<PAGE> 1
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: June 30, 1995
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: 0-14803
SYNTRO CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3114681
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
9669 Lackman Road, Lenexa, Kansas 66219
(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (913) 888-8876
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 (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 ________
Indicate the number of shares outstanding each of the issuer's classes of
common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding at
Class June 30, 1995
---------------------- -------------
<S> <C>
Common Stock 11,397,184
</TABLE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
1
<PAGE> 3
SYNTRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30,
1995 September 30,
(UNAUDITED) 1994
-------------- ----------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,407,524 $ 780,069
Short-term investments 3,832,383 5,259,539
Receivables - trade, net 492,331 422,552
Receivables - contracts and licenses 328,206 -
Inventories (Note 1) 684,761 839,519
Prepaid expenses and other 331,824 274,579
------------ ------------
Total current assets 7,077,029 7,576,258
LONG-TERM INVESTMENTS, AT COST 374,689 1,048,286
PROPERTY AND EQUIPMENT, NET 3,442,955 3,502,366
PATENTS AND LICENSES, NET 1,658,957 1,323,440
INVESTMENTS AND OTHER ASSETS 77,981 64,931
------------- ------------
$12,631,611 $13,515,281
=========== ===========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30,
1995 September 30,
(UNAUDITED) 1994
-------------- ----------------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 236,189 $ 175,870
Accrued compensation 216,999 200,352
Accrued royalties 149,012 137,784
Accrued rent 141,158 132,749
Other accrued expenses 305,236 399,881
Research contract and other advances - 270,023
------------- ------------
Total current liabilities 1,048,594 1,316,659
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value; 25,000,000
shares authorized; 11,397,184 shares
and 11,386,084 shares issued at
June 30, 1995 and September 30,
1994, respectively 113,972 113,861
Preferred stock, $1.00 par value;
225,000 shares authorized; no shares
issued in 1995 and 1994 - -
Additional paid-in capital 33,020,686 33,012,472
Accumulated deficit (21,551,641) (20,927,711)
------------ ------------
Total stockholders' equity 11,583,017 12,198,622
------------ ------------
$12,631,611 $13,515,281
=========== ===========
</TABLE>
2
<PAGE> 4
SYNTRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
---------------------------- ---------------------------
1995 1994 1995 1994
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES:
Net product sales $ 1,009,414 $ 865,277 $2,427,555 $2,427,266
Collaborative research and contract services 736,884 851,126 2,184,146 2,502,818
License and distribution fees - - 200,000 -
Interest and other income 121,347 92,955 360,612 313,710
----------- ---------- ---------- ----------
Total revenues 1,867,645 1,809,358 5,172,313 5,243,794
COSTS AND EXPENSES:
Cost of goods sold 520,619 484,404 1,313,154 1,329,407
Research and development costs 831,746 810,518 2,543,875 2,367,530
Selling, general and administrative expenses 686,960 571,974 1,952,889 1,703,192
----------- --------- ---------- ----------
Total costs and expenses 2,039,325 1,866,896 5,809,918 5,400,129
----------- ---------- ---------- ----------
LOSS BEFORE EQUITY IN INCOME
OR LOSS OF SYNTRO ZEON (171,680) (57,538) (637,605) (156,335)
Equity in income (loss) of Syntro Zeon (43,029) (1,743) 13,675 (6,168)
----------- ------------ ------------ -----------
NET LOSS $ (214,709) $ (59,281) $ (623,930) $ (162,503)
========== ========== ========== ==========
NET LOSS PER SHARE $(.02) $.00 $(.05) $(.01)
Shares used in computing loss per share 11,397,184 11,386,084 11,394,010 11,382,471
========== ========== ========== ==========
</TABLE>
3
<PAGE> 5
SYNTRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE-MONTH PERIODS ENDED JUNE 30, 1995 AND 1994
<TABLE>
<CAPTION>
Common Common Additional
Stock Stock Paid-In Accumulated
Shares Par Value Capital Deficit Total
------------ ----------- ------------- --------------- -----------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1994 11,386,084 $113,861 $33,012,472 $(20,927,711) $12,198,622
Exercise of stock options
