<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 THE QUARTERLY PERIOD ENDED JUNE 29, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-11880
------------------------
HYTEK MICROSYSTEMS, INC.
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 94-2234140
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification
organization) No.)
</TABLE>
400 Hot Springs Road, Carson City, Nevada 89706
(Address of principal executive offices)
Issuer's telephone number: (702) 883-0820
------------------------
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 ___
As of July 30, 1996, the issuer had outstanding 2,933,091 shares of Common
Stock, no par value.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
HYTEK MICROSYSTEMS, INC.
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER ENDED JUNE 29, 1996
INDEX
<TABLE>
<CAPTION>
PAGE NUMBER
-------------
<S> <C> <C>
Part I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Balance Sheet at June 29, 1996 (unaudited) and December 30, 1995............................ 3
Statement of Operations and Accumulated Deficit (unaudited) for the Quarter and Six Months
ended June 29, 1996 and July 1, 1995....................................................... 4
Statement of Cash Flows (unaudited) for the Quarter and Six Months ended June 29, 1996 and
July 1, 1995............................................................................... 5
Notes to Interim Financial Statements (unaudited)........................................... 6
Item 2. Management's Discussion and Analysis or Plan of Operation................................... 7
Part II. OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Security Holders......................................... 11
Item 6. Exhibits and Reports on Form 8-K............................................................ 12
Signatures.............................................................................................. 13
Exhibit Index........................................................................................... 14
</TABLE>
2
<PAGE>
PART I. -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
HYTEK MICROSYSTEMS, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 29, 1996 DECEMBER 30, 1995
------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............. $ 575,269 $ 92,995
Accounts receivable -- net of
allowance for doubtful accounts of
$20,000 at 12/30/95 and $50,000 at
6/29/96.............................. 1,359,773 1,179,847
Inventories............................. 1,454,911 1,239,785
Prepaid expenses and deposits........... 35,072 31,585
------------- -----------------
Total current assets.............. 3,425,025 2,544,212
Property, plant and equipment, at cost,
less accumulated depreciation.......... 202,822 101,375
------------- -----------------
Total assets...................... $ 3,627,847 $ 2,645,587
------------- -----------------
------------- -----------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable...................... $ 607,745 $ 673,531
Accrued employee compensation and
benefits............................. 286,914 191,267
Accrued warranty...................... 75,000 75,000
Customer pre-payments................. 235,718 178,664
Commissions and other accrued
liabilities.......................... 103,505 129,747
------------- -----------------
Total current liabilities......... 1,308,882 1,248,209
Shareholders' equity:
Common Stock, no par value: 7,500,000
shares authorized, 2,933,091 shares
issued and outstanding............... 4,962,676 4,913,806
Accumulated deficit..................... (2,643,711) (3,516,428)
------------- -----------------
Total shareholders' equity........ 2,318,965 1,397,378
------------- -----------------
$ 3,627,847 $ 2,645,587
------------- -----------------
------------- -----------------
</TABLE>
See accompanying notes.
3
<PAGE>
HYTEK MICROSYSTEMS, INC.
STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
QUARTERS AND SIX MONTHS ENDED JUNE 29, 1996 AND JULY 1, 1995
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
---------------------------- ----------------------------
6/29/96 7/1/95 6/29/96 7/1/95
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net revenues.......................................... $ 2,628,372 $ 1,380,324 $ 4,665,551 $ 2,220,698
Costs and expenses:
Cost of sales....................................... 1,791,961 925,410 3,184,672 1,593,999
Research and development............................ 141,897 148,343 289,380 310,905
Selling, general and administrative................. 175,231 130,734 317,539 246,130
------------- ------------- ------------- -------------
Total costs and expenses........................ 2,109,089 1,204,487 3,791,591 2,151,034
------------- ------------- ------------- -------------
Operating income...................................... 519,283 175,837 873,960 69,664
Interest income....................................... 324 877 621 1,429
Interest expense...................................... 1,163 555 1,864 925
------------- ------------- ------------- -------------
Income before provision for income taxes.............. 518,444 176,159 872,717 70,168
Provision for income taxes............................ -- -- -- --
------------- ------------- ------------- -------------
Net income............................................ $ 518,444 $ 176,159 $ 872,717 $ 70,168
Accumulated deficit:
Beginning of period................................. $ (3,162,155) $ (4,143,460) $ (3,516,428) $ (4,037,469)
------------- ------------- ------------- -------------
End of period....................................... $ (2,643,711) $ (3,967,301) $ (2,643,711) $ (3,967,301)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Net income per share.................................. $ .17 $ .06 $ .28 $ .03
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
Common and common equivalent shares used in per share
calculations......................................... 3,081,420 2,751,425 3,084,724 2,751,425
</TABLE>
See accompanying notes.
