U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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: December 31, 1998
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
Commission file No. 0-13167
TM CENTURY, INC.
(Name of small business issuer as specified in its charter)
Delaware 73-1220394
(State of incorporation) (IRS Employer Identification No.)
2002 Academy, Dallas, Texas 75234
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (972) 406-6800
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___
The number of issuer's shares of Common Stock outstanding as of
December 31, 1998 was 2,483,193.
Transitional Small Business Disclosure Format (check one): Yes___ No X
<PAGE>
<TABLE>
TM Century, Inc.
Balance Sheets
As of December 31, 1998 (Unaudited) and September 30, 1998
ASSETS
<S> <C> <C>
December 31, 1998 September 30, 1998
_________________ __________________
CURRENT ASSETS
Cash $ 286,401 $ 348,957
Accounts receivable, less allowance for doubtful accounts 671,095 763,653
of $225,470 and $230,000 respectively
Inventories, net 557,290 612,992
Prepaid expenses and other current assets 41,409 29,837
_________________ __________________
TOTAL CURRENT ASSETS 1,556,195 1,755,439
PROPERTY AND EQUIPMENT 2,509,739 2,508,394
Less accumulated depreciation (1,910,167) (1,879,587)
_________________ __________________
NET PROPERTY AND EQUIPMENT 599,572 628,807
INVENTORIES - NONCURRENT, net 165,071 178,397
OTHER ASSETS 18,260 18,260
_________________ __________________
TOTAL ASSETS $ 2,339,098 $ 2,580,903
================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 65,784 $ 100,050
Accrued expenses 175,466 233,836
Current portion of obligation under capital lease 82,156 122,212
Deferred revenue 138,109 108,694
Customer deposits 17,858 17,858
_________________ __________________
TOTAL CURRENT LIABILITIES 479,373 582,650
OBLIGATIONS UNDER CAPITAL LEASE - 6,407
CUSTOMER DEPOSITS - NONCURRENT 179,703 176,943
COMMITMENTS AND CONTINGENCIES 385,000 385,000
_________________ __________________
TOTAL LIABILITIES 1,044,076 1,151,000
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 7,500,000 shares; 29,705 29,705
2,970,481 shares issued; and 2,483,193 shares outstanding
Paid-in capital 2,275,272 2,275,272
Treasury stock - at cost, 487,288 (1,291,227) (1,291,227)
Retained earnings 281,272 416,153
_________________ __________________
TOTAL STOCKHOLDERS' EQUITY 1,295,022 1,429,903
_________________ __________________
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,339,098 $ 2,580,903
================= ==================
</TABLE>
<PAGE>
<TABLE>
TM Century, Inc.
Statements of Operations and Retained Earnings (Unaudited)
For The Three Months Ended December 31, 1998 and 1997
<S> <C> <C>
1998 1997
________________ ________________
REVENUES $ 1,489,768 $ 1,674,087
Less Commissions 287,021 306,560
________________ ________________
NET REVENUES 1,202,747 1,367,527
COSTS AND EXPENSES
Production, Programming, and Technical Costs 518,261 535,035
General and Administrative 558,650 541,523
Selling Costs 173,217 275,496
Depreciation 81,000 84,000
Reduction in Carrying Value of Inventories 6,000 -
________________ ________________
TOTAL 1,337,128 1,436,054
________________ ________________
OPERATING LOSS (134,381) (68,527)
OTHER INCOME (EXPENSE)
Interest income 1,551 1,679
Interest expense (2,051) (5,160)
________________ ________________
TOTAL (500) (3,481)
________________ ________________
NET LOSS $ (134,881) $ (72,008)
================ ================
RETAINED EARNINGS, BEGINNING OF PERIOD $ 416,153 $ 1,194,205
================ ================
RETAINED EARNINGS, END OF PERIOD $ 281,272 $ 1,122,197
================ ================
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.05) $ (0.03)
================ ================
WEIGHTED AVERAGE NUMBER OF BASIC
AND DILUTED COMMON SHARES OUTSTANDING 2,483,193 2,483,193
================ ================
</TABLE>
<PAGE>
<TABLE>
TM Century, Inc.
