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, 1999
[ ] 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 corporation (I.R.S. Employer
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, 2000, there were 5,909,410 outstanding shares of common
stock.
INDEX
NEOGEN CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Interim Financial Statements (unaudited)
Consolidated balance sheets - November 30, 1999
and May 31, 1999
Consolidated statements of income - Three
months ended November 30, 1999 and 1998;
six months ended November 30, 1999 and 1998.
Consolidated statements of stockholders' equity -
Six months ended November 30, 1999 and 1998.
Consolidated statements of cash flows - Six months
ended November 30, 1999 and 1998.
Notes to consolidated financial statements -
November 30, 1999.
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
PART I. FINANCIAL INFORMATION
Item 1. Interim Financial Statements (unaudited)
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
November 30 May 31
1999 1999
--------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 724,115 $ 1,062,811
Marketable securities 10,860,912 9,603,844
Accounts receivable 3,558,587 3,295,536
Inventories 4,513,392 4,360,580
Other current assets 654,622 960,745
----------- -----------
TOTAL CURRENT ASSETS 20,311,628 19,283,516
PROPERTY AND EQUIPMENT
net of accumulated depreciation 2,357,526 2,147,941
INTANGIBLE AND OTHER ASSETS
Goodwill, net of accumulated amortization 3,100,325 3,199,802
Other assets, net of accumulated amortization 1,393,692 1,476,879
----------- -----------
$27,163,171 $26,108,138
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable and current maturities
of long-term notes payable $ 48,672 $ 48,672
Accounts payable 908,549 842,429
Accrued compensation and benefits 573,565 606,689
Other accrued liabilities 45,564 430,828
----------- -----------
TOTAL CURRENT LIABILITIES 1,576,350 1,928,618
LONG-TERM NOTES PAYABLE 101,384 125,720
OTHER LONG-TERM LIABILITIES 267,982 267,982
STOCKHOLDERS' EQUITY
Common stock:
Par value $.16 per share, 10,000,000 shares authorized,
5,994,210 shares issued at November 30, 1999; 5,929,279
shares issued at May 31, 1999 959,074 948,685
Additional paid-in capital 22,510,712 22,235,726
Retained earnings 1,747,669 601,407
----------- -----------
25,217,455 23,785,818
----------- -----------
$27,163,171 $26,108,138
=========== ===========
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
Three Months Ended November 30 Six Months Ended November 30
1999 1998 1999 1998
------------------------------ ----------------------------
<S> <C> <C> <C> <C>
SALES $ 5,425,178 $ 5,920,765 $ 10,765,479 $ 11,637,320
COST OF GOODS SOLD 2,453,387 2,611,486 4,714,210 4,827,871
------------ ------------ ------------ ------------
GROSS MARGIN 2,971,791 3,309,279 6,051,269 6,809,449
EXPENSES
Sales and marketing 1,475,930 1,275,073 2,833,652 2,728,473
General and administrative 813,277 841,704 1,523,850 1,721,223
Research and development 424,793 423,699 758,117 821,938
------------ ------------ ------------ ------------
2,714,000 2,540,476 5,115,619 5,271,634
------------ ------------ ------------ ------------
OPERATING INCOME 257,791 768,803 935,650 1,537,815
Other Income (expense)
Interest income 147,442 118,609 279,955 251,146
Interest expense (3,115) (4,127) (6,316) (8,605)
Other 75,395 165,252 151,973 168,502
------------ ------------ ------------ ------------
219,722 279,734 425,612 411,043
------------ ------------ ------------ ------------
INCOME BEFORE TAX 477,513 1,048,537 1,361,262 1,948,858
Income tax 139,000 382,200 215,000 465,500
------------ ------------ ------------ ------------
NET INCOME $ 338,513 $ 666,337 $ 1,146,262 $ 1,483,358
============ ============ ============ ============
NET INCOME PER SHARE
Basic $ 0.06 $ 0.11 $ 0.19 $ 0.24
============ ============ ============ ============
Diluted $ 0.06 $ 0.11 $ 0.19 $ 0.24
============ ============ ============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
Common Stock
