<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended: NOVEMBER 30, 1996
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ______________
Commission File Number: 0-17988
NEOGEN CORPORATION
(Exact name of small business issuer as specified in its charter)
MICHIGAN 38-2367843
(State or other jurisdiction of (IRS employer
incorporation or organization) Identification No.)
620 LESHER PLACE, LANSING, MICHIGAN 48912
(Address of principal executive offices)
(517)372-9200
(Issuer's telephone number)
NONE
(Former name, former address and former
fiscal year, if changed since last report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.
Yes __x__ No___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Securities Exchange Act of 1934 after
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 equity, as of the latest practical date.
6,100,242 SHARES WERE OUTSTANDING ON JANUARY 1, 1997
<PAGE> 2
INDEX
NEOGEN CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Interim Financial Statements (unaudited)
Consolidated balance sheets--November 30, 1996 and May 31, 1996.
Consolidated statements of operations--Three months ended November 30,
1996 and 1995; six months ended November 30, 1996 and 1995.
Consolidated statements of stockholders' equity--Six months ended
November 30, 1996 and 1995.
Consolidated statements of cash flows--Six months ended November 30, 1996
and 1995.
Notes to consolidated financial statements--November 30, 1996.
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
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
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. INTERIM FINANCIAL STATEMENTS
<PAGE> 4
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
November 30 May 31
1996 1996
-----------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 318,991 $ 625,992
Marketable securities 11,636,872 1,557,041
Net accounts receivable 2,094,899 1,643,181
Inventories 3,528,540 3,378,671
Other current assets 350,952 318,882
------------ ------------
TOTAL CURRENT ASSETS 17,930,254 7,523,767
NET PROPERTY AND EQUIPMENT 1,466,378 1,381,788
INTANGIBLE AND OTHER ASSETS
Goodwill, net of accumulated amortization 2,036,627 2,034,153
Other assets, net of accumulated
amortization 551,001 591,436
------------ ------------
$ 21,984,260 $ 11,531,144
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable and current maturities
of long-term notes payable $ 71,147 $ 1,115,093
Accounts payable 738,214 497,502
Restructuring charges 157,779 217,794
Accrued compensation and benefits 526,538 369,788
Other accrued liabilities 168,682 88,878
------------ ------------
TOTAL CURRENT LIABILITIES 1,662,360 2,289,055
LONG-TERM NOTES PAYABLE 243,344 278,918
OTHER LONG-TERM LIABILITIES 105,467 105,467
STOCKHOLDERS' EQUITY - (NOTE C)
Common stock:
Par value $.16 per share, 10,000,000
shares authorized, 6,100,242 shares
issued at November 30, 1996; 4,559,260
shares issued at May 31, 1996 976,039 729,482
Additional paid in capital 23,896,946 13,841,617
Retained-earnings deficit (4,899,896) (5,713,395)
------------ ------------
19,973,089 8,857,704
------------ ------------
$ 21,984,260 $ 11,531,144
============ ============
</TABLE>
See notes to consolidated financial statements.
<PAGE> 5
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended November 30 Six Months Ended November 30
1996 1995 1996 1995
------------------------------ ----------------------------
<S> <C> <C> <C> <C>
REVENUES
Sales $ 3,750,440 $ 3,198,887 $ 7,780,803 $ 6,046,466
Contract revenues 10,722 36,228 15,282 114,293
----------- ----------- ----------- -----------
3,761,162 3,235,115 7,796,085 6,160,759
EXPENSES
Cost of goods sold 1,487,708 1,374,541 3,033,898 2,556,779
Sales and marketing 1,079,807 920,955 2,249,448 1,779,509
General and adm. 538,899 460,446 1,093,945 891,743
Research and develop. 318,275 348,207 666,349 669,542
----------- ----------- ----------- -----------
3,424,689 3,104,149 7,043,640 5,897,573
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 336,473 130,966 752,445 263,186
OTHER INCOME (EXPENSE)
Interest income 78,598 14,926 101,056 33,317
Interest expense (22,192) (39,364) (53,160) (75,740)
Other 42,758 26,710 47,758 50,713
----------- ----------- ----------- -----------
99,164 2,272 95,654 8,290
----------- ----------- ----------- -----------
INCOME BEFORE
INCOME TAXES 435,637 133,238 848,099 271,476
INCOME TAXES 22,897 6,400 34,600 13,600
----------- ----------- ----------- -----------
