<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1998 Commission file number 0-15148
---------
SCIENTIFIC NRG, INCORPORATED
(Exact name of registrant as specified in its charter)
Minnesota
(State or Other Jurisdiction of Incorporation or Organization)
2246 Lindsay Way
Glendora, California 91740
(Address of Principal Executive Offices)
41-1457271
(I.R.S. Employer Identification No.)
Registrant's telephone number, including area code: (909) 305-0322
------------
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date. At May 14, 1998 the
registrant had 4,203,423 shares of common stock, no par value, issued and
outstanding.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I
ITEM 1. FINANCIAL STATEMENTS. 1
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. 1
PART II
ITEM 1. LEGAL PROCEEDINGS. 9
ITEM 2. CHANGES IN SECURITIES. 9
ITEM 3. DEFAULT UPON SENIOR SECURITIES. 9
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS. 9
ITEM 5. OTHER INFORMATION. 9
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. 10
</TABLE>
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS.
The Company's unaudited condensed balance sheet as of the end of the
Company's most recent quarter, March 31, 1998 and unaudited condensed statements
of operations for the three and nine month period and statements of cash flow
for the nine month period up to the date of the balance sheet and the comparable
period of the preceding fiscal year are attached hereto as pages 3 through 8 and
are incorporated herein by this reference.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following discussion and analysis should be read in
conjunction with the Company's audited financial statements and management's
Discussion and Analysis of Financial Condition and results of Operations
included in the Company's Annual Report on Form 10-KSB, filed with the
Securities and Exchange Commission on October 15, 1997.
The following discussion includes "forward looking statements"
("FLS" ) that represent management's assessment of future performance and its
goals. There are no assurances that the FLS will be achieved.
RESULTS OF OPERATIONS
The three and nine month period ended March 31, 1998 compared to
the three and nine month period ended March 31, 1997.
The Company realized a net loss of $ 41,174, or $.(01) per share
for the three month period ended March 31, 1998, compared to a net gain of
$474,566 or $.13 per share for the corresponding period of the prior fiscal
year. The Company realized a net loss of $ 91,240, or $(.02) per share for the
nine month period ended March 31, 1998, compared to a net gain of $ 362,591, or
$.12 per share for the corresponding period of the prior fiscal year. For the
three and nine month period ended March 31, 1997 the Company realized an
extraordinary gain on the conversion of debt to common stock of $460,992. The
three month results for the periods ended March 31, 1997 and March 31, 1998
resulted in a net income (loss) before extraordinary item of $13,574 and
$(41,174), respectively. Management attributes the current quarter's loss to the
reduction in sales as discussed below.
Net sales of the Company during the three months ended March 31,
1998 decreased $ 68,903 or 44.9% from the corresponding period of the prior
fiscal year. Net sales of the Company during the nine months ended March 31,
1998 decreased $ 48,382 or 12.4% from the corresponding period of the prior
fiscal year. As discussed below in "Other Information", since becoming an
affiliate in 1996, Parke Industries, Inc. ("Parke") has accounted for
approximately one-third of the Company's revenue. At December 31, 1997, Parke
owned eleven percent of the outstanding common stock of the Company and held an
option to acquire an additional five percent.
1
<PAGE> 4
Subsequently, on January 31, 1998, Parke was acquired by SRS, a wholly
owned subsidiary of Carolina Power and Light. Under the purchase agreement, SRS
hired the Parke management team and bought Parke's stock in the Company and the
related stock option. Accordingly, as of January 31,1998, SRS became an
affiliate of the Company. SRS and Parke announced a strategic plan to
significantly expand SRS's presence in the energy efficient retrofit market.
However, the Company's sales to Parke during the three month period ended March
31, 1998 were significantly lower than normal due to Parke's integration with
SRS. Management of the Company believes this is a temporary condition and that
its strong ties with Parke and the plans of its new affiliate, SRS, will lead to
a substantial increase in demand for the Company's products in the future (FLS).