---------------------------- Additional Retained
Number Paid-In Earnings
of Shares Amount Capital (Deficit)
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Balance at June 1, 1999 5,929,279 $ 948,685 $ 22,235,726 $ 601,407
Exercise of options and warrants 64,931 10,389 274,986
Net income for the
six months ended
November 30, 1999 1,146,262
------------ ------------ ------------ ------------
Balance at November 30, 1999 5,994,210 $ 959,074 $ 22,510,712 $ 1,747,669
============ ============ ============ ============
Balance at June 1, 1998 6,208,179 $ 993,309 $ 24,269,549 $ (1,653,521)
Exercise of warrants 35,000 5,600 79,476
Repurchase of shares (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)
============ ============ ============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NEOGEN CORPORATION AND SUBSIDIARIES
Six Months Ended November 30
1999 1998
-----------------------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,146,262 $ 1,483,358
Adjustments to reconcile net income to net cash
provided from (used in) operating activities:
Depreciation and amortization 446,733 444,776
Changes in operating assets and liabilities:
Accounts receivable (263,051) (619,473)
Inventories (152,812) (380,996)
Other current assets 306,123 (139,031)
Accounts payable 66,120 432,255
Other accrued expenses (418,388) 203,440
------------ ------------
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 1,130,987 1,424,329
INVESTING ACTIVITIES
Purchases of property and equipment
and other assets (473,654) (480,877)
Acquisitions (600,000)
Purchases of marketable securities (17,594,553) (15,487,555)
Proceeds from sale of marketable securities 16,337,485 15,973,166
------------ ------------
NET CASH USED IN
INVESTING ACTIVITIES (1,730,722) (595,266)
FINANCING ACTIVITIES
Payments on long-term borrowings (24,336) (24,336)
Net payments for repurchase
of common stock (724,927)
Net proceeds from issuance
of common stock 285,375 85,079
------------ ------------
NET CASH PROVIDED FROM
(USED IN) FINANCING ACTIVITIES 261,039 (664,184)
------------ ------------
INCREASE (DECREASE) IN CASH (338,696) 164,879
Cash at beginning of period 1,062,811 719,877
------------ ------------
CASH AT END OF PERIOD $ 724,115 $ 884,756
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
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, 1999 are not necessarily indicative of the results
to be expected for the fiscal year ending May 31, 2000. For more complete
financial information, these consolidated financial statements should be read
in conjunction with the May 31, 1999 audited consolidated financial
statements and the notes thereto included in the Company's annual report on
Form 10-K for the year ended May 31, 1999.
NOTE B - EARNINGS PER SHARE
The following table presents the earnings per share calculations.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
November 30 November 30
1999 1998 1999 1998
----------------------- -----------------------
<S> <C> <C> <C> <C>
Numerator for Basic and Diluted
Earnings Per Share
Net Income $ 338,513 $ 666,337 $1,146,262 $1,483,358
========== ========== ========== ==========
Denominator
Denominator for basic earnings per share-
Weighted average shares 5,962,848 6,158,866 5,945,972 6,189,838
Effect of dilutive securities
stock options and warrants 23,581 33,285 27,294 42,401
---------- ---------- ---------- ----------
Denominator for diluted earnings
per share - adjusted weighted
average shares and assumed conversion 5,986,429 6,192,151 5,973,266 6,232,239
========== ========== ========== ==========
Basic Earnings per Share $ 0.06 $ 0.11 $ 0.19 $ 0.24
========== ========== ========== ==========
Diluted Earnings per Share $ 0.06 $ 0.11 $ 0.19 $ 0.24
========== ========== ========== ==========
</TABLE>
NOTE C - STOCK REPURCHASE
The Company's board of directors has authorized the purchase of up to 500,000
shares of the Company's common stock. As of December 31, 1999, the Company
had purchased 399,500 shares in negotiated and open market transactions.