(unaudited) 11,100 111 8,214 - 8,325
Net loss for the period
(unaudited) - - - (623,930) (623,930)
------------ ----------- --------------- ------------- ------------
Balance at June 30, 1995
(unaudited) 11,397,184 $113,972 $33,020,686 $(21,551,641) $11,583,017
========== ======== =========== ============ ===========
Balance at September 30, 1993 11,378,814 $113,788 $33,007,195 $(20,652,552) $12,468,431
Exercise of stock options
(unaudited) 7,270 73 5,277 - 5,350
Net loss for the period
(unaudited) - - - (162,503) (162,503)
--------------- ----------- --------------- ------------- -------------
Balance at June 30, 1994
(unaudited) 11,386,084 $113,861 $33,012,472 $(20,815,055) $12,311,278
========== ======== =========== ============ ===========
</TABLE>
4
<PAGE> 6
SYNTRO CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
-----------------------------------
1995 1994
------------- ------------
<S> <C> <C>
Net cash flows provided by (used for) operating activities:
Net loss $ (623,930) $ (162,503)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 266,843 252,454
Amortization of premium 35,503 101,433
Gain on sale of PPT stock - (14,126)
Net gain on disposal of fixed assets (1,994) -
Equity in profit (loss) of Syntro Zeon (13,675) 6,168
Changes in assets and liabilities:
Receivables - trade (69,779) (305,123)
Receivables - contracts and licenses (328,206) (342,757)
Inventory 154,758 (115,055)
Prepaid expenses and other (57,245) (153,501)
Accounts payable 60,319 (19,261)
Accrued liabilities (58,361) 141,928
Research contract and other advances (270,023) (531,401)
----------- -----------
Net cash used for operating activities (905,790) (1,141,744)
Cash flows provided by financing activities:
Stock options 8,325 5,350
------------ ------------
Net cash provided by financing activities 8,325 5,350
Cash flows provided by (used for) investing activities:
Short-term investments sold 4,624,457 4,622,907
Short-term investments purchased (2,183,534) (1,939,332)
Long-term investments purchased (375,672) (1,636,722)
Property and equipment acquired (170,863) (162,315)
Proceeds from sales of property and equipment 3,470 -
Additions to patents and licenses (372,939) (263,568)
Changes in other assets, net 1 21,550
Sale of investment in PPT - 314,441
-------------- -----------
Net cash provided by investing activities 1,524,920 956,961
----------- -----------
Net increase (decrease) in cash and cash equivalents 627,455 (179,433)
Cash and cash equivalents at beginning of period 780,069 529,479
----------- ----------
Cash and cash equivalents at end of period $1,407,524 $ 350,046
========== ==========
</TABLE>
5
<PAGE> 7
SYNTRO CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions 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 nine month
period ended June 30, 1995 are not necessarily indicative of the results that
may be expected for the year ended September 30, 1995. 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
September 30, 1994.
Note 1 - Inventories:
Inventories are stated at the lower of cost or market, cost being determined
using the first-in, first-out (FIFO) method. The components of inventory are
as follows:
<TABLE>
<CAPTION>
June 30, September 30,
1995 1994
------------ ---------------
<S> <C> <C>
Raw material $152,012 $133,992
Work-in-process 268,497 399,536
Finished goods 264,252 305,991
-------- --------
$684,761 $839,519
======== ========
</TABLE>
6
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUMMARY
Syntro Corporation (which, together with its wholly-owned subsidiaries, is
referred to herein as "Syntro" or the "Company") is engaged in biotechnology
research and in the development, manufacture and commercialization of
innovative vaccines for the animal health market. The Company uses its
proprietary technology and expertise in the genetic engineering of viruses to
address disease problems caused by infectious agents, particularly those that
have proven resistant to conventional technology. The Company's product
development programs currently address diseases of five major animal species:
swine, cattle, poultry, horses and cats. During fiscal 1994, having expanded
its portfolio of genetic engineering technology, and encouraged by the
regulatory approval of its first viral vector vaccine, Syntro resumed
exploration of the utility of its technology for human health applications.