Statements of Cash Flows (Unaudited)
For the Three Months Ended December 31, 1998 and 1997
<S> <C> <C>
1998 1997
_____________ _____________
OPERATING ACTIVITIES
Net loss $ (134,881) $ (72,008)
Adjustments to reconcile net income to
net cash provided by (used in) operating activities
Depreciation 81,000 84,000
Amortization 64,444 71,100
Provision for doubtful accounts (4,530) 12,000
Reduction in carrying value of inventories 6,000 -
Increase (decrease) in cash from changes in operating assets
and liabilities:
Trade accounts receivable 97,088 (90,340)
Inventories (1,416) (81,864)
Prepaid expenses (11,572) (18,555)
Accounts payable and accrued expenses (92,636) 45,435
Deferred revenue 29,415 (24,759)
Customer deposits 2,760 1,753
_____________ _____________
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 35,672 (73,238)
INVESTING ACTIVITIES
Purchases of property and equipment (51,765) (25,118)
_____________ _____________
NET CASH USED IN INVESTING ACTIVITIES (51,765) (25,118)
FINANCING ACTIVITIES
Principal payments on capital lease obligations (46,463) (43,354)
_____________ _____________
NET CASH USED IN FINANCING ACTIVITIES (46,463) (43,354)
NET DECREASE IN CASH (62,556) (141,710)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 348,957 294,333
_____________ _____________
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 286,401 $ 152,623
============= =============
Supplemental disclosures of cash flow information:
Cash paid for interest $ 2,051 $ 5,160
============= =============
</TABLE>
<PAGE>
TM CENTURY INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
December 31, 1998 AND 1997
1. BASIS OF PRESENTATION
The interim financial statements of TM Century, Inc. (the "Company")
at December 31, 1998, and for the three months ended December 31,
1998 and 1997, are unaudited, but include all adjustments (consisting
only of normal recurring adjustments) which the Company considers
necessary for a fair presentation. The September 30, 1998 balance
sheet was derived from the balance sheet included in the Company's
audited financial statements as filed on Form 10-KSB for the year
ended September 30, 1998. Certain amounts previously reported in
prior interim financial statements have been reclassified to conform
to the 1998 presentation.
The accompanying unaudited interim financial statements are for
interim periods and do not include all disclosures normally provided
in annual financial statements, and should be read in conjunction
with the Company's audited financial statements. The accompanying
unaudited interim financial statements for the three months ended
December 31, 1998 are not necessarily indicative of the results which
can be expected for the entire fiscal year.
2. INCOME TAXES
Deferred income taxes are provided, when applicable, on temporary
differences between the recognition of income and expense for tax and
for financial accounting purposes in accordance with Statement of
Financial Accounting Standards No. 109 ("SFAS 109"). Temporary
differences which give rise to deferred taxes include basis
differences of property and equipment, accelerated tax depreciation
in excess of book depreciation, and valuation allowances provided in
excess of amounts deductible for tax purposes. Under the provisions
of SFAS 109, recognition of deferred tax assets is permitted for such
amounts which can be carried forward to future periods.
The Company as of September 30, 1998 reduced the net deferred tax
asset to zero due to the Company experiencing four consecutive years
of losses. Realization is dependent on generating sufficient taxable
income prior to expiration of the loss carryforwards. As of
September 30, 1998, the Company had net operating loss carryforwards
of approximately $1.5 million expiring in 2008 through 2010 available
to offset future taxable income.
