UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
November 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the Transition Period From
_______________ to _______________
Commission file number 0-17988
NEOGEN CORPORATION
(Exact name of Registrant as specified in its charter)
Michigan 38-2367843
(State or other jurisdiction of (I.R.S. Employer
corporation or organization) Identification No.)
620 Lesher Place
Lansing, Michigan 48912
(517) 372-9200
(Address of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
As of January 1, 1999, there were 6,058,279 outstanding shares of
Common Stock.
<PAGE>
INDEX
NEOGEN CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Interim Financial Statements (unaudited)
Consolidated balance sheets - November 30, 1998 and May 31, 1998.
Consolidated statements of operations - Three months ended November
30, 1998 and 1997; six months ended November 30, 1998 and 1997.
Consolidated statements of stockholders' equity - Six months ended
November 30, 1998 and 1997.
Consolidated statements of cash flows - Six months ended November
30, 1998 and 1997.
Notes to consolidated financial statements - November 30, 1998.
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>
PART I. FINANCIAL INFORMATION
ITEM 1. Interim Financial Statements
<PAGE>
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
November 30 May 31
1998 1998
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and equivalents $ 884,756 $ 719,877
Marketable securities 9,383,251 9,868,862
Net accounts receivable 3,466,462 3,088,858
Inventories - notes C and F 5,255,026 4,474,030
Other current assets 580,350 441,319
----------- -----------
TOTAL CURRENT ASSETS 19,569,845 18,592,946
NET PROPERTY AND EQUIPMENT 2,035,905 1,885,051
INTANGIBLE AND OTHER ASSETS
Goodwill, net of accumulated amortization 3,902,536 4,023,235
Other assets, net of accumulated
amortization - note C 1,117,357 911,410
----------- -----------
$26,625,643 $25,412,642
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable and current maturities
of long-term notes payable $ 48,672 $ 48,672
Accounts payable 769,200 578,814
Accrued compensation and benefits 625,560 569,121
Other accrued liabilities 350,896 203,895
----------- -----------
TOTAL CURRENT LIABILITIES 1,794,328 1,400,502
LONG-TERM NOTES PAYABLE 150,056 174,392
OTHER LONG-TERM LIABILITIES 228,412 228,411
STOCKHOLDERS' EQUITY - (NOTE D)
Common stock:
Par value $.16 per share, 10,000,000 shares
authorized, 6,137,179 shares issued at
November 30, 1998; 6,208,179 shares
issued at May 31, 1998 981,949 993,309
Additional paid in capital 23,641,061 24,269,549
Retained-earnings deficit (170,163) (1,653,521)
----------- -----------
24,452,847 23,609,337
----------- -----------
$26,625,643 $25,412,642
=========== ===========
See notes to consolidated financial statements
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30 November 30
1998 1997 1998 1997
----------------------- ------------------------
<S> <C> <C> <C> <C>
REVENUES
Sales $5,920,765 $4,627,152 $11,637,320 $9,054,234
EXPENSES
Cost of goods sold 2,611,486 1,800,812 4,827,871 3,743,206
Sales and marketing 1,275,073 1,228,836 2,728,473 2,396,404
General and administrative 841,704 723,241 1,721,223 1,309,419
Research and development 423,699 360,439 821,938 654,700
---------- ---------- ----------- ----------
5,151,962 4,113,328 10,099,505 8,103,729
---------- ---------- ----------- ----------
INCOME FROM
OPERATIONS 768,803 513,824 1,537,815 950,505
OTHER INCOME (EXPENSE)
Interest income 118,609 150,438 251,146 316,060
Interest expense (4,127) (6,267) (8,605) (12,721)
Other 165,252 80,103 168,502 134,549
---------- ---------- ----------- ----------
279,734 224,274 411,043 437,888
---------- ---------- ----------- ----------
INCOME BEFORE
INCOME TAXES 1,048,537 738,098 1,948,858 1,388,393
INCOME TAXES 382,200 49,400 465,500 69,100
---------- ---------- ----------- ----------
NET INCOME $ 666,337 $ 688,698 $ 1,483,358 $1,319,293
========== ========== =========== ==========
BASIC EARNINGS
PER SHARE (NOTE B) $ 0.11 $ 0.11 $ 0.24 $ 0.21
========== ========== =========== ==========
DILUTED EARNINGS
PER SHARE (NOTE B) $ 0.11 $ 0.11 $ 0.24 $ 0.21
========== ========== =========== ==========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
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, 1998 6,208,179 $993,309 $24,269,549 $(1,653,521)
Exercise of options 35,000 5,600 79,476
Repurchase of shares - note D (106,000) (16,960) (707,964)
Net income for the
six months ended
November 30,1998 1,483,358
--------- -------- ----------- -----------
Balance at November 30, 1998 6,137,179 $981,949 $23,641,061 $ (170,163)
========= ======== =========== ===========
Balance at June 1, 1997 6,110,608 $977,697 $23,937,397 $(3,901,894)
Exercise of warrants 471 76 2,195
Exercise of options 84,500 13,520 293,846
Net income for the
six months ended
November 30,1997 1,319,293
--------- -------- ----------- -----------
Balance at November 30, 1997 6,195,579 $991,293 $24,233,438 $(2,582,601)
========= ======== =========== ===========
See notes to consolidated financial statements.
