U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1999.
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Commission File Number 0-14942
PRO-DEX, INC.
(Name of small business issuer in its charter)
Colorado 84-1261240
(State or other jurisdiction of (I.R.S. Employer ID No.)
Incorporation or organization)
1401 Walnut St., Ste. 540, Boulder, Colorado 80302
(Address of principal executive offices)
Issuer's telephone number: (303) 443-6136
Securities registered under Section 12(b) of the Exchange Act:
Name of each exchange
Title of each class on which registered
None None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, no par value
(Title of class)
The number of shares of the Registrant's no par value common stock
outstanding as of November 3, 1999, was 8,787,300.
PRO-DEX, INC. AND SUBSIDIARIES
DOCUMENTS INCORPORATED BY REFERENCE: None.
Table of Contents
Page No.
PART I Financial Information
Item 1.
Financial Statements
Consolidated Balance Sheets F-1 & F-2
Consolidated Statements of Operations F-3
Consolidated Statements of Cash Flow F-4
Notes to Consolidated Financial Statements 7
Item 2.
Management Discussion and Analysis 8
SIGNATURES 12
EXHIBITS NONE
Page 2 of 12 Pages
PRO-DEX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, June 30,
1999 1999
----------------- -----------------
(unaudited)
Current assets:
Cash and cash equivalents $ 0 $ 107,038
Accounts receivable, net of
allowance for doubtful accounts
of $70,830 and $40,000 2,860,302 3,157,132
Inventories, net 4,889,033 4,699,467
Deferred taxes 1,112,024 1,200,000
Prepaid expenses 283,998 147,613
----------------- -----------------
Total current assets 9,145,357 9,311,250
----------------- -----------------
Property and equipment 6,088,855 6,052,775
Less accumulated depreciation (3,102,904) (2,942,057)
----------------- -----------------
Net property and equipment 2,985,951 3,110,718
----------------- -----------------
Other assets:
Deferred taxes 1,700,000 1,700,000
Other 342,864 353,580
Intangibles, net 3,100,099 3,222,294
----------------- -----------------
Total other assets 5,142,963 5,275,874
----------------- -----------------
Total assets $ 17,274,271 $ 17,697,842
================= =================
See "Notes to Consolidated Financial Statements."
F-1
PRO-DEX, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
LIABILITIES & SHAREHOLDERS' EQUITY
September 30, June 30,
1999 1999
----------------- -----------------
(unaudited)
Current liabilities:
Current portion of long-term debt $ 8,509,355 $ 8,691,246
Accounts payable 2,747,388 3,047,368
Accrued expenses 1,576,801 1,589,851
Total current liabilities 12,833,544 13,328,465
Long-term debt, net of current portion 67,996 142,836
----------------- -----------------
Total liabilities 12,901,540 13,471,301
----------------- -----------------
Commitments and contingencies
Shareholders' equity:
Series A convertible preferred
shares, no par value; 10,000,000
shares authorized; 78,129 shares
issued and outstanding 282,990 282,990
Common shares, no par value;
50,000,000 shares authorized;
8,787,300 shares issued and
outstanding 14,837,694 14,837,694
Accumulated deficit (10,603,602) (10,743,543)
----------------- -----------------
4,517,082 4,377,141
Receivable for stock purchase (144,351) (150,600)
Total shareholders' equity 4,372,731 4,226,541
----------------- -----------------
Total liabilities and
shareholders' equity $ 17,274,271 $ 17,697,842
================= =================
See "Notes to Consolidated Financial Statements."
