<PAGE>
UNITED STATES
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 March 31, 1998.
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act for the
transition period from _________ to _________
Commission File Number: 0-12697
Dynatronics Corporation
------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Utah 87-0398434
------------------------------- -----------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7030 Park Centre Drive, Salt Lake City, UT 84121
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(801) 568-7000
--------------------------
(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.
X Yes No
----- -----
The number of shares outstanding of the issuer's common stock, no par value,
as of May 5, 1998 is 8,444,847 shares.
Transitional Small Business Disclosure Format.
(Check One) : Yes No X
--- ----
<PAGE>
DYNATRONICS CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page Number
-----------
Condensed Balance Sheet
March 31, 1998 1
Condensed Statements of Income
Three and Nine Months Ended March 31, 1998,
and March 31, 1997 2
Condensed Statements of Cash Flows
Nine Months Ended March 31, 1998,
and March 31, 1997 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis
Or Plan of Operation 6
PART II. OTHER INFORMATION 11
<PAGE>
DYNATRONICS CORPORATION
Condensed Balance Sheet
(Unaudited)
March 31
ASSETS 1998
--------
Current assets:
Cash and cash equivalents $ 180,847
Trade accounts receivable, less allowance for doubtful
accounts of $83,837 2,410,863
Other receivables 79,417
Inventories 2,935,574
Prepaid expenses 143,922
Deferred tax asset-current 91,757
-----------
Total current assets 5,842,380
Net property and equipment 2,799,558
Excess of cost over book value, net of accumulated amortization
of $275,029 1,164,147
Deferred tax asset-noncurrent 228,365
Other assets 717,523
-----------
$10,751,973
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt $ 202,937
Line of credit 1,035,925
Accounts payable 606,897
Accrued expenses 644,958
-----------
Total current liabilities 2,490,718
Long-term debt, excluding current installments 2,176,247
Deferred compensation 510,093
-----------
Total long-term liabilities, excluding current installments 2,686,340
-----------
Total liabilities 5,177,058
Stockholders' equity:
Common stock, no par value. Authorized 50,000,000
shares; issued and outstanding 8,444,847 shares 1,996,266
Retained earnings 3,578,649
-----------
Total stockholders' equity 5,574,915
-----------
$10,751,973
===========
See accompanying notes to condensed financial statements.
1
<PAGE>
DYNATRONICS CORPORATION
Condensed Statements Of Income
(Unaudited)
Three Months Ended Nine Months Ended
March 31 March 31
1998 1997 1998 1997
----------- ---------- ---------- ----------
Net sales $ 3,016,141 2,545,178 9,044,568 7,150,478
Cost of sales 1,760,860 1,448,611 5,238,605 4,081,976
----------- ---------- ---------- ----------
Gross profit 1,255,281 1,096,567 3,805,963 3,068,502
Selling, general, and
administrative expenses 856,656 805,899 2,602,517 2,226,840
Research and development
expenses 100,676 139,274 345,592 428,746
---------- ---------- ---------- ----------
Operating income 297,949 151,394 857,854 412,916
Other income (expense):
Interest income 319 126 400 7,316
Interest expense (61,134) (46,546) (153,483) (146,183)
Other income, net 20,604 280,829 63,848 330,467
--------- ---------- ---------- ----------
Total other income (expense) (40,211) 234,409 (89,235) 191,600
Income before income taxes 257,738 385,803 768,619 604,516
Income tax expense 34,128 112,736 218,506 187,787
--------- ---------- ---------- ----------
Net income $ 223,610 273,067 550,113 416,729
========= ========== ========== ==========
Earnings Per Share - Basic $ 0.03 0.03 0.07 0.05
========= ========== ========== ==========
Earnings Per Share - Diluted $ 0.03 0.03 0.06 0.05
========= ========== ========== ==========
Weighted average number
of common shares 8,428,791 8,424,747 8,428,157 8,424,747
See accompanying notes to condensed financial statements.