4
<PAGE>
HYTEK MICROSYSTEMS, INC.
STATEMENT OF CASH FLOWS (UNAUDITED)
QUARTERS AND SIX MONTHS ENDED JUNE 29, 1996 AND JULY 1, 1995
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
--------------------------- ---------------------------
JUNE 29, 1996 JULY 1, 1995 JUNE 29, 1996 JULY 1, 1995
------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................. $ 518,444 $ 176,159 $ 872,717 $ 70,168
Adjustments to reconcile net income to cash flow
provided by (used in) operations:
Depreciation and amortization........................ 14,886 16,206 24,330 30,210
Accounts receivable.................................. (66,695) (202,838) (179,926) (118,894)
Inventories.......................................... 144,020 (93,256) (215,126) (391,513)
Prepaid expenses and deposits........................ 4,643 2,814 (3,487) (657)
Other assets......................................... -- 3,030 -- 5,958
Accounts payable..................................... (402,776) 157,070 (65,786) 247,436
Accrued employee compensation and benefits........... 139,382 28,264 95,647 4,745
Commissions and other accrued liabilities............ 13,543 (42,485) (26,242) (31,082)
Customer pre-payments................................ 76,444 (89,615) 57,054 (16,910)
------------- ------------ ------------- ------------
Net cash provided by (used in) operating
activities........................................ 441,891 (44,651) 559,181 (200,539)
Cash flows from investing activities:
Cash purchases of equipment............................ (29,005) (10,152) (125,778) (37,706)
------------- ------------ ------------- ------------
Net cash from investing activities................. (29,005) (10,152) (125,778) (37,706)
Cash flows from financing activities:
Repayment of short-term borrowings..................... (50,000) -- -- --
Proceeds from exercise of stock options................ 22,532 -- 48,871 --
------------- ------------ ------------- ------------
Net cash used in financing activities.............. (27,468) -- 48,871 --
Net increase (decrease) in cash and cash equivalents..... 385,418 (54,803) 482,274 (238,245)
Cash and cash equivalents at beginning of period......... 189,851 200,113 92,995 383,555
------------- ------------ ------------- ------------
Cash and cash equivalents at end of period............... $ 575,269 $ 145,310 $ 575,269 $ 145,310
------------- ------------ ------------- ------------
------------- ------------ ------------- ------------
</TABLE>
See accompanying notes.
5
<PAGE>
HYTEK MICROSYSTEMS, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 29, 1996
(UNAUDITED)
1. In the opinion of management, the accompanying unaudited financial
statements include all adjustments (consisting of only normal recurring
adjustments) that are necessary in order to make the financial statements
contained herein not misleading. These financial statements, notes and analyses
should be read in conjunction with the financial statements for the fiscal year
ended December 30, 1995, and notes thereto, which are contained in the Company's
Annual Report on Form 10-KSB for such fiscal year. The results for the quarter
ended June 29, 1996 are not necessarily indicative of the results that may be
expected for the entire year ending December 28, 1996. The Company operates on a
52/53 week fiscal year, which approximates the calendar year.
2. The Company leases its Carson City facility pursuant to a ten year lease
expring in 2000. The aggregate future minimum rental commitments as of June 29,
1996 for this lease were:
<TABLE>
<S> <C>
1996.............................................. $ 76,548
1997.............................................. 156,918
1998.............................................. 164,760
1999.............................................. 172,998
2000.............................................. 88,608
---------
$ 659,832
---------
---------
</TABLE>
3. Inventories are stated at the lower of cost (determined using the
first-in, first-out method) or market. At June 29, 1996, inventories consisted
of:
<TABLE>
<S> <C>
Raw Material...................................... $ 670,296
Work-In-Process................................... 741,350
Finished Goods.................................... 43,265
-----------
$ 1,454,911
-----------
-----------
</TABLE>
4. Plant and equipment are stated at cost and depreciated on a
straight-line basis over the estimated useful life of the assets, generally
three to eight years.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
For the purposes of the following discussion, dollar amounts have been
rounded to the nearest $1,000 and all percentages have been rounded to the
nearest 1%.
This interim report on Form 10-QSB contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Actual results could differ
materially from those projected in the forward-looking statements as a result of
various factors, including the risk factors set forth below. The Company has
attempted to identify forward-looking statements by placing an asterisk
immediately following the sentence or phrase containing the forward-looking
statement(s).