<PAGE>
3. LONG-TERM DEBT AND LEASE OBLIGATIONS
Effective February 28, 1998, the Company's Line of Credit was renewed
through February 28, 1999 for the lesser of either; 80% of the
Company's domestic accounts and chattel paper (excluding Accounts
over 90 days old, chattel paper with installments or other sums more
than 90 days past due, and accounts and chattel paper due from any
person or entity not domiciled in the United States, or from any
shareholder, officer or employee), or $500,000. The Company's
$500,000 revolving Line of Credit with a bank grants a first lien and
security interest in and upon all accounts, chattel paper, contract
rights, general intangibles and deposit accounts. Borrowings under
the Line of Credit bear a fluctuating interest rate of prime plus
1.5%, payable monthly. The Line of Credit, which bears an annual
commitment fee of 0.5% of the unused amounts, is renewable annually,
subject to the consent of both parties. No borrowings were drawn
under the Line of Credit during the quarter. In conjunction with the
Company's leasing arrangement discussed below, the availability under
the Company's Line of Credit was reduced from $500,000 to $300,000.
In May 1996, the Company entered into a capital lease agreement for
the financing of the upgrade of its computer hardware and software
systems. The total cost of the project as of December 31, 1998, is
approximately $529,000, although no additional costs have been
incurred since December 31, 1996. The lease is backed by a $200,000
letter of credit which must be renewed annually subject to the
renewal of the Company's Line of Credit. The requirement of the
letter of credit will be reviewed on an annual basis. The lease has
a term of three years and contains an option to purchase the
equipment at its fair market value or renew the lease at its fair
market rental value at the end of the initial term. Based on
borrowing rates currently available to the Company on similar
arrangements, the fair value of the lease agreement approximates the
carrying value.
<PAGE>
4. EARNINGS PER SHARE
In February, 1997, the Financial Accounting Standards Board ("FASB")
issued Statement No. 128, "Earnings per Share", effective for periods
ending after December 15, 1997. Basic earnings per share are
calculated on the weighted average number of common shares
outstanding during each period. Diluted earnings per share are not
materially different than basic earnings per share. The following
table provides a reconciliation between basic and diluted earnings
per share, in accordance with FASB 128:
<TABLE>
<C> <S> <S>
Three Months Ended
December 31
____________________________
1998 1997
____________ ____________
Net Loss $ (134,881) $ (72,008)
Weighted Average Number of Shares Outstanding
Basic 2,483,193 2,483,193
Dilutive effect of common stock equivalents 0 0
Diluted 2,483,193 2,483,193
____________ ____________
Earnings Per Share:
Basic and Diluted Net Loss $ (0.05) $ (0.03)
</TABLE>
<PAGE>
5. LEGAL PROCEEDINGS
The Company has been advised by a State taxing authority of its'
intention to audit the sales tax records of the Company for business
done in such tax jurisdiction. The Company does not believe that the
results of such audit will have a material impact on the financial
position of the Company.
On May 22, 1998, the Company received a letter from the Recording
Industry Association of America, Inc. (RIAA) alleging that it was
illegally duplicating sound recordings of the RIAA's member companies
in its Mobile Beat Series I and II and Mobile Beat Holiday Series.
The RIAA alleged substantial damages in the amount of $76,000,000 and
stated that it would consider a pre-complaint settlement.
Following receipt of the letter, the Company and its counsel met with
RIAA's counsel on June 30, 1998. At this meeting, the RIAA made a
demand for $3 million to settle the dispute. RIAA was advised that
the Company's financial position could not support such a cash
settlement.
On July 14, 1998 the Company entered into a Tolling Agreement with
the RIAA. On July 24, 1998, it formally responded to the RIAA.
Since then, Disctronics, one of the companies that manufactures CDs
for the Company's GoldDisc line, contacted the Company and advised it
that Disctronics had been contacted by the RIAA and told not to
duplicate any sound recordings in the GoldDisc Series unless the
Company could supply written license agreements.
By letter dated August 4, 1998, RIAA advised the Company that it
would bring suit unless a meaningful settlement offer was proffered
by the Company by August 10, 1998. In September mediation was
undertaken with no settlement resulting.
In October 1998, the Company filed suit for declaratory judgment and
tortuous interference with respect to Disctronics. The suit was
later dismissed without prejudice by agreement.
Thus far no discovery has been undertaken. The Company believes that
it has a meritorious defense to many of the claims asserted, but it
is possible that it will not prevail if the matter is brought to
litigation. Any significant cash amount paid in settlement or
awarded in judgment would likely have an adverse effect on the
Company.
