UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
/ x / Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended October 31, 1996, 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 No. 0-16115
AIRSENSORS, INC.
----------------
(Exact name of registrant as specified in its charter)
Delaware 91-1039211
- ------------------------ --------------------
(State of Incorporation) IRS Employer I.D. No.
16804 Gridley Place, Cerritos, CA 90703
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 860-6666
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange 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
------ ------
Number of shares outstanding of each of the issuer's classes of common
stock, as of November 30, 1996:
5,691,014 shares of Common Stock, $.001 par value per share
<PAGE>1
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
AIRSENSORS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
October 31, 1996 and April 30, 1996
-----------
ASSETS
------
October 31, April 30,
1996 1996
----------- -----------
(unaudited)
Current assets:
Cash $ 2,381,066 $ 811,148
Accounts receivable 10,178,335 9,792,356
Less allowance for doubtful accounts 290,986 278,361
----------- -----------
Net accounts receivable 9,887,349 9,513,995
Inventories:
Raw materials and parts 6,491,875 6,096,292
Work-in-process 864,264 930,548
Finished goods 6,925,695 4,411,162
----------- -----------
Total inventories 14,281,834 11,438,002
Other current assets 2,112,795 2,815,181
----------- -----------
Total current assets 28,663,044 24,578,326
Equipment and leasehold improvements:
Dies, molds and patterns 3,760,821 3,297,764
Machinery and equipment 5,186,809 5,267,529
Office furnishings and equipment 3,938,705 2,895,187
Leasehold improvements 1,966,632 1,953,131
----------- -----------
14,852,967 13,413,611
Less accumulated depreciation and amortization 7,800,069 6,935,878
----------- -----------
Net equipment and leasehold improvements 7,052,898 6,477,733
Intangibles arising from acquisitions 11,491,000 7,915,314
Less accumulated amortization 2,819,020 2,689,397
----------- -----------
Net intangibles arising from acquisitions 8,671,980 5,225,917
Other assets 1,676,488 1,445,911
----------- -----------
$46,064,410 $37,727,887
=========== ===========
See accompanying notes.
<PAGE>2
AIRSENSORS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
October 31, 1996 and April 30, 1996
(Continued)
-----------
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
October 31, April 30,
1996 1996
----------- -----------
(unaudited)
Current liabilities:
Notes payable $ 106,185 $ 541,398
Accounts payable 3,299,660 3,532,070
Accrued payroll obligations 1,466,901 1,701,034
Accrued warranty obligations 320,207 469,639
Income taxes payable 1,171,575 706,057
Other accrued expenses 1,647,027 1,598,451
Current portion of long-term notes 1,539,660 716,932
----------- -----------
Total current liabilities 9,551,215 9,265,581
Line of credit 7,100,000 3,400,000
Term loans - Bank of America NT&SA 4,215,563 1,435,000
Term loan - DEPA Holding B.V. 2,639,175 2,820,640
Other long term liabilities 1,602,919 1,167,447
Minority Interest 517,828 383,197
Commitments and contingencies - -
Stockholders' equity:
1993 Series 1 Preferred Stock, $0.01 par value,
5,950 shares authorized, issued and
outstanding $5,950,000 liquidation value 5,650,000 5,650,000
Common stock, $.001 par value, authorized
25,000,000 shares; 5,686,848 issued and
outstanding at October 31, 1996
(5,654,568 at April 30, 1996) 5,687 5,655
Additional paid-in capital relating to
common stock 28,770,239 28,746,994
Shares held in trust (2,819) -
Accumulated deficit (14,049,352) (15,111,879)
Foreign currency translation adjustment 63,955 (34,748)
----------- -----------
Total stockholders' equity 20,437,710 19,256,022
----------- -----------
$46,064,410 $37,727,887
=========== ===========
See accompanying notes.
