<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number: 0-16310
AMERICAN EDUCATIONAL PRODUCTS, INC.
----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Colorado 84-1012129
--------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification number)
6550 Gunpark Drive, Suite 200, Boulder, Colorado 80301
- ------------------------------------------------ ------
(Address of principal executive offices) (Zip Code)
(303) 527-3230
-----------------------
(Issuer's telephone number)
N/A
---------------------------------------------------
Former name, former address, and former fiscal year,
if changed since last report
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 Issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [ X ] No [
]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the Registrant has filed all documents and reports required to
be filed by Sections 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No
[ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
As of May 8, 1998, the Company had 986,423 shares of its $.05 par value
common stock outstanding. Transitional Small Business Disclosure Format
(Check one): Yes [ ] No [ X ]
<PAGE>
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1998 and December 31,
1997
Consolidated Statements of Operations for the three months ended
March 31, 1998 and March 31, 1997
Consolidated Statements of Cash Flows for the three months ended
March 31, 1998 and March 31, 1997
Consolidated Statement of Stockholders' Equity from January 1, 1998
through March 31, 1998
Notes to Consolidated Financial Statements
Item 2. Management's discussion and analysis of financial condition and
results of operations
Liquidity and Capital Resources
Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5 Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
As of March 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
(Unaudited)
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 101,000 $ 183,000
Trade receivables, net of allowance
of $56,000 and $52,000 1,333,000 1,220,000
Royalty receivable 122,000 119,000
Inventories 2,840,000 2,540,000
Prepaid advertising costs 169,000 38,000
Other 110,000 139,000
------------ ------------
TOTAL CURRENT ASSETS 4,675,000 4,239,000
PROPERTY AND EQUIPMENT, net of accumu-
lated depreciation of $4,135,000 and
$3,985,000, respectively 2,295,000 2,247,000
VIDEO LIBRARY, net of accumulated amor-
tization of $611,000 and $581,000,
respectively 328,000 359,000
INTANGIBLE ASSETS, net 154,000 169,000
OTHER ASSETS 213,000 237,000
------------- -------------
TOTAL ASSETS $ 7,665,000 $ 7,251,000
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable $ 1,960,000 $ 1,855,000
Leases payable, current portion 44,000 -
Accounts payable 528,000 533,000
Accrued expenses 176,000 145,000
------------- -------------
TOTAL CURRENT LIABILITIES 2,708,000 2,533,000
LEASES PAYABLE, long-term portion 91,000 -
COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value;
50,000,000 shares authorized;
none issued or outstanding. - -
Common stock; $0.05 par value;
100,000,000 shares authorized;
960,323 and 922,872 shares issued
and outstanding. 48,000 46,000
Additional paid in capital 6,671,000 6,504,000
Accumulated deficit (1,853,000) (1,832,000)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,866,000 4,718,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 7,665,000 $ 7,251,000
============ ============
/TABLE
<PAGE>
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the Three Months ended March 31, 1998 and March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1998 1997
------------- -------------
<S> <C> <C>
INCOME:
Net sales $ 1,847,000 $ 1,621,000
Cost of goods sold 1,193,000 1,110,000
------------ ------------
Gross profit 654,000 511,000
OPERATING EXPENSES:
Advertising and catalog costs 34,000 10,000
Other marketing 211,000 185,000
------------ ------------
Total marketing 245,000 195,000
General and administrative 363,000 308,000
------------ ------------
Total operating expenses 608,000 503,000
------------ ------------
OPERATING INCOME 46,000 8,000
Interest expense (67,000) (63,000)
------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES (21,000) (55,000)
Income tax benefit (expense) - -
NET (LOSS) $ (21,000) $ (55,000)
============ ============
Basic (Loss) per share ($0.02) ($0.06)
======= =======
Diluted (Loss) per share ($0.02) ($0.06)
======= =======
Weighted average number of common
shares outstanding 935,000 915,000
Effect of dilutive securities - -
Weighted average number of common
shares outstanding plus dilutive
securities 935,000 915,000
============ ============
/TABLE
<PAGE>
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the Three Months ended March 31, 1998 and March 31, 1997
(Unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $ (21,000) $ (55,000)
Adjustments to reconcile net (loss)
to cash provided by operating
activities:
Depreciation 149,000 178,000
Amortization 49,000 78,000