NET INCOME $ 412,740 $ 126,838 $ 813,499 $ 257,876
=========== =========== =========== ===========
NET INCOME PER
SHARE (NOTE B) $ 0.08 $ 0.03 $ 0.16 $ 0.06
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE> 6
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Common Stock
-------------------- Additional Retained-
Number Paid-In Earnings
of Shares Amount Capital Deficit
--------- ------ ------- -------
<S> <C> <C> <C> <C>
Balance at June
1, 1996 4,559,260 $ 729,482 $ 13,841,617 $ (5,713,395)
Exercise of warrants 1,782 285 8,304
Exercise of options 38,100 6,096 85,845
Public offering -
(Note C) 1,500,000 240,000 10,075,090
Issuance of common
shares 1,100 176 4,840
Repurchase of warrants (118,750)
Net income for the
six months ended
November 30, 1996 813,499
--------- --------- ------------ -------------
Balance at November 30,
1996 6,100,242 $ 976,039 $ 23,896,946 $ (4,899,896)
========= ========= ============ ==============
Balance at June 1,
1995 4,460,027 $ 713,604 $ 13,592,684 $ (5,469,856)
Exercise of warrants 39,933 6,389 118,601
Exercise of options 28,000 4,480 51,635
Notes receivable related
to issuance of
common stock (124,990)
Net income for the
six months ended
November 30, 1995 257,876
--------- --------- ------------ --------------
Balance at November
30, 1995 4,527,960 $ 724,473 $ 13,637,930 $ (5,211,980)
========= ========= ============ ==============
</TABLE>
See notes to consolidated financial statements.
<PAGE> 7
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months Ended November 30
1996 1995
------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 813,499 $ 257,876
Adjustments to reconcile net income to
net cash from (used in)
operating activities:
Depreciation and amortization 279,624 264,353
Changes in operating assets and
liabilities:
Accounts receivable (451,718) (374,132)
Inventories (149,869) (135,131)
Other current assets (32,070) (26,503)
Accounts payable 240,712 10,925
Other accrued expenses 176,539 (88,005)
------------ -------------
NET CASH PROVIDED FROM (USED IN)
OPERATING ACTIVITIES 876,717 (90,617)
INVESTING ACTIVITIES:
Purchases of property and equipment
and other assets (273,036) (273,696)
Acquisition of business (53,217) (680,056)
Purchases of marketable securities (20,678,742) (1,502,024)
Proceeds from sale of
marketable securities 10,598,911 1,820,397
------------- ------------
NET CASH USED IN
INVESTING ACTIVITIES (10,406,084) (635,379)
FINANCING ACTIVITIES:
Net proceeds (payments) on short-
term borrowings (1,043,946) 300,000
Payments on long-term borrowings (35,574) (44,647)
Proceeds from issuance
of common stock (Note C) 10,301,886 56,115
------------ ------------
NET CASH PROVIDED FROM
FINANCING ACTIVITIES 9,222,366 311,468
------------ ------------
DECREASE IN CASH AND EQUIVALENTS (307,001) (414,528)
Cash and equivalents at
beginning of period 625,992 992,281
------------ ------------
CASH AND EQUIVALENTS
AT END OF PERIOD $ 318,991 $ 577,753
============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE> 8
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
NOTE A - 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 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
(consisting only of normal recurring accruals) considered necessary for a fair
presentation have been included. Certain amounts in the 1995 Unaudited
Consolidated Financial Statements have been reclassified to conform to the 1996
presentation. The results of operations for the six months ended November 30,
1996 are not necessarily indicative of the results to be expected for the
fiscal year ending May 31, 1997. For more complete financial information,
these consolidated financial statements should be read in conjunction with the
May 31, 1996 audited consolidated financial statements and the notes thereto
included in the Company's annual report on Form 10- KSB for the year ended May
31, 1996.
NOTE B - NET INCOME PER SHARE
The net income per share amounts for 1996 and 1995 are based on the weighted
average number of common shares outstanding adjusted to reflect the assumed
exercise of outstanding stock options and warrants, to the extent these items
had a dilutive effect on the computations.
NOTE C - STOCKHOLDERS EQUITY
On October 22, 1996, the Company sold to the public 1,500,000 shares of common
stock at a price of $7.50 per share. The net proceeds to the Company, after
deducting underwriting commissions and other expenses of the offering were
approximately $10,315,000.
