<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X} QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _______________to________________
Commission file number 2-86149
SELVAC CORPORATION
_____________________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Delaware 22-2408186
_____________________________________________________________________________
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) identification No.)
221 Boston Post Road, Suite 490, Marlboro, Massachusetts, 01752
_____________________________________________________________________________
(Address of principal executive offices)
(Zip Code)
Issuer's telephone number (508) 481-9495
____________________________
_____________________________________________________________________________
Former name, former address and former fiscal year, if changed
since last report
Indicate by a check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of 1934
during the preceding 12 months and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ___
Indicate the number of shares outstanding for each of the issuer's classes
of common stock, as of January 5, 1996
14,088,526 shares of common stock, $.01 par value
_______________________________________________________________________________
Page 1 of 14 pages
<PAGE> 2
SELVAC CORPORATION
Index
PAGE
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Condensed consolidated balance sheet as
of November 30, 1995 3
Condensed consolidated statements of
operations for the six and three months
ended November 30, 1995 and 1994 4-5
Condensed consolidated statements of
cash flows for the six months ended
November 30, 1995 and 1994 6
Notes to condensed consolidated financial
statements 7-8
Item 2. Management's discussion and analysis of
financial condition and results of operations 9-11
PART II. OTHER INFORMATION 11
Signature 12
Exhibit 11 Statement Re: Computation of net income
per common share 13-14
Exhibit 27 Financial Data Schedule 15
* * * *
<PAGE> 3
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
SELVAC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
NOVEMBER 30, 1995
<TABLE>
ASSETS
<S> <C>
CURRENT ASSETS:
Cash and equivalents $ 612,604
Accounts receivable, net of allowance for doubtful
accounts of $164,242 528,303
Finished goods inventories 718,029
Note receivable, current portion 50,000
Other current assets 110,134
____________
Total current assets 2,019,070
PROPERTY AND EQUIPMENT, net of accumulated depreciation
of $674,476 72,344
PATENTS AND PATENT RIGHTS, net of accumulated amortization
of $829,693 131,462
EXCESS OF COST OVER FAIR VALUE OF ASSETS ACQUIRED, net
of accumulated amortization of $166,257 56,587
NOTE RECEIVABLE - RELATED PARTY, net of current portion 255,448
OTHER ASSETS
Investment in non-marketable securities 750,000
Other 13,919
_____________
$ 3,298,830
=============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 57,161
Accrued expenses 42,810
Other current liabilities 23,100
_____________
Total current liabilities 123,071
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Serial preferred stock, $10 par value,
authorized-200,000 shares:
Series A, 12% cumulative convertible;
Issued and outstanding-22,500 shares 225,000
1985 Series, 12% cumulative convertible;
Issued and outstanding-22,500 shares 225,000
Common stock, $.01 par value,
authorized-20,000,000 shares:
Issued-16,387,485 shares 163,875
Additional paid-in capital 8,878,438
Accumulated deficit (5,360,955)
_____________
4,131,358
Treasury stock, at cost, 2,474,959 common shares (955,599)
_____________
Total stockholders' equity 3,175,759
_____________
$ 3,298,830
=============
See notes to condensed consolidated financial statements.
</TABLE>
-3-
<PAGE> 4
SELVAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30,
1995 1994
<S> <C> <C>
REVENUES:
Net sales $ 1,066,102 $ 1,529,168
Franchise revenue, net of related costs 0 5,577
_____________ ____________
1,066,102 1,534,745
COST OF SALES 625,629 886,448
_____________ ___________
GROSS MARGIN 440,473 648,297
_____________ ___________
OPERATING EXPENSES:
Selling, general and administrative 512,066 473,411
Loss on sale of property and equipment 0 10,101
_____________ ____________
512,066 483,512
_____________ ____________
(71,593) 164,785
INVESTMENT INCOME 32,345 60,400
_____________ ____________
INCOME (LOSS) BEFORE INCOME TAXES (39,248) 225,185
RECOVERY OF INCOME TAXES 0 55,114
_____________ ____________
NET INCOME (LOSS) $ (39,248) $ 280,299
============= ============
NET INCOME PER COMMON SHARE $ .00 $ .02
============= ============
INCOME (LOSS) APPLICABLE TO COMMON STOCK $ (66,248) $ 251,199
============= ============
WEIGHTED AVERAGED NUMBER OF COMMON SHARES AND
DILUTIVE COMMON EQUIVALENT SHARES OUTSTANDING
DURING PERIOD 13,849,510 14,559,687
============= ============
WEIGHTED AVERAGED NUMBER OF COMMON SHARES ASSUMING
FULL DILUTION DURING PERIOD 4,569,510 15,335,687
============= ============
</TABLE>
See notes to condensed consolidated financial statements.