RESULTS OF OPERATIONS
Net revenues for the quarter ended June 29, 1996 increased 90% from net
revenues for the quarter ended July 1, 1995. Net revenues for the quarter ended
June 29, 1996 were $2,628,000, as compared to $1,380,000 for the quarter ended
July 1, 1995. Net revenues for the six months ended June 29, 1996 increased 110%
to $4,666,000 from net revenues for the six months ended July 1, 1995 of
$2,221,000. The increase in net revenues for the quarter and six months ended
June 29, 1996 over the comparable period of the prior year is attributable to
increased sales to Chesapeake Sciences Corp. ("Chesapeake"), the Company's
largest customer during each of these periods. Chesapeake accounted for 70% and
75%, respectively, of net revenues for the quarter and six months ended June 29,
1996.
The Company's backlog of customer orders was $5,095,000 at June 29, 1996 as
compared to $3,900,000 at July 1, 1995, and $7,912,000 at December 30, 1995.
Approximately $2,247,000, or 44% of the total backlog, relates to orders from
Chesapeake. Because customers may place orders for delivery at various times
throughout the year, and due to the possibility of customer changes in delivery
schedules or cancellation of orders with little or no penalty, the Company's
backlog as of any particular date may not be indicative of actual future sales.*
Cost of sales was $1,792,000, or 68% of net revenues, for the quarter ended
June 29, 1996, as compared to $925,000, or 67% of net revenues, for the quarter
ended July 1, 1995. Both quarters contained large customer programs with a high
materials cost content per revenue dollar. Cost of sales for the six months
ended June 29, 1996 was $3,185,000, or 68% of net revenues, as compared to
$1,594,000, or 72% of net revenues, for the six months ended July 1, 1995. This
decrease in cost of sales as a percentage of net revenues is primarily a result
of spreading fixed costs over a much larger revenue base.
Research and development expenses were $142,000, or 5% of net revenues, for
the quarter ended June 29, 1996, as compared to $148,000, or 11% of net
revenues, for the quarter ended July 1, 1995. Research and development expenses
for the six months ended June 29, 1996 were $289,000, or 6% of net revenues, as
compared to $311,000, or 14% of net revenues, for the six months ended July 1,
1995. This decrease in the dollar amount of research and development expenses
for the quarter and six-month periods is the result of a slight reduction in
compensation to research and development personnel attributable to changes in
the mix of personnel and a reduction in expenditures for consumable tools and
supplies used for development purposes. The Company is continuing its efforts to
develop additional standard products. The decrease in research and development
expenses as a percentage of net revenues is primarily a result of spreading such
expenses over a much larger revenue base.
Selling, general and administrative expenses were $175,000, or 7% of net
revenues, for the quarter ended June 29, 1996, as compared to $131,000, or 9% of
net revenues, in the quarter ended July 1, 1995. Selling, general and
administrative expenses for the six months ended June 29, 1996 were $318,000, or
7% of net revenues, as compared to $246,000, or 11% of net revenues, for the six
months ended July 1, 1995. The increase in selling, general and administrative
expense for the quarter and six-month periods is primarily the result of
increases in compensation cost due to additional staffing in both selling and
administrative areas and increased expenditures for trade advertising. The
decrease in selling, general and administrative expenses as a percentage of net
revenues is due to the spreading of such expenses over a much larger revenue
base.
7
<PAGE>
The Company had an operating profit of $519,000 for the quarter ended June
29, 1996, as compared to operating profit of $176,000 for the quarter ended July
1, 1995. The increase in quarterly profit was primarily attributable to
increased sales volume. The Company had an operating profit of $874,000 for the
six months ended June 29, 1996, as compared to an operating profit of $70,000
for the six months ended July 1, 1995.
There was no provision for income taxes in any period presented as the
Company has net operating loss carryforwards for both Federal and California
income tax purposes. The Company accounts for deferred income taxes under the
method prescribed by Financial Accounting Standards Board Statement No. 109,
"Accounting for Income Taxes". Under this statement, deferred tax liabilities
and assets are determined based on differences between financial reporting and
tax bases of assets and liabilities.
LIQUIDITY AND CAPITAL RESOURCES
The Company had $575,000 in cash at June 29, 1996, as compared to $93,000 at
December 30, 1995. This increase of $482,000 from year end is comprised of
$559,000 generated by operating activities and $49,000 generated by financing
activities, offset by $126,000 used for the purchase of capital equipment
related to production requirements. Cash generated by operating activities
primarily reflects increased net income, offset by increases in accounts
receivable and inventories.