Bad debt expense 4,000 2,000
Changes in operating assets and
liabilities:
Decrease (increase) in operating
assets:
Accounts receivable (120,000) (351,000)
Inventories (300,000) 154,000
Prepaid advertising costs (131,000) (59,000)
Other 50,000 (3,000)
Increase (decrease) in operating
liabilities:
Accounts payable (5,000) 115,000
Accrued expenses 31,000 (48,000)
----------- -----------
Net cash provided (used) by operating
activities (294,000) 11,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (62,000) (66,000)
----------- -----------
Net cash provided (used) by investing
activities (62,000) (66,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable and long
term debt 189,000 170,000
Payments on notes payable and long
term debt (84,000) (151,000)
Net proceeds from the sale of stock 169,000 4,000
---------- -----------
Net cash provided (used) by financing --
activities 274,000 23,000
----------- -----------
NET INCREASE (DECREASE) IN CASH (82,000) (32,000)
Cash, at beginning of period 183,000 107,000
----------- -----------
Cash, at end of period $ 101,000 $ 75,000
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash payments for:
Interest $ 59,000 $ 61,000
=========== ===========
Income taxes $ - $ -
=========== ===========
Non-cash investing and financing
activities:
Acquisition of equipment for debt $ 135,000 $ -
=========== ===========
/TABLE
<PAGE>
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
January 1, 1998 through March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
COMMON STOCK
------------ Additional
Number Paid
of Common in (Accumulated
Shares Stock Capital Deficit) Total
---------- ---------- ----------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Balance as of Jan 1, 1998 922,872 $ 46,000 $6,504,000 $(1,832,000) $4,718,000
Sale of common stock under
the employee stock pur-
chase plan 517 - 3,000 - 3,000
---------- ---------- ----------- ------------ -----------
Exercise of warrants 36,934 2,000 164,000 - 166,000
Net loss - - - (21,000) (21,000)
---------- ---------- ------------ ------------ -----------
Balance as of Mar 31, 1998 960,323 $ 48,000 $6,671,000 $(1,853,000) $4,866,000
========== ========== ============ ============ ===========
</TABLE>
<PAGE>
<PAGE>
AMERICAN EDUCATIONAL PRODUCTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1 -- Presentation
- ----------------------
In the opinion of the Company, these unaudited consolidated financial
statements contain all adjustments (consisting of normal accruals) necessary
to present fairly the financial position as of March 31, 1998, and the results
of operations for the three months ended March 31, 1998, and 1997. These
statements should be read in conjunction with the audited financial statements
and notes thereto included in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1997.
Forward-Looking Statements
- --------------------------
In addition to historical information, this Quarterly Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and are thus prospective. The forward-looking
statements contained herein are subject to certain risks and uncertainties
that could cause actual results to differ materially from those reflected in
the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, competitive pressures, changing economic
conditions, those discussed in the Section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and other
factors, some of which will be outside the control of the Company. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which reflect management's analysis only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements
to reflect events or circumstances that arise after the date hereof. Readers
should refer to and carefully review the information in future documents the
Company files with the Securities and Exchange Commission.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion addresses the financial condition and results of
operation for American Educational Products, Inc. and Subsidiaries ("AMEP" or
the "Company"). AMEP currently has two operating subsidiaries: Hubbard
Scientific, Inc. ("Hubbard") and Scott Resources, Inc. ("Scott").
Subsequent to March 31, 1998, AMEP acquired all of the outstanding stock
of Learning and Leisure, Inc., a New York corporation ("L & L"). L & L owns
100% of National Teaching Aids, Inc., a developer and manufacturer of science
products for the K-12 market. The business combination will be recorded as a
purchase and will be reflected in the financial statements commencing in the
second quarter of 1998.
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto included in this quarterly
report.
Liquidity and Capital Resources -- March 31, 1998, Compared to December 31,
1997
- ---------------------------------------------------------------------------
The Company continued to improve its liquidity and capital resources
during the first quarter of 1998. Earnings before interest, taxes,
depreciation and amortization were $244,000.
