<PAGE>
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
United States
Securities and Exchange Commission
Washington, DC 20549
Form 10-QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the period ended March 31, 1998.
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: 0-18880
ATRIX INTERNATIONAL, INC.
(Exact Name of registrant as specified in its charter)
Minnesota 41-1591075
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
14301 Ewing Avenue South, Burnsville, MN 55306
(Address of Principal Executive Offices) (Zip Code)
(612) 894-6154
(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 [ ]
As of March 31, 1998 the following securities of the registrant were
outstanding: 1,413,449 shares of Common Stock, $.04 a value per share.
<PAGE>
PART I.
ITEM 1. FINANCIAL STATEMENTS
This report includes the financial position of Atrix International, Inc.,
("Atrix" or the "Company") as of March 31, 1998 and June 30, 1997, the results
of operations for the three months and nine months ended March 31, 1998 and
1997, and the cash flows for the nine months ended March 31, 1998 and 1997.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES. Sales for the third quarter ended March 31, 1998 totaled $1,095,211
compared with $1,560,315 for the same period a year ago. Sales for the nine
months ended March 31, 1998 totaled $3,099,028 compared to $4,388,558 for the
same period last year.
The following table shows the Company's revenues for the periods indicated by
product line, total manufactured products and total distributed products.
<TABLE>
<CAPTION>
Three Months Ended Nine months Ended
March 31, March 31,
--------------------------- -------------------------
1998 1997 1998 1997
--------- -------- ---------- -----------
<S> <C> <C> <C> <C>
Product Line
Vacuums and Supplies $ 491,145 $ 557,926 $1,426,537 $1,418,360
ESD Equipment 55,682 31,416 127,892 155,372
Circuit Board Cases 744 929 17,107 20,022
Special Assemblies 67,028 36,552 146,630 107,053
------ ------ ------- -------
Total Manufacturing 614,599 626,823 1,718,166 1,700,807
Loose Tools 271,728 499,298 808,766 1,555,301
Tool Kits 78,945 70,159 242,845 211,892
Instrumentation 41,455 244,811 149,839 582,071
------ ------- ------- -------
Total Distribution 392,128 814,268 1,201,450 2,349,264
R3 Copy Control Products 83,884 76,797 157,060 286,060
MI (A-Trax System) 4,600 42,427 22,352 52,427
----- ------ ------ ------
Total Revenue $1,095,211 $1,560,315 $3,099,028 $4,388,558
</TABLE>
Manufacturing sales for the three months ended March 31, 1998 were $614,599 as
compared to $626,823 for the same period in 1997, a decrease of $12,224. For the
nine months ended March 31, 1998, manufacturing sales were $1,718,166 as
compared to $1,700,807 for the same period last year, an increase of $17,359.
The primary reason for the increase for the nine month period, was increased
shipments of special assemblies, as the Company expands its product offerings in
this area. The increase in this area more than offset decreases in ESD equipment
and circuit board cases.
Distribution sales for the three months ended March 31, 1998 were $ 392,128 as
compared to $814,268 for the same period in 1997, a decrease of $422,140. For
the nine months ended March 31, 1998, distribution sales were $1,201,450,
compared to $2,349,264 for the same period in the prior year. The decrease for
both periods was primarily due to a significant reduction in sales of loose
tools and instrumentation to AT&T and Avnet, both formerly major customers.
Sales to these two customers decreased 97% and 90% respectively, in the three
and nine month periods ended March 31, 1998, from
2
<PAGE>
the same periods in 1997. The company does not expect any significant sales to
AT&T or Avnet in future periods.
R3 Copy Control product sales for the three months ended March 31, 1998 were
$83,884 as compared to $76,797 for the same period in 1997. R3 sales increased
in the three month period as the Company shipped its initial order of R3 Copy
Control products including automated proximity card input to the
U. S. Department of Agriculture. For the nine months ended March 31, 1998, R3
Copy Control product sales were $157,060 as compared to $286,060 for the same
period in the prior year. The primary reason for the decrease for the nine month
period is decreased sales to Pitney Bowes, a major R3 Copy Control customer.