Gross profit from operations during the three months ended March
31, 1998 decreased $ 59,428 or 73.6% from the gross profit from the
corresponding period of the prior fiscal year. Gross profit from operations
during the nine months ended March 31, 1998 decreased $ 31,470 or 21.4% from the
gross profit from the corresponding period of the prior fiscal year. Management
attributes this decrease to the Company's decrease in sales for the three months
ended March 31, 1998, as discussed above.
General, administrative and selling costs for the three months
ended March 31, 1998 decreased by $ 24,576, and increased as a percentage of
sales from 56.4% of sales to 73.2% of sales in comparison to the corresponding
period of the prior fiscal year. General, administrative and selling costs for
the nine months ended March 31, 1998 decreased by $ 80,440, and decreased as a
percentage of sales from 73.3% of sales to 60.1% of sales in comparison to the
corresponding period of the prior fiscal year. The reduction in overhead for the
three months ended March 31, 1998 indicates management's efforts to reduce
costs.
LIQUIDITY AND CAPITAL RESOURCES
The nine month period ended March 31, 1998 compared to the nine
month period ended March 31,1997.
The Company had a negative cash flow from operating activities for
the nine month period ended March 31, 1998 of $ 26,603 compared to a negative
cash flow of $ 209,546 for the nine month period ended March 31, 1997. The
improvement of cash flow from operating activities compared to the previous
period can be attributed to a reduction in overhead and the payments to vendors
on past due accounts during the nine month period ended March 31, 1997.
At March 31, 1997, the Company had net working capital of $ 37,854,
compared to a net working capital of $ 96,934 at June 30, 1997. A decrease in
working capital of $ 59,080, which is the result of the net loss of $91,240 and
partially offset by the non-cash compensation expense of $30,100 which was
prepaid at June 30, 1997 via the issuance of common stock.
2
<PAGE> 5
SCIENTIFIC NRG, INCORPORATED
PART I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
---------- ----------
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 8,697 $ 35,300
Trade receivables, less allowance for
doubtful accounts at March 31, 1998
and June 30, 1997 of $ 9,658 65,968 68,323
Inventories ( Note 2 ) 104,339 96,720
Prepaid expenses 3,192 --
---------- ----------
Total current assets 182,196 200,343
EQUIPMENT AND LEASEHOLD IMPROVEMENTS,
at depreciated cost 2,816 4,877
---------- ----------
$ 185,012 $ 205,220
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current obligations under capital leases $ 14,978 $ 14,978
Accounts payable 32,170 27,018
Accrued compensation 48,033 21,700
Other accrued expenses 49,161 39,713
---------- ----------
Total current liabilities 144,342 103,409
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, no par value;
authorized 40,000,000 shares;
issued and outstanding:
March 31,1998 4,203,423 shares
June 30, 1997 4,203,423 shares 3,546,707 3,516,607
Additional paid-in capital 11,970 11,970
Accumulated deficit -3,518,007 -3,426,766
---------- ----------
Total stockholders' equity 40,670 101,811
---------- ----------
$ 185,012 $ 205,220
========== ==========
</TABLE>
See accompanying notes to unaudited
condensed financial statements
3
<PAGE> 6
SCIENTIFIC NRG, INCORPORATED
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended March 31, Nine Months Ended March 31,
1998 1997 1998 1997
------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 84,572.00 $ 153,475.00 340,355.00 $ 388,737.00
Cost of sales 63,228.00 72,703.00 224,984.00 241,898.00
------------- ------------ ------------ ------------
Gross profit 21,344.00 80,772.00 115,371.00 146,341.00
Operating Expenses:
General administrative,
and selling costs 61,941.00 86,517.00 204,581.00 225,021.00
Research and development 377.00 1,111.00 1,430.00 3,944.00
------------- ------------ ------------ ------------
Loss from operations (40,974.00) (6,856.00) (90,640.00) (142,124.00)