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 D - 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:
November 30, 1999 May 31, 1999
----------------- ------------
Raw Material $1,519,175 $1,809,725
Work-In-Process 775,576 755,225
Finished Goods 2,218,641 1,795,630
========== ==========
$4,513,392 $4,360,580
========== ==========
NOTE E - SEGMENT INFORMATION
The Company has two reportable segments: Food Safety and Animal Safety. The
Food Safety segment produces and markets diagnostic test kits and related
products used by food producers and processors to detect harmful natural
toxins, drug residues, foodborne bacteria, food allergens, pesticide
residues, disease infections and levels of general sanitation. The Animal
Safety segment is primarily engaged in the production and marketing of
products dedicated to animal health, including 250 different veterinary
instruments and a complete line of consumable products marketed to
veterinarians and distributors serving the professional equine industry.
These segments are managed separately because they represent strategic
business units that offer different products and require different marketing
strategies. The Company evaluates performance based on total sales and
operating income of the respective segments.
Segment information for the three months ended November 30, 1999 and 1998 was
as follows:
<TABLE>
<CAPTION>
Corporate
Food Animal and
Safety Safety Eliminations (1) Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
Net sales to external customers $ 2,870,712 $ 2,554,466 $ $ 5,425,178
Operating income 394,651 90,027 (226,887) 257,791
Total assets 6,330,189 10,055,300 10,777,682 27,163,171
----------- ----------- ------------ -----------
1998
Net sales to external customers $ 2,555,524 $ 3,365,241 $ $ 5,920,765
Operating income 454,706 459,676 (145,579) 768,803
Total assets 7,025,742 10,554,452 9,045,449 26,625,643
----------- ----------- ------------ -----------
</TABLE>
Segment information for the six months ended November 30, 1999 and
1998 was as follows:
<TABLE>
<CAPTION>
Corporate
Food Animal and
Safety Safety Eliminations (1) Total
- ----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
Net sales to external customers $ 5,521,671 $ 5,243,808 $ $10,765,479
Operating income 997,149 349,753 (411,252) 935,650
Total assets 6,330,189 10,055,300 10,777,682 27,163,171
----------- ----------- ----------- -----------
1998
Net sales to external customers $ 5,421,961 $ 6,215,359 $ $11,637,320
Operating income 996,876 960,229 (419,290) 1,537,815
Total assets 7,025,742 10,554,452 9,045,449 26,625,643
----------- ----------- ----------- -----------
<FN>
(1) Includes corporate assets, consisting of marketable securities, and
overhead expenses not allocated to specific business segments. Also
includes the elimination of intersegment transactions and minority
interests.
</TABLE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.
The information in this Management's Discussion and Analysis of Financial
Condition and Results of Operations contains both historical financial
information and forward-looking statements. Neogen does not provide forecasts
of future performance. While management is optimistic about the Company's
long-term prospects, historical financial information may not be indicative
of future financial performance.
The words "anticipate", "believe", "potential", "expect", and similar
expressions used herein are intended to identify forward-looking statements.
Forward-looking statements involve certain risks and uncertainties. Various
factors, including competition, recruitment and dependence on key employees,
impact of weather on agriculture and food production, identification and
integration of acquisitions, research and development risks, patent and trade
secret protection, government regulation, and other risks detailed from time
to time in the Company's reports on file at the Securities and Exchange
Commission may cause actual results to differ materially from those contained
in the forward-looking statements.
Three Months Ended November 30, 1999 Compared to Three Months Ended November
30, 1998.
Total sales for the quarter ended November 30, 1999 declined $500,000, or 8%,
compared to the same quarter in the prior year. Sales of products dedicated
to food safety were up $300,000, or 12%, and sales of animal safety products
declined $800,000, or 24%.
The increase in food safety sales was influenced by several factors. Sales of
test kits to detect harmful bacteria such as E. coli O157:H7 and salmonella
continued their strong growth trend with sales up over $450,000 in the second
quarter. Sales of products used for the detection of food allergens also
increased over $50,000. The sales growth in these two areas offset declines
in two other areas. In the fourth quarter of last fiscal year, the Company
sold its human clinical product line. As a result, there were no human
clinical product sales in the second quarter this year compared to $130,000
in sales of human clinical products during the same quarter last year. Sales
of diagnostic tests for the detection of mycotoxins declined $70,000 compared
to the prior year primarily as a result of decreased sales for aflatoxin test
kits. Sales of diagnostic tests for the detection of naturally occurring
mycotoxins are influenced by the uncertainty of weather conditions, which
impacts growing conditions differently each year. Accordingly, it is not
uncommon for the Company to experience significant year to year fluctuations
in sales of these kits to detect harmful mycotoxins.
