UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to _______________
Commission file number 0-12551
CREATIVE COMPUTER APPLICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
California 95-3353465
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
26115-A Mureau Road, Calabasas, California 91302
(Address of principal executive offices)
(818) 880-6700
Issuer's telephone number:
Check whether the Issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act 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
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date: 2,920,740 common shares as of March 15, 1999.
Transitional Small Business Disclosure Format (check one):
Yes No X
CREATIVE COMPUTER APPLICATIONS, INC.
FORM 10-QSB
I N D E X
PART I - Financial Information: PAGE
Condensed Balance Sheets at February 28,
1999 and August 31, 1998 3
Condensed Statements of Operation for
the three months ended February 28, 1999
and February 28, 1998 4
Condensed Statements of Operation for the
six months ended February 28, 1999 and
February 28, 1998 5
Condensed Statements of Cash Flows for the six
months ended February 28, 1999 and
February 28, 1998 6
Notes to Condensed Financial Statements 7
Management's Discussion and Analysis or Plan
of Operation 7
PART II - Other Information:
Items 1 through 6 10
Signatures 11
PART 1 - FINANCIAL INFORMATION
CONDENSED BALANCE SHEETS
February 28, August 31,
1999 1998 *
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
<S> <C> <C>
CURRENT ASSETS:
Cash $ 351,235 $ 375,876
Receivables 2,288,619 1,973,601
Inventories 602,745 670,243
Prepaid expenses and other assets 155,364 79,907
Deferred tax asset 466,300 466,300
TOTAL CURRENT ASSETS 3,864,263 3,565,927
PROPERTY AND EQUIPMENT, net 516,324 575,804
INVENTORY OF COMPONENT PARTS 135,527 156,527
CAPITALIZED SOFTWARE COSTS,
net of accumulated amortization
of $521,258 and $384,509 1,203,996 1,128,498
INTANGIBLES, net 269,224 302,120
OTHER ASSETS 23,148 32,371
DEFERRED TAX ASSET 844,200 844,200
TOTAL ASSETS $6,856,682 $6,605,447
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable to bank $ 351,609 $ 611,609
Accounts payable 451,508 507,005
Accrued liabilities:
Vacation Pay 209,106 184,305
Other 302,519 344,081
Deferred service contract income 644,660 754,343
Deferred revenue 997,663 638,018
TOTAL CURRENT LIABILITIES 2,957,065 3,039,361
TOTAL LIABILITIES 2,957,065 3,039,361
SHAREHOLDERS' EQUITY:
Preferred shares, no par value;
500,000 shares authorized;
no shares outstanding - -
Common shares, no par value;
20,000,000 shares authorized;
2,920,740 and 2,920,740 shares
outstanding 5,831,027 5,831,027
Accumulated deficit (1,931,410) (2,264,941)
TOTAL SHAREHOLDERS' EQUITY 3,899,617 3,566,086
$6,856,682 $6,605,447
</TABLE>
See Notes to Financial Statements.
* As presented in the audited financial statements
CONDENSED STATEMENTS OF OPERATIONS
Three Months Ended February 28
1999 1998
<TABLE>
<CAPTION>
(unaudited)
<S> <C> <C>
NET SYSTEM SALES AND SERVICE REVENUE
System sales $1,520,280 $ 721,379
Service revenue 709,275 565,679
2,229,555 1,287,058
COST OF PRODUCTS AND SERVICES SOLD
System sales 645,712 681,689
Service revenue 362,624 333,451
1,008,336 1,015,140
Gross profit 1,221,219 271,918
OPERATING EXPENSES:
Selling, general and administrative 726,685 652,009
Research and development 193,195 165,582
919,880 817,591
Operating income (Loss) 301,339 ( 545,673)
INTEREST AND OTHER INCOME 2,028 572
INTEREST EXPENSE ( 11,979) ( 15,742)
LOSS ON INVESTMENT - ( 14,151)
Income (Loss) before taxes on income 291,388 ( 574,994)
TAXES ON INCOME ( 1,000) 0
NET INCOME (LOSS) $ 290,388 ($ 574,994)
EARNINGS (LOSS) PER COMMON SHARE (Note 2):
Basic $ .10 ($ .20)
Diluted $ .10 ($ .20)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES AND COMMON STOCK
EQUIVALENTS OUTSTANDING
Basic 2,920,740 2,910,865
Diluted 2,980,172 2,910,865
</TABLE>
See Notes to Financial Statements.