<PAGE>3
AIRSENSORS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three and six months ended October 31, 1996 and 1995
---------
Three Months Ended Six Months Ended
October 31, October 31,
----------------------- -----------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
Revenue:
Product sales $14,014,203 $10,401,789 $28,193,494 $22,197,914
Contract revenue 632,566 982,239 1,601,907 1,323,510
----------- ----------- ----------- -----------
Net revenue 14,646,769 11,384,028 29,795,401 23,521,424
Costs and expenses:
Cost of sales 8,635,561 7,105,114 17,744,681 14,716,289
Research and
development expense 2,086,686 2,015,903 4,370,441 3,795,680
Selling, general and
administrative expense 2,853,435 1,483,415 5,516,346 3,315,655
----------- ----------- ----------- -----------
Total costs and expenses 13,575,682 10,604,432 27,631,468 21,827,624
----------- ----------- ----------- -----------
Operating income 1,071,087 779,596 2,163,933 1,693,800
Financing charges 302,806 85,302 526,985 161,262
----------- ----------- ----------- -----------
Income before income taxes
and minority interest in
income of consolidated
subsidiaries 768,281 694,294 1,636,948 1,532,538
Provision for income taxes 63,167 29,000 181,000 128,000
Minority interest in income
of consolidated
subsidiaries 64,940 - 103,360 -
----------- ----------- ----------- -----------
Net income before dividends 640,174 665,294 1,352,588 1,404,538
Dividends on preferred stock 145,029 154,948 290,061 311,135
----------- ----------- ----------- -----------
Net income applicable
to common stock $ 495,145 $ 510,346 $ 1,062,527 $ 1,093,403
=========== =========== =========== ===========
Net income per share $0.09 $0.09 $0.19 $0.19
=========== =========== =========== ===========
Number of shares used in
per share calculation 6,754,392 6,637,629 6,755,780 6,639,966
=========== =========== =========== ===========
See accompanying notes.
<PAGE>4
AIRSENSORS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Six months ended October 31, 1996 and 1995
---------------
Six Months Ended
October 31,
------------ ------------
1996 1995
------------ ------------
Net cash provided by operating activities $ 501,152 $ 1,445,423
Cash flows from investing activities:
Payment for purchase of certain assets
acquired from Ateco (4,655,514) -
Investment in Media - (1,965,678)
Purchase of equipment and leasehold
improvements (609,201) (800,653)
Deferred software production costs - (338,088)
Other, net 100,026 (93,244)
------------ ------------
Net cash (used in) investing activities (5,164,689) (3,197,663)
Cash flows from financing activities:
Net borrowings on line of credit 3,700,000 500,000
Payments on notes payable (417,891) (357,170)
Proceeds from issuance of bank term loans 3,970,451 2,050,000
Proceeds from issuance of common stock 23,278 44,272
Payments on term loan (570,883) -
Payments of other long-term liabilities (181,439) (144,930)
Dividends paid on preferred stock (290,061) (311,135)
------------ ------------
Net cash provided by financing activities 6,233,455 1,781,037
------------ ------------
Net increase in cash 1,569,918 28,797
Cash beginning of year 811,148 65,489
------------ ------------
Cash, end of quarter $ 2,381,066 $ 94,286
============ ============
See accompanying notes.
<PAGE>5
AIRSENSORS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996 and 1995
--------------
(1) The accompanying condensed consolidated financial statements are
unaudited and reflect all adjustments (consisting only of normal recurring
adjustments) which are, in the opinion of management, necessary for the fair
presentation of the financial position and operating results for the interim
periods. The condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto,
together with management's discussion and analysis of financial condition and
the results of operations, contained in the Company's Annual Report on Form 10-
K for the fiscal year ended April 30, 1996 and in the Company's Form 10-Q for
the period ended July 31, 1996. The results of operations for the three
months and six months ended October 31, 1996 are not necessarily indicative of
the results that may be expected for the entire fiscal year ending April 30,
1997. Certain reclassifications have been made to the prior periods'
condensed consolidated financial statements to conform to the current interim
period presentation.
(2) Acquisition
Effective July 1, 1996, the registrant acquired certain assets of Ateco
Automotive Pty. Ltd. ("Ateco") for approximately $6,500,000. Ateco, an
Australian private company, has distributed IMPCO's gaseous fuel carburetion
systems and related devices for use with internal combustion engines since
1969 through its Gas Division near Melbourne, Australia. The acquisition of
Ateco has been accounted for under the purchase method of accounting and the
acquired operations have been included in the condensed consolidated financial
statements since the date of acquisition.
