dividends on Preferred
Stock Series A & B 3,135 3,135
---------- ----------
Net Gain/(Loss) available for
Common Stock $(141,467) $(168,306)
---------- ----------
Average Number of Shares of Common Stock 4,357,773 3,544,773
========== ==========
Primary Gain/(Loss) Per Share $ (.03) $ (.04)
========== ==========
*Each share of Series A Preferred Stock may be exchanged for one share
of Common Stock upon surrender of the Preferred Stock and payment of
$1200 per share. In view of the large difference between the current
market value of the stock and the conversion rate, these shares have
not been added to the total common shares used in computing the net
earnings per share.
**Each Warrant may be exchanged for one share of Common Stock at an
exercise price of $6.00 per share. In view of the large difference
between the current market value of the stock and the exercise price,
these shares have not been added to the total common shares used in
computing net earnings per share.
Fully diluted earnings per share, assuming conversion of Series A and
Series B Preferred Stock, has not been reflected, as the effect would
be either anti-dilutive or not material.
NOTE 2 - Sale/Leaseback of Building
In September 1998, the Company completed a sale/leaseback of its
manufacturing facility. This enabled the Company to significantly
reduce operating costs and increases the working capital. This
resulted in $717,000 net proceeds to the Company. The transaction
also provided for a three-year rent-free lease to the Company of
approximately 38% of the total space.
NOTE 3 - Purchase of Atlas Design
In September 1998, the Company completed the acquisition of the assets
of Atlas Design, Inc. for $145,000 in cash. Atlas Design provides short
and long term qualified engineering and technical staff to the country's
leading companies as well as human resource consulting. Atlas Design's
integration with the Company provides a pool of project engineering
leaders and software designers in support of the Company's longer term
contracts including the GE PTR-1500 series.
Both the sale of the building and the acquisition of Atlas Design, Inc.
is in line with the Company's expansion plan through acquisitions, mergers
and GE software support.
NOTE 4 - Taxes
At April 30, 1999 the Company has a net operating loss carry forward
of approximately $4,710,000 for tax purposes which is available to
offset future Federal taxable income. For Federal purposes, $253,276
of the carry forward expires in 2008, $1,232,010 expires in 2009,
$957,538 expires in 2010, $550,752 expires in 2012 and $1,716,424 in
2013. For state purposes the carry forward is approximately $3,863,000;
$706,241 expires in 2001, $897,997 expires in 2002, $542,540 in 2004 and
$1,716,222 in 2005. Also, at April 30, 1999 the Company has unused tax
credits of approximately $103,300 of which $12,100 expires in 2000, $26,300
in 2001 and $64,900 in 2002.
The above net operating loss created a deferred tax asset that has been
fully reserved. The amount is approximately $2,000,000.
At April 30, 1999 no deferred income taxes have been provided for per
SFAS No. 109 - Accounting for Income Taxes since management estimated
that temporary differences due to operating losses and tax credit carry
forwards will not be absorbed by future taxable income.
RECENT DEVELOPMENTS
The Company and CLOG LLC have entered into an Option Agreement, dated
as of December 22, 1998, which was amended and restated as of May 5, 1999
(the "Option Agreement"). Pursuant to the Option Agreement, the Company
has granted an option to CLOG to purchase convertible debentures of the
Company having an aggregate principal amount of up to $2,000,000. CLOG's
option may be exercised at any time prior to December 31, 1999, subject
to shareholder approval of the Option Agreement.
Each convertible debenture is convertible into common stock of the
Company at a conversion rate of $1.00 per share, the fair market value of
the common stock on the date of the Option Agreement. If CLOG were to
exercise its option for all $2,000,000 of convertible debentures, it would
have the right to convert those notes into 2,000,000 shares of common stock.
The Option Agreement provides that the voting power of any Conversion
Shares owned by CLOG will be voted in the same manner as shares voted by
all other shareholders of the Company.
Each convertible debenture will bear interest at the rate of 8% per
annum and will be due 12 months from the date such debenture is issued,
subject to acceleration under certain circumstances. At maturity, except
with respect to the initial $200,000 loaned, the Company will have the
option to pay each debenture, together with all accrued interest thereon,
by issuing shares of a new Series C preferred stock having a value of
$5.00 per share for purposes of such repayment.