F-2
PRO-DEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Quarter Ended September 30,
1999 1998
----------------- -----------------
(unaudited) (unaudited)
Net sales $ 5,126,163 $ 4,570,770
Cost of sales (Includes rent paid to a
director of $87,000 and $85,000 for
1999 and 1998.) 2,397,149 2,072,511
----------------- -----------------
Gross profits 2,729,014 2,498,259
----------------- -----------------
Operating expenses:
Selling 764,452 1,101,285
General and administrative 969,074 1,016,099
Research and development 434,970 343,366
Amortization 122,195 195,837
Unusual charges 0 838,833
----------------- -----------------
Total operating expenses 2,290,691 3,495,420
----------------- -----------------
Income (loss) from operations 438,323 (997,161)
----------------- -----------------
Other income (expense):
Interest (expense) (201,282) (211,674)
Other income (expense), net (9,124) 13,757
----------------- -----------------
Total (210,406) (197,917)
Income (loss) before income taxes (credits) 227,917 (1,195,078)
Income taxes (credits) 87,976 (477,647)
----------------- -----------------
Net income (loss) $ 139,941 $ (717,431)
================= =================
Basic and diluted earnings (loss) per
common and common equivalent share $ 0.02 $ (0.08)
================= =================
Basic weighted average number of common
and common equivalent shares
outstanding 8,787,300 8,787,300
Diluted weighted average number of
common and common equivalent shares
outstanding 8,796,716 --
See "Notes to Consolidated Financial Statements."
F-3
PRO-DEX, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Quarter Ended September 30,
1999 1998
----------------- -----------------
(unaudited) (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 139,941 $ (717,431)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 283,042 347,784
Provision for doubtful accounts 31,308 (13,751)
Deferred Taxes 87,976 0
Change in working capital components
net of effects from purchases and
divestitures:
Decrease in accounts receivable 273,258 580,244
(Increase) in inventories (189,566) (186,177)
(Increase) in prepaid expenses (136,385) (444,989)
Decrease in other assets 9,229 2,619
Increase (decrease) in accounts
payable and accrued expense (313,030) 619,692
Decrease in income taxes payable 0 (478,031)
----------------- -----------------
Net cash provided by (used in)
operating activities 185,773 (290,040)
----------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (36,080) (274,010)
----------------- -----------------
Net cash flows (used in) investing
activities (36,080) (274,010)
----------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term borrowing 0 1,375,000
Principal payments on long-term
borrowing (256,731) (810,950)
----------------- -----------------
Net cash flows provided by (used in)
financing activities (256,731) 564,050
----------------- -----------------
(DECREASE) IN CASH AND CASH EQUIVALENTS (107,038) 0
Cash and cash equivalents, beginning of
period 107,038 0
----------------- -----------------
Cash and cash equivalents, end of period $ 0 $ 0
================= =================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash payments for interest $ 201,282 $ 211,674
Cash payments for income taxes $ 0 $ 3,600
See "Notes to Consolidated Financial Statements."
F-4
PRO-DEX, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For Quarter Ended September 30, 1999
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instruction to Form 10-Q and
Article 10 of regulation S-X. 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 quarter
ended September 30, 1999, are not necessarily indicative of the results that
may be expected for the year ended June 30, 2000. For further information,
refer to the consolidated financial statements and footnotes thereto included
in the Company's annual report on Form 10-K for the year ended June 30, 1999.
NOTE 2 - EARNINGS PER SHARE
Basic earnings per common share data has been computed on the basis of
the weighted-average number of common shares outstanding during each period
presented. Diluted per share amounts assume the conversion, exercise or
issuance of all potential common stock instruments unless the effect is to
reduce a loss or increase the income per common share from continuing
operations.
NOTE 3 - LONG TERM DEBT
The Company has a $10,000,000 credit facility from Harris Trust and
Savings Bank (the "Bank") secured by all assets of the Company and guaranteed
by each of the Company's subsidiaries. On July 24, 1999 the Bank provided the
Company an amendment to the credit agreement waiving violations of certain
covenants in the credit facility as of June 30,1999, and amending the
covenants going forward. The amendment also requires the payments of fees of
up to $420,000 in the event the Company defaults on conditions contained in
the amendment. The facility now consists of a $6,000,000 term loan with a
five-year amortization period, and a $4,000,000 revolving line of credit with
a termination date of December 31, 1999. The revolving line of credit is
subject to a borrowing base limit equal to the sum of 80% of eligible accounts
receivable, 50% of eligible inventories, 60% of eligible fixed assets and an
intangible asset advance amount of $1,400,000. The term loan portion is
payable in equal quarterly installments of $200,000 through December 31, 1999,
when the full amount of the then unpaid balance of the note will be due. In
addition, all proceeds from any sale of long-term assets in excess of $50,000
and all proceeds from any issuance of equity securities would be applied to
reduce the term loan. The term loan had an outstanding balance at September
30, 1999 of $3,600,000. The revolver portion of the facility had an
outstanding balance at September 30, 1999 of $4,000,000. At September 30,
1999, no amounts were available under the revolver/term loan. At September
30, 1999 the Company did not meet certain of the covenants in the amendment.
