UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
June 30, 1999
Commission File Number
0-17187
Logic Devices Incorporated
(Exact name of registrant as specified in its charter)
California 94-2893789
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1320 Orleans Drive, Sunnyvale, California 94089
(Address of principal executive offices)
(Zip Code)
(408) 542-5400
(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
Indicate the number of shares outstanding of the
issuer's classes of common stock, as of the latest
practicable date. On July 31, 1999, 6,648,238 shares of
Common Stock, without par value, were outstanding.
Logic Devices Incorporated
INDEX
Page
Number
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1999 3
and September 30, 1998
Consolidated Statements of Income for the three months
ended June 30, 1999 and 1998 4
Consolidated Statements of Income for the nine months 5
ended June 30, 1999 and 1998
Consolidated Statements of Cash Flows for the
nine months ended June 30, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
Exhibit 10 18
Exhibit 11 19
Exhibit 27 20
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Logic Devices Incorporated
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 165,000 $ 142,900
Accounts receivable, net of allowance 4,301,300 4,553,400
Inventories 11,719,600 12,535,600
Prepaid expenses 294,600 372,100
Income taxes receivable 90,000 90,000
Total current assets 16,570,500 17,694,000
Equipment and leasehold improvements 3,805,300 4,935,500
Other assets 635,800 969,400
$21,011,600 $23,598,900
Liabilities and Shareholders' Equity
Current liabilities:
Bank borrowings 3,500,000 5,350,000
Notes payable 257,600 -
Current portion of long-term
debt obligations 268,300 562,400
Accounts payable 731,100 1,585,400
Accrued expenses 331,000 565,700
Total current liabilities 5,088,000 8,063,500
Long-term debt obligations,
less current portion 226,500 392,100
Total liabilities 5,314,500 8,455,600
Shareholders' equity:
Common stock, 10,000,000 shares
authorized; 6,632,388 and
6,121,750 shares issued and
outstanding 18,091,900 18,091,900
Common stock subscribed - (307,500)
Retained earnings (2,394,800) (2,641,100)
Total shareholders' equity 15,697,100 15,143,300
$21,011,600 $23,598,900
</TABLE>
Logic Devices Incorporated
Consolidated Statements of Income
Three months ended June 30, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Net sales $ 3,532,100 $ 3,298,700
Cost of sales 1,797,000 1,724,300
Gross margin 1,735,100 1,574,400
Operating expenses:
Research and development 372,000 332,800
Selling, general and administrative 1,037,200 1,077,200
Operating expenses 1,409,200 1,410,000
Income from operations 325,900 164,400
Other expense 126,500 163,700
Income before taxes 199,400 700
Income taxes - -
Net income $ 199,400 $ 700
Basic and diluted earnings
per common share $ 0.03 $ 0.00
Weighted average shares of
common stock outstanding 6,632,388 6,121,750
</TABLE>
Logic Devices Incorporated
Consolidated Statements of Income
Nine months ended June 30, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Net sales $ 9,859,100 $10,055,800
Cost of sales 5,289,800 5,797,300
Gross margin 4,569,300 4,258,500
Operating expenses:
Research and development 1,101,000 973,900
Selling, general and administrative 2,832,100 2,848,100
Operating expenses 3,933,100 3,822,000
Income from operations 636,200 436,500
Other expense 389,100 508,000
Income (loss) before taxes 247,100 (71,500)
Income tax expense (benefit) 800 (84,200)
Net income $ 246,300 $ 12,700
Basic and diluted earnings
per common share $ 0.04 $ 0.00
Weighted average shares of
common stock outstanding 6,632,388 6,121,750
</TABLE>
Logic Devices Incorporated
Consolidated Statements of Cash Flows
Nine months ended June 30, 1999 and 1998
(unaudited)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net income $ 246,300 $ 12,700
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization 1,306,300 1,252,000
Change in operating assets and liabilities:
Accounts receivable, net 252,100 (1,358,100)
Inventories 816,000 (980,700)