-4-
<PAGE> 5
SELVAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
NOVEMBER 30,
1995 1994
<S> <C> <C>
REVENUES
Net sales $ 314,868 $ 549,351
COST OF SALES 213,241 309,403
_____________ ____________
GROSS MARGIN 101,627 239,948
OPERATING EXPENSES:
Selling, general and administrative 314,585 249,641
_____________ ____________
(212,958) (9,693)
INVESTMENT INCOME 14,514 32,404
_____________ ____________
INCOME (LOSS) BEFORE INCOME TAXES (198,444) 22,711
PROVISION FOR INCOME TAXES 0 0
_____________ ____________
NET INCOME (LOSS) $ (198,444) $ 22,711
============= ============
NET LOSS PER COMMON SHARE $ (.02) $ .00
============= ============
INCOME (LOSS) APPLICABLE TO COMMON STOCK $ (211,944) $ 8,161
============= ============
WEIGHTED AVERAGED NUMBER OF COMMON SHARES AND
DILUTIVE COMMON EQUIVALENT SHARES OUTSTANDING
DURING PERIOD 13,844,944 14,468,381
============= ============
WEIGHTED AVERAGED NUMBER OF COMMON SHARES ASSUMING
FULL DILUTION DURING PERIOD 14,564,944 15,244,381
============= =============
</TABLE>
See notes to condensed consolidated financial statements.
-5-
<PAGE> 6
SELVAC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
NOVEMBER 30,
1995 1994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations $ (39,248) $ 280,299
Adjustments to reconcile net income (loss)
to net cash (used) by operating activities:
Loss on sale of equipment 0 10,101
Depreciation and amortization 108,126 84,268
Deferred tax recovery 0 (55,114)
Changes in operating assets and liabilities:
Accounts receivable 103,294 (48,035)
Inventories (182,074) (124,382)
Other operating assets (82,539) (79,049)
Accounts payable (27,060 (91,242)
Accrued expenses (15,653) 8,013
_____________ ____________
Net cash used by operating activities (135,154) (15,141)
_____________ ____________
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of discontinued operations 0 350,000
Notes receivable repayments 112,500 41,000
Property and equipment acquisitions 0 (11,856)
Other 0 1,920
_____________ ___________
Net cash provided by investing activities 112,500 381,064
_____________ __________
CASH FLOWS FROM FINANCING ACTIVITIES:
Note repayment 0 (140,000)
Preferred stock dividends (26,700) (29,100)
Proceeds from issuance of common stock 30,750 0
Treasury stock acquisitions (2,301) (100,865)
_____________ ___________
Net cash provided (used) by financing activities 1,749 (269,965)
_____________ ___________
CASH USED BY DISCONTINUED OPERATIONS 0 (126,506)
_____________ __________
DECREASE IN CASH FOR THE PERIOD (20,905) (30,548
CASH, beginning of period 633,509 337,863
____________ __________
CASH, end of period 612,604 $ 307,315
============= ==========
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Receipt of marketable securities as payment
for accounts receivable $ 35,984
=============
Receipt of non-marketable securities as payment of
note receivable $ 750,000
=============
Receipt of stock into treasury in payment of note
receivable $ 37,500
=============
Conversion of preferred stock into common stock $ 35,000
=============
</TABLE>
See notes to condensed consolidated financial statements.
-6-
<PAGE> 7
SELVAC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. 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-QSB and
Regulation SB. 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 of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the six and three
months ended November 30, 1995 are not necessarily indicative of the results
that may be expected for the year ending May 31, 1996. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report on Form 10-KSB for the year
ended May 31, 1995.
The accounting policies followed by the Company are set forth in Note 1
to the Company's financial statements in the 1995 Selvac Corporation and
Subsidiaries Annual Report on form 10-KSB for the year ended May 31, 1995.
2 CONTINGENCIES:
Since January 1990, the Company has been engaged in an ongoing dispute
with the United States Food and Drug Administration (FDA) regarding the
marketing status for Finally Free Hair Remover for personal
(non-professional) use. In June 1991, the Company agreed not to
manufacture, process, pack, label, promote, advertise, distribute, or sell
Finally Free Hair Remover unless it received marketing authorization from
the FDA. Subsequently, the Company received approval to export this product
to Canada.