Accounts receivable were $1,360,000 at June 29, 1996, as compared to
$1,180,000 at December 30, 1995. This increase is the result of higher levels of
shipments at the end of the second quarter of 1996 as compared to the 1995
fiscal year end. At June 29, 1996, accounts in excess of 60 days amounted to 3%
of total accounts receivable, as compared to less than 1% at December 30, 1995.
Inventories were $1,455,000 at June 29, 1996, as compared to $1,240,000 at
December 30, 1995. This increase consists primarily of work in process required
to meet increased shipment levels.
Accounts payable were $608,000 at June 29, 1996, as compared to $674,000 at
December 30, 1995. This decrease results from improved cash flow allowing
improvement in vendor payment cycles.
Accrued employee compensation and benefits was $287,000 at June 29, 1996, as
compared to $191,000 at December 30, 1995. This increase is due to a slight
increase in the number of employees and an increase in the amounts accrued for
the employee profit sharing plan.
Commissions and other accrued liabilities were $104,000 at June 29, 1996, as
compared to $130,000 at December 30, 1995. This reduction is the result of a
decrease in accrued liabilities due to payments made in 1996 of certain expenses
accrued in 1995.
During the first quarter ended March 30, 1996, the Company had borrowed
$50,000 under its line of credit with Sierra Bank of Nevada. During the second
quarter ended June 29, 1996, this entire amount was re-paid, and the $100,000
line is available for use as required. At June 29, 1996, the Company was in
compliance with all of the covenants of the loan agreement.
FUTURE OUTLOOK
During the quarter and six months ended June 29, 1996, the Company increased
both revenue and earnings over the comparable prior year period, and, in
addition, improved its cash position and working capital. Management believes
that ongoing operations during the remainder of 1996, together with the unused
portion of its line of credit, will provide sufficient cash to meet normal
operating needs without additional financing activities through December 28,
1996.* However, since the Company desires to expand its technological base and
increase its offering of standard products, investments in resources requiring
additional new equity or debt, may be required.* In such case, there can be no
assurance that such financing will be available on terms acceptable to the
Company or at all.
The Compay's backlog of unfilled orders has decreased during the six months
ended June 29, 1996. Chesapeake Sciences Corp. remains as the largest portion
(44%) of the Company's current backlog. In addition, as mentioned above,
Chesapeake accounted for 70% and 75%, respectively, of net revenues for the
quarter and six months ended June 29, 1996. Any cancellation of orders by, or
disruption of operations at Chesapeake Sciences Corporation, would have a major
adverse impact on the Company's future operating results. While the Company
anticipates additional "follow-on" orders from Chesapeake,* currently there are
no assurances that such orders will be obtained. Consequently, there is a risk
that the current levels of revenue and earnings could decline in the future.*
8
<PAGE>
PART II -- OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Shareholders of the Company was held on May 17,
1996 (the "Meeting").
(b) The following directors were elected at the Meeting:
Shou-Chen Yih
Charles S. Byrne
Robert Boschert
Edward W. Moose
Edward Y. Tang
(c) The results of the vote on each matter submitted to the shareholders at
the Meeting were as follows:
<TABLE>
<CAPTION>
FOR WITHHELD
------------ -----------
<S> <C> <C>
Election of Directors:
Shou-Chen Yih............................................ 2,353,597 600
Charles S. Byrne......................................... 2,353,597 600
Robert Boschert.......................................... 2,353,697 500
Edward W. Moose.......................................... 2,352,697 1,500
Edward Y. Tang........................................... 2,363,697 500
</TABLE>
Ratification of the selection of Ernst & Young to serve as auditors for
fiscal 1996:
<TABLE>
<S> <C> <C>
For -- 2,350,597
Against -- 1,600
Abstained -- 2,000
Broker Non-Votes -- 0
</TABLE>
(d) Not applicable.
The foregoing matters are described in more detail in the issuer's
definitive proxy statement dated April 8, 1996 relating to the Annual Meeting of
Shareholders held on May 17, 1996.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
<TABLE>
<S> <C>
10.1 Incentive Compensation Agreement for Charles S. Byrne,
President and Chief Executive Officer.
10.2 Incentive Compensation Agreement for Jon B. Presnell,
Vice-president.
27.1 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K.
No Reports on Form 8-K were filed during the quarter ended June 29,
1996.
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
HYTEK MICROSYSTEMS, INC.
(Registrant)
Date: July 30, 1996
By: /s/ Charles S. Byrne
-----------------------------------
Charles S. Byrne,
President, Chief Executive Officer
and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
10
<PAGE>
HYTEK MICROSYSTEMS, INC.