Prepaid expenses and other assets 77,500 618,700
Income taxes receivable - (522,000)
Deferred income taxes - 299,000
Accounts payable (854,300) 1,311,000
Accrued expenses (234,700) (49,700)
Net cash provided by
operating activities 1,609,200 582,900
Cash flows from investing activities:
Capital expenditures (153,200) (1,922,300)
Decrease (increase) in other assets 310,700 (548,300)
Net cash provided by (used in)
investing activities 157,500 (2,470,600)
Cash flows from financing activities:
Bank borrowings, net (1,850,000) 1,725,000
Notes payable 257,600 -
Common stock subscribed 307,500 -
Repayment of long-term obligations (459,700) (191,900)
Net cash (used in) provided by
financing activities (1,744,600) 1,533,100
Net increase (decrease) in cash 22,100 (354,600)
Cash and cash equivalents at
beginning of period $ 142,900 $ 365,700
Cash and cash equivalents at
end of period $ 165,000 $ 11,100
</TABLE>
Logic Devices Incorporated
Notes to Consolidated Financial Statements
June 30, 1999 and September 30, 1998
(unaudited)
(A) Basis of Presentation
The accompanying unaudited interim financial statements
reflect all adjustments which are, in the opinion of
management, necessary to present fairly the financial
position, results of operations and cash flows for the
periods indicated.
The accompanying unaudited interim financial statements
have been prepared in accordance with the instructions
for Form 10-Q and, therefore, do not include all
information and footnotes necessary for a complete
presentation of the financial position, results of
operations, and cash flows, in conformity with
generally accepted accounting principles. The Company
has filed audited financial statements which include
all information and footnotes necessary for such a
presentation of the financial position, results of
operations and cash flows for the years ended September
30, 1998 and December 31, 1997, with the Securities and
Exchange Commission. It is suggested that the
accompanying unaudited interim financial statements be
read in conjunction with the aforementioned audited
financial statements. The unaudited interim financial
statements contain all normal and recurring entries.
The results of operations for the interim period ended
June 30, 1999 are not necessarily indicative of the
results to be expected for the full year.
(B) Inventories
A summary of inventories follows:
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
<S> <C> <C>
Raw materials $ 3,629,300 $ 2,599,900
Work-in-process 5,286,000 5,373,600
Finished goods 2,804,300 4,562,100
$11,719,600 $12,535,600
</TABLE>
Based on forecasted 1999 sales levels, the Company has
on hand inventories aggregating approximately twelve
months of sales.
Logic Devices Incorporated
Notes to Consolidated Financial Statements
June 30, 1999 and September 30, 1998
(unaudited)
(C) Financing
As of June 30, 1999, the Company had $3,500,000 in
outstanding borrowings under a revolving line of credit
facility with Sanwa Bank. The Company was not in compliance
with certain repayment obligations under such facility. See
"Part II. Item 3. Defaults Upon Senior Securities." On
July 27, 1999, the Company repaid all of its outstanding
indebtedness with Sanwa Bank utilizing funds from operations
and the proceeds from borrowings with Silicon Valley Bank
under a new revolving line of credit facility. See "Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations."
Certain additional borrowings in the aggregate
principal amount of $250,000 were extended prior to their
maturity on May 31, 1999 to July 31, 1999 and again to
September 30, 1999. See "Item 2. Management's Discussion
and Analysis of Financial Condition and Results of
Operations."
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Results of Operations
Revenues
Net revenues were $3,532,100 for the three months ended
June 30, 1999, an increase of 7% from $3,298,700 for the
three months ended June 30, 1998. The increase in revenues
for the period was attributed to an increase in sales on the
Company's digital signal processing (DSP) products.