The following table presents the unaudited pro forma consolidated results
of operations as if the acquisition had occurred at the beginning of each
period (Dollars in thousands, except for net income per share):
Six Months Ended
October 31,
-----------------------
1996 1995
---------- ----------
Revenue $ 30,611 $ 26,742
Net income applicable
to common stock 1,034 994
Net income per share $ .18 $ .17
The proforma consolidated results of operations are not necessarily
indicative of the actual results of operations that would have occurred had
the purchase actually been made at the beginning of the respective periods, or
of results which may occur in the future.
(3) Income taxes
For federal income tax purposes, at October 31, 1996, the Company had net
operating loss carryforwards of approximately $6,079,000 available to offset
future taxable income. The estimated effective annual tax rate for fiscal
year 1997 was reduced by the presumed use of an annual net operating loss
carryforward of $2,400,000 and research and development credits of $1,500,000.
<PAGE>6
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operation
Results of Operations
- ---------------------
Net income applicable to common stock was $495,000 and $510,000 for three
months ended October 31, 1996 and 1995, respectively. Net income applicable
to common stock for the six months ended October 31, 1996 and 1995, was
$1,063,000 and $1,093,000 respectively.
Net revenue for the three months and six months ended October 31, 1996,
increased by $3.3 million (29%) and $6.3 million (27%), respectively, as
compared to the same periods in the prior fiscal year.
Product sales for the three months and six months ended October 31, 1996,
increased by 35% and 27%, respectively, as compared to the same periods in the
prior fiscal year. The following table sets forth the Company's product sales
by application (all dollars in thousands):
Three months ended Six months ended
October 31, October 31,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
Motor vehicle $ 5,929 $ 3,318 $ 11,079 $ 7,256
Forklifts and other material
handling equipment 5,500 5,063 11,771 11,014
Small portable to
large stationary 2,585 2,021 5,343 3,928
-------- -------- -------- --------
Total product sales $ 14,014 $ 10,402 $ 28,193 $ 22,198
======== ======== ======== ========
During the three months and six months ended October 31, 1996, net
revenue attributable to the Company's motor vehicle products increased by 79%
and 53%, respectively, as compared to the same periods in the prior fiscal
year. These increases were primarily attributable the Company's Australian
operation which was acquired in July 1996. The following table sets forth the
Company's worldwide motor vehicle product sales by application, (all dollars
in thousands):
Three months ended Six months ended
October 31, October 31,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
Component parts $ 5,737 $ 2,684 $ 9,724 $ 6,409
Upfitting systems 192 634 1,355 847
-------- -------- -------- --------
Total $ 5,929 $ 3,318 $ 11,079 $ 7,256
======== ======== ======== ========
During the three months and six months ended October 31, 1996, sales for
the Company's motor vehicle component parts increased by 114% and 52%,
respectively, as compared to the same periods in the prior fiscal year.
During the three and six months ended October 31, 1996, the Company recognized
revenue of $2.5 million and $3.3 million, respectively resulting from its
<PAGE>7
Australia operations. Management anticipates that revenue attributable to the
Company's motor vehicle component parts will be higher during fiscal year 1997
as compared to fiscal year 1996 primarily as a result of its Australian
operations and an increase in the demand for the Company's motor vehicle
component parts in Latin America.
Revenue attributable to upfitting vehicles with the Company's systems
decreased by 70% during the three months ended October 31, 1996, and increased
by 60% during the six months ended October 31, 1996, as compared to the same
periods in the prior fiscal year. During the previous year, revenue resulted
primarily from a program with the United States Postal Service. During the
current year, revenue resulted from a program with Ford Motor Company in which
IMPCO's bi-fuel propane system was utilized on F150 and F250 pick-up trucks.
The Ford Motor Company program was completed during the current quarter.
During the second quarter of the current year, the Company was awarded a new
$1.5 million Postal Service contract to convert postal vehicles to compressed
natural gas. These systems will be delivered during the third and fourth
quarters of the current year. Management anticipates that revenue
attributable to upfitting vehicles with the Company's systems will improve
over the levels recognized during the prior year.
During the three months and six months ended October 31, 1996, sales of
the Company's products for forklifts and other material handling equipment
increased by approximately 9% and 7%, respectively, as compared to the same
periods in the prior fiscal year. During the three and six months ended
October 31, 1996, the Company recognized revenue of $.7 million and $1.8
million, respectively, resulting from its European operations which were
acquired in October 1995. This increase was partially offset by lower sales
levels recognized by the Company's domestic operations resulting from a
decrease in demand for new forklifts in the material handling industry.