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Six Months Ended November 30
1998 1997
----------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,483,358 $ 1,319,293
Adjustments to reconcile net income to net cash
provided from (used in) operating activities:
Depreciation and amortization 444,776 329,071
Changes in operating assets and
liabilities:
Accounts receivable (377,604) (573,139)
Inventories (380,996) (480,532)
Other current assets (139,031) (164,556)
Accounts payable 190,386 (53,890)
Other accrued expenses 203,440 (14,229)
------------ ------------
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 1,424,329 362,018
INVESTING ACTIVITIES:
Purchases of property and equipment
and other assets (480,877) (410,362)
Aquisitions - note C (600,000) (1,398,632)
Purchases of marketable securities (15,487,554) (10,354,137)
Proceeds from sale of marketable securities 15,973,165 11,431,818
------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES (595,266) (731,313)
FINANCING ACTIVITIES:
Payments on long-term borrowings (24,336) (35,575)
Net payments for repurchase
of common stock - note D (724,927) 0
Net proceeds from issuance
of common stock 85,079 309,637
------------ ------------
NET CASH PROVIDED FROM
(USED IN) FINANCING ACTIVITIES (664,184) 274,062
------------ ------------
INCREASE(DECREASE) IN CASH 164,879 (95,233)
Cash at beginning of period 719,877 718,864
------------ ------------
CASH AT END OF PERIOD $ 884,756 $ 623,631
============ ============
See notes to consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. 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. The results of operations for the six
months ended November 30, 1998 are not necessarily indicative of the results
to be expected for the fiscal year ending May 31, 1999. For more complete
financial information, these consolidated financial statements should be read
in conjunction with the May 31, 1998 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, 1998.
NOTE B - EARNINGS PER SHARE
During the year ended May 31, 1998, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share". The
following table presents the earnings per share calculations in conformance
with SFAS No. 128.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30 November 30
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Numerator for Basic and Diluted
Earnings Per Share
Net Income $ 666,337 $ 688,698 $1,483,358 $1,319,293
========== ========== ========== ==========
Denominator
Denominator for basic earnings per share-
Weighted average shares 6,158,866 6,175,757 6,189,838 6,148,064
Effect of Dilutive Securities
Stock options and warrants 33,285 262,938 42,401 226,585
--------- ------- ---------- ----------
Denominator for diluted earnings
per share - adjusted weighted
average shares and assumed conversions 6,192,151 6,438,695 6,232,239 6,374,649
========= ========= ========== ==========
Basic Earnings Per Share $ 0.11 $ 0.11 $ 0.24 $ 0.21
===== ===== ===== =====
Diluted Earnings Per Share $ 0.11 $ 0.11 $ 0.24 $ 0.21
===== ===== ===== =====
</TABLE>
<PAGE>
NOTE C - ACQUISITIONS
In August 1998, the Company purchased certain inventory and technology from
BioPort Corporation of Lansing, Michigan. The purchase price consisted of a
single cash payment of $600,000. The Company allocated $400,000 of the
purchase price to finished goods and bulk toxoid inventories of Type B equine
botulism vaccine ("Bot Tox-B"). The remainder of the purchase price was
allocated to other assets and consisted primarily of Types A, B, and C
botulism seed cultures, manufacturing protocols, quality control procedures
and USDA license to manufacture Bot Tox-B.