CREATIVE COMPUTER APPLICATIONS, INC.
CONDENSED STATEMENTS OF OPERATIONS
Six Months Ended February 28
1999 1998
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
NET SYSTEM SALES AND SERVICE REVENUE
System sales $2,727,886 $1,966,116
Service revenue 1,379,958 1,128,383
4,107,844 3,094,499
COST OF PRODUCTS AND SERVICES SOLD
System sales 1,391,916 1,306,550
Service revenue 720,068 726,857
2,111,984 2,033,407
Gross profit 1,995,860 1,061,092
OPERATING EXPENSES:
Selling, general and administrative 1,297,621 1,241,380
Research and development 338,948 321,125
1,636,569 1,562,505
Operating income (Loss) 359,291 ( 501,413)
INTEREST AND OTHER INCOME 2,606 1,146
INTEREST EXPENSE ( 27,167) ( 19,740)
LOSS ON INVESTMENT - ( 14,151)
Income (Loss) before taxes on income 334,730 ( 534,158)
TAXES ON INCOME ( 1,200) 0
NET INCOME (LOSS) $ 333,530 ($ 534,158)
EARNINGS (LOSS) PER COMMON SHARE (Note 2):
Basic $ .11 ($ .19)
Diluted $ .11 ($ .19)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES AND COMMON STOCK
EQUIVALENTS OUTSTANDING
Basic 2,920,740 2,885,365
Diluted 2,925,785 2,885,365
</TABLE>
See Notes to Financial Statements.
CONDENSED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash
Six Months Ended February 28
1999 1998
(unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (Loss) $ 333,530 ($ 534,158)
Adjustments to reconcile net
income (Loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 286,166 230,919
Provision for possible losses 36,844 77,267
Changes in operating assets and
liabilities:
Receivables ( 351,862) ( 42,507)
Inventories 67,498 ( 96,107)
Prepaid expenses and other assets ( 67,147) ( 28,544)
Accounts payable ( 55,497) 52,375
Accrued liabilities 236,269 ( 261)
Net cash provided by (used in)
operating activities 485,801 ( 341,016)
INVESTING ACTIVITIES
Additions to property and equipment ( 35,127) ( 176,200)
Capitalized software costs ( 212,247) ( 202,000)
Net cash used in investing
activities ( 247,374) ( 378,200)
FINANCING ACTIVITIES:
Additions to (payments on) notes
payable, net ( 260,000) 384,313
Decrease in capital lease obligations,
net of payments ( 3,068) ( 10,453)
Exercise of Stock Options - 66,550
Net cash provided by (used in)
financing activities ( 263,068) 440,410
NET DECREASE IN CASH ( 24,641) ( 278,806)
Cash, beginning of period 375,876 534,430
Cash, end of period $ 351,235 $ 255,624
</TABLE>
See notes to financial statements.
CREATIVE COMPUTER APPLICATIONS, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Note 1. In the opinion of management, the accompanying unaudited condensed
financial statements reflect all adjustments (which include only
normal recurring accruals) necessary to present fairly the
Company's financial position as of February 28, 1999 and
August 31, 1998, the results of its operations for the three months
and six months ended February 28, 1999 and 1998, and cash flows
for the six months ended February 28, 1999 and February 28, 1998.
Note 2. The Company adopted SFAS No. 128, "Earnings Per Share,". SFAS No.
128 requires presentation of basic and diluted earnings per share.