Sales to Pitney Bowes decreased as Pitney Bowes reduced inventory levels for a
variety of products. R3 Copy Control sales are expected to return to 1996 levels
in future quarters. M1 (A-Trax Production Monitoring System) sales for the three
months ended March 31, 1998 were $4,600 as compared to $42,427 for the same
period in 1997. For the nine months ended March 31, 1998, M1 sales were $22,352
as compared to $52,427 for the same period in the prior year. The decrease for
both periods was a result of the Company's initial M1 beta site shipment, which
occurred in the quarter ended March 31, 1997. The company expects M1 sales to
increase as it continues to implement marketing strategies for this product.
Looking forward, the Company believes that revenues from manufactured vacuum
products, and the R3 Copy Control system will improve. The initial R3 Copy
Control product shipment to the U. S. Department of Agriculture was for 48
units, but the account has the potential to approach 650+ units over a two year
period. Acceptance of the Omega series vacuum line has been very strong, with
agreements being reached with seventeen domestic and eight international
distributors to stock the vacuum line. In addition, numerous other prospects are
currently evaluating these products. The Company hired an M1 Business
Development Manager in February, 1998 and is beginning to market its A-Trax
Production Monitoring System, which is a new remote metering and monitoring
system for the injection molding industry. It was developed as a retrofit system
permitting injection molding plants to install the units on existing molding
machines for plant monitoring, metering, reporting and scheduling capabilities.
Field testing which began in February 1997 has now been completed. The Company
believes that the A-Trax Production Monitoring System's competitive pricing,
will provide a platform for Atrix to expand into the $40 million annual plastics
monitoring market. With the exception of the continued decrease in the
AT&T/Avnet sales, the Company believes that sales to other customers will
increase for the remainder of the fiscal year. The Company notes that except for
historical financial statements, the above and other forward looking statements
are subject to certain risks. For this purpose, any statements contained in this
report that are not statements of historical fact may be deemed to be forward
looking statements. Without limiting the foregoing, words such as "may," "will,"
"expect," "believe," "anticipate," "estimate," or continue," or comparable
terminology, are intended to identify forward looking statements. These
statements by their nature involve substantial risks and uncertainties, and
actual results may differ materially depending on a variety of factors
including, market acceptance of the Company's new products, the company's
ability to increase sales to existing customers, the Company's ability to
increase sales of the R3 Copy Control products, changes in production costs,
loss of a major customer, an economic downturn, an unplanned expense, or other
events.
GROSS PROFIT
The gross profit margin as a percentage of sales was 33.9% and 30.9% for the
three month periods ended March 31, 1998, and 1997, respectively. For the nine
month period ended March 31, 1998, the gross profit margin was also 32.3% versus
30.4% for the same period last year. The increase in gross profit margin is due
mainly to the Company's product mix, moving away from the less profitable
distribution sales and towards the more profitable vacuum sales. The company
expects that the gross margin will continue to improve throughout the remainder
of the fiscal year as sales of vacuum products, copy control products and the M1
increase.
3
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three months ended March
31, 1998 and 1997 decreased to $407,458 from $414,763 for the same period in
1997, or $7,305. Total selling expenses for the quarter ended March 31, 1998
were $115,089 as compared to $131,607 for the same period in 1997. Reductions in
commissions, catalog and show expenses were the primary reasons for the decrease
of $16,518. The Company expects selling expenses to be slightly higher in future
periods, due to increases in sales commissions and travel related costs. Total
general and administrative expenses for the quarter ended March 31, 1998 were
$292,369 compared to $283,156 for the same period in 1997. The primary reason
for the increase in the general and administrative expenses of $9,213 is an
increase in research and development costs, as labor related to the development
of the A-Trax Production Monitoring System is no longer being capitalized this
fiscal year. Legal, professional and SEC expenses also increased during the
current period. These expenses were largely offset by a reduction in retirement
benefits due to an accrual made at June 30, 1997. Selling, general and
administrative expenses represented 37.2% and 26.6% of sales for the quarters
ending March 31, 1998 and 1997, respectively. Expenses as a percentage of sales
increased primarily due to the decline of $465,104 in sales from the quarter
ended March 31, 1998.
Selling, general and administrative expenses for the nine months ended March 31,
1998 decreased to $1,173,715 from $1,219,636 in the same period of 1997, or
$45,921. Total selling expenses for the nine months ended March 31, 1998 were
$334,693, compared to $410,015 for the same period in 1997. Reductions in
commissions, catalog and show expenses were the primary reasons for the decrease
of $75,322. Total general and administrative expenses for the nine months ended
March 31, 1998 increased to $839,022, compared to $809,621 or $29,401 for the
same period in 1997. The reasons for the changes in expenses for the nine-month
periods were similar to those described above for the three-month periods.