Certain of those amended covenants were negotiated prior to the completion of
the Company's annual audit at June 30, 1999. Adjustments made during the
year-end audit prevented the Company from meeting certain of those amended
covenants at September 30, 1999. Management believes that the Company will be
in compliance with all but one of the covenants during the second quarter of
the current fiscal year. The Company is presently working with the Bank to
adjust the amended covenants to reflect the adjustments made to year end and
has requested the Bank waive imposition of additional fees.
Item 2. Management's Discussion and Analysis
Results of Operations
Forward-Looking Statements. When used in this Report on Form 10-QSB, the
words "expects, "anticipates", "estimates", "believes", "hopes", "intends",
"forecasts" and similar expressions are intended to identify forward-looking
statements. These statements which are not historical or current facts are
made pursuant to the safe harbor provisions of Section 27A of the Securities
Act and Section 21E of the 1934 Act and the Company intends that such
forward-looking statements be subject to those safe harbor provisions for such
statements. The Company wishes to caution readers not to place undue reliance
on any such forward-looking statements, which speak only as of the date of
this report. While forward-looking statements represent management's best
judgment as to what may occur in the future, they are subject to risks,
uncertainties and important factors beyond the control of the Company that
could cause actual results and events to differ materially from historical
results of operations and events as well as those presently anticipated or
projected. These factors include adverse economic conditions, entry of new
and stronger competitors, capital availability, unexpected costs and failure
to capitalize upon access to new clientele. Other risks and uncertainties
which may affect forward-looking statements about the Company's business and
prospects include, but are not limited to, the ramifications of the continued
industry consolidation of dental dealers and distributors, managed health
care, increasingly limited acquisition opportunities, the Company's ability to
effectively integrate operations of acquired companies, dealer acceptance and
support of new products, maintaining favorable supplier relationships, Y2K
issues of various customers and vendors, the inability to engage qualified
human resources as needed, and general economic conditions. The Company
disclaims any obligations subsequently to revise any forward-looking
statements to reflect events or circumstances after the date of such statement
or to reflect the occurrence of anticipated or unanticipated events.
Results of Operations for the Quarter Ended September 30, 1999 Compared to
Quarter Ended September 30, 1998.
Net sales by subsidiary follows:
Increase/
1999 1998 (Decrease)
------------ ------------ ------------
Biotrol $ 1,930,933 $ 2,126,880 $ (195,947)
Challenge 431,510 633,911 (202,401)
Micro Motors 1,536,776 1,491,286 45,490
Oregon Micro Systems 1,529,346 851,804 677,542
(Inter-company sales) (302,402) (533,111) 230,709
------------ ------------ ------------
$ 5,126,163 $ 4,570,770 $ 555,393
============ ============ ============
Consolidated sales increased 12.2% for the quarter ended September 30,
1999, over the quarter ended September 30, 1998. At Biotrol, sales for the
quarter ended September 30, 1999 decreased 9.2%, compared to the same quarter
in the previous year. Sales in the quarter ended September 30, 1998 were
higher due to aggressive sales promotions offered to customers to stimulate
revenue. Management at Biotrol did not employ a similar strategy in the
current quarter to avoid a potential negative impact on future revenue. Sales
for the quarter at Challenge decreased 31.9% for the quarter ended September
30, 1999 compared to the same quarter in the previous year. In an effort to
control inventory levels at Biotrol inter-company sales of its preventive
dental products to Biotrol decreased 32.2% for the quarter ended September 30,
1999 compared to the quarter ended September 30, 1998. Private label and OEM
sales at Challenge decreased 31.6% to $206,315 for quarter ended September 30,
1999 compared to $301,696 for quarter ended September 30, 1998. A large
private label customer delayed orders into future quarters pending approval of
a label change for its products. At Micro Motors sales increased 3.1% for the
quarter ended September 30, 1999 compared to the quarter ended September 30,
1998. Sales to private label and OEM customers increased 13.1% for the
quarter ended September 30, 1999 compared to the same quarter in the previous
year. The increase is attributable to sales of the new electric controller
developed in the previous year from a substantial R & D effort. Future
orders received in the current quarter for the new controllers for delivery
in the current fiscal year were approximately $1.4 million. Revenue at Oregon
Micro Systems increased 79.5% for the quarter ended September 30, 1999
compared to the previous year's same quarter. Revenue at OMS continues to be
heavily dependent on the semiconductor industry, but the development of new
products and technology has enabled OMS to broaden its revenue base. The new
products have increased the range of applications, and broadened the
available markets for OMS' motion controllers.