2
<PAGE>
DYNATRONICS CORPORATION
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31
1998 1997
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 550,113 416,729
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization of property and equipment 129,975 129,577
Gain on sale of land 0 (259,953)
Other amortization 56,612 65,154
Provision for doubtful accounts 12,600 9,000
Provision for inventory obsolescence 85,500 78,000
Provision for warranty reserve 123,792 82,853
Decrease (increase) in operating assets:
Receivables (246,126) (442,737)
Inventories (840,814) (366,440)
Prepaid expenses and other assets (288,947) (73,563)
Deferred tax assets (58,456) 1,135
Increase (decrease) in operating liabilities:
Trade accounts payable and accrued expenses (167,390) 99,372
Deferred compensation 63,063 60,138
Income taxes payables (62,453) 133,009
------------ ----------
Net cash provided by (used in) operating activities (642,531) (67,726)
------------ ----------
Cash flows from investing activities:
Capital expenditures (75,124) (139,976)
Proceeds from sale of assets 0 362,620
------------ ----------
Net cash provided by (used in) investing activities (75,124) 222,644
------------ ----------
Cash flows from financing activities:
Principal payments under capital lease obligations (4,968) (15,221)
Principal payments on long-term debt (118,782) (357,747)
Net change in line of credit 465,397 (118,755)
Proceeds from sale of common stock 12,240 0
------------ ----------
Net cash provided by (used in) financing activities 353,887 (491,723)
------------ ----------
Net increase (decrease) in cash and cash equivalents (363,768) (336,805)
Cash and cash equivalents at beginning of period 544,615 416,854
------------ ----------
Cash and cash equivalents at end of period $ 180,847 80,049
============ ==========
Supplemental cash flow information
Cash paid for interest (net of amounts capitalized) 153,483 146,183
Cash paid for income taxes 337,700 52,100
See accompanying notes to condensed financial statements.
</TABLE>
3
<PAGE>
DYNATRONICS CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
March 31, 1998
(Unaudited)
NOTE 1. PRESENTATION
The financial statements as of March 31, 1998 and for the nine months then
ended were prepared by the Company without audit pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the
opinion of management, all necessary adjustments to the financial
statements have been made to present fairly the financial position and
results of operations and cash flows. All adjustments were of a normal
recurring nature. The results of operations for the respective periods
presented are not necessarily indicative of the results for the respective
complete years. The Company has previously filed with the SEC Annual
Reports on Form 10-KSB under the name of Dynatronics Corporation which
included audited financial statements for the two years ending June 30,
1997 and 1996. It is suggested that the financial statements contained in
this filing be read in conjunction with the financial statements and notes
thereto contained in the Company's 10-KSB filing for the fiscal year ended
June 30, 1997.
NOTE 2. EARNINGS PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share (SFAS 128).
SFAS 128 became effective for financial statements with interim and annual
periods ending after December 15, 1997. Accordingly, the Company has
adopted SFAS 128 for the quarter ended December 31, 1997 and all subsequent
periods.
SFAS 128 establishes a different method of computing earnings (loss) per
share than was required under the provisions of Accounting Principles Board
Opinion No. 15. Under SFAS 128, entities with publicly held common stock
are required to present basic earnings (loss) per share and diluted
earnings (loss) per share. Basic earnings per share is the amount of
earnings (loss) for the period available to each share of common stock
outstanding during the reporting period. Diluted earnings per share is the
amount of earnings (loss) for the period available to each share of common
stock outstanding during the reporting period and to each share that would
have been outstanding assuming the issuance of common shares for all
dilutive potential common shares outstanding during the period.
Prior periods have been restated for presentation in accordance with SFAS
128.
<PAGE>
NOTE 3. INVENTORIES
Inventories consisted of the following:
March 31
1998
--------------
Raw Materials $ 1,553,466
Finished Goods 1,535,589
Inventory Reserve (153,481)
-------------
$ 2,935,574
=============
NOTE 4. PROPERTY AND EQUIPMENT
Property and equipment were as follows:
March 31
1998
---------------
Land $ 354,744
Buildings 2,091,313
Machinery and equipment, and
equipment under capital lease 1,407,214
-------------
3,853,271
Less accumulated depreciation
and amortization. (1,053,713)
-------------
$ 2,799,558
=============
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
- ---------------------
Sales for the quarter ended March 31, 1998 reached a record third quarter high
$3,016,141, up 19 percent as compared to $2,545,178 in the same period of the
prior year. Sales for the nine-month period ended March 31, 1998 increased
26 percent to $9,044,568 as compared to $7,150,478 in the prior year
period.