The Company's line of swine pseudorabies vaccines and its broad distribution
network have enabled it to maintain a leading share of the highly competitive
U.S. market for these products. The Company's first commercial product,
PRV/Marker(R), was introduced in 1988 and quickly became a commercial success.
A second generation vaccine introduced in September 1991, PRV/Marker Gold(R),
allowed the Company to capture a major share of its market segment. The
Company subsequently has introduced other swine pseudorabies vaccines to meet
the specialized needs of various market niches. In October 1993, the Company
expanded its swine vaccine business beyond the PRV/Marker line with the
introduction of MaxiVac(R)-FLU, the first vaccine approved by the U.S.
Department of Agriculture ("USDA") for the prevention of swine influenza.
The Company's technological advances and its ability to advance a product
through the stages of research and development, regulatory approval,
manufacturing and marketing have attracted collaborative relationships with
major national and multinational companies. For example, a collaborative
program with Nippon Zeon Co., Ltd. ("Nippon Zeon") resulted in the development
and USDA approval of the first commercially available viral vector vaccine,
VectorVax(R) FP-N. This vaccine, which contains a genetically designed vector
virus that protects poultry against two widespread diseases, was the first
Category III* vaccine to be approved by the USDA. It is being commercialized
by Syntro Zeon, L.C. ("Syntro Zeon"), a limited liability company formed by the
Company and Nippon Zeon of America. VectorVax FP-N is being marketed in the
U.S. by Hoechst-Roussel Agri-Vet Company ("Hoechst-Roussel"), which also has
licensed the exclusive right to market the vaccine in Canada, Mexico and the
Caribbean.
The Company has other strategic partnerships intended to accelerate the
development and/or commercialization of products. For example, collaborations
with Hoechst-Roussel and/or Hoechst Veterinar GmbH ("Hoechst Veterinar")
provide resources for the development and future marketing of additional viral
vector vaccines for poultry, cattle and horses. A distribution arrangement
with Bayer AG is intended to facilitate registration and distribution of
PRV/Marker Gold in Europe.
__________________________________
*Category I, II and III are USDA designations for products developed
through the use of recombinant DNA technology. Category III includes viral
vector vaccines, the most technologically advanced recombinant vaccines.
7
<PAGE> 9
RESULTS OF OPERATIONS
Three months ended June 30, 1995 and June 30, 1994
Revenues for the quarter ended June 30, 1995 were $1,868,000, an increase of 3%
over the third quarter of fiscal 1994. Record quarterly product sales were
largely offset by an anticipated decrease in contract revenues.
Strengthened sales of the Company's swine pseudorabies vaccines and increased
sales of products introduced over the past two years resulted in a 17% increase
in product sales over the third quarter of fiscal 1994. Management believes
the Company has established and is maintaining a leading share of the U.S.
market for its swine pseudorabies vaccines which, as a result of the success of
various state eradication programs, no longer is growing. The Company believes
it may experience quarterly sales fluctuations as the sale and contract
manufacture of new products begins to make a significant contribution to
product revenues.
Cost of goods sold as a percentage of sales for the three-month period ended
June 30, 1995 was 52%, compared to 56% for the third quarter of the prior
fiscal year. The Company benefitted from a favorable product mix and from
production efficiencies resulting from increased throughput.
Collaborative research revenues, which include reimbursable development
expenses incurred on behalf of collaborative partners, were approximately 13%
below those of the third quarter of fiscal 1994. This expected decrease was
related largely to the progression of several collaborative projects from the
research phase into later development and registration phases. (See
"Prospective.")
Research and development expenditures increased approximately 3% over the third
quarter of fiscal 1994. This increase was related to reimbursable development
expenses incurred on behalf of collaborative partners, which fluctuate from
quarter to quarter. The costs of operating the Company's research and
development laboratories actually decreased over the comparable quarter.