Gross profits by subsidiary follows:
Increase/
1999 1998 (Decrease)
------------ ------------ ------------
Biotrol $ 1,001,440 $ 1,069,407 $ (67,967)
Challenge 102,406 264,353 (161,947)
Micro Motors 480,014 559,828 (79,814)
Oregon Micro Systems 1,145,154 604,671 540,483
------------ ------------ ------------
$ 2,729,014 $ 2,498,259 $ 230,755
============ ============ ============
The Company's consolidated gross profit for the quarter ended September
30, 1999 increased 9.2% over the same quarter in the previous year. Gross
profit as a percentage of sales decreased to 53.2% for the quarter ended
September 30, 1999 compared to 54.7% for the quarter ended September 30, 1998.
The decline is attributed to a change in the sales mix to lower margin
products at Micro Motors, and a decline in volume at Challenge Products
without a corresponding decline in fixed manufacturing overhead. Gross profit
at Biotrol increased to 51.9% for the quarter ended September 30, 1999
compared to 50.3% for the same quarter in the previous year, due to an
increase in sales of higher margin products. Consolidated gross profit
dollars increased $230,755 primarily due to the increase in sales and gross
profits at OMS.
Operating expenses decreased to $2,290,691 for the quarter ended
September 30, 1999, from $2,658,052 without unusual charges for the quarter
ended September 30, 1998, a decline of 13.8%. The decrease in operating
expenses is mainly attributed to a restructuring of the sales and marketing
function at the Company's Biotrol subsidiary causing a reduction in headcount
and related selling expenses. Operating expenses with unusual charges
included decreased by 34.5% for the quarter ended September 30, 1998. The
Company took an unusual charge in the quarter ended September 30, 1998 of
$838,833. Effective July 1, 1998, management determined that payments made
for consulting services and a non-compete arrangement to an individual related
to a prior acquisition by the Company had no future value, and took a charge
to earnings in the amount of $313,496. In addition, the Company amended the
duties of an executive under an existing employment agreement. Management
determined that the value of the new position is less than the previous
position, but has continued to honor its obligation under the contract. The
Company took a charge for the excess of $525,337.
Income from operations for the quarter ended September 30, 1999 was
$438,323 compared to a (loss) from operations of ($997,161) which included
unusual charges of $838,833 for the quarter ended September 30, 1998. The
increase in sales and gross profit dollars combined with a decrease in
operating expenses is the main reason for the increase in operating income.
Management also believes that the completion of the consolidation of three of
the Company's largest dental customers in fiscal year ended June 30, 1999 has
had a favorable effect on operations. Revenues from the combined customer
have returned to pre-consolidation levels.
Net interest expense decreased $8,927 in the first quarter of fiscal 2000
due to a decline in the debt owed compared to the same quarter in the previous
fiscal year.
Income before income taxes increased $1,422,995 including unusual charges
of $838,833 in the first quarter of the previous year. Without these charges,
income before taxes increased $584,162. The effective tax rate for operations
was 39% for the current fiscal quarter compared to 40% for the previous year's
quarter. Net income increased to $139,941 compared to a net loss of
($717,431), including unusual charges. Without unusual charges net income
increased $354,072 for the quarter ended September 30, 1999 compared to the
quarter ended September 30, 1998. Basic and diluted earnings per share for
the quarter ended September 30, 1999 were $.02 compared to a loss per share
of ($.08) including unusual charges, and ($.02) without unusual charges for
same quarter in the previous year.