Over the past two years, the Company has embarked on a strategic plan to
broaden its product line and expand its distribution network. This has been
accomplished through such activities as the May 1996 acquisition of Superior
Orthopaedic Supplies, the introduction of the "50 Series Plus" line of
electrotherapy and ultrasound products during fiscal year 1997, the January
1997 acquisition of assets to begin the manufacture of therapy tables and
rehabilitation equipment in Columbia, South Carolina and the exclusive
marketing agreement with Life-Tech, Inc. to distribute its iontophoresis
products to the physical therapy market. These strategic achievements are the
basis and cause for the increased sales and profitability during the quarter
ended March 31, 1998.
The Company continues to enjoy strong sales domestically of the "50 Series
Plus" line of electrotherapy and ultrasound products. By incorporating state-
of-the-art technology to reduce manufacturing costs, profit margins for these
products are the highest of any devices manufactured by the Company.
Increased sales of medical supplies and soft goods accounts for the majority
of increased revenues for the reporting period and continues to be a focal
point of the Company's overall strategy. Sales of these products increased 50
percent over the same nine-month period last year. During the quarter ended
March 31, 1998, the Company introduced its 1998 product catalog containing 300
new products - twice the number of products previously offered to
practitioners in last year's catalog. Management expects this new catalog
will further stimulate sales growth in future periods.
In January 1997, the Company announced it had acquired assets to begin
manufacturing physical therapy treatment tables, parallel bars, and other
specialty rehabilitation equipment at a facility in Columbia, South Carolina.
This facility currently manufactures over 30 varieties of products and has
doubled the number of products offered during fiscal year 1998 compared to
last year. These products are being manufactured under the direction of a
seasoned management team with 30 years of experience in this industry. This
division is on track to generate $1 million in sales during fiscal year
1998.
The development of new marketing strategies emphasizing Dynatronics' position
as the low-cost provider of iontophoresis products has been the main factor in
increasing sales of iontophoresis products during the past five quarters.
Iontophoresis is a process of transdermally delivering certain anti-
inflammatory and anesthetic drugs into a localized area without the use of
needles. Management anticipates sales of iontophoresis products in fiscal
year 1998 will approach $1,000,000 - nearly double their fiscal year 1997
level.
<PAGE>
Total gross margin for the quarter ended March 31, 1998 increased 14
percent to $1,255,281 as compared to $1,096,567, in the prior year period.
Total gross margin for the nine-month period ended March 31, 1998 increased
24 percent to $3,805,963 as compared to $3,068,502 in the prior year
period. These increases are directly attributable to the increase in sales
volume as mentioned above. Gross margins as a percentage of sales were
41.6 percent for the reporting quarter compared to 43.1 percent in the same
quarter in the prior year period. This decrease reflects the significant
increase in sales of medical supplies, soft goods and tables, which carry
lower margins than the Company's device products.
Selling, General and Administrative (SG&A) expenses for the three and nine-
month periods ended March 31, 1998, increased to $856,656 and $2,602,517,
respectively, as compared to $805,899 and $2,226,840, respectively, in the
same periods last year. These increases are primarily related to
additional labor expense due to increased staffing needs created by the
higher sales volume and the anticipation of and preparation for further
sales increases in the future.
Research and development expenses in the three and nine-month periods ended
March 31, 1998 totaled $100,676 and $345,592, respectively, compared to
$139,274 and $428,746, respectively, in the prior year periods. R&D
expenses for fiscal year 1998 year-to-date are lower that the similar
period in fiscal year 1997 due primarily to the fact that during 1997 the
Company developed and introduced the "50 Series Plus" product line. Due to
the planned introduction of new products in the first quarter of fiscal
1999, management anticipates R&D expenses to increase in the next two
quarters with overall R&D expenses for fiscal 1998 outpacing expenses for
fiscal 1997.