Research and development, legal and SEC expenses increased, while retirement
benefits decreased. Selling, general and administrative expenses represented
37.9% and 27.8% of sales for the nine months ending March 31, 1998 and 1997,
respectively. Expenses as a percentage of sales increased primarily due to the
decline of $1,289,530 in sales from the nine-month period March 31, 1998. The
Company expects its selling, general and administrative expenses to remain at
comparable levels but be lower as a percentage of sales for the remainder of
fiscal 1998.
NET INCOME/(LOSS)
The Company generated a net loss for the quarter ended March 31, 1998 of $31,965
versus a net income of $72,257 for the quarter ended March 31, 1997. The results
for the quarter ended March 31, 1998, included a return to profitability for the
Company in the month of March, the Company's first profitable month since it
reported the loss of the Avnet tool business. The net loss for the nine months
ended March 31, 1998 was $153,900 as compared to a net income of $126,579 for
the same period in 1997. The changes were due to the factors discussed above.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash and marketable securities at March 31, 1998 was $1,437,504
compared to $1,715,571 at June 30, 1997. Working capital decreased to $1,707,268
at March 31, 1998 from $1,766,717 at June 30, 1997. The decrease in the
Company's cash and working capital positions, was due primarily to factors
related to the revenue decline including, a net loss for the first nine months
and an increase in inventories.
The Company maintains a line of credit with Riverside Bank. As of March 31,
1998, the borrowing base under the line of credit was the lesser of (a)
$1,000,000 or (b) the sum of (i) 75% of eligible accounts receivable and (ii)
50% of eligible inventory. The Company is also required to maintain tangible net
worth of $1,900,000. The line of credit is secured by the Company's assets. The
interest rate is at prime. The
4
<PAGE>
Company is required to pay accrued interest on a monthly basis. As of March 31,
1998, the outstanding balance on the line of credit was $840,000 and the
remaining borrowing availability was $57,976.
The Company did not have any material commitments for capital expenditures
outstanding as of March 31, 1998. The Company's plan of operations currently
does not call for raising additional capital. The Company plans to finance its
operations for the remainder of fiscal year ending June 30, 1998 with working
capital and bank borrowings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are included herein:
27.1 Financial Data Schedule for the quarter ended March 31, 1998
27.2 Amended Financial Data Schedule for the quarter ended
December 31, 1997
(b) Reports on Form 8-K
None
5
<PAGE>
ATRIX INTERNATIONAL, INC.
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
March 31, 1998 June 30, 1997
-------------- -------------
Current Assets: (unaudited)
<S> <C> <C>
Cash and cash equivalents $1,143,227 $1,386,514
Marketable securities, at cost 294,277 329,057
Accounts receivable less allowance for doubtful accounts
($20,030 and $27,158, respectively) 577,724 543,091
Inventories 975,795 918,493
Prepaid expenses 88,193 94,315
----------- ------
Total Current Assets 3,079,216 3,271,470
--------- ---------
Deferred Income Taxes 124,000 124,000
Property and equipment, net 306,964 375,624
Intangible assets, net 76,105 82,381
Capitalized software development costs, net 191,170 231,249
--------- -----------
TOTAL ASSETS $3,777,455 $4,084,724
========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $424,740 $494,766
Notes payable - bank 840,000 850,000
Current maturities of long-term debt 36,928 62,622
Accrued liabilities 70,280 97,365
---------- -----------
Total current liabilities 1,371,948 1,504,753
Notes payable - long term 90,731 111,294
---------- -----------
Total Liabilities 1,462,679 1,616,047
Shareholders' Equity:
Preferred stock, $.01 par value
3,000,000 shares authorized,
no shares issued
Common stock, $.04 par value,
12,500,000 shares authorized, 1,413,449
shares issued and outstanding 56,536 56,536
Capital in excess of par value 3,276,969 3,276,969
Accumulated deficit (1,018,729) (864,828)
----------- -----------
Total shareholders' equity 2,314,776 2,468,677
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,777,455 $4,084,724
========== =========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
ATRIX INTERNATIONAL, INC.
STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine months Ended
March 31, March 31,
-------------------------- --------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 1,095,211 $ 1,560,315 $ 3,099,028 $ 4,388,558
Cost of Sales 723,715 1,078,483 2,096,741 3,054,356
----------- ----------- ----------- -----------
Gross Profit 371,496 481,832 1,002,287 1,334,202
Selling, general and
administrative expenses 407,458 414,763 1,173,715 1,219,636
----------- ----------- ----------- -----------
Income/(loss) from operations (35,962) 67,069 (171,428) 114,566
Other Income 0 255 0 255
Interest Income/(expense), net 5,077 5,196 21,293 11,240
----------- ----------- ----------- -----------
Income/(loss) before taxes (30,885) 72,520 (150,135) 126,061
Income tax (expense)/benefit (1,080) (263) (3,765) 518
----------- ----------- ----------- -----------
Net Income/(loss) ($ 31,965) $ 72,257 ($ 153,900) $ 126,579
=========== =========== =========== ===========
Net income/(loss) per share -
Basic and diluted ($ 0.02) $ .05 ($ 0.11) $ .09
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
ATRIX INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended March 31,
Cash flows from operating activities: 1998 1997
---------- -----------
<S> <C> <C>
Net income/(loss) ($ 153,900) $ 126,579
Adjustments to reconcile net income to net
cash provided by operating
activities:
Depreciation and amortization 128,488 139,529
Change in current assets and liabilities:
Accounts receivable (34,633) 33,113
Inventories (57,302) 96,293
Prepaid expenses 6,122 10,045
Accounts payable (70,026) (157,865)
Accrued liabilities (27,085) (10,230)
----------- -----------
Net cash provided/(used) by operating activities (208,336) 237,464
Cash flows from investing activities:
Purchase of equipment, leasehold
improvements and other assets, net (11,372) (17,369)
(Purchases)/ sales of marketable securities, net 34,780 216,794
Additions intangible assets (2,102) (55,729)
----------- -----------
Net cash provided/(used) by investing activities 21,306 143,696
Cash flows from financing activities:
Proceeds (repayments) from notes payable - bank, net (10,000) (41,299)
Repayments of notes payable - Porous Media (44,391) (49,909)
Repayments of capital lease obligations (1,866) (652)
----------- -----------
Net cash (used)/ provided by financing activities (56,257) (91,860)
Net increase/(decrease) in cash (243,287) 289,300
Cash - beginning of the period 1,386,514 541,515
----------- -----------
Cash - end of the period $ 1,143,227 $ 830,815
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
ATRIX INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. CORPORATE ORGANIZATION
Atrix International, Inc. (the Company) designs and manufactures toner vacuums,
vacuum filters and circuit board transport cases. The Company also designs the
hardware and software for R3 Remote Metering and Copy Control products. In
addition, Atrix distributes tools, meters, electrostatic discharge (ESD) and
static control products and assembles tool kits for the telecommunication,
office machine and computer industries.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements, which are unaudited except for the
balance sheet as of June 30, 1997, have been prepared in accordance with
instructions to Form 10-QSB and do not include all the information and notes
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 fair presentation have been
included. These financial statements should be read in conjunction with the
financial statements and accompanying notes included in the Company's Annual
Report on Form 10-KSB, for the year ended June 30, 1997 filed with the
Securities and Exchange Commission.
REVERSE STOCK SPLIT
On December 11, 1997, the Company announced a one-for-four reverse stock split,
effective December 16, 1997, for shareholders of record as of December 15, 1997.
The reverse split reduced the number of outstanding common shares in the Company
from 5,653,644 to 1,413,449 and raised the stock price above the $1.00 bid
requirement for NASDAQ SmallCap Market listed companies. Subsequent to the
reverse split, the Company exceeded all the requirements for continued listing:
net tangible assets, public float, market value of public float, number of
market makers, round of shareholders and corporate governance requirements. The
effect of the reverse stock split has been reflected for all periods presented.
