SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarter ended March 31, 2000
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 1-10492
EPITOPE, INC.
(Exact name of registrant as specified in its charter)
OREGON NO. 93-0779127
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
8505 SW Creekside Place
Beaverton, Oregon 97008-7108
(Address of principal executive offices) (Zip code)
(503) 641-6115
(Registrant's telephone number, including area code)
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 [ ]
Number of shares of Common Stock, no par value, outstanding as of March 31,
2000: 15,964,919
<PAGE>
PART I. FINANCIAL INFORMATION
<TABLE>
PAGE NO.
--------
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
<S> <C>
Condensed Consolidated Balance Sheets at March 31, 2000 (unaudited)
and September 30, 1999......................................................... 2
Condensed Consolidated Statements of Operations (unaudited) for the
three months and six months ended March 31, 2000 and 1999...................... 3
Condensed Consolidated Statements of Changes in Shareholders' Equity
(unaudited) for the three months and six months ended March 31, 2000........... 4
Condensed Consolidated Statements of Cash Flows (unaudited) for the six
months ended March 31, 2000 and 1999........................................... 5
Notes to Condensed Consolidated Financial Statements (unaudited)................... 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS ......................................................... 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...................... 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.............................................................. 12
ITEM 5. OTHER INFORMATION.............................................................. 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................................... 12
</TABLE>
<PAGE>
EPITOPE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
MARCH 31, 2000 SEPTEMBER 30, 1999
(Unaudited)
ASSETS
Current assets
<S> <C> <C>
Cash and cash equivalents........................... $ 7,460,328 $ 1,075,898
Marketable securities............................... 3,977,407 4,532,594
Trade accounts receivable, net ..................... 1,536,217 1,489,884
Other receivables................................... 620,122 73,356
Inventories (Note 2) ............................... 1,316,003 1,504,050
Prepaid expenses.................................... 411,558 329,958
--------------- --------------
15,321,635 9,005,740
Property and equipment, net......................... 1,233,131 1,030,595
Patents and proprietary technology, net ............ 402,520 487,085
Other assets and deposits........................... 172,102 170,895
--------------- --------------
$ 17,129,388 $ 10,694,315
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable.................................... $ 313,953 $ 474,713
Salaries, benefits and other accrued liabilities.... 1,167,038 1,643,573
--------------- --------------
1,480,991 2,118,286
Commitments and contingencies....................... - -
Shareholders' equity (Notes 2 and 4)
Contributed capital................................. 123,322,488 114,827,231
Accumulated deficit................................. (107,674,091) (106,251,202)
--------------- --------------
15,648,397 8,576,029
$ 17,129,388 $ 10,694,315
</TABLE>
<PAGE>
EPITOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31 MARCH 31
2000 1999 2000 1999
Revenues
<S> <C> <C> <C> <C>
Product sales .............................. $ 3,044,586 $ 2,072,919 $ 5,629,342 $ 4,317,329
Grants and contracts ....................... 32,247 - 74,517 59
------------ ------------- ------------ -------------
3,076,833 2,072,919 5,703,859 4,317,388
Costs and expenses
Product costs .............................. 1,215,149 682,875 2,236,214 1,512,321
Operations.................................. 390,093 453,996 815,751 827,200
Research and development costs ............. 771,867 594,903 1,309,088 1,132,758
Selling, general and administrative expenses 1,715,702 1,244,568 2,936,784 2,507,482
------------ ------------- ------------ -------------
4,092,811 2,976,342 7,297,837 5,979,761
Loss from operations ....................... (1,015,978) (903,423) (1,593,978) (1,662,373)
Other income (expense), net
Interest income............................. 107,544 75,281 175,404 140,516
Interest expense............................ (143) (190) (240) (532)
Other, net.................................. (887) (4,670) (4,075) (10,591)
------------ ------------- ------------ -------------
106,514 70,421 171,089 129,393
Net loss.................................... $ (909,464) $ (833,002) $ (1,422,889) $ (1,532,980)
Basic and diluted net loss per share........ $ (0.06) $ (0.06) $ (0.10) $ (0.11)
Weighted average number of shares outstanding 15,067,881 14,008,013 14,655,199 13,799,135
</TABLE>
<PAGE>
EPITOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
<TABLE>
COMMON STOCK ACCUMULATED
SHARES DOLLARS DEFICIT TOTAL
<S> <C> <C> <C> <C>
BALANCES AT SEPTEMBER 30, 1999................. 14,245,097 $ 114,827,231 $(106,251,202) $ 8,576,029
Common stock issued upon