In management's opinion the likelihood of an unfavorable outcome and
an estimate of the amount or range of any potential loss cannot be
determined. However, the Company has recorded a reserve for possible
loss of $385,000 as of September 30, 1998 on the terms of its latest
settlement offer based on annual payments of $50,000 over a period of
eleven years. The recorded reserve reflects a discount of the
settlement offer using a discount rate of 8% per annum.
<PAGE>
TM CENTURY, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
TM Century, Inc. (the "Company") is engaged primarily in the
creation, production, marketing, and worldwide distribution of
compact disc music libraries, production libraries, morning show
services, and station identification jingles, for radio stations
worldwide.
Forward-Looking Statements
__________________________
This Quarterly Report contains forward-looking statements about the
business, financial condition and prospects of the Company that
reflect assumptions made by management and management's beliefs based
on information currently available to it. The Company can give no
assurance that the expectations indicated by such forward-looking
statements will be realized. If any of management's assumptions
should prove incorrect, or if any of the risks and uncertainties
underlying such expectations should materialize, the Company's actual
results may differ materially from those indicated by the forward-
looking statements.
The key factors that are not within the Company's control and that
may have a direct bearing on operating results include, but are not
limited to, continued maturation of the domestic and international
markets for compact disc technology; acceptance by the customers of
the Company's existing and any new products and formats; the
development by competitors of products using improved or alternative
technologies and the potential obsolescence of technologies used by
the Company; the continued availability of software, hardware and
other products obtained by the Company from third parties; dependence
on distributors, particularly in the international market, and on
third parties engaged to replicate the Company's products on compact
discs; the retention of employees; the success of the Company's
current and future efforts to reduce operating expenses; the
effectiveness of new marketing strategies; and general economic
conditions. Additionally, the Company may not have the ability to
develop new products cost-effectively. There may be other risks and
uncertainties that management is not able to predict.
When used in this Quarterly Report, words such as "believes",
"expects", "intend", "plans", "anticipates", "estimates" and
similar expressions are intended to identify forward-looking
statements, although there may be certain forward-looking statements
not accompanied by such expressions. All forward-looking statements
are intended to be covered by the safe harbor created by Section 21E
of the Securities Exchange Act of 1934.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company relies upon current sales of music libraries and jingles
on terms of cash upon delivery for operating liquidity. Liquidity is
also provided by cash receipts from customers under contracts for
production libraries and weekly music service contracts having terms
of up to four years. The Company is obligated to provide music
updates throughout the contract terms for both production library and
weekly music service contracts. Sales of music libraries, jingles,
and the payments under production library and weekly music service
contracts will provide in the opinion of management, adequate
liquidity to meet operating requirements at least through the end of
fiscal 1999.
During the quarter ended December 31, 1998, approximately $83,600 was
spent for the purchase of property and equipment and for product
development costs for new music libraries, music library updates, and
jingles. Funds for operating needs, new product development, and
capital expenditures for the period were provided from cash reserves.
The Company's expenditures for property, equipment, and development
of new products are discretionary. Product development expenditures
are expected to be approximately $180,000 in fiscal 1999.
Management anticipates that cash flow from operations and cash
reserves will be sufficient to meet these capital requirements at
least through the end of fiscal year 1999. The Company has no other
significant commitments for capital expenditures in fiscal 1999.
The Company has been advised by a State taxing authority of its'
intention to audit the sales tax records of the Company for business
done in such tax jurisdiction. The Company does not believe that the
results of such audit will have a material impact on the financial
position of the Company.