Management believes that these operating costs will remain relatively stable
for the remainder of the year. As the Company has continued to explore
additional uses for its viral vector technology, it has self-funded a larger
portion of these operating costs. (See "Prospective.")
Interest and other income rose $28,000 over the comparable quarter of fiscal
1994, largely as a result of higher investment interest rates.
Selling, general and administrative expenses increased 20% for the quarter
ended June 30, 1995, compared to the same quarter of the prior fiscal year. A
decrease in marketing expense was more than offset by increased expense related
to professional services, particularly legal defense and investor relations
costs.
The net loss for the third quarter of fiscal 1995 was $215,000, compared to a
net loss of $59,000 for the third quarter of fiscal 1994.
8
<PAGE> 10
Nine months ended June 30, 1995 and June 30, 1994
Revenues for the nine months ended June 30, 1995 were $5,172,000, representing
a 1% decrease from the same period of the previous fiscal year. Product sales
remained approximately level, and licensing fees partially offset an
anticipated decrease in collaborative research revenues.
Product sales were $2,428,000 during the nine-month period ended June 30, 1995,
compared to $2,427,000 for the comparable period of fiscal 1994. In the first
quarter of 1995, sales of the Company's swine vaccines suffered from weak
economic conditions in the pork production industry. Product sales recovered
during the second and third quarters. Sales of products introduced by the
Company over the past two years have compensated for the fact that sales of the
Company's swine pseudorabies vaccines have not completely returned to the
levels of the prior fiscal year.
Cost of goods sold as a percentage of sales for the nine-month period ending
June 30, 1995 was 54%, compared to 55% for the comparable period of the
previous year. A favorable product and distribution mix offset increases in
inventory reserves.
Collaborative research revenues, which include reimbursable development
expenses incurred on behalf of collaborative partners, were approximately 13%
below those of the comparable period of fiscal 1994. This expected decrease
was related largely to the progression of several collaborative projects from
research and animal testing phases into later development and registration
phases. (See "Prospective.")
Research and development expenditures increased 7% over the comparable period
of fiscal 1994. The largest contributors to this increase were development
expenses incurred on behalf of, and reimbursed by, collaborative partners. The
costs of operating the Company's research and development laboratories during
the nine-month period rose slightly over the comparable period of fiscal 1994.
As the Company has continued to explore additional uses for its viral vector
technology, it has self-funded a larger portion of these operating costs. (See
"Prospective.")
Interest and other income rose $47,000 over the comparable nine-month period of
fiscal 1994, the result of higher investment interest rates.
Selling, general and administrative expenses increased 15% over the nine-month
period ended June 30, 1995, compared to the same period the previous year. A
decrease in marketing expense was more than offset by increased expense related
to professional services, particularly legal defense and investor relations
costs.
The net loss for the nine-month period ended June 30, 1995 was $624,000,
compared to a net loss of $163,000 for the comparable period of fiscal 1994.
CAPITAL RESOURCES AND LIQUIDITY
At June 30, 1995, Syntro had cash, cash equivalents, short-term investments and
long-term investments of $5,615,000, a decrease of $1,473,000 since September
30, 1994. In addition to the $337,000 cash impact of the Company's net loss
for the nine-month period, its principal uses of cash included a $373,000
investment in additions to patents, a $270,000 decrease in research contract
advances, a $128,000 increase in contract receivables related to research and
9
<PAGE> 11
development performed for collaborative partners and a $171,000 investment in
plant and equipment. (At June 30, 1995, contract receivables also included
$200,000 in licensing fees.)
Capital expenditures made during the first nine months of fiscal 1995 were
associated primarily with limited internal modifications that the Company made
to its manufacturing facility to obtain a European Good Manufacturing Practice
(GMP) certificate and to modifications and equipment additions related to the
development and pilot manufacture of poultry products. The Company has made no
material commitments for additional capital expenditures, though it intends to
continue to invest in capital additions to its research, development,
manufacturing and administrative areas in order to maintain the quality of its
operations.