Operating income increased 97 percent to $297,949 in the three-month period
ended March 31, 1998 compared to $151,394 in the same period of the prior
year. Operating income for the nine-month period ended March 31, 1998 more
than doubled to $857,854 as compared to $412,916 in the previous year. As
a percentage of sales, operating margins increased from 5.9% in the third
quarter of fiscal 1997 to 9.9% in the current reporting period. For the
comparative nine-month period, operating margins increased from 5.8% in
fiscal 1997 to 9.5% in fiscal 1998. The increased sales volumes and lower
SG&A and R&D expenses as a percent of sales were the primary reasons for
these increases in operating income.
Income before tax for the quarter ended March 31, 1998 increased 90 percent
to $257,738 compared to $136,005 during the similar period of the prior
year, exclusive of a one-time $249,798 gain from the sale of land reported
last year in the third quarter. Income before tax for the nine-month
period increased 117 percent to $768,619 as compared to $354,718 in the
previous year period, exclusive of the one-time land sale gain. (Including
the gain, income before tax was $385,803 and $604,516 for the three and
nine-month periods last year.) Increased sales together with lower SG&A
and R&D expenses as a percent of sales contributed to the increased profit
from operations.
Income tax expense for the three and nine-month period ended March 31, 1998
equaled $34,128 and $218,506, respectively, as compared to $112,736 and
<PAGE>
$187,787 respectively, in the prior year periods. During the reporting
period, the Company filed its tax return for the prior fiscal year. Due to
certain allowed R&D credits and overpayment of estimated taxes, the Company
received a $54,000 tax refund and recorded that benefit during the current
reporting period. The recording of this tax benefit had the effect of
lowering the Company's tax rate from 34 percent to 13 percent for the
quarter, and from 35 percent to 28 percent in the nine-month period.
Net income for the third quarter of fiscal year 1998 increased 46 percent
excluding the one-time $249,798 gain from the sale of land reported last
year in the third quarter, and the $54,000 tax benefit recorded this year.
On the same basis, net income climbed to $169,610, compared to $116,444 in
the same quarter last year. (Including the one-time items, net income was
$223,610, compared to $273,067 for the same quarter of fiscal year 1997, a
decrease of 18 percent.) Net income for the nine-month period increased 91
percent to $496,113 compared to $260,106 in the prior year period excluding
the one-time items mentioned previously. (Including the one-time items,
net income for the nine-month period increased to $550,113 compared to
$416,729 for the same period last year.) These increases are a result of
the factors discussed above and reflect the successful implementation of
the Company's strategic plan to broaden its product offerings and increase
distribution.
Liquidity and Capital Resources
- -------------------------------
The Company expects revenues from operations, together with available
sources of borrowing, will be adequate to meet its working capital needs
related to its business and its planned capital expenditures for the
upcoming operating year.
The Company continues to maintain a liquid position. The Company's current
ratio at March 31, 1998 was 2.3 to 1. Current assets represent 54 percent
of total assets.
Trade accounts receivable are from the Company's dealer network and are
generally considered to be within term. All accounts payable are within
term with the Company continuing its policy of taking advantage of any and
all payment discounts available.
The Company maintains a revolving line of credit with a commercial bank in
the amount of $2,500,000. The outstanding balance on this line of credit
at March 31, 1998 was $1,035,925, with approximately $1.4 million available
to the Company. The line is secured and bears interest at the rate of 1/2
percent over prime. The loan agreement also imposes certain restrictive
covenants on the Company and requires it to maintain certain ratios in its
operations. The Company is within those ratios and there is no default
under the loan agreements. In addition, the Company negotiated a $500,000
line of credit for the purpose of acquiring capital equipment as part of
its capital expansion program.
Inventory levels, net of reserves, at March 31, 1998 totaled $2,935,574
while net accounts receivable were $2,410,863. Over the past year
inventories have increased to support the Company's increased sales volumes
and broader product lines. In addition, management has made a stronger
effort to reduce backorders by increasing inventory quantities. Accounts
Receivable has also increased over the past year commensurate with
corresponding increases in sales. Financing for these increases has been
provided through net profits from operations together with the Company's
line of credit facility.