Basic earnings per share is computed by dividing income or loss
available to common shareholders by the weighted average number of
common shares outstanding for the reporting period. Diluted
earnings per share reflects the potential dilution that could occur
if securities or other contracts, such as stock options, to issue
common stock were exercised or converted into common stock. All
prior period weighted average and per share information has been
restated in accordance with SFAS No. 128.
Note 3. The Company elected early adoption of Statement of Position 97-2,
"Software Revenue Recognition",("SOP 97-2"). SOP 97-2 supersedes
SOP 91-1 regarding software revenue recognition. SOP 97-2
required the Company to change the method of recognizing revenue
on software sales and related services, in accordance with SOP 97-2.
The SOP requires companies to recognize revenue when (i) persuasive
evidence of an arrangement exists, (ii) delivery has occurred, (iii)
the vendor's fee is fixed and determinable, and (iv) collectability is
probable. The SOP also requires companies to allocate the fee on a
multiple element contract between the various elements based on
vendor-specific objective evidence of fair value. The impact of this
adoption was recorded in the Company's Statements of Operations for
the three months and six months ended February 28, 1998.
Note 4. The Company's bank line of credit as of February 28, 1999 amounted
to approximately $700,000, of that amount $351,609 was outstanding
as of that date. The Company was in compliance with all covenants
and financial ratios required by its bank as of February 28, 1999.
The Company extended its line of credit with the bank, which is now
due on February 1, 2000.
Item 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
This following section of the report contains forward-looking
statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements
involve risks and uncertainties so that the actual results may vary
materially.
Results of Operations
In October 1997 the American Institute of Certified Public Accountants
issued Statement of Position (SOP) 97-2, Software Revenue Recognition, which
became effective for fiscal years beginning after December 15, 1997 although
earlier adoption was recommended. The new SOP affects all companies that sell
software and provide related services. Its provisions necessitate significant
modifications in the way the Company structures software transactions and
reports revenues from those activities. Because SOP 97-2 significantly changes
the way in which the Company accounts for the sale of its Clinical Information
Systems, management decided to adopt the change in accounting method during the
second quarter of 1998 instead of waiting until the beginning of its next
fiscal year. The results of the accounting change had an immediate impact
on the reporting of revenues and created operating losses for the 2nd
and 3rd fiscal quarters of 1998.
SOP 97-2 requires that the Company modify its
revenue recognition policies on a going forward basis and no
restatement of prior periods is required. Accordingly the following
discussion takes into consideration the effect of SOP 97-2 for the
current periods only and therefore the comparisons are not fully
representative The change in accounting method brought about by SOP
97-2 primarily affects reporting of revenues from the sale of the
Company's CIS products and related data acquisition products bundled
into CIS transactions. All other components of the
Company's business from which it derives revenues were already
compliant with the provisions of SOP 97-2. Under the SOP 97-2
guidelines revenues from the sale of the Company's CIS products are
recognized as hardware and standard software are delivered to a
customer; custom software, such as interfaces to other vendors
systems, is recognized when delivered and operational, and revenues
associated with the installation and implementation of systems are
recognized as the services are performed. Other provisions of the
SOP that require, among other things, a defined contract and
definitive sales price have been met by the Company's internal sales
policies that were already in place for many years.
Sales for the second quarter of fiscal 1999 ended February
28, 1999 increased by $942,497 or 73% compared to the same quarter
of fiscal 1998. For the six-month period ended February 28, 1999
sales increased $1,013,345 or 33% compared to the same period in
fiscal 1998. When analyzed by product category for the quarter and
six month periods, sales of Clinical Information Systems (CIS)
increased $610,879 or 101% and $518,557 or 32% respectively, sales
of data acquisition products increased $188,246 or 189% and $240,267
or 74% respectively, and service revenues increased by $143,372 or
25% and $254,521 or 22% respectively. The increase in revenues
associated with the Company's CIS products was primarily
attributable to an increase in CIS sales in second quarter of fiscal
1999. The increase in the sale of data acquisition products is
primarily attributable to a larger number of units shipped to OEM
customers, and the increase of CIS sales. The increase in service
revenues was attributable to a greater number of customer sites on
contract. The Company has experienced an increase in sales of its
CIS products and has won larger contracts that have contributed to
the overall increase in sales. Management believes this trend will
continue in the second half of the current fiscal year.