The Company's asset based financing arrangement with Republic Acceptance
Corporation expires on April 30, 2000, and provides for borrowings up to
$2,800,000. Certain amounts available to be borrowed under the agreement are
derived from a borrowing base as defined in the agreement relating to
allowable inventory and accounts receivable. As of March 31, 1998, the
borrowing base formula limited total borrowings to $2,560,000. Borrowings are
collateralized by substantially all the Company's assets. Interest, computed
at a floating rate plus 3%, is payable monthly. In addition, the Company is
required to make minimum monthly principal payments of $20,000.
The borrowing arrangement contains a demand provision such that the
lender can demand repayment at any time. Accordingly, the entire balance of
outstanding borrowings is reflected as a current liability. The lender has
not indicated that it will demand payment during 1998 and management does not
expect to receive such a demand. Should such a demand be made, the Company
would not have the funds available. However, the Company's improved financial
condition should allow it to obtain the necessary funds via either an equity
placement or alternate borrowing arrangements.
The Company believes that the funds available to it in 1998 will be
adequate to meet its operating requirements. The source of those funds will
be cash flow from operations and additional borrowings available under the
arrangement with its lender. The Company intends to install new computer
software and hardware during 1998. Substantially all of the arrangements
required to finance that installation were completed during 1997. Any
acquisition activity undertaken by the Company during 1998 would be contingent
upon obtaining the necessary financing.
As mentioned previously, the Company purchased L & L subsequent to March
31, 1998. The purchase price of approximately $2,000,000 consists of a
$250,000 cash down payment and long-term financing provided by the seller.
The Company experienced a 15% working capital increase during the first
quarter of 1998. Current assets of $4,675,000 increased $436,000 from
December 31, 1997, and current liabilities increased $175,000 from $2,533,000
to $2,708,000. As a result, working capital increased from $1,706,000 to
$1,967,000 and the current ratio increased from 1.67 to 1.73. Working capital
improved because of funds generated by operations and from the exercise of
common stock warrants.
Total assets increased 6% from $7,251,000 at December 31, 1997, to
$7,665,000 at March 31, 1998. During the same period, total liabilities
increased 11% from $2,533,000 to $2,799,000. Stockholders equity increased
from $4,718,000 at December 31, 1997, to $4,866,000 at March 31, 1998, an
increase of $148,000 or 3%. The increase in stockholders' equity was
primarily the result of warrantholders exercising their rights to purchase
shares under the terms of the 1996 private placement.
Accounts receivable increased from $1,220,000 at December 31, 1997, to
$1,333,000 at March 31, 1998, an increase of $113,000 or 9%. This increase is
consistent with seasonal sales patterns.
The royalty receivable of $122,000 as of March 31, 1998 results from the
sale of Churchill and represents royalties expected to be received during the
next twelve months.
Inventories increased from $2,540,000 at the end of 1997 to $2,840,000 at
March 31, 1998, an increase of $300,000 or 12%. The Company increased its
inventories in anticipation of additional sales to international dealers.
Prepaid advertising costs increased from $38,000 at December 31, 1997, to
$169,000 at March 31, 1998. This increase is due to investment in the spring
1998 catalog program offset by partial amortization of this program.
Net property and equipment increased from $2,247,000 at December 31,
1997, to $2,295,000 at March 31, 1998, an increase of $48,000 or 2%. The
increase represents asset purchases (primarily new computer hardware and
software) offset by depreciation of $149,000.
Video and film library costs decreased from $359,000 at December 31,
1997, to $328,000 at March 31, 1998, a decrease of $31,000 or 9%. The
decrease consists entirely of regular monthly amortization.
Intangible assets decreased from $169,000 at December 31, 1997, to
$154,000 at March 31, 1998, a decrease of $15,000 or 9%. The decrease results
from regular monthly amortization of the assets.
Accounts payable and accrued expenses increased by $26,000 from $678,000
at December 31, 1997, to $704,000 at March 31, 1998. The increase is
consistent with increased inventories and purchasing activity as the Company
enters the second quarter.
At March 31, 1998, the Company had increased its borrowings under its
credit facility by $105,000 to reflect the increased needs and borrowing
capacity generated by first quarter sales. Both the current and long-term
portion of leases payable reflect financing of the new computer system.