The decline in sales of animal safety products is primarily due to lower
sales for two products. Sales of the Company's vaccine to prevent type B
botulism in horses declined $350,000 in the quarter, due exclusively to a
shortage in product availability. The Company is currently producing and,
effective in early January 2000, obtained a conditional license to ship
BotVax(TM) B from its USDA-approved Tampa, Florida, manufacturing facilities.
Additionally, a customer for specialty needles used to inject unique
marinades into meats has encountered financial difficulties and is no longer
purchasing product from the Company. Sales of this product decreased over
$550,000 as a result of this single customer. The Company continues to sell
this product to other similar customers but it will take some time to
increase sales of this specific product to previous levels.
Cost of goods sold decreased $160,000 compared to last year. As a percentage
of sales, cost of goods sold was higher than the prior year due partially to
the overall mix of product sold and partially due to lower absorption of
labor and overhead costs related to veterinary instruments.
Sales and marketing expenses increased $200,000 in the second quarter as the
Company is in the process of adding sales and marketing personnel to expand
sales activities both domestically and internationally.
General and administrative expenses, and research and development expenses
during the quarter are comparable to the second quarter of the prior year.
Management believes research and development is critical to the Company's
future. Second quarter research and development expenses were 8% of sales
compared to the Company's annual budget of 7%.
Other income decreased $60,000 because the Company's share of royalties paid
to an affiliated partnership was lower in the second quarter than in the
second quarter of the prior year.
The Company's effective tax rate was approximately 29% in the second quarter
due to the availability of tax credit carryforwards, which were used to
offset federal income taxes.
Six Months Ended November 30, 1999 Compared to Six Months Ended November 30,
1998.
Total sales for the six months ended November 30, 1999 declined $875,000, or
7%, compared to the same period of the prior year. Sales of products
dedicated to food safety were up $100,000, or 2% and sales of animal safety
products declined $975,000, or 16%.
The increase in food safety sales was affected by a number of factors. Sales
of test kits to detect harmful bacteria such as E. coli O157:H7 and
salmonella continued their strong growth trend with sales up $650,000. Sales
of products used for the detection of food allergens also increased $100,000.
The sales growth in these two areas offset sales declines in two other areas.
In the fourth quarter of last fiscal year, the Company sold its human
clinical product line. As a result, there were no human clinical product
sales in the first six months this year compared to $270,000 in sales of
human clinical products during the same period last year. Sales of diagnostic
tests for the detection of mycotoxins declined $380,000 compared to the prior
year primarily as a result of decreased sales for aflatoxin and vomitoxin
test kits. It is not uncommon for the Company to experience significant year
to year fluctuations in sales of these kits.
The decline in sales of animal safety products is primarily due to lower
sales for two products. Sales of the Company's vaccine to prevent type B
botulism in horses declined $400,000, due exclusively to a shortage in
product availability. As discussed previously in this 10-Q, the Company is
currently producing and, effective in early January 2000 began shipping this
product to customers. Additionally, a customer for specialty needles used to
introduce unique marinades into meats has encountered financial difficulty
and is no longer purchasing product from the Company. Sales of this product
decreased over $700,000 as a result of this single customer.
Cost of goods sold decreased $100,000 compared to last year. As a percentage
of sales, cost of goods sold was higher than the prior year due to the
overall mix of products sold.
Sales and marketing expenses increased $100,000 in the period of six months
ended November 30, 1999. The Company is in the process of adding sales and
marketing personnel to expand sales activities both domestically and
internationally.
General and administrative expenses declined $200,000 compared to the prior
year. Although savings were achieved in a number of areas, legal and
professional fees decreased in excess of $150,000.
Management believes that the Company is not involved in any material adverse
legal proceedings. However, Neogen is a party in lawsuits as discussed in
Part II, Item 1. Legal Proceedings in this form
10-Q. Management intends to vigorously pursue this litigation and cannot
predict the outcome of these lawsuits.