Expenses
Cost of revenues increased 4%, from $1,724,300 in the
three months ended June 30, 1998 to $1,797,000 in the three
months ended June 30, 1999. Gross profit increased by 10%,
from $1,574,400 in the 1998 period to $1,735,100 in the 1999
period. This increase was the result of increased sales
volume for the 1999 period, which spreads fixed overhead
costs over more units. As a percentage of net revenues,
gross profit margin increased from 48% in the three months
ended June 30, 1998 to 49% in the three months ended June
30, 1999. This improvement in gross profit margin was the
result of increased sales volume, which spreads fixed
overhead costs over more units.
Research and development expense increased slightly
from $332,800 (10% of net revenues) in the 1998 period to
$372,000 (11% of net revenues) in the 1999 period. The
Company is continuing its efforts to develop new products.
In 1998, the Company invested heavily in new product
development. The Company plans to continue its substantial
investments in new product research and development
throughout 1999.
Selling, general and administrative expense decreased
from $1,077,200 (33% of net revenues) in the 1998 period to
$1,037,200 (29% of net revenues) in the 1999 period. This
decrease was the result of continuous cost cutting measures
pursued by the Company.
The Company had income from operations for the 1999
period of $325,900 versus income of $164,400 in 1998, due
to the above mentioned factors.
For the 1999 period, the Company incurred $126,500 in
other expense, consisting mainly of interest expense versus
other expense of $163,700 in 1998.
As a result of the foregoing, the Company enjoyed net
income of $199,400 in the 1999 period versus net income of
$700 in the 1998 period.
Liquidity and Capital Resources
Cash Flows
For the nine months ended June 30, 1999, the Company
had after-tax cash earnings (defined as net income plus non-
cash depreciation charges) of $1,552,600 versus $1,264,700
for the comparable 1998 period. Although the Company has
historically relied on after-tax earnings as the Company's
primary source of financing for working capital needs and
for capital expenditures, the Company used borrowings
during the 1998 and 1999 period.
During the 1999 period, after-tax cash earnings of
$1,552,600, decreases in accounts receivable of $252,100,
inventories of $816,000 and prepaid expenses of $77,500,
funded decreases in accounts payable of $854,300 and accrued
expenses of $234,700 and a reduction in bank debt of
$1,850,000. This resulted in total net cash provided by
operations of $1,609,200. The Company invested $153,200 in
capital expenditures and increased notes payable by $250,000
during the period. The Company also received $307,500 from
repayment of director loans. The Company expects to receive
an income tax refund of approximately $90,000 in the third
quarter of 1999.
During the 1998 nine-month period, after-tax cash
earnings of $1,264,700, increases in bank borrowings of
$1,725,000 and accounts payable of $1,311,000 and decreases
in prepaid expenses of $618,700 and deferred income taxes of
$299,000, funded increases in accounts receivable of
$1,358,100, inventory of $980,700 and income taxes
receivable of $522,000 and decreases in accrued expenses of
$49,700, which resulted in net cash provided by operations
of $582,900. The Company invested $2,470,600 in capital
expenditures and other assets during the period.
Working Capital
The Company's investment in inventories and accounts
receivable has been significant and will continue to be
significant in the future. Over prior periods, the Company,
as a nature of its business, has maintained these high
levels of inventories and accounts receivable.
The Company relies on third party suppliers for raw
materials and as a result maintains substantial inventory
levels to protect against disruption in supplies. The
Company has historically maintained inventory turnover of
approximately 225 days to 365 days, since 1990. The low
point in inventory levels came in 1992 and 1993 when the
Company had supply disruptions from one of its major
suppliers.
The Company looks at its inventories in relationship to
its sales which have ranged from 140 days to 365 days
between 1998 and 1992. This inventory to sales ratio is a
more stable measure of inventory levels, versus the
traditional inventory turnover measure because, at the times
when the Company is experiencing supply disruptions, and
therefore lower inventory levels, the Company is also
experiencing increased costs of goods due to inefficiencies
in its operations stemming from sporadic deliveries which
skews the numerator and denominator in different directions
for inventory turns calculations. The lowest days on hand of
inventory to sales has been experienced when the Company has
had supply disruptions as in 1992 and 1993.