The Series C preferred will be non-voting and carry a cumulative
dividend of 8% per annum, which may be payable by the issuance of shares
of common stock valued at $5.00 per share. The Series C preferred will
be convertible into common stock at the rate of one share of common stock
for each share of Series C preferred and have a liquidating preference of
$5.00 per share. The Series C preferred may be redeemed by the Company at
any time by paying $5.00 in cash therefor.
Pursuant to the Option Agreement, the Company filed a Registration
Statement with the Securities and Exchange Commission (the "Commission")
covering the resale of the 2,000,000 shares of common stock into which
the convertible debentures are convertible. Such Registration Statement
was declared effective by the Commission on April 12, 1999. The Company
will take appropriate measures to update the Registration Statement and
the Prospectus to reflect the results of the shareholder vote on this
proposal after its Annual Meeting of Shareholders to be held June 17, 1999.
The Company and The Nybor Group Inc. have entered into a Consulting
Agreement, dated as of December 22, 1998, which was amended and restated
as of May 5, 1999 (the "Consulting Agreement"). Pursuant to the Consulting
Agreement (the effectiveness of which is subject to shareholder approval),
Nybor has agreed to provide the services of its President, Warren Schreiber,
to the Company for management consulting and financial consulting purposes
through December 31, 2004. Mr. Schreiber also serves as the managing
member of CLOG LLC. As compensation, Nybor will receive 1,057,143 shares
of common stock.
The Consulting Agreement provides that the voting power of the
Consulting Shares owned by Nybor will be voted in the same manner as shares
voted by the other shareholders (as discussed above).
The Registration Statement discussed above also covered the resale
of the shares issuable pursuant to the Consulting Agreement.
Potential Acquisition
In February 1999, the Company began negotiations to acquire another
placement services business for a total purchase price of $1,625,000, of
which $700,000 is payable at the closing and the balance is payable over
2 1/2 years. The transaction is subject to a number of conditions,
including completion of due diligence review and the execution of a
definitive agreement, which have not yet been satisfied.
Shares of Stock issued to Employees and Consultants
In November 1998, the Company issued 468,000 shares as a bonus to its
officers and key employees, of which $81,125 is included in cost of sales
and $240,625 in selling, general and administrative expenses.
In December 1998, the Company issued 65,000 shares to various consultants
for the performance of various services in the amount of $44,688, which
was expensed to selling, general and administrative.
The Company has registered such shares with the SEC.
In March 1999, 100,000 shares were issued upon exercise of Options
granted to certain key employees under the Conolog Corporation 1995/1996
Stock Option Plan (the "Option Plan"). The Option Plan is designed to
permit the Company to grant either incentive stock options under Section
422A of the Internal Revenue code (the "Code") or nonqualified stock options.
Under the Option Plan, a Stock Option Committee (the "Option Committee")
of the Board of Directors is authorized to grant options to purchase up
to 200,000 shares of stock to key employees, officers, directors and
consultants of the Company. The Option Committee administers the
Option Plan and designates the optionee's, the type of options to be
granted (i.e., nonqualified or incentive stock options), the number of
shares subject to the options, and the terms and conditions of each
option. The terms and conditions include the exercise price, date of
grant, and date of exercise of each option. An employee may, at the
discretion of the Option Committee, be permitted to exercise an option
and make payment by giving a personal note.
Incentive stock options may only be granted to employees of the
Company and not to directors or consultants who are not so employed.
The exercise price for incentive stock options must be at least
one hundred percent (100%) of the fair market value of the Common
Stock as determined by the Option Committee on the date of the grant.
All incentive stock options under the Option Plan must be granted
within ten (10) years from the date of adoption of the Option Plan
and each option must be exercised, if at all, within ten (10) years
of the date of grant. In no event may any employee be given incentive
stock options whereby more than $100,000 of options become excercisable
for the first time in a single calendar year. All incentive stock
options must be exercised by an option within three (3) months after
termination of the optionee's employment, unless such termination is as
a result of death, disability or retirement. In the event an optionee's
employment is terminated as a result of death or disability, such optionee
or his designated beneficiary shall be entitled to exercise any and all
options for a period of twelve (12) months after such termination. If
an optionee's employment is terminated as a result of retirement, the
optionee shall be entitled to exercise his options for a period of
twenty four (24) months following such termination.
Nonqualified stock options under the Option Plan are generally
subject to the same rules as discussed above. Nonqualified stock
options may, however, also be granted to directors and consultants,
whether or not such individuals are employees of the Company. The
exercise price for nonqualified stock options may not be granted at
less that eighty-five percent (85%) of the fair market value of the
shares on the date of the grant.