QUARTERLY REPORT ON FORM 10-QSB
FOR THE QUARTER AND SIX MONTHS ENDED JUNE 29, 1996
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ----------- ------------------------------------------------------------------------------------
<C> <S>
10.1 Incentive Compensation Agreement for Charles S. Byrne, President and Chief Executive
Officer.
10.2 Incentive Compensation Agreement for Jon B. Presnell, Vice-president.
27.1 Financial Data Schedule.
</TABLE>
11
<PAGE>
EXHIBIT 10.1
INCENTIVE COMPENSATION AGREEMENT FOR CHARLES S. BYRNE
FOR THE FISCAL YEAR ENDING DECEMBER 28, 1996
Upon completion of the audit for the fiscal year 1996 and certification of the
Company's financial statements for the year, Hytek will pay the following
incentive to Charles S. Byrne based upon achievement of the following criteria:
CRITERIA MAXIMUM INCENTIVE
- ------------------------------------------------------------- -----------------
1. Achieve 1996 original forecast pre-tax profit of
$881,000: $6,000
Achieve additional $810,000 pre-tax profit for 1996
(total $1,691,000): additional $3,000 $ 9,000
2. Achieve additional revenue over the 1996 forecast
($6,899K) of $2,000,000 payable in increments:
Additional $1,000,000 = $3,000
Additional $2,000,000 = $6,000 $ 6,000
3. Achieve reductions in inventory levels which equate to an
annualized inventory turns ratio of four times. (Said
turns ratio to be calculated by Ernst & Young.) $ 3,000
-------
Total Potential Incentive $18,000
Each criteria above is a separate item and will be awarded if such item is
achieved. This incentive program is authorized by the Compensation Committee of
the Board of Directors as of May 17, 1996.
By: /s/ Robert Boschert Accepted: /s/ Charles S. Byrne
---------------------------- -------------------------
Robert Boschert Charles S. Byrne
/s/ Edward W. Moose
----------------------------
Edward W. Moose
<PAGE>
EXHIBIT 10.2
INCENTIVE COMPENSATION AGREEMENT FOR JON B. PRESNELL
FOR THE FISCAL YEAR ENDING DECEMBER 28, 1996
Upon completion of the audit for the fiscal year 1996 and certification of the
Company's financial statements for the year, Hytek will pay the following
incentive to Jon B. Presnell based upon achievement of the following criteria:
CRITERIA MAXIMUM INCENTIVE
- ------------------------------------------------------------- -----------------
1. Achieve 1996 forecast confident bookings of $4,794,700. $ 2,500
2. Book an additional $3,500,000 in business over the
forecast confident bookings. Payable in increments:
Additional $2,000,000 = $3,500
Additional $2,500,000 = $4,500
Additional $3,000,000 = $5,500
Additional $3,500,000 = $6,500 $ 6,500
3. Achieve 1996 forecast sales of $6,899,000. $ 2,500
4. Achieve 1996 forecast gross margin of $2,415,000. $ 3,500
-------
Total Potential Incentive $15,000
Each criteria above is a separate item and will be awarded if such item is
achieved. This incentive program is authorized by the Compensation Committee of
the Board of Directors as of February 7, 1996.
By: /s/ Charles S. Byrne Accepted: /s/ Jon B. Presnell
---------------------------- -------------------------
Charles S. Byrne, C.E.O. Jon B. Presnell, V.P.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AT 6/29/96 AND STATEMENT OF OPERATIONS AT 6/29/96 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 575,269
<SECURITIES> 0
<RECEIVABLES> 1,409,773
<ALLOWANCES> 50,000
<INVENTORY> 1,454,911
<CURRENT-ASSETS> 3,425,025
<PP&E> 2,679,507
<DEPRECIATION> 2,476,685
<TOTAL-ASSETS> 3,627,847
<CURRENT-LIABILITIES> 1,308,882
<BONDS> 0
0
0
<COMMON> 2,318,965<F1>
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,627,847
<SALES> 4,661,737
<TOTAL-REVENUES> 4,665,550
<CGS> 3,184,672
<TOTAL-COSTS> 3,791,591
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,864
<INCOME-PRETAX> 872,717
<INCOME-TAX> 0
<INCOME-CONTINUING> 872,717
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 872,717
<EPS-PRIMARY> 0.298
<EPS-DILUTED> 0.283
<FN>
<F1>Common Stock as reported above is net of $2,643,712 accumulated deficit.
</FN>
</TABLE>