Other than the foregoing, management knows of no trends, demands, or
uncertainties that are reasonably likely to have a material impact on the
Company's short-term liquidity or capital resources.
Year 2000 Issue
- ---------------
The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of the
Company's computer programs that have date sensitive software may recognize a
date using "'00" as the year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices or engage in similar normal business activities.
Based upon a recent assessment, the Company has made a preliminary
determination that it may be required to upgrade or replace certain portions
of its software so that its computer systems will properly utilize dates
beyond December 31, 1999.
During the first quarter of 1998, the Company continued its
implementation of computer hardware and software that is Year 2000 compliant.
Resources were devoted to the installation of computer systems and training
related to the new system. It is expected that the new system will be fully
installed and operational during 1998.
The Company presently believes that with upgrades of existing software
and conversions to new software, the year 2000 Issue can be mitigated.
However, if such upgrades and conversions are not made, or are not completed
or available timely, the Year 2000 Issue could have a material impact on the
operations of the Company. However, the Company has initiated formal
communications with its significant suppliers and large customers to determine
the extent to which the Company is vulnerable to those third parties' failure
to remediate their own Year 2000 Issue.
Total estimated costs for hardware and software have been increased by
$25,000 to reflect additional costs of the data communications equipment
necessary to transmit information between the Company's various locations.
Financing for the increased costs is available under the Company's equipment
leasing arrangements.
In view of the foregoing, there is reasonable assurance that the Year
2000 issue will not have a material adverse effect upon the Company. However,
there can be no guarantee that the systems of other companies on which the
Company's business relies will be timely converted, or that failure to convert
by another company, or a conversion that is incompatible with the Company's
systems, would not have a material adverse effect on the Company.
Impact of Recently Issued Accounting Standards
- ----------------------------------------------
Statement of Financial Accounting Standards 130, "Reporting Comprehensive
Income" and Statement of Financial Accounting Standards 131, "Disclosures
About Segments of an Enterprise and Related Information" were recently issued.
Statement 130 establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is
defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures,
Statement 130 requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be reported
in a financial statement that displays with the same prominence as other
financial statements. Statement 131 supersedes Statement of Financial
Accounting Standards 14, "Financial Reporting for Segments of a Business
Enterprise". Statement 131 establishes standards on the way that public
companies report financial information about operating segments in annual
financial statements and requires reporting of selected information about
operating segments in interim financial statements issued to the public. It
also establishes standards for disclosures regarding products and services,
geographic areas and major customers. Statement 131 defines operating
segments as components of a company about which separate financial information
is available that is evaluated regularly by the chief operating decision maker
in deciding how to allocate resources and in assessing performance.
Statements 130 and 131 are effective for financial statements for fiscal
periods beginning after December 15, 1997, and require comparative information
for earlier years to be restated. The implementation of these new standards
has not had a material effect on the financial statements and is not expected
to have a material effect in future financial statements.
Results of Operations -- Three months ended March 31, 1998, Compared to the
Three months ended March 31, 1997
- ---------------------------------------------------------------------------
The Company's revenues were $1,847,000 in the first quarter of 1998, an
increase of $226,000 or 14% from the same period 1997 revenues of $1,621,000.
The sales increase occurred primarily because of increased activity with large
educational distributors, both domestic and international. In particular, the
Company shipped increased volumes of Fraction Bars, Simple Machines and
geologic specimen collections.
The cost of goods sold for the quarter ended March 31, 1998, was
$1,193,000, an increase of $83,000 or 8% from the same period 1997 amount of
$1,110,000.
Consolidated gross profits for the first quarter of 1998 were $654,000,
an increase of $143,000 or 28% from the same period 1997 gross profits of
$511,000. As a percentage of sales, the first quarter gross margin increased
from 32% in 1997 to 35% in 1998. The improvement was primarily the result of
increased manufacturing activity that increased cost absorption. The reader
is reminded that the actual gross margin percent is sensitive to actual
production levels and can vary significantly between periods.
The advertising component of marketing costs for the first quarter of
1998 was $34,000, an increase of $24,000 or 240% from the same period 1997
cost of $10,000. Advertising costs as a percent of sales were 2% in the
first quarter of 1998 and 1% in the first quarter of 1997. Hubbard and Scott
produce direct mail catalogs featuring their manufactured products. In 1998,
the Company chose to increase its catalog mailing program as one of its
marketing initiatives.