Management anticipates that the worldwide revenue provided by forklift and
other material handling equipment during the current year will be comparable
to fiscal year 1996.
During the three months and six months ended October 31, 1996, sales for
the Company's small portable to large stationary engines increased by 28% and
36%, respectively, as compared to the same periods in the prior fiscal year.
For the six months ended October 31, 1996, $.5 million of the increase was
attributable to a product line that the Company purchased in April 1996. The
balance of the increase was attributable to higher demand for large and small
power generator units used in power replacement and recreational applications.
Management anticipates that revenue generated from the Company's small
portable to large stationary engines will be higher in fiscal year 1997 than
fiscal year 1996.
Contract revenue for the three and six months ended October 31, 1996,
decreased by $.3 million (36%) and increased by $.3 million (21%),
respectively, as compared to the same periods in the prior fiscal year. The
increase for the six months was primarily attributable to the extension of the
development contract with General Motors Corporation (GM) in August 1995. The
decrease for the three months reflects that the work for certain platforms
pursuant to the GM contract is approaching completion. In addition, during
fiscal year 1996 certain other OEM development programs were initiated and
completed that are not present in fiscal year 1997. Management is in the
process of negotiating additional contracts, that if signed, would generate
comparable or higher contract revenue in the current fiscal year as compared
to the prior fiscal year.
<PAGE>8
During the three months and six months ended October 31, 1996, the
Company's revenues were generated in the following geographic regions:
Three months ended Six months ended
October 31, October 31,
-------------------- --------------------
1996 1995 1996 1995
-------- -------- -------- --------
United States and Canada 44% 73% 53% 68%
Pacific Rim 28% 11% 22% 14%
Europe 15% 9% 15% 11%
Latin America 13% 7% 10% 7%
Gross Profit Margin
- -------------------
The Company's gross profit margin on product sales for the three months
ended October 31, 1996, was $5.4 million (38%) as compared to $3.3 million
(32%) during the prior fiscal year. The Company's foreign operations
contributed $1.8 million of the $2.1 million increase. Higher selling prices
and a favorable product mix from the domestic operations accounted for the
remaining increase.
The Company's gross profit margin on product sales for the six months
ended October 31, 1996, was $10.4 million (37%) as compared to $7.5 million
(34%) during the prior fiscal year. The Company's foreign operations
contributed $2.8 million of the $2.9 million increase. Higher selling prices
and a favorable product mix from the domestic operations accounted for the
remaining increase.
Research and Development
- ------------------------
Research and Development (R&D) expense for the six months ended October
31, 1996, increased by approximately 15% as compared to the same period in the
prior fiscal year. This increase was primarily due to application and
development of the Company's products under the GM contract which was extended
in August 1995. Management believes the Company's future success depends on
its ability to design, develop and market new products to meet mandated
emission standards and will therefore continue to incur significant R&D costs.
Management anticipates that R&D expense during fiscal year 1997 will be higher
than levels experienced during fiscal year 1996 due to product development.
Selling, General and Administrative
- -----------------------------------
Selling, general and administrative (SG&A) expense for the three months
and six months ended October 31, 1996, increased by approximately $1.4 million
(92%) and $2.2 million (66%), respectively as compared to the same periods in
the prior fiscal year. The combined SG&A expenses for the Company's European
and Australia operations for three months and six months ended October 31,
1996, were $1.2 million and $2.1, respectively. These expenses were not
present in the Company's condensed consolidated statement of income for the
three and six months ending October 31, 1995. SG&A as a percentage of sales
has increased because of the Company's European operations. The European
facilities distribute alternate fuel products throughout Europe and
historically have incurred higher SG&A expenses as a percentage of sales as
compared to the Company's domestic operations.
<PAGE>9
Financing charges
- -----------------
Financing charges for the three months and six months ended October 31,
1996, increased by $218,000 (255%) and $366,000 (227%) as compared to the same
periods in the prior fiscal year. For the three and six months ended October
31, 1996, financing charges increase $169,000 and $237,000, respectively, for
loans associated with the acquisition of the Company's foreign operations.
The remainder of the increase was due to increased utilization of the line of
credit and the capital lease facility. Management anticipates that financing
charges for fiscal year 1997 will increase as compared to fiscal year 1996 as
a result of the recent acquisitions and debt service on the Company's line of
credit.