The Company provides reserves for product material that
is over one year old with no backlog or sales activity and
reserves for future obsolescence. The Company also takes
physical inventory write-downs for obsolescence. The Company
has been actively reducing inventory levels over the past
several quarters.
The Company's accounts receivable level has been
consistently correlated to the Company's previous quarter
revenue level. Because of the Company's customer scheduled
backlog requirements, up to 80% of the quarterly revenues
may be shipped in the last month of the quarter. This has
the effect of placing a large portion of the quarterly
shipments reflected in accounts receivable not yet due per
the Company's net 30 day terms. This, combined with the fact
that the Company's distributor customers (which made up 46%
and 66% of the Company revenues in the first nine months of
1999 and 1998, respectively), generally pay 90 days and
beyond, results in the accounts receivable balance at the
end of the quarterly period being at its highest point for
the period. This has been consistent over prior periods. The
Company is currently working to accelerate accounts
receivable collections.
Although current levels of inventory and accounts
receivable impact the Company's liquidity, the Company
believes that it is a cost of doing business given the
Company's fabless operation. The Company has begun to make
progress in reducing inventory and accounts receivable
levels during the current fiscal year.
Financing
The Company had a $6,000,000 revolving line of credit
with Sanwa Bank, with a maturity date of May 31, 1999. The
line of credit bore interest at the Bank's prime rate plus
1.00% and was secured by all the assets of the Company. On
March 11, 1999, the Company accepted the Bank's demand to
amend the terms of its revolving line of credit facility so
that its maximum borrowing amount was $4,500,000 from March
11, 1999 through March 30, 1999, $4,250,000 from March 31,
1999 through June 29, 1999, and $3,000,000 from June 30,
1999 through August 1, 1999, the scheduled date of maturity
of such facility. The amended line of credit bore interest
at the Bank's prime rate (7.75 percent as of 6/30/99) plus
2.00%. On June 30, 1999, the Company reduced the principal
amount of its borrowings to $3,500,000. See "Part II. Item
3. Defaults Upon Senior Securities."
On July 27, 1999, the Company terminated its revolving
credit facility with Sanwa Bank, paying all principal and
interest then owing using funds from operations and the
proceeds of loans from new revolving credit facilities
provided by Silicon Valley Bank.
Under the terms of its line of credit facility with
Silicon Valley Bank, the Company is precluded (as it was
under the terms of its revolving credit facility with Sanwa
Bank) from paying any cash dividends without the consent of
the lender even if the Company is in compliance with all of
the financial covenants. Regardless of any such
restrictions in its bank loan agreements, the Company does
not intend to pay cash dividends in the near future and
anticipates reinvesting its cash flow back into operations.
As discussed in the Company's Form 10-Q for the quarter
ended March 31, 1999, the Company borrowed, in addition to
its bank borrowings, an aggregate principal amount of
$250,000 on February 24, 1999. The loans are unsecured and
bear interest to maturity at the rate which is the reference
or equivalent rate of interest quoted, published or
announced by Sanwa Bank plus 2.00%. The loans had an
original maturity of March 31, 1999, but the holders of the
loans have successively extended the maturity date through
September 30, 1999. The holders have agreed to subordinate
their loans to those of Silicon Valley Bank in certain
circumstances but are permitted to receive scheduled
payments of principal and interest so long as the Company is
not in default under its revolving credit facility with
Silicon Valley Bank at the time of such payment.
While the Company will continue to evaluate debt and
equity financing opportunities, it believes its financing
arrangements and cash flow generated from operations provide
a sufficient base of liquidity for funding operations and
capital needs to support the Company's operations.