Other income - 22,177.00 - 63,568.00
Interest expense - (1,547.00) - (15,212.00)
------------- ------------ ------------ ------------
Income (loss) before provision for
taxes and extraordinary gain (40,974.00) 13,774.00 (90,640.00) (97,801.00)
Provision for taxes (200.00) (200.00) (600.00) (600.00)
------------ ------------ ------------ ------------
Income (loss) before extraordinary gain (41,174.00) 13,574.00 (91,240.00) (98,401.00)
Extraordinary gain on conversion of
debt to common stock,
net of $0 tax - 460,092.00 - 460,992.00
------------ ------------ ------------ ------------
Net income (loss) $ (41,171.00) $ 474,566.00 $ (91,240.00) $ 362,591.00
============ ============ ============ ============
Weighted average number
of shares outstanding 4,203,423.00 3,525,293.00 4,203,423.00 2,960,346.00
------------ ------------ ------------ ------------
Income (loss) per share;
From continuing operations $ (0.01) - (0.02) (0.03)
Extraordinary gain - 0.13 - 0.15
------------ ------------ ------------ ------------
Net income (loss) per common share $ (0.01) $ 0.13 $ (0.02) $ 0.12
============ ============ ============ ============
</TABLE>
See accompanying notes to unaudited
condensed financial statements
4
<PAGE> 7
SCIENTIFIC, INCORPORATED
CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY
Nine Months Ended March 31, 1988
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT EQUITY
--------- ---------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Balance, June 30, 1997 4,203,423 $3,516,607 $11,970 $(3,425,788) $101,811
Common stock earned in connection
with legal services rendered - 3,738 - - 3,738
Common stock earned by Parke Industries,
an affiliated company, for services rendered
under an administrative service agreement - 15,000 - - 15,300
Net loss - - - (41,265) (41,265)
--------- ---------- ------- ----------- --------
Balance, September 30, 1997 4,203,423 3,535,345 11,970 (3,468,031) 79,284
Common stock earned in connection
with legal services rendered - 1,362 - - 1,362
Common stock earned by Parke Industries,
an affiliated company, for services rendered
under an administrative service agreement - 10,000 - - 10,000
Net loss - - - (8,802) (8,802)
--------- ---------- ------- ----------- --------
Balance, December 31, 1997 4,203,423 3,546,707 11,970 (3,476,833) 81,844
Net loss - - - (41,174) (41,174)
--------- ---------- ------- ----------- --------
Balance, March 31, 1997 4,203,423 $3,546,707 $11,970 $(3,518,007) $ 40,670
========= ========== ======= =========== ========
</TABLE>
See accompanying notes to unaudited
condensed financial statements
5
<PAGE> 8
SCIENTIFIC NRG, INCORPORATED
CONDENSED STATEMENTS OF CASH FLOW
Nine Months Ended March 31, 1998 and 1997
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, March 31,
1998 1997
--------- ---------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Cash received from customers $ 336,227 $ 369,831
Cash paid to suppliers and employees (361,230) (572,507)
Interest paid - (6,870)
Income taxes paid (1,600) -
--------- ---------
Net cash used in operating activities (26,603) (209,546)
--------- ---------
CASH FLOW USED IN INVESTING ACTIVITIES
Purchase of equipment and
leasehold improvements - (5,000)
CASH FLOW FROM FINANCING ACTIVITIES
Net decrease in line of credit - (44,220)
Proceeds from advances and notes from
Company's officer and/or director - 70,000
Principal payments under
capital lease obligations - (15,148)
Principal payments on advances - (60,000)
Proceeds from issuance of common stock - 310,500
--------- ---------
Net cash provided by financing activities - 261,132
--------- ---------
Net increase (decrease) in cash $ (26,603) 46,586
CASH
Beginning of period 35,300 -
--------- ----------
Ending of period $ 8,697 $ 46,586
========= ==========
</TABLE>
See accompanying notes to unaudited
condensed financial statements
6
<PAGE> 9
SCIENTIFIC NRG, INCORPORATED
CONDENSED STATEMENTS OF CASH FLOW (Continued)
Nine Months Ended March 31, 1998 and 1997
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, March 31,
1998 1997
<S> <C> <C>
RECONCILIATION OF NET INCOME (LOSS)