Other marketing costs for the first quarter of 1998 were $211,000, an
increase of $26,000 or 14% from the same period 1997 cost of $185,000. Other
marketing costs as a percent of sales were 11% in both periods. The cost
increase primarily reflects additional marketing efforts directed toward
international markets.
General and administrative expenses were $363,000, an increase of $55,000
or 18% from the first quarter 1997 G & A expense of $308,000. G & A costs as
a percent of sales were 20% in the first quarter of 1998 and 19% in the first
quarter of 1997. The cost increases are associated with increased investor
relations activities, costs associated with listing on the Pacific Exchange,
and adding an additional member to the Board of Directors.
Total operating costs increased 21% from $503,000 in the first quarter of
1997 to $608,000 in the first quarter of 1998. Operating costs as a
percentage of sales approximated 33% in the first quarter of 1998 and 31%
during the same period in 1997.
Interest expense increased from $63,000 in the first quarter of 1997 to
$67,000 in the first quarter of 1998, an increase of $4,000 or 6%. The
increase results from increased interest rates and lending fees.
The Company did not recognize any income tax benefit or expense for the
first quarter of 1998. During earlier quarters, all income tax liabilities
had been offset against operating losses. The Company has net operating loss
and contribution carryovers of approximately $3,700,000 available for income
tax purposes. Subject to certain restrictions imposed by the Internal Revenue
Code, the Company will be able to offset those carryforwards against future
taxable income, if any, and will be able to record a benefit from those
carryforwards when they appear to be realizable. For 1998, it appears that
the carryover will allow the Company to eliminate substantially all income tax
expense that might be incurred.
The net loss for the first quarter of 1998 was $21,000, compared with a
net loss of $55,000 in the same period of 1997. Both the basic and diluted
loss per share was $0.02 for the 1998 first quarter and $0.06 for the 1997
first quarter. No potential dilutive securities were included in the
calculation because of net losses for the periods.
Inflation has not had any material effect on the Company's operations
during 1998. The Company attempts to reduce the impact of cost increases
through design changes, improved factory efficiencies, and sales price
increases. There is no guarantee that it will continue to be successful in
these attempts.
The Company historically has experienced significant seasonality in its
sales primarily due to the purchasing cycle of educational institutions.
Typically, the first and fourth fiscal quarters each generate approximately
20% of annual sales, with the second and third fiscal quarters each generating
approximately 30% of annual sales. This distribution of sales is likely to
continue throughout 1998.
Other than the foregoing, management knows of no trends, demands, or
uncertainties that are reasonably likely to have a material impact on the
Company's results of operations.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
No legal proceedings have been filed on behalf of or against the Company
nor have any claims been made.
Item 2. Changes in Securities
None.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibits: None.
Reports on Form 8-K: None
<PAGE>
SIGNATURE
In accordance with the requirements of the Securities Exchange Act,
the registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AMERICAN EDUCATIONAL PRODUCTS, INC.
Dated: May 11, 1998 By: /s/ Clifford C. Thygesen
---------------- --------------------------------
Clifford C. Thygesen, President
Dated: May 11, 1998 By: /s/ Frank L. Jennings
---------------- --------------------------------
Frank L. Jennings, Chief Financial
Officer and Vice President of
Finance
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1998
<CASH> 101
<SECURITIES> 0
<RECEIVABLES> 1,389
<ALLOWANCES> (56)
<INVENTORY> 2,840
<CURRENT-ASSETS> 4,675
<PP&E> 6,430
<DEPRECIATION> 4,135
<TOTAL-ASSETS> 7,665
<CURRENT-LIABILITIES> 2,708
<BONDS> 0
0
0
<COMMON> 48
<OTHER-SE> 4,818
<TOTAL-LIABILITY-AND-EQUITY> 7,665
<SALES> 1,847
<TOTAL-REVENUES> 1,847
<CGS> 1,193
<TOTAL-COSTS> 608
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67
<INCOME-PRETAX> (21)
<INCOME-TAX> 0
<INCOME-CONTINUING> (21)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (21)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