<PAGE> 9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
THREE MONTHS ENDED NOVEMBER 30, 1996 COMPARED TO THREE MONTHS ENDED NOVEMBER
30, 1995.
Total revenues for the quarter ended November 30, 1996 were $526,000 or 16%
higher than the same quarter in 1995. A 26% increase in sales of diagnostic
products was partially offset by a 6% decline in veterinary instrument sales
and lower research revenues in the second quarter.
The increase in diagnostic sales for the second quarter was primarily due to a
$428,000 or 31% increase in demand for test kits sold to the grain, feed, and
nuts market to detect naturally occurring toxins such as vomitoxin and
aflatoxin. Sales of diagnostic test kits to detect human infections
contributed $90,000 to sales growth in the second quarter.
Diagnostic test systems sold to the meat and poultry markets for the detection
of bacteria increased approximately $100,000 or 200% in the second quarter.
Management believes that sales to the meat and poultry industry will continue
to grow partially as a result of new safety and inspection regulations which
will begin to be implemented in January, 1997.
Veterinary instrument sales were down $52,000 in the second quarter, primarily
due to a continuation of depressed economic conditions in cattle markets. This
has resulted in lower demand for durable veterinary instruments. Contract
revenues declined approximately $25,000 compared to last year because the
Company is working on fewer research grants in 1996 than in 1995.
The increase in cost of goods sold for the second quarter is a direct result of
the overall increase in product sales. Expressed as a percentage of revenues,
cost of goods sold improved to 40% compared to 42% in the prior year due
primarily to a higher mix of diagnostic products.
Sales and marketing expenses increased $159,000 or 17% in the three months
ended November 30, 1996 compared to the same period in 1995. Commissions and
royalties expense for diagnostic products increased $90,000 in the second
quarter due to increased sales volume. Most of the remaining increase was the
result of higher salaries, fringe, and travel costs for new sales and technical
support personnel hired in the current fiscal year in anticipation of increased
sales of diagnostic products.
General and administrative expenses were $78,000 higher in the quarter ended
November 30, 1996 than the quarter ended November 30, 1995. Improved operating
performance, increased sales volume, and an overall increase in corporate
business activity resulted in higher expense for several categories including
salaries and wages ($23,000), travel cost ($13,000), investor relations
($9,000), telephone ($6,000), consulting ($10,000), and legal and professional
fees ($15,000).
<PAGE> 10
Research and development expense declined 9% in the second quarter primarily
due to lower costs for contract services ($14,000) and supplies ($13,000).
Other income increased $97,000 in the second quarter compared to the same
period last year. A portion of the proceeds from a public offering completed
in the second quarter was used to pay down short-term bank borrowings resulting
in lower interest expense. The remaining proceeds were invested in short-term
marketable securities resulting in an increase in interest income. In
addition, the Company's share of royalties paid to an affiliated partnership
was higher in the second quarter than last year.
Due primarily to the increased sales volume for diagnostic products in the
second quarter, the Company posted net income of $.08 per share compared to
$.03 per share in the same period last year.
SIX MONTHS ENDED NOVEMBER 30, 1996 COMPARED TO SIX MONTHS ENDED NOVEMBER 30,
1995.
Total revenues for the six months ended November 30, 1996 were $1,734,000 or
29% higher than the same period in 1995. Sales of diagnostic products were up
$1,816,000 in the first six months representing an increase of 41% while sales
of veterinary instruments declined $82,000 or 5%. Contract revenues decreased
$99,000 or 87%.
The significant increase in diagnostic product sales was primarily due to a
$913,000 or 75% increase in sales of the Company's diagnostic test kits for the
detection of vomitoxin. In early July, 1996, a large portion of midwest winter
wheat was found to contain high levels of vomitoxin due to cool, rainy weather
conditions during the flowering stages of the grain. Although sales of
vomitoxin test kits should continue to run higher than the prior year for the
remainder of fiscal 1997, it is unlikely that sales will continue at the pace
experienced in the first six months. However, sales of other diagnostic test
kits to detect natural toxins increased $424,000 or 30% during the first six
months due to overall market growth in the grain, feed, and nut markets for
these products.