TO NET CASH USED IN OPERATING ACTIVITIES
Net Income (loss) $(91,240) $ 362,591
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Non-cash interest expense -- 18,212
Depreciation and amortization 2,061 3,625
Provision for doubtful accounts -- (4,110)
Loss on disposal of fixed assets -- 22,252
Compensation expense arising from
professional services and service contracts 30,100 52,500
Extraordinary gain from debt conversion to equity -- (460,992)
Write off of other assets - deposits -- 4,809
Change in assets and liabilities:
Trade receivables 2,354 40,704
Inventories (7,619) 15,565
Prepaid expenses and deposits (3,192) (6,179)
Accounts payable, accrued compensation
and other accrued expenses 40,933 (259,123)
Accrued interest payable -- --
Accrued income taxes -- 600
-------- ---------
Net cash used in operating activities $(26,603) $(209,546)
======== =========
</TABLE>
See accompanying notes to unaudited
condensed financial statements
7
<PAGE> 10
SCIENTIFIC NRG, INCORPORATED
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 1998
NOTE 1. BASIS OF PRESENTATION
In the opinion of the Company's management, the accompanying unaudited condensed
financial statements include all adjustments ( consisting of normal accruals )
necessary for the fair presentation of its financial position at March 31, 1998,
results of operations for the three and nine months ended March 31, 1998 and
1997 and cashflows for the nine months ended March 31, 1998 and 1997. Although
the Company believes that the disclosures in these financial statements are
adequate to make the information presented not misleading, certain information
and disclosures normally included in the financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted. These financial statements should be read in conjunction with the
Company's audited financial statements included in the Company's Annual Report
on Form10-KSB filed with the Securities and Exchange Commission on October 15,
1997. Operating results for the three and nine month periods ended March 31,
1998 are not necessarily indicative of the results that may be expected for the
Company's entire year ending June 30, 1998. The Financial Accounting Standards
Board has issued Statement of Financial Accounting Standards 128, "Earnings per
Share" ( SFAS 128 ), which is effective for financial statements issued for
periods ending after December 15, 1997. The effect of adopting SFAS 128 has not
yet been determined.
NOTE 2. INVENTORIES
Inventories are stated at the lower of cost or net realizable value. Cost is
determined under the standard cost method. Costs include materials, direct
labor, and an allocable portion of manufacturing overhead. The Company operates
in an industry in which its products are subject to design changes and
manufactured based upon customer specifications. Accordingly, should design
requirements change significantly or customer orders be canceled, the ultimate
net realizable value of such products could be less than the carrying value of
such amounts. At March 31, 1998, management believes that inventories are
carried at their net realizable value.
8
<PAGE> 11
PART II
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 2. CHANGES IN SECURITIES.
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.
At the Annual Meeting of Shareholders of the Company held on February
21, 1998, the following persons were nominated and elected as directors of the
Company; Daniel Parke, Jonathan Forgy, Oliver Washburn, Richard Weed, and John
Tastad.
The directors appointed the following persons to serve as officers of
the Company at the pleasure of the board: Daniel Parke, Chief Executive Officer;
Jonathan Forgy, President; Tami Miller, Secretary; and Oliver Washburn,
Treasurer.
ITEM 5. OTHER INFORMATION.
Since becoming an affiliate in 1996, Parke Industries, Inc. ("Parke")
has accounted for approximately one-third of the Company's revenue. At December
31, 1997, Parke owned eleven percent of the outstanding common stock of the
Company and held an option to acquire an additional five percent.