exercise of options.......................... 12,846 58,250 - 58,250
Common stock issued as
matching savings plan contributions....... 2,691 17,492 - 17,492
Common stock issued under Employee
Stock Purchase Plan.......................... 1,253 4,197 - 4,197
Compensation expense for
stock option grants.......................... - 80,108 - 80,108
Net loss for the quarter....................... - - (513,425) (513,425)
---------- -------------- ------------- --------------
BALANCES AT DECEMBER 31, 1999 (UNAUDITED)...... 14,261,887 $ 114,987,278 $(106,764,627) $ 8,222,651
Common stock issued upon
exercise of options.......................... 1,143,944 5,071,383 - 5,071,383
Common stock issued upon
exercise of warrants...................... 551,700 3,262,202 - 3,262,202
Common stock issued as
matching savings plan contributions....... 2,193 20,559 - 20,559
Common stock issued under Employee
Stock Purchase Plan.......................... 5,195 24,838 - 24,838
Compensation expense for
stock option grants.......................... - 28,373 28,373
Expenses related to equity issuance............ - (72,145) - (72,145)
Net loss for the quarter....................... - - (909,464) (909,464)
---------- -------------- ------------- --------------
BALANCES AT MARCH 31, 2000 (UNAUDITED)......... 15,964,919 $ 123,322,488 $(107,674,091) $ 15,648,397
</TABLE>
<PAGE>
EPITOPE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
SIX MONTHS ENDED MARCH 31 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $ (1,422,889) $ (1,532,980)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization ......................................... 309,613 311,553
Loss on disposition of assets.......................................... 40 10,590
(Increase) decrease in accounts receivable and other receivables ...... (593,099) 494,261
Decrease (increase) in inventories .................................... 188,047 (623,969)
(Increase) decrease in prepaid expenses ............................... (81,600) 17,377
Decrease in accounts payable and accrued liabilities .................. (637,295) (547,978)
Common stock issued as compensation for services....................... - 41,685
Compensation expense for stock option grants and
deferred salary increases .......................................... 108,481 157,312
Other, net ............................................................ 41,070 -
------------ ------------
Net cash used by operating activities.................................. (2,087,632) (1,672,149)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in marketable securities ................................... (6,110,187) (3,971,291)
Proceeds from sale of marketable securities ........................... 6,665,373 3,269,206
Additions to property and equipment ................................... (401,951) (325,971)
Expenditures for patents and proprietary technology ................... (25,673) (99,488)
Investment in affiliated companies..................................... (42,276) (18,059)
------------ ------------
Net cash provided (used) by investing activities....................... 85,286 (1,145,603)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock ................................ 8,386,776 2,178,788
------------ ------------
Net cash provided by financing activities.............................. 8,386,776 2,178,788
Net increase (decrease) in cash and cash equivalents .................. 6,384,430 (638,964)
Cash and cash equivalents at beginning of period ...................... 1,075,898 1,164,275
------------ ------------
Cash and cash equivalents at end of period $ 7,460,328 $ 525,311
</TABLE>
<PAGE>
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1 THE COMPANY
Epitope, Inc. (Epitope or the Company) develops, manufactures and markets oral
specimen collection devices and diagnostic products using its proprietary oral
fluid technologies. These products are sold to public and private-sector clients
in the United States and certain foreign countries. The Company's primary focus
is on the detection of antibodies to the Human Immunodeficiency Virus (HIV), the
cause of Acquired Immune Deficiency Syndrome (AIDS). The Company's technology is
also being used to test for drugs-of-abuse and other analytes. Commercial
distribution of the Company's oral specimen collection device as part of a test
for the five major drugs-of-abuse was launched on February 2, 2000.
The interim condensed consolidated financial statements included herein are
unaudited; however, in the opinion of the Company's management, the interim data
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair statement of the results of operations for the interim
periods. These condensed consolidated financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's 1999 Annual Report on Form 10-K. Results of operations for the period
ended March 31, 2000 are not necessarily indicative of the results of operations
expected for the full fiscal year.
NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation. The accompanying financial statements include the
accounts of the Company and its joint venture subsidiary. All significant
intercompany balances and transactions have been eliminated.