Amendment to Employment Agreement
During the quarter, an amendment was made to the Employment Agreement
between the Company and Robert Benou dated June 1, 1997. The Company
will pay Mr. Benou a bonus equal to the amount he would have received
had his salary been $190,000 as of June 1, 1998 and will increase
annually as provided in the original Employment Agreement.
Potential Litigation
In December 1998, the Company was named in two related litigations
pending, one in the United States District Court for the Southern
District of New York and the other in Superior Court of New Jersey.
The first of the pending litigations was commenced in 1993. The
litigations relate to a dispute concerning real property acquired
in 1984. While the property is near real property formerly owned
by Conolog, Conolog was not a party to that transaction. The claim
made against Conolog alleges that Conolog contributed to environmental
contamination of the property acquired in 1984. The litigation is
in its early stages, insofar as Conolog is concerned. However,
the Company believes that it has no liability and intends to vigorously
defend itself.
ITEM 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
A summary of income, costs and expenses for the current quarter and
corresponding quarter of the previous year follows:
For the three months For the nine months
Ended April 30, Ended April 30,
1999 1998 1999 1998
Revenues $ 924,476 $ 276,071 $1,833,153 $629,688
Costs and Expenses (832,977) (246,940) (2,385,274) (794,859)
Other Income 0 0 413,789 0
---------- --------- --------- -------
Net Income/(Loss)
after Taxes, before $ 91,499 $ 29,131 $(138,332) $(165,171)
extraordinary item =========== =========== ========== ==========
QUARTER ENDED APRIL 30, 1999
Revenues for the quarter ended April 30, 1999 totaled $924,476,
representing an increase of 234.8% or $648,405 from $276,071 reported
for the same quarter a year ago. Revenues increased largely due to
the inclusion of Atlas Design, a human resource company the assets
of which were purchased in September 1998 as well as releases from
Surtek and Lockheed Martin.
Gross margin for the quarter totaled $297,390 representing 32% of
revenues as compared to $225,718 or 81.7% of revenues for the quarter ended
April 30, 1998. The decrease in gross margin is mostly due to large costs
being capitalized towards the PTR1500 project during the quarter ended April
39, 1998 therefor increasing inventory as compared to no capitalized costs
and a decrease in inventory for the quarter ended April 30, 1999.
Selling, general and administrative expenses increased from $194,433 to
$205,891 for the quarter, representing an increase of $11,458 as compared
to 1998. This increase is attributable to the addition of a Director of
Acquisitions and Mergers in March 1998.
Interest expense decreased from $12 to $0 for the quarter ended April
30, 1999 over the same period of 1998 due to the repayment of debts of the
Company.
As a result of the foregoing, the Company reported net income of $91,499,
or $.02 per share for the quarter compared to net income of $29,130 or
$0.00 per share.
NINE MONTHS ENDED APRIL 30, 1999
Revenues for the nine months ended April 30, 1999 totaled $1,833,153,
representing an increase of 191.1% or $1,203,465 from $629,688 reported
for the same period a year ago. Revenues increased largely due to the
inclusion of Atlas Design, a human resource company, the assets of which
were purchased in September 1998 as well as releases from several major
customers.
Gross margin for the nine months totaled $329,635 representing 17.9% of
revenues as compared to $414,639 or 65.8% of revenues for the nine
months ended January 31, 1998. The decrease in gross margin is mostly
due to less costs being capitalized towards the PTR1500 project and
the issuance of stock to certain employees.
Selling, general and administrative expenses increased from $552,949
to $878,796 for the nine months, representing an increase of $326,000
as compared to 1998. This increase in attributable to compensation
that was paid to certain consultants in connection with the acquisition
of Atlas Design and stock bonuses paid to employees and consultants.
Interest expense decreased from $22,459 to $0 for the nine months ended
April 30, 1999 over the same period of 1998 due to the repayment of
debts of the Company.
The sale of the building contributed a net gain of $413,789 as other
income.
As a result of the foregoing, the Company reported a net loss of
$138,332, or $(.03) per share for the nine months compared to a net loss of
$165,171 or $(.04) per share.
LIQUIDITY AND FINANCIAL CONDITION
Inventories increased $106,197 from July 31, 1998 attributable to the
PTR-1500 Series product.
Accounts Receivable increased $511,564 to $556,041 reflecting higher
sales for the period.
Working Capital at April 30, 1999 was $4,670,402 compared to $4,192,541
at July 31, 1998. This is primarily attributed to the sale of the Company's
building.