Cost of sales for the second quarter and six month period
ended February 28, 1999 decreased by $6,804 or 1% and increased by
$78,577 or 4% respectively as compared to the same quarter and six
month period of 1998. For the quarter and six month period the
increase in costs of sales was primarily attributable to a decrease
in labor costs of $34,029 or 8% and $57,287 or 7% respectively, and
decreases in other costs of $44,499 or 12% and $40,323 or 5%
respectively. The decreases were partially offset by increases in
material costs of $71,724 or 36% and $176,187 or 42% respectively.
The overall increases in material costs were attributable to an
increase in CIS sales during the periods. For the current quarter
and six month period ended February 28, 1999, cost of sales as a
percentage of sales decreased to 45% from 79% and decreased to 51%
from 66% respectively. These decreases were attributable to a
higher volume of CIS product sales and service revenues. In
addition, the Company booked several software only transactions
which contributed to higher gross margins.
Selling and administration expenses increased $74,676 or
about 11% and $56,241 or 5% in comparing the current quarter and six
months ended February 28, 1999 with the same periods of fiscal 1998.
The increase was primarily attributable to planned expenditures in
sales and marketing associated with the Company's CIS products.
Management anticipates the increased level of sales and marketing
expenditures to continue in the second half of fiscal 1999 as the
Company expands its sales and marketing activities related to the
sale of its CIS products across a broader market spectrum.
Research and Development expense increased $27,613 or 17%
and $17,823 or 6% for the current quarter and six months ending
February 28, 1999 compared to the same periods of fiscal 1998. The
increases were primarily attributable to a greater amount of labor
costs incurred in the current periods due to a number of new
software products in development.
As a result of the aggregate factors discussed above the
Company earned net income of $290,388 or basic and diluted net
income per share of $.10 and $333,530 or basic and diluted net
income of $.11 per share for the current quarter and six month
period ending February 28, 1999 compared to the net losses of
$574,994 or basic and diluted loss per share of $.20 and a net loss
of $534,158 or basic and diluted loss per share of $.19 in the
comparable quarter and six month period one year ago.
Capital Resources and Liquidity
As of February 28, 1999, the Company's working capital
amounted to $907,198 compared to $526,566 at August 31, 1998. The
ratio of the Company's current assets to current liabilities was
approximately 1.3 to 1 at February 28, 1999 compared to 1.2 to 1 at
August 31, 1998.
The Company's Balance Sheet has been affected by the
inclusion of deferred revenues as a current liability which affects
working capital ratios, which resulted from the adoption of SOP 97-2.
The Company's bank line of credit as of February 28, 1999
amounted to approximately $700,000, of that amount $351,609 was
outstanding as of that date. The Company was in compliance with all
covenants and financial ratios required by its bank as of February
28, 1999. The Company extended its line of credit with the bank,
which is now due on February 1, 2000.
The Company believes that its cash flows from operations
together with its bank credit facilities should be sufficient to
fund its working capital requirements for its 1999 fiscal year.
Seasonality, Inflation and Industry Trends
The Company sales are generally lower in the summer
and higher in the fall and winter. Inflation has had no material
effect on the Company business since the Company has been able to
adjust the prices of its products and services. Management
believes that most phases of the healthcare segment of the computer
systems industry will continue to be competitive and that the
changes taking place in healthcare will have a long term positive
impact on its business. In addition, management believes that the
industry will experience more significant technological advances
which will improve the quality of service and reduce costs. The
Company is poised to meet these challenges by continuing to employ
new technologies when they become available, diversifying its
product offerings, and by constantly enhancing its software
applications.