<TABLE>
Inventories. Inventory components are summarized as follows: 03/31/00 9/30/99
(Unaudited)
<S> <C> <C>
Raw materials......................................................... $ 298,268 $ 360,806
Work-in-process....................................................... 512,734 441,952
Finished goods ....................................................... 505,001 701,292
------------ ---------
$ 1,316,003 $ 1,504,050
</TABLE>
Net Loss Per Share. Basic and diluted loss per share has been computed using the
weighted average number of shares of common stock and potential common stock
outstanding during the period. Potential common stock consists of the number of
shares issuable upon exercise of outstanding warrants and options less the
number of shares assumed to have been purchased for the treasury with the
proceeds from such exercise. Potential common stock is excluded from the
computation if its effect is anti-dilutive. Basic and diluted net income (loss)
per share are the same for the comparable three month and six month periods
ended March 31, 2000 and 1999. Shares of potential common stock that were not
included in the calculation of diluted loss per share as they were anti-dilutive
are as follows:
<TABLE>
THREE MONTHS ENDED SIX MONTHS ENDED
3/31/00 3/31/99 3/31/00 3/31/99
<S> <C> <C> <C> <C>
Number of Shares.......... 1,716,250 873,662 1,232,802 496,296
</TABLE>
Exercise of Options and Warrants. During the quarter ended March 31, 2000,
1,143,944 shares of common stock were issued for the exercise of employee stock
options, and 551,700 shares of common stock were issued for the exercise of
warrants. Proceeds from the exercise of options and warrants were $5,071,383 and
$3,262,202, respectively. Equity issuance costs of $72,145 for commissions
related to the exercise of common stock warrants were deducted from the
proceeds. Payroll taxes related to the exercise of employee stock options during
the quarter, charged to general and administrative expenses, were $259,602. See
Note 4 regarding subsequent exercises.
<PAGE>
Statement of Cash Flows. Cash paid for interest approximated interest expense in
the quarters ended March 31, 2000 and 1999. No cash was paid for income taxes in
fiscal 2000 or 1999. Compensation expense related to the issuance of
compensatory equity securities, which also represent non-cash transactions,
amounted to $108,481 and $157,312 in the first six months of fiscal 2000 and
1999, respectively.
Management Estimates. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
relating to assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could vary from these
estimates.
Reclassifications. Certain reclassifications have been made to prior years' data
to conform with the current year's presentation. These reclassifications had no
impact on previously reported results of operations or shareholders' equity.
Regulatory affairs, quality assurance, materials management and purchasing were
reclassified as Operations. In the comparable periods of fiscal 1999 these
departments were included in either Research and development costs or Selling,
general and administrative expenses. Management believes these reclassifications
provide a more meaningful presentation.
NOTE 3 SEGMENT AND GEOGRAPHIC AREA INFORMATION
The following disclosures are required by Statement of Financial Accounting
Standards No. 131, "Segment Disclosures and Related Information" (SFAS 131):
The Company's products are all included in the medical products industry
segment. See Note 1 for a description of the Company's business. The Company's
products are sold principally in the United States and Asia. Operating loss
represents revenues less product costs and operating expenses. No operating
income or loss is reflected for geographic areas other than the United States as
all revenues for other geographic areas are exports from the United States.
IN THOUSANDS
<TABLE>
FOR THE SIX MONTHS ENDED REVENUES OPERATING LOSS IDENTIFIABLE ASSETS
MARCH 31, 2000 1999 2000 1999 2000 1999
GEOGRAPHIC AREA
<S> <C> <C> <C> <C> <C> <C>
United States..................................... $5,381 $4,087 $(1,423) $(1,533) $17,129 $10,694
Canada............................................ 7 2 - - - -
Asia.............................................. 237 194 - - - -
Latin America..................................... - 4 - - - -
Europe............................................ 3 28 - - - -
Other............................................. 1 2 - - - -
------ ------ ------- ------- ------- -------
$5,629 $4,317 $(1,423) $(1,533) $17,129 $10,694
</TABLE>
Customer Concentration. In the second quarter of fiscal 2000 four customers
accounted for 66 percent of product revenues as compared to 71 percent for the
same quarter of fiscal 1999. For the six month periods ended March 31, 2000 and
1999 the same four customers accounted for 60 percent and 70 percent,
respectively. The Company believes that its relationship with each of these
customers is strong and believes that they will purchase comparable or
increasing volumes of the Company's products for the foreseeable future. There
can be no assurance, however, that sales to these customers will not decrease or
that these customers will not choose to replace the Company's products with
those of competitors. The loss of any of these customers or a significant
decrease in the volume of products purchased by them would have a material
adverse effect on the Company.