NOTE D - STOCK REPURCHASE
In August, the Company announced that its board of directors had authorized
the purchase of up to 250,000 shares of the Company's common stock. As of
November 30, 1998, the Company had purchased 106,000 shares in negotiated and
open market transactions for a total price, including commissions, of
approximately $725,000. As of January 1, 1999 the Company had purchased
184,900 shares at a total price, including commissions, of approximately
$1,282,000. Shares purchased under this buy-back program will be retired and
used to satisfy future issuance of common stock upon the exercise of
outstanding stock options and warrants.
NOTE E - COMPREHENSIVE INCOME
Effective June 1, 1998, the Company adopted the Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income. Adoption of this statement did not have any
material effect on the financial statements of the Company.
NOTE F - INVENTORIES
Inventories are stated at the lower of cost, determined on the first-in,
first-out method, or market. The components of inventories are as follows:
<TABLE>
<CAPTION>
November 30 May 31
1998 1998
---------- ----------
<S> <C> <C>
Raw Material $1,733,009 $2,003,124
Work-In-Process 826,018 837,679
Finished Goods 2,695,999 1,633,227
---------- ----------
$5,255,026 $4,474,030
========== ==========
</TABLE>
<PAGE>
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
Three Months Ended November 30, 1998 Compared to Three Months Ended
November 30, 1997.
Total sales for the quarter ended November 30, 1998 increased $1,294,000, or
28%, compared to the same quarter in 1997. Sales of products dedicated to
animal safety increased $1,023,000, or 50%, and sales of food safety
diagnostic products were up $211,000, or 9%. Miscellaneous other sales
increased $60,000.
The increase in sales of animal safety products was due to several factors.
The acquisition of certain assets of Vetoquinol, U.S.A., which occurred in
the prior fiscal year, contributed $353,000 in increased sales during the
second quarter compared to the same quarter last year. Sales of products to
the professional equine market increased $274,000 primarily as a result of
greater international demand for Bot Tox-B, a vaccine to prevent Type B
botulism in horses. Sales of specialty needles and syringes used to inject
spices and marinades into meat and poultry were $499,000 higher than last
year, an increase of more than 300%.
Food safety sales were significantly higher in two areas. Sales of aflatoxin
test kits increased 178,000, or 44%. Hot, dry growing conditions during the
summer contributed to growth of molds that produce aflatoxin, a known
carcinogen. Accordingly, testing for this harmful residue by food and animal
feed producers increased. E. coli O157:H7 test kits sales also increased in
the second quarter by $142,000 or 56% due to greater domestic and
international demand from meat processors.
Cost of goods sold increased significantly in the second quarter partially
due to the increase in overall product sales. In addition, the significant
increases in sales of Bot Tox-B and specialty needles and syringes
contributed to the higher cost of goods sold since these product lines carry
proportionately higher material costs that most other Company products.
Sales and marketing expenses increased only $46,000 or 4% in the second
quarter. The increase was primarily due to higher salaries, fringe and travel
costs.
The $118,463 increase in general and administrative expenses was the result
of higher legal and professional fees compared to the same quarter last year.
A more detailed discussion of legal expenses is included later in this Form
10-Q.
Research and development expenses were up $63,260, or 18%, in the second
quarter due principally to increased staffing levels. Management believes
research and development is critical to the Company's future and continues to
expand efforts in terms of ongoing research projects pertaining to food and
animal safety products. Second quarter research and development expenses were
7% of total sales compared to the Company's annual budget of 8%.
<PAGE>
Other income increased by $56,000 in the second quarter. Interest income was
$31,000 lower due exclusively to lower cash balances available to invest in
marketable securities. However, the Company's share of royalties paid to an
affiliated partnership was $85,000 higher in the second quarter than the
prior year.
Neogen's effective federal tax rate has been insignificant because the
Company has had net operating loss carry forwards ("NOL's") available to
offset taxable income. During the first quarter the Company utilized its
remaining NOL's. As a result, the Company's effective federal tax rate
increased significantly in the second quarter to 36.5% compared to 6.7% in
the same quarter last year. The higher income taxes completely offset the
Company's increase in pre-tax profit, resulting in the same earnings per
share as the prior year.