Year 2000 Compliance
Many currently installed computer systems and
software products are coded to accept only two digit entries in the
date code field. As the year 2000 approaches, these code fields
will need to accept four digit entries to distinguish years
beginning with "19" from those beginning with "20". As a result
some computer systems and software used by the Company and its
clients may have to be upgraded to comply with such Year 2000
requirements. The Company is currently expending resources to
review its products, systems and services and the computer systems
and software products it sells in order to identify and modify those
products, systems and services. The Company believes that the cost
of the modifications associated with this effort will not have a
material adverse effect on the Company's operating results.
However, achieving Year 2000 compliance is dependent on many
factors, some of which are not completely within the Company's
control, including without limitation, the availability and cost of
trained personnel and effectiveness of software upgrades used by the
Company and its vendors and suppliers. Should either the Company's
internal systems or the internal systems of one or more significant
vendors or suppliers fail to achieve Year 2000 compliance, the
Company's business and its results of operations could be adversely
affected.
Clinical Information Systems
The Company has been engaged in evaluating and modifying its
CIS products for sometime and has completed core modifications and
testing for Year 2000 changes to CyberLAB II(Registered Trademark).
The Company has distributed the Year 2000 compliant software
upgrades to its clients. CyberRAD(Registered Trademark) and MQA
were designed to be Year 2000 compliant. CyberMED(Trademark) is
currently being modified and it is expected that the modifications
and testing will be completed by mid 1999. Subsequently the
modified CyberMED(Trademark) upgrade will be distributed to clients.
Modifications were also completed to the financial management
system, and have been distributed. The Company is also evaluating
communication interfaces it has installed in order to determine in
each individual case, whether the software is Year 2000 compliant,
and will undertake such modifications as are deemed to be necessary
to be compliant. The Company believes it is timely and on schedule
in its efforts to effectuate the modifications, testing and upgrade
of its developed software applications to its clients. Management
is cognizant of the fact that the timeliness of the completion and
distribution of Year 2000 modifications are critical to the success
of the Company.
CREATIVE COMPUTER APPLICATIONS, INC.
As part of the Company's Year 2000 due diligence efforts it
evaluated all of the information technology products that it resold
to its clients, that are manufactured by third party vendors. This
information and the manufacturers own Year 2000 compliance programs
have been fully disclosed to the Company's clients.
Some of the Company's clients may require upgrades to their
computers and/or operating systems, in order to operate the upgraded
application software and otherwise be Year 2000 compliant. The
Company has been conducting a review of its client installations in
order to determine their status and to advise clients as to what
modifications should be undertaken. The Company's extended service
agreements require that the client be responsible for the cost of
any upgrades to their computers that may be required to operate
upgraded or modified application software. Therefore the Company
does not expect to bear the costs associated with this effort and
instead will derive revenues from the upgrades. The Company had
identified the modifications and/or upgrades required by the vendors
and is assisting its clients in securing the necessary modifications
and/or upgrades. As a follow up, the Company has sent a Year 2000
technical document to all it's clients, and posted the information
on its web site to assist its clients in their evaluations, at
www.ccainc.com.
In House Systems and Computers
The Company continues to conduct a review of the computers,
systems and software that it utilizes internally to operate its
business. It determined that some systems such as its accounting
and voice mail systems needed to be replaced since they were not
modifiable. However, such systems were already due to be replaced
because they are no longer adequate and are not being supported by
their manufacturers. The Company is currently in the process of
replacing those systems. Other systems supported by their
manufacturers will be upgraded in the normal course with Year 2000
modifications on a timely basis. Although the Company will have to
bear the cost of replacing non-compliant systems, it is not
anticipated that the aggregate expenditures will be of a material
nature. The cost of such replacements so far is estimated at
approximately $50,000.
PART II - OTHER INFORMATION
Items 1 through 3. NOT APPLICABLE.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Company held an Annual Meeting of Shareholders on March
5, 1999.