The Company also experienced an increase in sales of $220,000 or 219% for test
systems to detect E. coli 0157:H7 and salmonella as a result of a growing
demand for test kits to detect micro-organisms. Management believes that the
July, 1996 announcement of new inspection and safety regulations for the meat
and poultry industry scheduled to begin implementation in January, 1997, will
have a positive effect on future sales.
The decline in veterinary instrument sales was due to depressed cattle prices
resulting in lower overall demand for durable veterinary instruments. In
management's opinion, the current down cycle in cattle prices should improve
over the remainder of this fiscal year. In addition, the Company has
reorganized its sales and marketing efforts for veterinary instruments which
management believes will favorably impact future sales for this segment.
The decline in contract revenues for the first six months of this year was
primarily due to scheduled completion in the second quarter of
<PAGE> 11
last year of two contracts with the United States Department of Agriculture.
It is common for contract revenues to fluctuate from year to year depending on
timing and terms of the contracts.
Cost of goods sold increased $477,000 or 19% as a direct result of the overall
increase in product sales. Expressed as a percentage of sales, cost of goods
sold was 39% in the first six months of fiscal 1997 compared to 42% in the
first six months of fiscal 1996. This improvement was due to a higher sales
mix of diagnostic test kits, increased labor productivity, and better
utilization of fixed overhead costs for diagnostic products.
Sales and marketing expenses increased $470,000 in the first six months
compared to the prior year. Commissions and royalties expense for diagnostic
products increased $223,000 in the first six months due to increased sales
volume. Expenses for printing, advertising, and promotions related to sales
activities for diagnostic products increased $80,000 compared to the prior
year. A total of $112,000 was due to higher salaries, fringe, and travel cost
associated with the hiring of new salesmen and technical support personnel in
anticipation of an increase in diagnostic sales. The remaining increase is
primarily due to an increase in the provision for doubtful accounts.
General and administrative expenses were $202,000 higher in the six months
ended November 30, 1996 than the six months ended November 30, 1995. Bonus
accruals increased $75,000 compared to last year based on improved operating
performance. Michigan Single Business Tax was $16,000 higher than the prior
year due to increased profitability at the Company's Lansing, Michigan
operations. Salaries for clerical and accounting personnel increased $38,000
due to higher sales volume. Several other categories of expense also increased
in the first six months including telephone ($13,000), travel ($14,000),
consulting ($16,000), and legal and professional fees ($24,000).
Although research and development expense was virtually unchanged in the first
six months this year compared to the first six months last year, management
believes that research and development is critical to the Company's future.
Accordingly, the Company expects its annual research and development expense
will approximate the same levels, expressed as a percentage of revenue, as
experienced in prior years.
Other income for the first six months increased $87,000, all of which occurred
in the second quarter ended November 30, 1996. During this quarter, the
Company completed a public offering of common stock. A portion of the proceeds
from the offering was used to pay down short-term bank borrowings resulting in
lower interest expense. The remaining proceeds were invested in short-term
marketable securities which resulted in higher interest income.
The Company earned $.16 per share in the six months ended November 30, 1996 as
compared to $.06 per share in the same period last year. This significant
improvement is primarily due to the substantial increase in sales volume
compared to the prior year.
<PAGE> 12
FINANCIAL CONDITION AND LIQUIDITY
At November 30, 1996, the Company had $11,956,000 in cash and marketable
securities, working capital of $16,268,000, and stockholders' equity of
$19,973,000. In addition, the Company has bank lines of credit totaling
$2,500,000 with nothing borrowed against these lines as of November 30, 1996.
Cash and marketable securities increased $10,406,000 during the first six
months primarily as a result of the public offering of the Company's common
stock completed on October 22, 1996 (See Note C to Unaudited Consolidated
Financial Statements.)
Accounts receivable were $452,000 higher at November 30, 1996 than at May 31,
1996. A total of $351,000 of the increase is due to increased sales volume of
diagnostic products. Receivables for veterinary instruments were up $101,000
at November 30, 1996 due exclusively to strong sales during the last two weeks
of November. Inventories increased only 4% at November 30, 1996, partially due
to normal increase in veterinary instrument inventory levels during the second
quarter in anticipation of higher sales volume which traditionally occurs in
the third quarter, and partially due to increased inventory levels to handle
the higher sales volume for diagnostic test kits to detect natural toxins. The
increase in other current assets was primarily the result of an increase in
prepaid insurance and professional fees at November 30, 1996.