Six Months Ended November 30, 1998 Compared to Six Months Ended November 30,
1997.
Total sales for the six months ended November 30, 1998 were $2,583,000, or
29%, higher than the same period in 1997. Animal safety product sales
increased $1,788,000, or 47%, while sales of food safety products were up
$685,000, or 15%. All other sales increased $110,000.
The increase in animal safety sales is attributable to the following factors:
sales pertaining to prior year acquisitions of certain assets of W.J. Bartus,
Inc. and Vetoquinol, U.S.A. accounted for $966,000 of increased sales in 1998
compared to 1997; sales of the Company's vaccine to prevent Type B botulism
in horses increased $284,000 compared to last year; and sales of specialty
needles and syringes used to inject spices and marinades into meat and
poultry were $562,000 higher.
The increase in sales of food safety products was primarily due to increases
in sales in two areas. Large sections of the southern United States suffered
from hot, dry weather conditions during the summer months, which promoted
mold growth in corn and other commodity crops. Sales of test kits to detect
aflatoxin, a harmful residue from molds that proliferate in hot, dry weather
conditions, increased $479,000, or 63%, during the first six months. Although
testing for aflatoxin will likely continue to run higher than the prior year,
management does not believe testing will continue at the same levels as
experienced in the first two quarters.
Sales of diagnostic tests to detect microorganisms such as E. coli O157:H7
and salmonella, also increased in the first six months with sales up $397,000
compared to last year. The sales increases in these two areas were partially
offset by a decline of approximately $247,000, or 15%, in sales of diagnostic
test kits to detect vomitoxin. Sales of aflatoxin, vomitoxin and other
natural toxin test kits are affected by the uncertainties of weather which
impacts growing conditions differently each year.
Cost of goods sold increased $1,085,000 compared to the same period last year
as a direct result of the overall increase in product sales. Expressed as a
percent of sales, cost of goods sold was 41% in 1998, the same percentage as
1997.
Sales and marketing expenses increased $332,000, or 14%, in the first six
months compared to last year. Virtually all sales and marketing expense
categories were higher than the prior year including salaries, fringe,
travel, royalties, commissions, trade shows and technical
<PAGE>
service. The Company is expanding its sales activities both domestically and
internationally to gain wider distribution of its products dedicated to food
and animal safety.
The $412,000 increase in general and administrative expense is due to two
factors. Increases in sales volume and overall business activity resulted in
a need for additional administrative staff. The increase in staff, along with
higher accruals for bonuses due to improved operating performance, resulted
in $157,000 of higher personnel related expense in the first six months. In
addition, legal and professional fees increased $268,000 compared to the same
period last year.
Management believes that the Company is not involved in any material adverse
legal proceedings. In November, Neogen announced that it had won a lawsuit
against Arthur J. and Arthur M. Trickey involving company trademarks.
Although damages awarded to Neogen were minor, final resolution puts a
definitive end to legal expenses for this lawsuit which amounted to
approximately $130,000 during the first six months of the current fiscal
year. Neogen is a party in other lawsuits as discussed in Item 3, Legal
Proceedings, in the Company's Form 10-KSB for the year ended May 31, 1998.
Management intends to vigorously pursue this litigation and cannot predict
the outcome of these lawsuits. Furthermore, the Company has no way to predict
the level of expenses that may be incurred in fiscal year 1999 in pursuing
this litigation.
As a result of increased expenses for additional research staff compared to
the prior year, research expenses were up $167,000 during the first six
months.
Other income declined slightly for the six months ended November 30, 1998
compared to last year. Lower interest income was mostly offset by the
Company's higher share of royalties paid to an affiliated partnership.
Income taxes for the six-month period ended November 30, 1998 were
substantially higher than the same period last year. The Company fully
utilized its remaining NOL's during its first quarter resulting in a
significant increase in effective tax rate for the first six months compared
to last year. The company expects its effective tax rate to run approximately
of 36% going forward.
Financial Condition and Liquidity
At November 30, 1998, the Company had $10,268,000 in cash and marketable
securities, working capital of $17,776,000 and stockholders' equity of
$24,453,000. In addition, the Company has bank lines of credit totaling
$10,000,000 with nothing borrowed against these lines as of November 30,
1998.