Subsequently, on January 31, 1998, Parke was acquired by SRS, a wholly
owned subsidiary of Carolina Power and Light. Under the purchase agreement, SRS
hired the Parke management team and bought Parke's stock in the Company and the
related stock option. Accordingly, as of January 31,1998, SRS became an
affiliate of the Company. SRS and Parke announced a strategic plan to
significantly expand SRS's presence in the energy efficient retrofit market.
Management of the Company believes that its strong ties with Parke and the plans
of its new affiliate, SRS, may lead to a substantial increase in demand for the
Company's products in the future (FLS).
In addition, the Company has been approached by persons who have
expressed a desire to see the Company play a role in the consolidation of the
energy efficient lighting products industry, particularly compact fluorescent
lighting products and other products used by ESCOs on large retrofit projects.
Management of the Company plans to pursue opportunities that will enhance
shareholder value and allow the Company to compete in selected areas of the
energy efficient lighting market.
9
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
The following exhibits are incorporated herein by reference from the
Company's initial Form 10 filing on or about November 12, 1986 or in other
reports filed pursuant to the Securities Exchange Act of 1934, as amended.
<TABLE>
<S> <C>
3.1 Articles of Incorporation as in effect on the date hereof
(including Amendment thereto effective December 28, 1988).
3.2 Articles of Incorporation as in effect on the date hereof
(including Amendment thereto effective November 20, 1996).
3.3 Bylaws.
4.1 Specimen of Issued and Outstanding Restricted Share Certificate
and reverse side thereof (see also Exhibits 3.1 and 3.3).
4.6 Incentive Stock Option Plan.
10.7 Agreement (assigning patent rights).
10.8 Agreement Between Scientific Component Systems, Inc. and NRG,
Inc., June 29, 1983.
10.9 Agreement, July, 1983 (assigning patent rights, with Exhibit
10.7 as exhibit).
10.10 Assignment of Patent Rights from Scientific Component Systems,
Inc. to NRG, Inc., April 20, 1984.
10.11 Assignment of Patent Rights from Rhett McNair and James Helling
to NRG, Inc., April 20, 1984.
10.12 Assignment of Patent Rights from Rhett McNair, James Helling,
William R. Ingles and Gerald L. Fullerton to NRG, Inc., April
20, 1984.
10.13 Agreement Assigning Patent Rights from Scientific Component
Systems, Inc., to NRG, Inc., April 20, 1984.
10.14 Assignment with Possibility of Reverter of Patent Rights from
Rhett McNair to NRG, Inc., January 21, 1986.
10.20 Form of Warrant Certificate.
10.27 New Lease for Company Headquarters in Tustin, California.
10.28 Royalty Agreement with Rhett McNair.
10.29 Consulting Agreement with MLF & Associates, Inc., April 1, 1990.
10.30 Promissory Note Payable to Oliver Washburn and Extension
Thereto.
10.31 Promissory Note Payable to Malcolm Fickel and Extension Thereto.
10.32 Promissory Note Payable to Malcolm Fickel and Extension Thereto.
10.33 Promissory Note Payable to Malcolm Fickel and Extension Thereto.
</TABLE>
10
<PAGE> 13
<TABLE>
<S> <C>
10.34 Promissory Note Payable to Malcolm Fickel and Extension Thereto.
10.35 Deferred Compensation Agreement Between the Company and Malcolm
Fickel.
10.36 Line of Credit Agreement with Bank.
10.37 Promissory Note Payable to Peter C. Kreft.
10.38 Stock Purchase Agreement Between the Company and MLF &
Associates, Inc. Retirement Trust, April 30, 1993.
10.39 Stock Purchase Agreement Between the Company and Malcolm L.
Fickel, April 30, 1993.
10.40 Stock Purchase Agreement Between the Company and Oliver K.
Washburn, April 30, 1993.
10.41 Stock Purchase Agreement Between the Company and Peter C. Kreft,
April 30, 1993.
10.42 Stock Purchase Agreement Between the Company and Thomas C.
Moceri, April 30, 1993.