In July 1994, the FDA determined that Finally Free shall be considered
a Class III device under the Food, Drug and Cosmetic Act and accordingly,
will require premarket approval before it is sold, manufactured or
distributed in the U.S. Presently, management is of the opinion that the
potential benefit to the Company, of obtaining premarket approval, would not
justify the cost. However, the Company has entertained discussions with
entities willing to subsidize a significant portion of the cost. Although
no agreements have resulted from these discussions, management intends to
continue to pursue arrangements under which the Company will not have to
absorb the entire cost of the FDA approval process.
As of November 30, 1995, the carrying value of intangible assets
relating to the Domestic Finally Free product, consisting primarily of
patents, is $117,000.
3 INCOME TAXES:
The Company recognized an increase in its deferred tax asset valuation
allowance of approximately $17,000 and $85,000 respectively, for the three
and six months ended November 30, 1995.
For the six and three months ended November 30, 1994, respectively,
the Company recognized a reduction in its deferred tax asset valuation
allowance of approximately $155,000 and $10,000.
-7-
<PAGE> 8
SELVAC CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
4. NOTE RECEIVABLE:
In June 1995, the Company renegotiated its note receivable from CDF
Acquisition Corp. Under the terms of the new agreement, the remaining
principal balance of $200,000 at the date of the refinancing, is to be paid
in installments of $50,000 in December 1995, 1996, 1997 and June 1998.
Interest on the unamortized principal balance, at 9% through June 1996 and 7%
thereafter, is payable with each principal installment. Interest accrued
prior to the refinancing, is payable at $50,000 in December 1996 and $47,948
in December 1997.
5 CHANGE IN ACCOUNTING ESTIMATE:
Effective September 1, 1995, the Company reduced the estimated useful
lives used in calculating depreciation and amortization of certain intangible
assets and equipment. The effected assets will continue to be depreciated
using the straight line method over the estimated remaining useful lives, as
adjusted.
Depreciation and amortization expense included in selling, general and
administrative expenses for the six and three months ended November 30, 1995
was approximately $39,000 higher than that which would have been calculated
prior to the change in accounting estimate. As a result, loss before income
taxes was increased by $39,000 for the six and three months ended
November 30, 1995 and net loss per common share for the three months ended
November 30, 1995 increased by $.01. The effect on loss per common share for
the six months ended November 30, 1995 was less that $.005.
-8-
<PAGE> 9
SELVAC CORPORATION
PART 1. FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES:
In June 1995, the Company renegotiated the repayment terms of its
note receivable from CDF Acquisition Corp. (CDF). Under the terms of the
original agreement, the entire principal plus accrued interest, at the
prime rate, was payable in May 1996. Under the terms of the new agreement,
in June 1995, the Company received $112,500 in cash and 200,000 shares of
its own common stock valued at $37,500 as payment towards the CDF note
receivable. In December 1995, the Company received an additional payment
of $59,000 ($50,000 principal and $9,000 interest). The remaining principal
and accrued interest balances are to be paid on an installment basis through
June 1998. Interest on the unpaid principal balance is at 9% through
June 1996 and 7% thereafter.
In September 1995, the Company issued 75,000 shares of its common
stock at $.41 per share upon the exercise of nonqualified stock options.
Proceeds of $31,000 from the issuance, along with $113,000 CDF note
repayment, were used to finance the Company's operations for the first
half of fiscal 1996.
In July 1995, Roadrunner Video Enterprises, Inc. (Roadrunner) was
acquired by Business Data Group, Inc. (BDG), a publicly traded entity.
In satisfaction of Roadrunner's $750,000 note due to the Company, BDG
issued 75,000 shares of $10 par value, 12% preferred stock to the Company.
Each share of preferred stock is convertible into 10 shares of BDG common
stock through June 2000.
Although the preferred stock is a restricted security (not registered
for public trading) Roadrunner is obligated to register, for public sale,
a sufficient number of common shares to satisfy conversion rights attached
to the preferred shares. Management of Roadrunner anticipates the completion
of such registration by the first or second quarter of calendar year 1996.
When and if the registration has been completed, intentions are to evaluate
the merit of retaining all or part of the preferred stock.