Liquidity and Capital Resources
The operations of the Company are conducted primarily through its four
wholly owned subsidiaries. The Company's financial position at September 30,
1999 is weak, with working capital on that date of approximately negative
$3,700,000. The Company currently maintains a $10,000,000 credit facility with
Harris Trust and Savings. The agreement was amended on July 24, 1999, and a
new termination date for the credit facility was set at December 31, 1999.
The facility consists of a $6,000,000 term loan, and a $4,000,000 revolving
line of credit. Both facilities require monthly interest payments at the
prime rate plus one-half percent. The term loan had an outstanding balance on
September 30, 1999 of $3,600,000. The revolver portion of the facility had an
outstanding balance on September 30, 1999 of $4,000,000. At September 30,
1999 there was no availability under the revolver. Under the amended waiver
agreement the Company is required to meet certain financial covenants,
including minimum tangible net worth, debt to total capitalization, and
interest coverage ratio. At September 30, 1999, the Company did not meet
certain of the financial covenants of the credit facilities. The amended
covenants were determined prior to the closing of the Company's annual audit
at June 30, 1999. Certain year-end adjustments precluded the Company from
meeting certain of the covenants. There are fees required by the bank in the
event the Company is in default. The Bank has reserved its right to terminate
the loan and charge the fees contained in the amended waiver agreement.
Management is cooperating with the Bank in an effort to satisfy the bank's
requirements without imposition of additional fees.
Management has engaged an outside investment banker to assist them in
locating alternative sources of working capital for the Company. In addition,
the Company's operating performance has improved over the previous year, and
is generating positive working capital. At the present time, management is
confident that it will obtain the necessary working capital to fund
operations, and satisfy the requirements of its current lender.
During the quarter the Company has been unable to make timely payments to
some of its creditors. Management has maintained communication with these
vendors and due, in part, to the mostly excellent relationships with the same,
deferred payment terms have been negotiated with most vendors. To date, no
vendors have suspended parts deliveries or services needed by the Company.
Accounting Changes
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information". SFAS No. 130 requires that an enterprise report, by
major components and as a single total, the change in its net assets during
the period from non-owner sources; and SFAS No. 131 establishes annual and
interim reporting standards for an enterprise's operating segments and related
disclosures about its products, services, geographic areas and major
customers. Adoption of these Statements did not impact the Company's
financial position, results of operations or cash flow. Both Statements were
adopted for fiscal year 1999, with earlier application permitted.
Impact of Inflation and Changing Prices
The industries in which the Company competes are labor intensive, often
involving personnel with high level technical or sales skills. Wages and
other expenses increase during periods of inflation and when shortages in the
marketplace occur. The Company expects its subsidiaries to face somewhat
higher labor costs, as the market for personnel with the skills sought by the
Company becomes tighter in a period of full employment. In addition,
suppliers pass along rising costs to the Company's subsidiaries in the form of
higher prices. Further, the Company's credit facility with Harris Bank
involves increased costs if domestic interest rates rise or there are other
adverse changes in the international interest rates, exchange rates, and/or
Eurocredit availability. To some extent, the Company's subsidiaries have
been able to offset increases in operating costs by increasing charges,
expanding services and implementing cost control measures. Nevertheless,
each of the Company's subsidiaries' ability to increase prices is limited by
market conditions, including international competition in many of the
Company's markets.
Year 2000 Systems Assessments and Preparedness
The Year 2000 problem arises because many information systems and devices
containing embedded technology use two digits rather than four digits to
identify a year. Calculations in date-sensitive systems using two digits
could result in system failures and errors that disrupt normal business
operations as the Year 2000 approaches.