Year 2000 Compliance
The year 2000 creates the potential for date related
data to cause computer processing errors or system shut-
downs because computer-controlled systems have historically
used two digits rather than four to define years. For
example, computer programs that contain time data sensitive
software may recognize a date using two digits of "00" as
the year 1900 rather than the year 2000. The
miscalculations and systems failures that may be caused by
such date misrecognition could disrupt the operations of the
Company. Since the risk relates to computer-controlled
systems, the year 2000 issue affects computer software,
computer hardware, and any other equipment with imbedded
technology that involves date sensitive functions. The
Company has determined to assess the scope of its Year 2000
problems, to remediate the problem, and to plan for the
contingency of remediation failure separately for each of
its internal computer software programs, its computer
hardware, its machinery which includes imbedded computer
technology, its suppliers and its products.
The Company completed its assessment of all aspects of
its operations other than its customers and suppliers prior
to the beginning of the fiscal quarter ending December 31,
1998. As a result of its assessment, the Company has
determined that none of its products have date sensitive
functions and, accordingly, that no products will require
modification or replacement.
The Company is still in the process of determining the
extent to which its customers and suppliers may be impacted
by year 2000 computer processing problems. This assessment
has been slower than the Company's other assessment efforts
since it necessarily involves obtaining information from
third parties, and the Company's suppliers are foreign
operations which may have local customs or attitudes
regarding disclosure which differ from those in the United
States. Conversely, because the Company relies on third
parties to manufacture its chips and assemble its products,
the Company's production may be slowed or other of its
operations may be adversely impacted by the Year 2000
problems of its suppliers. The Company has received
assurances from its major suppliers, including the silicon
foundaries supplying the Company with silicon wafers, that
they are Year 2000 compliant. The Company does not believe
it has any technological interfaces with customers that will
be affected by the Year 2000 issue.
The Company completed remediation of its computer
hardware, internal computer software programs and equipment
with imbedded technology in March 1998. Through December
31, 1998, the Company has spent approximately $50,000
modifying or replacing its internal computer software
programs, its computer hardware, and machinery with embedded
computer technology, primarily to upgrade software and to
modify maintenance agreements. Since it believes
remediation of such systems has been completed, the Company
does not expect to expend any material amounts on such
remediation in the future. However, if the Company has
failed to properly assess any of the year 2000 problems or
failed to fully remedy any identified year 2000 problems of
its computer hardware, computer software programs, or
machinery with embedded technology, the Company may be
forced to spend more than anticipated on such remediation in
the future.
Until its assessment efforts are complete, the Company
will not be able to reasonably estimate the future costs of
eliminating problems caused by the Year 2000 problems of its
suppliers, whether by investing in new technology or
software to interface with these parties or finding
alternative sources of supply. Beginning June 1, 1999, the
Company expects to shift production away from suppliers that
have not demonstrated Year 2000 compliance to the Company's
satisfaction and to the Company's current suppliers that are
Year 2000 compliant. If such current suppliers are unable
to satisfy increased production burdens, the Company expects
to engage new suppliers that are Year 2000 compliant. There
can be no assurance that the Company will be able to shift
additional production to any of its current suppliers or to
new suppliers without additional costs or at all. Shifts to
new suppliers typically require capital outlays and
increased time requirements for production, either of which
may adversely affect the results of operations of the
Company.
Item 3. Quantitative and Qualitative Disclosures about
Market Risk.
The Company conducts all of its transactions, including
those with foreign suppliers and customers, in United States
dollars. It is therefore not directly subject to the risks
of foreign currency fluctuations and does not hedge or
otherwise deal in currency instruments in an attempt to
minimize such risks. Of course, demand from foreign
customers and the ability or willingness of foreign
suppliers to perform their obligations to the Company may be
affected by the relative change in value of such customer or
supplier's domestic currency to the value of the United
States dollar. Furthermore, changes in the relative value
of the U. S. dollar may change the price of the Company's
prices relative to the prices of its foreign competitors.
The Company also does not hold any market risk sensitive
instruments that are not considered cash under generally
accepted accounting principles.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not Applicable.
Item 2. Changes in Securities and Use of Proceeds.