The Company's cash, cash equivalents, short-term investments and long-term
investments are expected to be sufficient to meet the currently foreseeable
liquidity needs of the Company. Anticipated capital requirements may change
depending on numerous factors. These factors include the progress of the
Company's research and development activities, the resources the Company
devotes to self-funded programs and advanced technologies, the ability of the
Company to achieve research and development objectives under its collaborative
agreements, the ability of the Company to replace research contract revenues as
collaborative research programs mature, and any costs required to enforce the
rights to use and to defend the Company's technology and products.
Capital requirements also may be affected by the length of time required to
gain regulatory approvals, the market's acceptance of the Company's new
products, the level of investment required by new product introductions in
inventories and accounts receivable, the ability of the Company to distribute
its products through favorable trade channels, and the demand for and
competition against the Company's products. Furthermore, additional capital
may be either provided or required as the result of new opportunities for the
Company to accelerate the expansion of its product lines and markets through
additional strategic alliances or acquisitions of products and technologies or
as the result of future changes in the Company's strategic plan.
PROSPECTIVE
The Company owns beneficially a 50% interest in the capital, profits, losses
and distributions of Syntro Zeon, L.C. ("Syntro Zeon"), a Kansas limited
liability company. Syntro Zeon was formed by Syntro and Nippon Zeon of
America, Inc. to market viral vector poultry vaccines developed through the
Company's collaborative program with Nippon Zeon Co., Ltd. Syntro currently
anticipates that Syntro Zeon will generate revenues in the form of royalties
and licensing fees. Syntro also expects to generate additional revenues from
the contract manufacture of VectorVax(R) FP-N. Because product manufactured in
connection with the USDA licensing of VectorVax FP-N will be used in the
vaccine's market introduction, the Company believes contract manufacturing
revenues from Syntro Zeon will not contribute significantly to total revenues
during fiscal 1995.
As new animal health products whose development or registration has been funded
by collaborative partners receive regulatory approval, revenues from
collaborative research contracts related to such products will decline. The
Company's intent when entering into such contracts is to replace these revenues
or to generate greater revenues with product sales, contract manufacturing
revenues or royalties related to the approved products. If collaborative
research contract revenue reductions are not offset by revenues from such
sources or by contract revenues from collaborative partners for new programs,
and if expenses are not reduced commensurately, the Company could experience
additional losses.
10
<PAGE> 12
In connection with the exploration of additional uses for its proprietary
technology both within and outside of the veterinary vaccine field, the Company
has increased self-funded investment in research and development since the
beginning of fiscal 1994. The Company intends to seek alliances with one or
more corporate partners who would support the research and development of
additional genetically engineered products. The Company intends to carefully
control its investment in this area until such collaborations are formed,
limiting its expenditures on independent efforts to early exploration,
feasibility studies and the development of project proposals.
11
<PAGE> 13
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
See Part 1 Item 3 of the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1994.
ITEM 2. CHANGE IN SECURITIES
Not applicable at June 30, 1995
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable at June 30, 1995
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable at June 30, 1995
ITEM 5. OTHER INFORMATION
Not applicable at June 30, 1995
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 10.1 Amendment No. 2 to Executive
Employment Agreement dated as of May
16, 1995 between the Company and
Judson D. Todd.
Exhibit 11 Earnings Per Share Calculation
Exhibit 27 Financial Data Schedule
(b) Not applicable at June 30, 1995
12
<PAGE> 14
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNTRO CORPORATION
Date: 8/11/95 /s/ Susan H. Strobel
----------------------
Susan H. Strobel
Chief Financial Officer
13
<PAGE> 15
AMENDMENT NO. 2
TO
EXECUTIVE EMPLOYMENT AGREEMENT
THIS AMENDMENT NO. 2 TO EXECUTIVE EMPLOYMENT AGREEMENT is made and
entered into as of the 16th day of May, 1995 to amend that certain Executive
Employment Agreement effective as of the first day of October, 1992 by and
between SYNTRO CORPORATION, a Delaware corporation ("Syntro"), and JUDSON D.