<PAGE>
NOTE 4 SUBSEQUENT EVENTS
Stock option exercises. Through April 30, 2000, the Company had received an
additional $2.5 million in cash from the exercise of warrants and options to
purchase 427,867 shares of common stock.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Statements below regarding future events or performance are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. The Company's actual results could be quite different from those
expressed or implied by the forward-looking statements. Factors that could
affect results include: loss of key personnel; failure to comply with
regulations of the FDA or other regulatory agencies; obstacles to international
marketing of the Company's products; loss or impairment of sources of capital;
ability of the Company to develop product distribution channels; ability of the
Company to develop new products; development of competing products; market
acceptance of oral testing products; and changes in federal or state law or
regulations. These factors are discussed more fully under "Forward-Looking
Statements; Risk Factors" in Item 1 and elsewhere in the Company's Annual Report
on Form 10-K. Although forward-looking statements help to provide complete
information about the Company, readers should keep in mind that forward-looking
statements are much less reliable than historical information. Readers are
cautioned not to place undue reliance on the forward-looking statements.
RESULTS OF OPERATIONS
The table below shows the amount (in thousands) and percentage of Epitope's
total revenue contributed by each of its principal products and by grants and
contracts.
<TABLE>
THREE MONTHS ENDED MARCH 31 (IN THOUSANDS, EXCEPT %) 2000 1999
DOLLARS PERCENT DOLLARS PERCENT
Product Sales
<S> <C> <C> <C> <C>
Oral specimen collection devices....................... $ 2,578 84% $ 1,486 72%
Western blot HIV confirmatory tests.................... 416 13 499 24
Other product sales.................................... 51 2 88 4
------- ----- ------- ---
3,045 99 2,073 100%
Grants and contracts...................................... 32 1 - -
------- ----- ------- ---
$ 3,077 100% $ 2,073 100%
SIX MONTHS ENDED MARCH 31 (IN THOUSANDS, EXCEPT %) 2000 1999
DOLLARS PERCENT DOLLARS PERCENT
Product sales
Oral specimen collection devices....................... $ 4,708 83% $ 3,005 70%
Western blot HIV confirmatory tests.................... 815 14 1,165 27
Other product sales.................................... 106 2 147 3
------- ----- ------- ---
5,629 99 4,317 100
Grants and contracts...................................... 75 1 - -
------- ----- ------- ---
$ 5,704 100% $ 4,317 100%
</TABLE>
Revenues. Total product sales increased by $972,000 or 47 percent in the current
quarter as compared to the first quarter of fiscal 1999. This increase was
primarily a result of expanded sales volume of Epitope's lead product, the
OraSure oral specimen collection device, which increased by $1,092,000 or 73
percent in the current quarter as compared to the first quarter of fiscal 1999.
Total product sales revenues increased from the first quarter of fiscal 2000 by
$460,000 or 18 percent primarily as a result of growth in the life insurance and
international testing markets.
OraSure device and other product sales into the public health markets in the
quarter ended March 31, 2000 totaled $720,000 or 24 percent of product sales as
compared to $458,000 or 21 percent in the same period of fiscal 1999, and
$1,684,000 or 30 percent of product sales as compared to $1,032,000 or 23
percent in the comparable six month periods. The life insurance testing market
in the second quarter of fiscal 2000 contributed $1,688,000 or 55 percent of
total product sales for the period as compared to $988,000 or 48 percent in the
first quarter of fiscal 1999, and $2,767,000 or 49 percent of product sales as
compared to $1,890,000 or 44 percent in the comparable six month periods. Sales
into international markets in the current quarter were $153,000 or 5 percent of
product sales as
<PAGE>
compared to $128,000 or 6 percent of product sales in the same quarter of fiscal
1999, and $294,000 or 5 percent of product sales as compared to $231,000 or 6
percent in the comparable six month periods.
Sales of the Company's Western blot HIV confirmatory tests decreased by $83,000
or 17 percent in the current quarter as compared to the first quarter of fiscal
1999, and $350,000 or 30 percent in the comparable six month periods. With
reduced sales of Western blot HIV confirmatory tests to Organon Teknika, and
OraSure sales to a broader customer base, the total sales to the Company's top 4
customers decreased to 66 percent of total sales in the second quarter of fiscal
2000. See "Customer Concentration" in Note 3 to the Consolidated Financial
Statements, "Segment and Geographic Area Information."
Fiscal year sales are anticipated to rise in 2000, compared to fiscal year 1999.
However, sales may be affected by economic factors and seasonality of certain
market segments. Expectations for future sales are based primarily on forecasts
provided to the Company by individual customers rather than firm orders, as many
of the customers in the public health and international markets do not have
ongoing purchase commitments with the Company.
Grant and contract revenues increased by $32,000 or 100 percent in the current
quarter as compared to the first quarter of fiscal 1999, and by $75,000 for the
comparable six month periods due to funding from the grant provided by the
National Institutes for Health (NIH) for the development of a syphilis test.
Phase I of the grant contract has been completed and the request to begin Phase
II has been made.