<PAGE>
Long-term debt excluding current installments at March 31, 1998 totaled
$2,176,247, comprised primarily of the mortgage loan on the Company's
office and manufacturing facility and the note payable associated with the
acquisition of Superior Orthopaedic Supplies. In addition, recent
acquisitions of capital equipment to improve manufacturing efficiencies
have added approximately $200,000 of long-term debt during the reporting
quarter. The balance on the mortgage loan is approximately $1.6 million
with monthly principal and interest payments of $19,700.
Business Plan
- -------------
With the introduction of the new "50 Series Plus" product line during the
third quarter of fiscal 1997, the Company increased its market share in the
most profitable segment of its market. This product line offers the
greatest number of features at the lowest price of any previous products
offered by the Company and continues to show strong domestic sales.
Since the acquisition of Superior Orthopaedic Supplies in May 1996, the
Company has been able to increase sales of Superior's product line of soft
goods and medical supplies through Dynatronics' distribution network.
Sales of these products have more than doubled over the two year period
since acquisition. The start-up of the treatment table and rehabilitation
products manufacturing operation in South Carolina has further broadened
the Company's product line. The Company has a stated objective of making
additional acquisitions in upcoming quarters that will expand manufacturing
operations and add new products. Offering a broad product line is of
strategic importance as clinics continue to consolidate and develop
centralized purchasing which favors single source suppliers for their
medical device and supplies needs.
To capitalize on its broadened product line, the Company published its
first full-line catalog in January 1997. In February 1998, the Company
introduced a new version of its catalog with twice the number of products
as the Company's first catalog. This new catalog is expected to further
stimulate sales growth of the Company's products.
Another avenue to increase sales and profits being pursued by management is
that of strategic business alliances such as the exclusive distribution
agreement signed with Life-Tech, Inc. in August 1996. The Company
continues to evaluate additional strategic alliance opportunities which
could enhance and broaden the Company's product line.
With the approval to market products in Japan being granted during fiscal
year 1997, sales in Japan have begun to ramp up slowly in fiscal year 1998
to date. Management anticipates initial marketing efforts in Europe will
begin this fiscal year, continuing the Company's international expansion.
In conjunction with this effort, the Company believes its "50 Series Plus"
line of products will qualify for the CE Mark during the fourth quarter of
fiscal 1998. This mark makes it possible to market this product line in
all European Union states. In addition, the Company is making progress in
its efforts to meet the requirements for ISO 9001 certification which is a
validation of the Company's quality manufacturing practices. This
certification is expected to be completed in the first half of fiscal year
1999. International markets are more difficult to develop and subject to
risks, such as currency fluctuations. For instance, sales of Company
products have been significantly diminished in Korea and Taiwan over the
past year, while markets such as South Africa and South America are
growing.
<PAGE>
The Company recognizes the need to continually upgrade and re-engineer
existing products as well as introduce new products. The Company's
continuing commitment to Research and Development enables Dynatronics to be
a technological leader in the market. New products and engineering
improvements are constantly being evaluated and developed. The Company
plans to introduce a new product line in the first quarter of fiscal year
1999. This new product line will target a broader spectrum of professional
practitioners. Research and development of this product line will
significantly increase R&D expenses for the fourth quarter of fiscal year
1998 and possibly into the first quarter of fiscal year 1999.
To better meet growing demand for its products, the Company embarked on a
$1.3 million capital improvement campaign to increase space and
efficiencies primarily at its operations in Columbia, South Carolina, and
Chattanooga, Tennessee. This capital improvement campaign will double the
space at the Chattanooga facility and increase space at the Columbia
facility by 33 percent. New manufacturing equipment is also being
purchased which will greatly enhance manufacturing capabilities and
efficiencies. These improvements are all scheduled to be placed in service
during the fourth quarter of fiscal 1997.