TODD, a resident of Leawood, Kansas (the "Executive"), as amended by Amendment
No. 1 dated as of April 1, 1995 (as so amended, the "1992 Agreement").
W I T N E S S E T H:
WHEREAS, the term of the 1992 Agreement is scheduled to expire on
September 30, 1996; and
WHEREAS, Syntro desires to extend the term of the 1992 Agreement so as
to be coterminous with executive employment agreements with other executives of
Syntro, and the Executive is willing to extend the term of the 1992 Agreement
and continue his services to Syntro and SyntroVet, through and including
February 28, 1997 on the terms and conditions of the 1992 Agreement; and
NOW, THEREFORE, in consideration of the mutual promises and conditions
contained herein, the parties hereby agree as follows:
A. Section 3 of the 1992 Agreement (as amended by Paragraph B of Amendment No.
1) is hereby amended to change the reference of "September 30, 1996" to
"February 28, 1997."
B. The 1992 Agreement, as amended hereby, shall continue in full force and
effect.
IN WITNESS WHEREOF, this Amendment No. 2 to Executive Employment
Agreement is effective as of the day and year first above written.
SYNTRO CORPORATION EXECUTIVE:
9669 Lackman Road
Lenexa, Kansas 66219
/s/ Judson D. Todd
----------------------
By: /s/ Russell T. Stern, Jr. Judson D.Todd
------------------------- 13920 Kenneth Road
Russell T. Stern, Jr., Leawood, Kansas 66224
Chairman of the Board
<PAGE> 16
EXHIBIT 11.1
SYNTRO CORPORATION AND SUBSIDIARIES
EARNINGS PER SHARE CALCULATION
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
JUNE 30, JUNE 30,
----------------------------- -----------------------------
1995 1994 1995 1994
--------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
PRIMARY
-------
Net loss $ (214,709) $ (59,281) $ (623,930) $ (162,503)
============ ========== ============ ===========
Weighted average number of common
shares outstanding during the period 11,397,184 11,386,084 11,394,010 11,382,471
Add - common equivalent shares
(determined using the "treasury
stock method") representing shares
issuable upon exercise of stock
options - - - -
------------ ----------- ------------ ------------
Weighted average number of shares
used in calculation of primary
loss per share 11,397,184 11,386,084 11,394,010 11,382,471
============ =========== ============ ===========
Primary loss per common share $(.02) $.00 $(.05) $(.01)
============ =========== ============ ===========
FULLY DILUTED
-------------
Net loss $ (214,709) $ (59,281) $ (623,930) $ (162,503)
============ =========== ============ ============
Weighted average number of shares used
in calculating primary income per
common share 11,397,184 11,386,084 11,394,010 11,382,471
Add incremental shares representing:
Shares issuable upon exercise of stock
options included in primary
calculation above - - - -
Shares issuable upon exercise of stock
options based on period end market
price - - - -
------------ ----------- ------------ ------------
Weighted average number of shares
used in calculation of fully diluted
loss per share 11,397,184 11,386,084 11,394,010 11,382,471
============ =========== =========== ===========
Fully diluted loss per common share $(.02) $.00 $(.05) $(.01)
============ =========== =========== ===========
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<CASH> 1,407,524
<SECURITIES> 4,207,072
<RECEIVABLES> 820,537
<ALLOWANCES> 0
<INVENTORY> 684,761
<CURRENT-ASSETS> 7,077,029
<PP&E> 6,853,993
<DEPRECIATION> 3,411,038
<TOTAL-ASSETS> 12,631,611
<CURRENT-LIABILITIES> 1,048,594
<BONDS> 0
<COMMON> 113,972
0
0
<OTHER-SE> 11,469,045
<TOTAL-LIABILITY-AND-EQUITY> 12,631,611
<SALES> 2,427,555
<TOTAL-REVENUES> 5,172,313
<CGS> 1,313,154
<TOTAL-COSTS> 3,857,029
<OTHER-EXPENSES> 1,952,889
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (623,930)
<INCOME-TAX> 0
<INCOME-CONTINUING> (623,930)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (623,930)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