10.43 Financing Agreement Between the Company and Pre-Banc Business
Credit, Inc., May 21, 1993.
10.44 Addendum to Consulting Agreement between the Company and Malcolm
L. Fickel, June 30, 1993.
10.45 Leasing Agreement Between the Company and Auto Car Leasing
Company, September 9, 1993.
10.46 Stock Warrant Agreement Between the Company and Eddie R.
Fischer, September 9, 1993.
10.47 Note and Revolving Loan Agreement Between the Company and
William T. Moceri, IRA, November 15, 1994.
10.48 Promissory Note Payable to Thomas C. Moceri, Trustee, Thomas C.
Moceri Profit Sharing Plan, September 28, 1994.
10.49 Promissory Note Payable to Oliver Washburn, March 7, 1995.
10.50 Promissory Note Payable to Oliver Washburn, March 7, 1995.
10.51 General Release Agreement Between the Company and Peter Kreft,
June 9, 1995.
10.52 Promissory Note Payable to Oliver Washburn, September 14, 1995.
10.53 Promissory Note Payable to Oliver Washburn, November 13, 1995.
10.54 Promissory Note Payable to Oliver Washburn, April 26, 1996.
10.55 Promissory Note Payable to Oliver Washburn, July 18, 1996.
</TABLE>
11
<PAGE> 14
<TABLE>
<S> <C>
10.56 Workout Agreement dated August 30, 1996
10.57 Secured Promissory Note to Malcolm L. Fickel , September 11,1996
10.58 Secured Promissory Note to Oliver K. Washburn , September
11,1996
10.59 Subordinated Cash Flow Promissory Note to Oliver K. Washburn ,
September 30 , 1996
28.2 Patent No. 4,520,436 (X-18 Series Downlight).
28.4 Patent No. 4,595,969 (Lamp Mounting Apparatus and Method).
28.5 Patent No. 4,641,228 (Lamp Mounting Apparatus and Method).
28.6 Patent No. 4,700,110 (Lamp Switching).
28.7 Patent No. 4,704,664 (Lamp Apparatus).
28.8 Trademarks Registered (Lightning Bolt Logo, Scientific NRG
Component Systems, SCS, X-18) and Notice of Publication of
Trademark, "Switchit".
28.9 Patent No. 4,922,393 (Lamp Apparatus).
</TABLE>
(b) Reports on Form 8-K
No reports were filed during the quarter ended March 31, 1998 on form
8-K.
12
<PAGE> 15
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Date: May 14, 1998
SCIENTIFIC NRG, INCORPORATED,
a Minnesota Corporation
By: /s/ Daniel W. Parke
--------------------
Name: Daniel W. Parke
Title: Chairman and CEO
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Date
---------- ----
<S> <C>
By: /s/ Daniel W. Parke May 14, 1998
-----------------------
Name: Daniel W. Parke
Title: Chairman and CEO
By: /s/ Oliver K. Washburn May 14,1998
-----------------------
Name: Oliver K. Washburn
Title: Treasurer
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM AUDITED
FINANCIAL STATEMENTS FOR YEAR ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-KSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 8,697
<SECURITIES> 0
<RECEIVABLES> 65,968
<ALLOWANCES> 9,658
<INVENTORY> 104,339
<CURRENT-ASSETS> 182,196
<PP&E> 18,274
<DEPRECIATION> 15,458
<TOTAL-ASSETS> 185,012
<CURRENT-LIABILITIES> 144,342
<BONDS> 0
0
0
<COMMON> 4,203,423
<OTHER-SE> (3,476,833)
<TOTAL-LIABILITY-AND-EQUITY> 185,012
<SALES> 340,355
<TOTAL-REVENUES> 340,355
<CGS> 224,684
<TOTAL-COSTS> 206,011
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (90,640)
<INCOME-TAX> (600)
<INCOME-CONTINUING> (91,240)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (91,240)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