The Company has assessed its Year 2000 issues and determined an
immaterial effect exists on any operating systems hardware and
software. The Company converted its main operating software system
that is Year 2000 compatible in March, 1998 and the consultant who is
responsible for creating the in-house Contract Administration System
indicated there would be minimal Year 2000 issues. The Company's
vendor purchased accounting system consultant believes the accounting
system is Year 2000 compatible. In addition, the Company's Microsoft
Windows NT consultant confirmed that the Company's network
environment is Year 2000 compliant. The Company's in-house
programmer analyst also believes there are no major Year 2000 issues
for the Company. Furthermore the Company's assessment incorporates
existing vendors and suppliers relationships and management believes
there would be no material effect on the Company's business, results
of operations, or financial condition if they do not timely become
Year 2000 compliant. The most reasonably likely worst scenario
estimates the cost to be approximately $50,000 to deal with any Year
2000 issues. It is anticipated that any necessary funds will come
from operations and cash reserves.
<PAGE>
RESULTS OF CONTINUING OPERATIONS
Comparison of the three-month Periods Ended December 31,1997 and 1998
_____________________________________________________________________
Revenues declined approximately $184,000 or 11.0% in the three-month
period ended December 31, 1998 as compared to the same period for the
previous year. The revenue decrease was primarily due to a decrease
in revenues in the weekly HitDisc and GoldDisc music services of
$348,000. Offsetting these decreases were revenue increases in
production libraries of $54,000, radio Jingles of $77,000 and the
Comedy service of $38,000. The Comedy revenue increase is due to an
increase in the amount of the advertising revenue being allocated to
Comedy from barter sales.
Revenues of weekly HitDisc and GoldDisc music services decreased
$101,000 and $247,000 respectively, or 31.1% as compared to the same
period previous year. The decrease in compact disc music library
revenues was due to a decrease in weekly and recurrent music sales
for domestic and international customers. As the compact disc music
library market matures, sales of compact discs are generated
primarily from changes in music formats or sales of new music
libraries or formats rather than from conversions to compact disc
music delivery technology. The market for compact disc music
libraries to broadcast customers has reached a substantial level of
maturity in the United States, which is the market from which the
Company derives most of its music library revenues. A decline in
revenues from music library sales may result in a proportionately
greater decline in operating income because music libraries provide
higher margins than the Company's other products. However,
management believes the introduction of new products will counteract
the declines in revenues from existing music libraries. New products
include pre-recorded music (GoldDrive) provided to equipment
manufacturers of hard drive systems which was introduced during the
fiscal year 1997. Renewals and new sales growth are subject to
customer acceptance of the new products.
Production library revenues increased $54,000, or 24.1%. Increases
in production library revenue is due to the substantial increase in
advertising/barter arrangements for the Company's sales and imaging
libraries. Even though production library revenues may decline due
to the expiration of three-year contracts, management believes that
production libraries will continue to generate a significant portion
of overall revenues from sales of existing products through
advertising/barter arrangements and sales of new products. The
Company introduced two new music libraries during fiscal year 1997
and one at the beginning of fiscal year 1998, and continued sales of
pre-1997 music libraries. Sales and new sales growth are subject to
customer acceptance of the new products.
Revenues for Jingles increased $77,000 or 42.6% primarily due to an
increase in demand for custom Jingles compared to the same quarter
last year.
Commissions decreased $19,500 or 6.4%, and is proportional to the
decrease in commissioned sales. As a percentage of revenues,
commissions increased from 18.3% to 19.3% due to changes in the
revenue structure where a greater percentage of revenue is on barter.
<PAGE>
Production, programming and technical costs decreased $17,000 or
3.1%, and as a percentage of revenue increased from 32.0% to 34.8%.
The increase as a percentage of revenues is primarily due to higher
salaries and benefits for production libraries.
Selling costs decreased $102,000 or 37.1%, and as a percentage of
revenues decreased from 16.5% to 11.6%. The decrease in expenses is
primarily due to a reduction in sales salaries as a result of changes
in sales force and in-house commission plans. Selling costs as a
percentage of selling and commission costs decreased from 47.3% to
37.6% and is due to a reduction in the number of commissioned
contract sales compared to the same quarter last year.
General and administrative costs decreased $17,000 or 3.2% and is
primarily due to the Company's continued efforts in reducing
operating expenses.