On April 5, 1999, the Company issued to a party which purchased
certain products during the quarter from the Company and which
agreed to act as a distributor for the Company, a five-year warrant
to purchase 150,000 shares of the Company's common stock. The
warrant is fully vested and has an initial exercise price of $2.875
per share, which was the closing price of the Company's common stock
on such date. This exercise price will be reduced to $1.875 per
share if, by November 30, 1999, Company has not registered under the
Securities Act of 1933 the resale of the shares of the Company's
common stock for which the warrant is exercisable. The issuance of
the warrant was not registered under the Securities Act of 1933 in
reliance on an exemption from registration under Section 4(2) of such
Act and rules promulgated thereunder. No underwriters participated
in this transaction.
Item 3. Defaults Upon Senior Securities.
On June 30, 1999, the Company failed to achieve a principal
reduction covenant required under its amended revolving credit
facility with Sanwa Bank. Under the terms of the facility as amended
on March 17, 1999, the Company's maximum borrowing amount was
$4,500,000 from March 11, 1999 through March 30, 1999, reduced to
$4,250,000 from March 31, 1999 through June 29, 1999, and further
reduced to $3,000,000 from June 30, 1999 through August 1, 1999, the
scheduled date of maturity of such facility. By June 30, 1999, the
Company reduced the principal amount of its borrowings from
$4,250,000 to $3,500,000, which was $500,000 less than required.
Sanwa Bank did not waive the failure by the Company to comply with
this obligation under the revolving credit facility. The Company
terminated this revolving credit facility on July 27, 1999 and paid
all principal and interest required thereunder. See "Part I. Item 2.
Management's Discussion and Analysis of Financial Condition and
Results of Operations."
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) (1) Exhibit 10 - Promissory Note Extension
(2) Exhibit 11 - Computation of Earnings Per Common Share
(3) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter
for which this report is filed.
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.
Logic Devices Incorporated
(Registrant)
Date: August 11, 1999 By /s/ William J.Volz
William J. Volz
President and Principal
Executive Officer
Date: August 11, 1999 By /s/ Mary C. deRegt
Mary C. deRegt
Chief Financial Officer
Principal Financial and
Accounting Officer
INDEX TO EXHIBITS
Exhibit Number Description
10 Extension to Notes Payable
11 Computation of Earnings Per Common Share
27 Financial Data Schedule
EXHIBIT 10
PROMISSORY NOTE EXTENSION
The undersigned, William J. Volz and The Holding Company, being
the holders of promissory notes (the "Notes") from Logic Devices
Incorporated dated February 24, 1999 in the principal amounts of
$100,000 and $150,000, respectively, hereby agree to the extension of
the Maturity Date, as defined in the Notes, to September 30, 1999.
June 30, 1999
/s/ William J. Volz
William J. Volz
The Holding Company
By: /s/ Burton W. Kanter
President
EXHIBIT 11
Logic Devices Incorporated
Computation of Earnings per Common Share
(unaudited)
Nine months ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Weighted average shares of common
stock outstanding 6,632,388 6,121,750
Dilutive effect of common stock options - -
Dilutive effect of common stock warrants 38,100 -
Weighted average common and
common share equivalents 6,670,488 6,121,750
Net income (loss) $ 246,300 $ 12,700
Basic and diluted earnings
per common share $ 0.04 $ 0.00
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1999
<CASH> 165,000
<RECEIVABLES> 4,440,700
<ALLOWANCES> 139,400
<INVENTORY> 11,719,600
<CURRENT-ASSETS> 16,570,500
<PP&E> 10,903,100
<DEPRECIATION> 7,097,800
<TOTAL-ASSETS> 21,011,600
<CURRENT-LIABILITIES> 5,088,000
<BONDS> 0
<COMMON> 18,091,900
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 21,011,600
<SALES> 9,859,100
<TOTAL-REVENUES> 9,859,100
<CGS> 5,289,800
<TOTAL-COSTS> 9,222,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 389,100
<INCOME-PRETAX> 247,100
<INCOME-TAX> 800
<INCOME-CONTINUING> 246,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 246,300
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
</TABLE>