Outlook: issues and risks
- --------------------------
The preceding discussion includes management's outlook for revenues and
expenditures. The Company faces a number of risks and uncertainties that
should also be considered in evaluating its short and long term outlook.
These risks include, among others, the following: (1) continued world-wide
legislation enforcing environmental laws which regulate emission standards and
energy independence, (2) the Company's ability to secure future development
programs, (3) world-wide economic trends that influence geographic price
disparities between gasoline and alternative fuels, (4) fluctuations in the
foreign exchange rates causing purchases from the United States to become
undesirable, (5) the Company's ability to hire, train, and retain qualified
personnel, (6) uncontrollable changes in the timing of new product
introductions or new applications by customers which utilize the Company's
products, and (7) growth rates in foreign markets. In addition, current
economic forecasts may deviate from actual economic conditions and unfavorably
impact the Company's performance. The Company is not currently aware of any
significant new competitors, however the Company could be adversely affected
by the expansion of existing competitors, increased price competition, or
entry of new competition.
Liquidity and Capital Resources
- -------------------------------
AirSensors, Inc. uses the cash generated from its operations and external
financing to fund capital expenditures, pay dividends on the preferred stock
and invest in and operate its existing operations and new businesses. These
sources are sufficient to meet all current obligations on a timely basis.
Management believes that such sources of funds will be sufficient to meet the
needs of its business for the foreseeable future.
Operating Activities
- --------------------
Net cash provided by operating activities was $.5 million during the six
months ended October 31, 1996, as compared to $1.4 million during the same
period in the prior fiscal year. The decrease in net cash provided by
operations was primarily attributable to an increase in accounts receivable of
$1.3 million, and a decrease in accounts payable of $1.4 million as compared
to the same period in the prior fiscal year. These decreases were partially
offset by an increase in depreciation and amortization of $.5 million and a
decrease in inventory of $1.6 million as compared to the same period in the
prior fiscal year.
<PAGE>10
During fiscal year 1996, inventory increased by $1.5 million primarily
due to a temporary buildup of inventory in anticipation of future sales of
compressed natural gas systems and core products. The increase in accounts
payable during fiscal year 1996, was directly related to the increase in
inventory. During fiscal year 1997, $1.3 million of the increase in accounts
receivable $1.2 million was attributable to new business generated by the
Australian operation. The increase in depreciation and amortization for the
current year, as compared to the prior year, is also primarily a result of the
inclusion of the Company's recently acquired foreign operations.
Investing activities
- --------------------
Net cash used in investing activities for the six months ended October
31, 1996, was $5.2 million as compared to $3.2 million for the same period
last fiscal year. Investing activities principally included the purchase of
certain assets from Ateco in Australia (July 1996) which resulted in a net
cash use of $4.7 million. During the six months ended October 31, 1995,
investing activities included the purchase of Media which resulted in a net
use of cash of $2.0 million. Management projects an increase in capital
expenditures during the remainder of the fiscal year, as compared to the prior
fiscal year, primarily as a result of planned increases in dies, molds and
patterns, and capital expenditures by the Company's recent foreign
acquisitions.
Financing activities
- --------------------
Net cash provided by financing activities for the six months ended
October 31, 1996, was approximately $6.2 million as compared to $1.8 million
for the same period in the prior fiscal year. During the six months ended
October 31, 1996, proceeds from the issuance of bank term loans included the
securing of term loans with Bank of America NT&SA and its Sydney Australia
branch of $2.0 million and A$2.5 million (US $1.9 million), respectively, to
finance the purchase of Ateco. During the six months ended October 31, 1996,
proceeds from the issuance of bank term loans included the securing of term
loans with Bank of America NT&SA of $2.0 million to finance the purchase of
Media. In addition, net borrowing on the line of credit increased $3.2
million as compared to the same period in the prior fiscal year. During the
current year, the Company increased it's borrowing under the operating line of
credit primarily for current operations and the Australian acquisition. The
Company made payments of $571,000 on the term loans to finance the Company's
European and Australian operations.
Foreign currency risk
- ---------------------
The effect of foreign currency exchange risk has not been material to the
company to date. The Company seeks to hedge its foreign currency risk by
minimizing its U.S. dollar investment in foreign operations using foreign
currency term loans to finance the operations of its foreign subsidiaries.