(b) The following Directors, all of whom were incumbents, were
reelected to the five member Board at the March 5, 1999
meeting:
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
Bruce M. Miller 2,374,167 37,700
Steven M. Besbeck 2,374,167 37,700
James R. Helms 2,374,407 37,460
Lawrence S. Schmid 2,374,407 37,460
Robert S. Fogerson, Jr. 2,374,407 37,460
</TABLE>
(c) 1. The only matter voted upon at the March 5, 1999
Annual Meeting was the ratification of BDO Seidman,
LLP as the Company's auditors by a vote of 2,386,607
for, 16,270 against, 8,990 abstaining, and 0 non-votes.
(d) Not applicable.
Item 5. NOT APPLICABLE.
Item 6. Exhibits and Reports on Forms 8-K
(a) Exhibit 11 - Statement re: computation of per share
earnings.
Exhibit 27 - Financial Data Schedule.
(b) There were no reports filed on Form 8-K during
the quarter ended February 28, 1999.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Company
caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
CREATIVE COMPUTER APPLICATIONS, INC.
(Company)
Date: March 31, 1999 /S/ Steven M. Besbeck
Steven. M. Besbeck, President
Chief Executive Officer, Chief
Financial Officer
Date: March 31, 1999 /S/ Carol Bessel
Carol Bessel
Controller and Chief Accounting
Officer
CREATIVE COMPUTER APPLICATIONS, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
Exhibit 11
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
February 28, February 28,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
AVERAGE MARKET PRICE
PER SHARE $ .91 $ 1.66 $ .99 $ 1.58
NET INCOME (LOSS) $ 333,530 ($ 534,158) $ 290,388 ($ 574,994)
Basic weighted average
number of common
shares outstanding 2,920,740 2,885,365 2,920,740 2,910,865
Diluted effect of
stock options 5,045 - 59,432 -
Diluted weighted average
number of common
shares outstanding 2,925,785 2,885,365 2,980,172 2,910,865
Basic earnings (loss)
per share $ .11 ($ .19) $ .10 ($ .20)
Diluted earnings (loss)
per share $ .11 ($ .19) $ .10 ($ .20)
</TABLE>
CREATIVE COMPUTER APPLICATIONS, INC.
[ARTICLE] 5
[RESTATED]
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] AUG-31-1998
[PERIOD-END] FEB-28-1998
[CASH] 255624
[SECURITIES] 0
[RECEIVABLES] 1898925
[ALLOWANCES] 0
[INVENTORY] 771902
[CURRENT-ASSETS] 3470064
[PP&E] 1835608
[DEPRECIATION] 1186287
[TOTAL-ASSETS] 6046446
[CURRENT-LIABILITIES] 2324237
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 5819185
[OTHER-SE] (2150196)
[TOTAL-LIABILITY-AND-EQUITY] 6046446
[SALES] 3094499
<TOTAL REVENUES> 3095645
[CGS] 2033407
[TOTAL-COSTS] 3595912
[OTHER-EXPENSES] 14151
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 19740
[INCOME-PRETAX] (534158)
[INCOME-TAX] 0
[INCOME-CONTINUING] (534158)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (534158)
[EPS-PRIMARY] (.19)
[EPS-DILUTED] (.19)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> AUG-31-1999
<PERIOD-END> FEB-28-1999
<CASH> 351235
<SECURITIES> 0
<RECEIVABLES> 2288619
<ALLOWANCES> 0
<INVENTORY> 602745
<CURRENT-ASSETS> 3864263
<PP&E> 1850314
<DEPRECIATION> 1333990
<TOTAL-ASSETS> 6856682
<CURRENT-LIABILITIES> 2957065
<BONDS> 0
0
0
<COMMON> 5831027
<OTHER-SE> (1931410)
<TOTAL-LIABILITY-AND-EQUITY> 6856682
<SALES> 4107844
<TOTAL-REVENUES> 4110450
<CGS> 2111984
<TOTAL-COSTS> 3748553
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 27167
<INCOME-PRETAX> 334730
<INCOME-TAX> 1200
<INCOME-CONTINUING> 333530
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 333530
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
</TABLE>