Gross Margin. Gross margin on product sales was 61 percent in the second quarter
of fiscal 2000 compared to 67 percent in the comparable period of fiscal 1999.
For the comparable six month periods the gross margins were 60 percent and 65
percent, respectively. The decline in gross margin is primarily attributable to
decreases in sales and production volumes of the Western blot HIV confirmatory
tests.
Operations. Operation expenses decreased by $64,000 or 14 percent in the current
quarter as compared to last year's second quarter and decreased $11,000 or 1% in
the comparable six month periods. The decrease is due to cost management and a
more stable employee base.
Research and Development Expenses. Research and development expenses increased
by $177,000 or 30% as compared to the second quarter of fiscal 1999, and by
$176,000 or 16 percent for the comparable six month periods. R&D expenses for
fiscal year 2000 are expected to exceed the 1999 level as spending for the
syphilis test and clinical trials for OraQuick are planned, although some of
this increased expense will be offset by grant funding.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the second quarter of fiscal 2000 increased by
$471,000 or 38 percent as compared to last year's second quarter, and by
$429,000 or 17 percent for the comparable six month periods. The increases were
primarily a result of costs associated with the hiring the Company's chief
executive officer and nearly $260,000 in payroll taxes on the exercise of
employee stock options. Also see Liquidity and Capital Resources and Note 2 to
the Consolidated Financial Statements, "Exercise of Options and Warrants."
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
(IN THOUSANDS) 3/31/00 9/30/99
<S> <C> <C>
Cash and cash equivalents.............................................. $ 7,460 $ 1,076
Marketable securities.................................................. 3,977 4,533
Working capital........................................................ 13,841 6,887
</TABLE>
Net cash flows used in operating activities increased by $415,000 compared to
the six month period in fiscal 1999. The total of cash and cash equivalents plus
marketable securities increased by $6.5 million during the quarter due primarily
to the exercise of options and warrants to purchase common stock. The Company
received proceeds of $5.1 million from the exercise of options to purchase
common stock and $3.3 million from the exercise of warrants to purchase common
stock during the quarter. During April 2000, the Company received an additional
$2.5 million in cash from the exercise of warrants and options to purchase
427,867 shares of common stock.
The Company anticipates that it will continue to need funds to support ongoing
research and development projects, to provide additional manufacturing capacity,
and to increase working capital to support growth. The Company
<PAGE>
believes that its operating liquidity requirements for the foreseeable future
can be met by existing resources, including marketable securities and cash
generated by operations. The Company may also receive funds through the exercise
of additional stock options and warrants as well as research grants; however,
there can be no assurances that funding from these sources will be available.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company does not hold material amounts of derivative financial instruments,
other financial instruments, or derivative commodity instruments, and
accordingly has no material market risk to report under this item.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 5. OTHER INFORMATION
As discussed in the December 31, 1999 Quarterly Report on Form 10-Q, Robert D.
Thompson, 38, was appointed as the Company's president and chief executive
officer in January 2000. Prior to joining the Company, Mr. Thompson was chief
operating officer and chief financial officer at LabOne, Inc. (Nasdaq NM: LABS),
a Kansas City, Missouri-based insurance testing laboratory.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibits are listed on the attached exhibit index following the signature page
of this report.
(b) Reports on Form 8-K
None.
<PAGE>
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.
EPITOPE, INC.
May 5, 2000 /S/CHARLES E. BERGERON
- ------------------------------------- ------------------------------------
Date Charles E. Bergeron
Chief Financial Officer
(Principal Financial Officer)
May 5, 2000 /S/THEODORE R. GWIN
- ------------------------------------- ------------------------------------
Date Theodore R. Gwin
Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
27. Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
condensed consolidated financial statements included herein and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 7,460,328
<SECURITIES> 3,977,407
<RECEIVABLES> 2,206,339
<ALLOWANCES> 50,000
<INVENTORY> 1,316,003
<CURRENT-ASSETS> 15,321,635
<PP&E> 6,276,151
<DEPRECIATION> 5,043,020
<TOTAL-ASSETS> 17,129,388
<CURRENT-LIABILITIES> 1,480,991
<BONDS> 0
0
0
<COMMON> 123,322,488
<OTHER-SE> (107,674,091)
<TOTAL-LIABILITY-AND-EQUITY> 17,129,388
<SALES> 5,629,342
<TOTAL-REVENUES> 5,703,859
<CGS> 2,236,214
<TOTAL-COSTS> 7,297,837
<OTHER-EXPENSES> 171,329
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 240
<INCOME-PRETAX> (1,422,889)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,422,889)
<EPS-BASIC> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