Depreciation decreased $3,000 or 3.6% and is primarily due to more
depreciable assets are nearing the end of their depreciable years and
being partially offset by increases in production equipment in the
first and second quarters of fiscal year 1998.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings
The Company has been advised by a State taxing authority of its'
intention to audit the sales tax records of the Company for business
done in such tax jurisdiction. The Company does not believe that the
results of such audit will have a material impact on the financial
position of the Company.
On May 22, 1998, the Company received a letter from the Recording
Industry Association of America, Inc. (RIAA) alleging that it was
illegally duplicating sound recordings of the RIAA's member companies
in its Mobile Beat Series I and II and Mobile Beat Holiday Series.
The RIAA alleged substantial damages in the amount of $76,000,000 and
stated that it would consider a pre-complaint settlement.
Following receipt of the letter, the Company and its counsel met with
RIAA's counsel on June 30, 1998. At this meeting, the RIAA made a
demand for $3 million to settle the dispute. RIAA was advised that
the Company's financial position could not support such a cash
settlement.
On July 14, 1998 the Company entered into a Tolling Agreement with
the RIAA. On July 24, 1998, it formally responded to the RIAA.
Since then, Disctronics, one of the companies that manufactures CDs
for the Company's GoldDisc line, contacted the Company and advised it
that Disctronics had been contacted by the RIAA and told not to
duplicate any sound recordings in the GoldDisc Series unless the
Company could supply written license agreements.
By letter dated August 4, 1998, RIAA advised the Company that it
would bring suit unless a meaningful settlement offer was proffered
by the Company by August 10, 1998. In September mediation was
undertaken with no settlement resulting. In October 1998, the
Company filed suit for declaratory judgment and tortuous interference
with respect to Disctronics. The suit was later dismissed without
prejudice by agreement.
Thus far no discovery has been undertaken. The Company believes that
it has a meritorious defense to many of the claims asserted, but it
is possible that it will not prevail if the matter is brought to
litigation. Any significant cash amount paid in settlement or
awarded in judgment would likely have an adverse effect on the
Company.
In management's opinion the likelihood of an unfavorable outcome and
an estimate of the amount or range of any potential loss cannot be
determined. However, the Company has recorded a reserve for possible
loss of $385,000 as of September 30, 1998 on the terms of its latest
settlement offer based on annual payments of $50,000 over a period of
eleven years. The recorded reserve reflects a discount of the
settlement offer using a discount rate of 8% per annum.
<PAGE>
Item 2. Changes in securities - Not applicable.
Item 3. Defaults upon senior securities - Not applicable.
Item 4. Submission of matters to a vote of security holders - Not
applicable.
Item 5. Other information - Not applicable.
Item 6. Exhibits and Reports on Form 8-K - Not applicable
(a) Exhibits
10. Material Contracts: None.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the three
month period ending December 31, 1998.
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 10, 1999
TM CENTURY, INC.
BY:/s/Roger A. Holeman
Roger A. Holeman
Chief Financial Officer
(Principal Accounting Officer)
BY:/s/Neil W. Sargent
Neil W. Sargent
Chief Executive Officer
(Principal Executive Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS DOCUMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AND STATEMENTS OF OPERATIONS OF THE COMPANY'S FORM 10-QSB FOR THE
QUARTERLY PERIOD ENDED DECEMBER 31, 1998.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 286401
<SECURITIES> 0
<RECEIVABLES> 896565
<ALLOWANCES> 225470
<INVENTORY> 722361
<CURRENT-ASSETS> 1556195
<PP&E> 2509739
<DEPRECIATION> 1910167
<TOTAL-ASSETS> 2339098
<CURRENT-LIABILITIES> 479373
<BONDS> 0
0
0
<COMMON> 29705
<OTHER-SE> 1265317
<TOTAL-LIABILITY-AND-EQUITY> 2339098
<SALES> 1489768
<TOTAL-REVENUES> 1489768
<CGS> 518261
<TOTAL-COSTS> 1624149
<OTHER-EXPENSES> (1551)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2051
<INCOME-PRETAX> (134881)
<INCOME-TAX> 0
<INCOME-CONTINUING> (134881)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (134881)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