The increase in accounts payable is partially due to higher trade payables
for inventory at November 30, 1996 compared to May 31, 1996 and also the result
of an overall increase in vendor activity due to increased sales volume.
Accruals for restructuring charges are expected to decline throughout fiscal
1997 as the Company pays or settles these liabilities. Other accrued
liabilities increased $237,000 due to increased accruals for taxes, royalties,
commissions and bonuses, all of which are the result of increased sales and
improved operating performance.
The Company did not borrow any additional funds during the first six months and
made scheduled payments on long-term debt totaling $35,574. In addition, the
Company used $1,029,000 of proceeds from a public offering of its common stock
to pay off existing short-term borrowings on two separate bank lines of credit
at the end of October, 1996. Neogen expended approximately $273,000 in the
first six months for additions to property, equipment, and other assets. At
November 30, 1996, the Company had no material commitments for capital
expenditures. Inflation and changing prices are not expected to have a
material effect on the Company's operations.
Neogen has been profitable for fourteen of its last fifteen quarters and has
generated positive cash flows from operations during this period. Management
believes that the Company's existing cash and marketable securities at November
30, 1996, along with its available bank lines of credit, will be sufficient to
fund activities for the foreseeable future.
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit Index
Exhibit 4 - Instruments defining the rights of security holders -
incorporated by reference from Exhibit 3(a) (2) of the Second
Amendment to the Form S-18 Registration Statement filed on August 22,
1989.
Exhibit 11 - Statement regarding computation of earnings per share.
Exhibit 27 - Financial Data Schedule
(b) Reports On Form 8-K Filed In Quarterly Period Ended November 30,
1996.
The Company did not file any reports on Form 8-K in the quarterly
period ended November 30, 1996.
<PAGE> 14
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.
NEOGEN CORPORATION
January 10, 1997 /s/ James L. Herbert
- ------------------------ ---------------------------------
Date James L. Herbert
President
January 10, 1997 /s/ Lon M. Bohannon
- ------------------------- ---------------------------------
Date Lon M. Bohannon
Vice President-Chief Financial
Officer
<PAGE> 15
EXHIBIT INDEX
Exhibits Filed Herewith
Exhibit No. Description
11 Statement Regarding Computation Of Earnings Per Share
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
(11)--STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
NEOGEN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended November 30 Six Months Ended November 30
1996 1995 1996 1995
--------- --------- ---------- ----------
<S> <C> <C> <C> <C>
Weighted average common
and common equivalent
shares outstanding:
Average shares out-
standing 5,258,342 4,490,951 4,921,053 4,475,592
Net effect of dilutive
stock warrants--
based on the treasury
stock method using
average market price
which is greater than
quarter-end market
price 17,583 33,487 17,980 33,274
Net effect of dilutive
stock options--based
on the treasury stock
method using average
market price which is
greater than quarter-
end market price 119,656 152,422 125,494 157,911
---------- ---------- ---------- ----------
TOTALS 5,395,581 4,676,860 5,064,527 4,666,777
========== ========== ========== ==========
Net income $ 412,740 $ 126,838 $ 813,499 $ 257,876
========== ========== ========== ==========
Net income per share $ 0.08 $ 0.03 $ 0.16 $ 0.06
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) THE
NEOGEN CORPORATION FORM 10-QSB FOR THE SIX MONTHS ENDED NOVEMBER 30, 1996 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FORM 10-QSB
</LEGEND>
<CIK> 0000711377
<NAME> NEOGEN CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 318,991
<SECURITIES> 11,636,872
<RECEIVABLES> 2,374,899
<ALLOWANCES> 280,000
<INVENTORY> 3,528,540
<CURRENT-ASSETS> 17,930,254
<PP&E> 4,238,877
<DEPRECIATION> 2,772,499
<TOTAL-ASSETS> 21,984,260
<CURRENT-LIABILITIES> 1,662,360
<BONDS> 0
0
0
<COMMON> 976,039
<OTHER-SE> 18,997,050
<TOTAL-LIABILITY-AND-EQUITY> 21,984,260
<SALES> 7,780,803
<TOTAL-REVENUES> 7,796,085
<CGS> 3,033,898
<TOTAL-COSTS> 7,043,640
<OTHER-EXPENSES> (148,814)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,160
<INCOME-PRETAX> 848,099
<INCOME-TAX> 34,600
<INCOME-CONTINUING> 813,499
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 813,499
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