Early in 1998, Pro-Dex conducted an assessment of Year 2000 compliance of
all of its major information technology systems, non-information technology
systems with date-sensitive software and embedded microprocessors and products
the Company manufactures or sells to customers. Pro-Dex developed detailed
plans to resolve all major issues by the end of Fiscal 1998. As of September
30, 1999, the Company estimates that it is over 98% complete with its efforts
to remediate current systems or implement new systems that are Year 2000
compliant. Pro-Dex has substantially completed its effort to assess
non-compliant embedded technology including its assessment of the products it
has delivered to customers.
Pro-Dex expects that only one of its four company units will be involved
in any significant compliance efforts in 1999. Continuing projects include
the completion of lower priority information technology systems. Efforts in
fiscal year 2000 will shift from systems projects to identifying areas of
other business risk and developing contingency plans where appropriate.
The Company and its subsidiaries initiated formal communications with key
suppliers and service providers to determine the potential risk to its
operations in the event these third parties fail to resolve Year 2000 issues.
Pro-Dex and each division have substantially completed assessment of suppliers
and service providers. If Pro-Dex determines that there is a risk to its
operations due to a third party Year 2000 compliance failure, appropriate
contingency plans will be implemented to address such risk. The extent of
this risk, however, cannot be determined with any degree of certainty due to
the number of small suppliers and service providers used by the Company and
its subsidiaries, and the reliance of all operations on basic utility service
providers.
The Company estimates that total capital expenditures related to the
implementation of its Enterprise Resource Planning ("ERP") system will be
approximately $1.7 million over 3 - 5 years. Pro-Dex has incurred
approximately 95% of the capital expenditures as of September 30, 1999. The
majority of these expenditures relate to new systems installations. Although
the timing of new systems installations was influenced by the Year 2000
problem, the Company would have installed these systems in any event.
While it is possible that the Company will not complete the systems
projects scheduled in 1999 due to a variety of factors, including but not
limited to the significant shortage of qualified information systems
personnel, the Company is taking actions it believes necessary for the timely
completion of those projects. Management believes that it is unlikely that
such projects will be delayed to the extent that the Company suffers any
material adverse effects due to noncompliance. In the unlikely event,
however, that the remaining systems projects are not completed prior to
experiencing significant noncompliance ramifications, results of operations
could be adversely affected.
In addition to the Company's internal risks and of those posed by third
parties with whom the Company deals with directly, there remain additional
Year 2000 risks and uncertainties that could affect Pro-Dex. These risks
include utility and communication failures and governmental, economic and
market responses to the Year 2000 issue. While Pro-Dex continues to believe
that these Year 2000 matters will not have a material adverse impact on its
results of operations, liquidity or financial condition, the ultimate impact
on Pro-Dex of the Year 2000 problem remains uncertain.
The foregoing statements regarding both our internal and external Year
2000 goals are forward looking statements. Pro-Dex's Year 2000 project
capital expenditures, estimated percentage of completion and estimated
completion dates are based on management's best estimates, which were derived
utilizing numerous assumptions of future events, including the availability of
certain resources, third-party modification plans and other factors. There
can be no guarantee that these estimates will be achieved and actual results
could differ materially from those anticipated.
Date: September 30, 1999 /s/ Kent E. Searl
_______________________________
Kent E. Searl, Chairman
Date: September 30, 1999 /s/ George J. Isaac
_______________________________
George J. Isaac, Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 2,931,132
<ALLOWANCES> 70,830
<INVENTORY> 4,889,033
<CURRENT-ASSETS> 9,145,357
<PP&E> 6,088,855
<DEPRECIATION> 3,102,904
<TOTAL-ASSETS> 17,274,271
<CURRENT-LIABILITIES> 12,833,544
<BONDS> 0
0
282,990
<COMMON> 14,782,694
<OTHER-SE> (89,351)
<TOTAL-LIABILITY-AND-EQUITY> 17,274,271
<SALES> 5,126,163
<TOTAL-REVENUES> 5,126,163
<CGS> 2,397,149
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,290,691
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 201,282
<INCOME-PRETAX> 227,917
<INCOME-TAX> 87,976
<INCOME-CONTINUING> 139,941
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 139,941
<EPS-BASIC> 0.02
<EPS-DILUTED> 0.02
</TABLE>