Cash and marketable securities decreased $321,000 during the first six
months. The aggregate of the acquisition of certain assets of BioPort
Corporation for $600,000, the use of $725,000 for the purchase of 106,000
shares of the Company's common stock (see Notes C and D of the Notes to
Unaudited Consolidated Financial Statements) and $481,000 expended for
property, equipment and other assets exceeded cash provided from operations.
Accounts receivable were $378,000 higher at November 30, 1998 than at May 31
due primarily to significant shipments of food and animal safety products
during the last 15 days of the
<PAGE>
second quarter. Inventories increased $781,000 at November 30, 1998 compared
to May 31. Of this amount, $400,000 was due to inventories purchased from
BioPort Corporation. The remaining increase was due to higher production
levels of veterinary instruments, along with an increase in professional
equine and food safety finished good products in anticipation of future
increases in sales volume.
The increase in other non-current assets at November 30, 1998 compared to May
31, 1998 was due to the acquisition of certain assets of BioPort Corporation.
Accounts payable increased $190,000 between May 31 and November 30 due
primarily to the timing of month-end cutoffs and scheduled payment dates for
trade payables and because of greater payables associated with higher levels
of inventory. Accrued expenses were $203,000 higher at November 30 as a
result of increases in accruals for a number of areas including bonuses,
commissions, royalties and payroll taxes.
The Company did not borrow any additional funds during the first six months
and made scheduled payments totaling $24,000 on long-term debt. At November
30, 1998, 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 22 of its last 23 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,
1998, along with its available bank lines of credit and cash expected to be
generated from future operations, will be sufficient to fund activities for
the foreseeable future. However, existing cash and marketable securities may
not be sufficient to meet the Company's cash requirements to commercialize
products currently under development or its plans to acquire additional
technology and products that fit within the Company's mission statement.
Accordingly, the Company may be required to issue equity securities or enter
into other financing arrangements for a portion of the Company's future
capital needs.
Year 2000
The Company believes that its financial and manufacturing systems are year
2000 compliant with the exception of the financial software used at its Ideal
Instruments subsidiary. The Company has purchased a software tool and
scheduled an outside programmer to implement software changes by February 1,
1999 at the Ideal Instruments subsidiary to ensure year 2000 compliance. The
Company does not expect implementation of these changes to have a material
impact on its results of operation. The Company's operations with respect to
the year 2000 may also be affected by other entities with whom it transacts
business. The Company is currently unable to determine the potential impact,
if any, that could result from such entities' failure to adequately address
this issue.
<PAGE>
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 27 - Financial Data Schedule
(b) Reports on Form 8-K Filed in Quarterly Period Ended November 30, 1998.
The Company did not file any reports on Form 8-K in the quarterly period
ended November 30, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NEOGEN CORPORATION
January 11, 1999 /s/ James L. Herbert
Date --------------------
James L. Herbert
President
January 11, 1999 /s/ Lon M. Bohannon
Date --------------------
Lon M. Bohannon
Vice President - Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
27 FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE NEOGEN CORPORATION FORM 10-Q FOR
THE QUARTER ENDED NOVEMBER 30, 1998 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-Q
</LEGEND>
<RESTATED>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> NOV-30-1998
<CASH> 884,756
<SECURITIES> 9,383,251
<RECEIVABLES> 3,711,382
<ALLOWANCES> 244,920
<INVENTORY> 5,255,026
<CURRENT-ASSETS> 19,569,845
<PP&E> 5,713,140
<DEPRECIATION> 3,677,235
<TOTAL-ASSETS> 26,625,643
<CURRENT-LIABILITIES> 1,794,328
<BONDS> 0
0
0
<COMMON> 981,949
<OTHER-SE> 23,470,898
<TOTAL-LIABILITY-AND-EQUITY> 26,625,643
<SALES> 11,637,320
<TOTAL-REVENUES> 11,637,320
<CGS> 4,827,871
<TOTAL-COSTS> 10,099,505
<OTHER-EXPENSES> (419,648)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,605
<INCOME-PRETAX> 1,948,858
<INCOME-TAX> 465,500
<INCOME-CONTINUING> 1,483,358
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,483,358
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.24
</TABLE>