The decline in research and development expense of $65,000 is due entirely to
lower salary and fringe cost. Research and development expenses through
November 30, 1999 were 7%, which is comparable to the Company's annual budget
of 7%.
The Company's effective tax rate was approximately 16% in the six months
ended November 30, 1999 due to the availability of tax credit carryforwards,
which were used to offset federal income taxes.
Financial Condition and Liquidity
At November 30, 1999, the Company had $11,600,000 in cash and marketable
securities, working capital of $18,700,000 and stockholders' equity of
$25,200,000. In addition, the Company has unused bank lines of credit
totaling $10,000,000. Cash and marketable securities increased $900,000
during the six months ended November 30, 1999, with $1,100,000 of cash
generated by operations.
At November 30, 1999, 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.
Although cash and marketable securities are generally considered adequate,
management believes that these resources 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 its future capital needs.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In August 1996, the Company initiated a lawsuit in the U.S. District Court
for the Western District of Michigan, Southern Division against Arthur J.
Trickey and Arthur M. Trickey ("Mr. Trickey"). This litigation involved a
dispute over a letter of intent the Company entered into with Mr. Trickey to
distribute certain products Mr. Trickey alleged he had developed. Mr. Trickey
filed a counterclaim alleging a common law right to the disputed trademark.
In November 1998, the Company won this lawsuit but does not expect to collect
any significant damages. Mr. Trickey has appealed the verdict to the United
States Sixth Circuit Court of Appeals on an in pro per basis. The District
Court denied Mr. Trickey's request for preparation of the trial transcript at
public expense on the grounds that the appeal would be frivolous, and this
denial was upheld by the Court of Appeals. Mr. Trickey is proceeding with the
appeal without a transcript and without legal counsel.
The Company continues to vigorously pursue a lawsuit against Vicam, L.P.,
Vicam Management Corporation and Jack L. Radlo ("Vicam") filed in the U.S.
District Court for the Middle District of Florida in August 1996. The Company
is suing to recover damages incurred in the character of lost sales caused by
Vicam's publication of the false allegation that a Neogen product violates
two patents licensed to Vicam. In February 1999, a hearing was held for the
purpose of providing evidence concerning the patent issues of the case. The
judge who presided over this hearing ruled that polyclonal antibodies of the
type used in Neogen's product are substantially different from monoclonal
antibodies of the type used in Vicam's product. Management believes this
decision significantly impacts Vicam's counterclaim of patent infringement.
If Vicam were to prevail, the Company believes that its damages would be
relatively insignificant since the Company's sales of this product have not
been material.
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, 1999.
The Company did not file any reports on Form 8-K in the quarterly period
ended November 30, 1999.
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
1/13/2000 /s/ James L. Herbert
----------------- --------------------------------
Date James L. Herbert
President
1/13/2000 /s/ Richard R. Current
----------------- --------------------------------
Date Richard R. Current
Vice President - Chief Financial Officer
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
27 FINANCIAL DATA SCHEDULE
/TEXT>
<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, 1999 AND FORM 10-K FOR
THE YEAR ENDED MAY 31, 1999.
</LEGEND>
<RESTATED>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> JUN-01-1999
<PERIOD-END> NOV-30-1999
<CASH> 724,115
<SECURITIES> 10,860,912
<RECEIVABLES> 3,724,587
<ALLOWANCES> 166,000
<INVENTORY> 4,513,392
<CURRENT-ASSETS> 20,311,628
<PP&E> 6,077,876
<DEPRECIATION> 3,720,350
<TOTAL-ASSETS> 27,163,171
<CURRENT-LIABILITIES> 1,576,350
<BONDS> 0
0
0
<COMMON> 959,074
<OTHER-SE> 24,258,381
<TOTAL-LIABILITY-AND-EQUITY> 27,163,171
<SALES> 10,765,479
<TOTAL-REVENUES> 10,765,479
<CGS> 4,714,210
<TOTAL-COSTS> 5,115,619
<OTHER-EXPENSES> (431,928)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,316
<INCOME-PRETAX> 1,361,262
<INCOME-TAX> 215,000
<INCOME-CONTINUING> 1,146,262
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,146,262
<EPS-BASIC> 0.19
<EPS-DILUTED> 0.19
</TABLE>