The Company plans to use the additional funds from the sale of the
building to complete the PTR1500 for the General Electric Co., to improve its
financial condition and prepare for an anticipated increase in business in
fiscal 1999. The Company anticipates additional backlog releases from the
Bonneville Power Administration and the US Government as well as other key
customers. This should generate additional sales and resulting cash flow to
support an expanded operating level in fiscal 1999 versus fiscal 1998.
The Company also plans to use the funds for future expansion through
mergers and acquisitions.
The Company presently meets its cash requirements through existing cash
balances and cash generated from operations.
MANAGEMENT REPRESENTATION
The information furnished reflects all adjustments which management
considers necessary for a fair statement of the results of the period.
As of April 30, 1999 the Registrant's backlog of orders stands at
$1.2 million, a mix of military and commercial telecommunication products.
The Company anticipates its commercial shipments to grow as a percentage
of total sales for the foreseeable future.
In February 1999, the Company completed tests of its first production
units for non-GE frequencies. The successful completion of the Company's
PTR1500 tone protection testing, for the standard frequencies, permits
the Company to introduce the first production units to US and Canadian
West Coast utilities ahead of schedule. The Company plans to introduce
the PTR1500 to other utilities across the US and Canada.
STATEMENT REGARDING PRESENT OPERATIONS
There was no material change in the nature of the operations of
Registrant during the three months ended April 30, 1999 from the information
contained in the Registrant's annual report of Form 10-K for the fiscal year
ended July 31, 1998.
FORWARD LOOKING STATEMENTS
This 10-Q contains certain forward-looking statements. Due to the
uncertainties associated with doing business with governmental entities and
the release of backlog orders and competition in a business characterized by
rapid technologic changes and advances, actual results may differ materially
from any such forward looking statements.
Part II - Other Information
CONOLOG CORPORATION
1. Legal Proceedings - See Recent Developments
2. Changes in Securities - See Management Discussion
3. Defaults upon Senior Securities - None
4. Submission of Matters to a Vote of Security Holders - None
5. Other Materially Important Events - See Management's
Discussion
6. No reports or Exhibits on Form 8-K have been filed during the
quarter.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended
the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form 10-Q and has duly caused
this Report to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Somerville, State of New Jersey, on this 14th
day of June, 1999.
CONOLOG CORPORATION
By /s/ Robert S. Benou
Robert S Benou
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this 10-Q has been signed below by the following persons in the capacities
and on the dates indicated.
Date: June 14, 1999 /s/ Robert S. Benou
Robert S. Benou
President,
Chief Executive Officer
and Director
Date: June 14, 1999 /s/ Arpad J. Havasy
Arpad J. Havasy
Executive Vice President,
Secretary, Treasurer and
Director
Date: June 14, 1999 /s/ Marc R. Benou
Marc R. Benou
Vice President, Assistant
Secretary and Director
Date: June 14, 1999 /s/ Louis S. Massad
Louis S. Massad
Director
Date: June 14, 1999 /s/ Edward J. Rielly
Edward J. Rielly
Director
1
14
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<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> JUL-31-1999 JUL-31-1999
<PERIOD-END> APR-30-1999 APR-30-1999
<CASH> 889,005 889,005
<SECURITIES> 0 0
<RECEIVABLES> 562,041 562,041
<ALLOWANCES> (6,000) (6,000)
<INVENTORY> 3,316,465 3,316,465
<CURRENT-ASSETS> 4,884,449 4,884,449
<PP&E> 1,678,002 1,678,002
<DEPRECIATION> (1,588,663) (1,588,663)
<TOTAL-ASSETS> 5,123,189 5,123,189
<CURRENT-LIABILITIES> 214,047 214,047
<BONDS> 0 0
77,500 77,500
597 597
<COMMON> 4,357,773 4,357,773
<OTHER-SE> 473,272 473,272
<TOTAL-LIABILITY-AND-EQUITY> 5,123,189 5,123,189
<SALES> 924,476 1,833,153
<TOTAL-REVENUES> 924,476 2,246,942
<CGS> 627,086 1,503,518
<TOTAL-COSTS> 832,977 2,382,314
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 91,499 (135,372)
<INCOME-TAX> 0 2,960
<INCOME-CONTINUING> 91,499 (138,332)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 91,499 (138,332)
<EPS-BASIC> .02 (.03)
<EPS-DILUTED> .02 (.03)
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