The Company continues to evaluate research into areas of potential efficacy
of its low-power laser device. Should any such research provide evidence
deemed sufficient for submission to the U.S. Food and Drug Administration,
the Company would give consideration to submitting a Pre-Market Approval
Application for the laser to the FDA.
The company is in the process of ensuring that its internal computer
systems are Year 2000 compliant. The company does not expect any material
Year 2000 compliance issues to arise related to its primary internal
business information systems. With respect to third-party providers whose
services are critical to the Company, the Company intends to monitor the
efforts of such providers as they become Year 2000 compliant. Management
is presently not aware of any Year 2000 issues that have been encountered
by any such third-party providers that could materially affect the
Company's operations. Notwithstanding the foregoing, there can be no
assurance that the Company will not experience operational difficulties as
a result of Year 2000 issues, either arising out of internal operations, or
caused by third-party service providers, which individually or collectively
could have an adverse impact on business operations or require the Company
to incur unanticipated expenses to remedy such problems.
Forward-looking Statements
- --------------------------
This quarterly report contains forward-looking statements relating to
anticipated financial performance, product development, and similar
matters. The Private Securities Litigation Reform Act of 1995 provides a
safe harbor for forward-looking statements. With the exception of
historical information, statements in this report are forward-looking
within the meaning of the law, including statements regarding future
<PAGE>
products, product development, research and development spending, and the
Company's business plan, as well as statements regarding the levels of
future international sales. The Company notes that risks inherent in its
business and a variety of factors could cause or contribute to a difference
between actual results and anticipated results. Those risks include, but
are not limited to, such factors as market acceptance of Company products
(particularly new product lines and re-designed product lines), the ability
to hire and retain the services of trained personnel at cost-effective
labor rates, the absence of new adverse government regulation of the
Company's products, the actions of foreign regulators that may adversely
affect the expansion of the Company's marketing activities in foreign
markets, political or economic changes in the United States and abroad
which may adversely affect the market for physical therapy devices or soft
goods in general or the Company's products in particular, the Company's
ability to keep pace with technological advances which can occur rapidly,
the Company's ability to meet increasing demand, the ability to introduce
new products on a timely basis, changing customer requirements, delays in
new products qualifications, the timing and extent of research and
development expenses, the Company's access to and ability to finance such
changes. The foregoing and other factors, both within and outside the
Company's control, may cause actual results to differ from those described
in forward-looking statements made in this Report.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
There are no material legal proceedings pending to which the
Company or any of its subsidiaries is a party or of which any
of their property is the subject which require disclosure in
this statement.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A) Exhibits
No. Description
-------- -----------
27 Financial Data Schedule
<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.
DYNATRONICS CORPORATION
-----------------------
Registrant
Date 5/14/98 /s/ Kelvyn H. Cullimore, Jr.
----------------- ----------------------------
Kelvyn H. Cullimore, Jr.
President
Chief Executive Officer
Date 5/14/98 /s/ John L. Hales
---------------------------
John L. Hales
Chief Financial Officer and
Principal Accounting Officer
19
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET & STATEMENT OF INCOME 3-31-98 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 180,847
<SECURITIES> 0
<RECEIVABLES> 2,494,700
<ALLOWANCES> 83,837
<INVENTORY> 2,935,574
<CURRENT-ASSETS> 5,842,380
<PP&E> 3,853,271
<DEPRECIATION> 1,053,713
<TOTAL-ASSETS> 10,751,973
<CURRENT-LIABILITIES> 2,490,718
<BONDS> 2,217,192
0
0
<COMMON> 1,996,266
<OTHER-SE> 3,578,649
<TOTAL-LIABILITY-AND-EQUITY> 10,751,973
<SALES> 9,044,568
<TOTAL-REVENUES> 9,044,568
<CGS> 5,238,605
<TOTAL-COSTS> 5,238,605
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12,600
<INTEREST-EXPENSE> 153,483
<INCOME-PRETAX> 768,619
<INCOME-TAX> 218,506
<INCOME-CONTINUING> 550,113
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 550,113
<EPS-PRIMARY> .07
<EPS-DILUTED> .06
</TABLE>