The term loans are denominated in local currencies and are included in the
local balance sheets. As of October 31, 1996, the Company had investments in
its European and Australian subsidiaries of $.6 million and $4.7 million,
respectively, subject to foreign currency risk.
<PAGE>11
Part II - OTHER INFORMATION
Items 1-5 Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
--------
Exhibit 11.1 - Computation of net income per share.
(b) Reports on Form 8-K
-------------------
No reports were filed on Form 8-K during the Company's fiscal
quarter ended October 31, 1996.
SIGNATURES
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.
AirSensors, Inc.
(Registrant)
Date: December 13, 1996 By /s/Thomas M. Costales
---------------------
Thomas M. Costales
Chief Financial Officer
and Treasurer
[Authorized Signatory]
<PAGE>12
AIRSENSORS, INC.
COMPUTATION OF NET INCOME PER SHARE
Six months ended October 31, 1996 and 1995
---------------
Three months ended Six months ended
October 31, October 31,
------------------------ ------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
PRIMARY CALCULATION:
Net income $ 640,174 $ 665,293 $1,352,588 $1,404,537
Dividends on
preferred stock (145,029) (154,948) (290,061) (311,135)
----------- ----------- ----------- -----------
Net income applicable
to common stock 495,145 510,345 1,062,527 1,093,402
Add: Effect of treasury
stock on repayment
of borrowings 117,244 52,801 190,476 98,188
Add: Effect of treasury
stock on purchase of
investments/securities - 3,827 - 60,970
----------- ----------- ----------- -----------
Net income applicable to
common stock for
calculation of net
income per share $ 612,389 $ 566,973 $1,253,003 $1,252,560
Weighted average number
of common shares
outstanding 5,686,848 5,646,177 5,683,454 5,643,801
Dilutive effect of
outstanding stock
options and warrants (As
determined by application
of the modified treasury
stock method) 1,067,544 991,552 1,072,326 996,165
----------- ----------- ----------- -----------
Weighted average number
of common shares, as
adjusted for calculation
of net income per share 6,754,392 6,637,729 6,755,780 6,639,966
=========== =========== =========== ===========
Net income per share $0.09 $0.09 $.19 $0.19
=========== =========== =========== ===========
<PAGE>13
FULLY DILUTED CALCULATION:
Net income applicable to
common stock for
calculation of net income
per share before effect
of treasury stock on
repayment of borrowings $ 495,145 $ 510,345 $1,062,527 $1,093,402
Add: Effect of treasury
stock on repayment
of borrowings 117,244 52,801 190,476 98,188
Add: Effect of treasury
stock on purchase of
investments/securities - 3,827 - 60,970
----------- ----------- ----------- -----------
Net income applicable to
common stock for
calculation of net
income per share $ 612,389 $ 566,973 $1,253,003 $1,252,560
Weighted average number
of common shares
outstanding 5,686,848 5,646,177 5,683,454 5,643,801
Dilutive effect of
outstanding stock
options and warrants (As
determined by application
of the modified treasury
stock method) 1,067,544 991,552 1,072,326 996,165
----------- ----------- ----------- -----------
Weighted average number
of common shares, as
adjusted for calculation
of net income per share 6,754,392 6,637,729 6,755,780 6,639,966
=========== =========== =========== ===========
Net income per share $0.09 $0.09 $0.19 $0.19
=========== =========== =========== ===========
(1) The conversion of preferred stock was not assumed since its effect would be
antidilutive.
<PAGE>14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<CASH> 2,381,066
<SECURITIES> 0
<RECEIVABLES> 10,178,335
<ALLOWANCES> 290,986
<INVENTORY> 14,281,834
<CURRENT-ASSETS> 28,663,044
<PP&E> 14,852,967
<DEPRECIATION> 7,800,069
<TOTAL-ASSETS> 46,064,410
<CURRENT-LIABILITIES> 9,551,215
<BONDS> 0
0
5,650,000
<COMMON> 5,687
<OTHER-SE> 14,782,023
<TOTAL-LIABILITY-AND-EQUITY> 46,064,410
<SALES> 28,193,494
<TOTAL-REVENUES> 29,795,401
<CGS> 17,744,681
<TOTAL-COSTS> 27,631,468
<OTHER-EXPENSES> 0
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</TABLE>