During the first quarter of the current fiscal year, the Company
acquired 11,600 of its common shares into treasury in addition to those
received as payment against the CDF note receivable. The Company does not
anticipate treasury stock acquisitions in the immediate future unless there
are unexpected price fluctuations.
In December 1995, the Company filed a post-effective amendment to
Form S-1 with the Securities and Exchange Commission, to register for public
sale, 881,218 shares of its common stock, issuable at $1.25 per share, upon
the excercise of outstanding common stock purchase warrants. Estimated
costs of this registration are $25,000. There can be no assurance that all
or any of the warrant holders will excercise their rights under the
warrants. Present intentions are to use any proceeds resulting from
exercise of these warrants for working capital.
-9-
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
LIQUIDITY AND CAPITAL RESOURCES: (continued)
The Company is presently dependent upon sales of one product in limited
markets. Efforts have been made to pursue investment opportunities which
will enable the Company to expand or diversify its market. In this regard,
on October 11, 1995, the Company signed a non-binding letter of intent and
pursuant to an agreement dated January 1, 1996 entered into a contract to
acquire Classy Lady by Mehl of Puerto Rico, Inc. (Classy Lady), a privately
held corporation. Under the terms of the contract, Classy Lady will be
merged into and with a wholly owned subsidiary of the Company. In exchange
for all of their stock in Classy Lady, its former stockholders will receive
15,000,000 shares of the Company's common stock. In addition, the former
shareholders of Classy Lady will be entitled to earn-out incentives allowing
them to receive up to 10,000,000 additional common shares contingent upon
achieving designated milestones for the financing of joint ventures for the
development of laser hair removal systems.
Classy Lady, which is not an operating entity, owns exclusive license
rights to certain multiple hair removal and laser hair removal processes for
which patents have been obtained or are presently pending. Although costs
associated with the Classy Lady acquisition are not expected to have a
significant impact on the Company's cash flow, the need for additional
resources is expected in order to develop and market products which exploit
the Classy Lady processes. Financing arrangements, including a public or
private placement of common stock will be considered should additional funds
be needed in this regard.
Classy Lady and Laser Industries LTD, (Laser Industries) a publicly
held corporation, have signed an agreement to form a joint venture that will
develop and market laser hair removal systems. Under the terms of the
contract, Classy Lady will not be required to contribute financial resources
to this joint venture.
RESULTS OF OPERATIONS:
Sales for the six and three months ended November 30, 1995 decreased
$463,000 or 30% and $234,000 or 43% respectively, as compared to the
corresponding periods of the previous year. This was due primarily to a
decrease in sales volume resulting from lower orders of Finally Free
products, particularly in Europe and Canada, and to a lesser extent to price
reductions necessitated by increased competition.
Gross margin as a percentage of sales decreased by 1.1% and 11.4%
respectively, for the six and three months ended November 30, 1995.
Current year sales, particularly those for the second fiscal quarter
included a greater percentage to markets where the Company has less
favorable pricing arrangements. Additionally, second quarter 1995 revenues
included approximately $43,000 of promotional sales of Finally Firm products
sold at little or no margin. The effect of these factors was offset to some
degree by improved vendor pricing and warehousing efficiency.
-10-
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS: (continued)
The Company continues to be dependent on the sales of one product,
Finally Free, which accounted for 95% of sales for the six months ended
November 30, 1995. With further price decreases and reduced sales volume
for Finally Free anticipated in future periods, the Company is continuing
efforts to establish markets for Finally Firm. In this regard, Finally Firm
had been introduced as a test market product in Taiwan. It is presently too
early for management to draw conclusions as to the results of this effort.
Additionally, during the second quarter of the current fiscal year, the
Company began marketing efforts for its new Raywatch. This product is a
wrist or clip-on watch that contains features which assist its wearer in
measuring and monitoring exposure to ultra violet light. Initial intentions
are for the Company to sell its Raywatch directly to domestic consumers.
Other distribution arrangements and markets will be considered in the
future. Costs related to the initial marketing of this product were $41,000.
Selling, general and administrative expenses for the six and three
months ended November 30, 1995, increased by $39,000 and $65,000
respectively, as compared to the corresponding periods of the previous
year. Depreciation and amortization costs increased by $24,000 primarily
as a result of changes in the estimated useful lives of certain intangible
assets and equipment. The effect of this change in accounting estimate
along with the aforementioned marketing costs related to the Raywatch
product were the primary factors contributing to the increased selling,
general and administrative costs. Additional Raywatch marketing costs of
$25,000 to $50,000 are anticipated for the third quarter of current fiscal
year.
Assuming consummation of the Classy Lady acquisition and related Laser
Industries joint venture, future direction of the Company's efforts will
include those related to the development and marketing of products which
exploit Classy Lady's licensed processes. Under the terms of the contract
between the Company and Classy Lady, management of Classy Lady and their
appointees are to comprise a majority of the Company's Board of Directors
subsequent to the acquisition.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
The following exhibits is included herein:
Exhibit 11: Statement re: computation of net income per
common share
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K:
None
-11-
<PAGE> 12
SIGNATURE
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.
SELVAC CORPORATION
DATE: January 12, 1996 BY: (s) Allan Borkowski .
_________________ ______________________________
Allan Borkowski
Chairman of the Board and
Chief Financial Officer
-12-
<PAGE> 13
SELVAC CORPORATION
(11) Statement re: Computation of New Income Per Common Share
(Unaudited)
Computation of average number of shares outstanding used in determining
primary and fully diluted earnings per share:
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
1995(1) 1994 1995(1) 1994
<S> <C> <C> <C> <C>
PRIMARY:
Weighted average number of shares
outstanding 13,849,510 14,559,687 13,844,944 14,468,381
Assumed exercise of common stock
warrants and certain stock
options based on average market
value 0 0 0 0
___________ __________ __________ _________
Weighted average number of shares
used in primary per share
computations 13,849,510 14,559,687 13,844,944 14,468,381
========== ========== ========== ==========
FULLY DILUTED:
Weighted average number of shares
outstanding 13,849,510 14,559,687 13,844,944 14,468,381
Assumed conversion of Series A
cumulative convertible stock 360,000 384,000 360,000 384,000
Assumed conversion of 1985 Series
cumulative convertible stock 360,000 392,000 360,000 392,000
Assumed exercise of common stock
warrants and certain options
based on higher of average or
closing market price 0 0 0 0
_________ __________ __________ __________
Weighted average number of shares
used in fully diluted per share
computations 14,569,510 15,335,687 14,564,944 15,244,381
========== ========== ========== ==========
(1) Outstanding stock purchase warrants were not considered in the
computation as their effect on earnings per share would be anti-dilutive.
</TABLE>
-13-
<PAGE> 14
SELVAC CORPORATION
(11) Statement re: Computation of Net Income Per Common Share
(Unaudited)
(Continued)
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
NOVEMBER 30, NOVEMBER 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Primary 13,849,510 14,559,687 13,844,944 14,468,381
========== ========== ========== ==========
Fully diluted 14,569,510 15,335,687 14,564,944 15,244,381
========== ========== ========== ==========
PRIMARY:
Net income (loss) $ (39,248) $ 280,299 $(198,444) $ 22,711
Paid and cumulative undeclared
preferred stock dividends (27,000) (29,100) (13,500) (14,550)
___________ __________ __________ __________
Net income (loss) applicable
to common stock $ (66,248) $ 251,199 $(211,944) $ 8,161
=========== ========== ========== =========
Net income (loss) per share $ .00 $ .02 $ (.02) $ .00
=========== ========= ========== ==========
FULLY DILUTED:
Net income (loss) per share$ * $ * $ * $ *
=== == == ==
*Not calculated as the effect would be anti-dilutive.
-14-
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET AND INCOME STATEMENT INCLUDED IN PART I, ITEM 1 OF
THE REGISTRANT'S QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED
NOVEMBER 30 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAY-31-1996
<PERIOD-END> NOV-30-1995
<CASH> 612,604
<SECURITIES> 0
<RECEIVABLES> 692,545
<ALLOWANCES> 164,242
<INVENTORY> 718,029
<CURRENT-ASSETS> 2,019,070
<PP&E> 746,820
<DEPRECIATION> 674,476
<TOTAL-ASSETS> 3,298,830
<CURRENT-LIABILITIES> 123,071
<BONDS> 0
<COMMON> 163,875
0
450,000
<OTHER-SE> 2,561,884
<TOTAL-LIABILITY-AND-EQUITY> 3,298,830
<SALES> 1,066,102
<TOTAL-REVENUES> 1,098,447
<CGS> 625,629
<TOTAL-COSTS> 625,629
<OTHER-EXPENSES> 512,066
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (39,248)
<INCOME-TAX> 0
<INCOME-CONTINUING> (39,248)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (39,248)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