NET INCOME (LOSS) PER SHARE
In February, 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings Per Share" (SFAS No. 128), SFAS No. 128 applies to entities with
publicly held common stock and is effective for financial statements issued for
periods ending after December 15, 1997. Under SFAS No. 128 the presentation of
primary earnings per share is replaced with a presentation of basic earnings per
share. SFAS No. 128 requires dual presentation of basic and diluted earnings per
share for entities with complex capital structures. Basic earnings per share
includes no dilution and is computed by dividing net income (loss) available to
common stockholders by the weighted average number of common shares outstanding
for the period (1,413,449 for all periods presented in this report on Form
10-QSB). Diluted earnings per share reflects the potential dilution of
securities that could share in the earnings of an entity, similar to fully
diluted earnings per share. The Company has adopted SFAS No. 128 in the quarter
ended December 31, 1998, and all net income (loss) per share data presented
complies with this statement. There is no difference between basic and diluted
earnings per share data as presented, as the impact from stock options is either
anti-dilutive for the fiscal 1998 periods due to net losses, or there was no
additional dilution from stock options for the fiscal 1997 periods, due to stock
option exercise prices exceeding the average common stock price for the periods.
9
<PAGE>
Note 3. Inventories
Inventories are comprised of the following at:
March 31, 1998 June 30, 1997
-------------- -------------
Raw Materials $398,871 $355,165
Finished goods 576,924 563,328
--------- --------
Total $975,795 $918,493
NOTE 4. INCOME TAXES
The Company has available net operating loss and tax credit carryforwards for
income tax purposes of approximately $1,086,937 and $83,688, respectively, on
June 30, 1997. These carryforwards expire in the years ending June 30, 2003
through 2008. Utilization of the net operating loss and tax credit carryforwards
are subject to certain limitations under Section 382 of the Internal Revenue
Code. A valuation allowance exists for a portion of the net tax benefit
associated with all carryforwards and temporary differences at March 31, 1998
and June 30, 1997 as their realization is not presently assured.
INVENTORY OF DEFERRED ITEMS AND NOL CARRYFORWARD
The composition of the net deferred tax is as follows:
March 31, 1998 June 30, 1997
-------------- -------------
Loss Carryforwards $543,487 $476,078
Research & Development
Credits 83,688 83,688
Inventory 11,826 11,453
Bad Debts 5,671 5,671
Fixed Assets 65,630 77,121
Amortization (206,831) (186,033)
Other 0 0
------- -------
503,471 467,978
Less: Valuation Allowance (379,471) (343,978)
--------- -------
$124,000 $124,000
======= =======
10
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ATRIX INTERNATIONAL, INC.
Date: May 7, 1998 /s/ Steven D. Riedel
-------------------------------
Steven D. Riedel
Chief Executive Officer
(Principal Executive Officer)
/s/ Dean L. Gerber
-------------------------------
Dean L. Gerber
Chief Financial Officer
(Principal Financial and Accounting
Officer)
11
<PAGE>
ATRIX INTERNATIONAL, INC.
EXHIBIT INDEX TO ANNUAL REPORT
ON FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1998
ITEM NO. ITEM METHOD OF FILING
- ------- ---- ----------------
27.1 Financial Data Schedule for the
quarter ended March 31, 1998 Filed herewith
27.2 Amended Financial Data
Schedule for the quarter ended
December 31, 1997 Filed herewith
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 1,143,227
<SECURITIES> 294,277
<RECEIVABLES> 577,724<F1>
<ALLOWANCES> 0
<INVENTORY> 975,795
<CURRENT-ASSETS> 3,079,216
<PP&E> 306,964<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,777,455
<CURRENT-LIABILITIES> 1,371,948
<BONDS> 0
0
0
<COMMON> 56,536
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,777,455
<SALES> 3,099,028
<TOTAL-REVENUES> 3,099,028
<CGS> 2,096,741
<TOTAL-COSTS> 2,096,741
<OTHER-EXPENSES> 1,173,715
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (21,293)<F3>
<INCOME-PRETAX> (150,135)
<INCOME-TAX> 3,765
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (153,900)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
<FN>
<F1>Net of allowance for doubtful accounts
<F2>Net of accumulated depreciation
<F3>Interest expense is net with interest income
The Board of Directors approved a one-for-four reverse split of the Company's
Common Stock, effective for shareholders of record as of December 15, 1997.
Prior financial data schedules have not been restated to reflect the reverse
stock split.
</FN>
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 963,610
<SECURITIES> 547,048
<RECEIVABLES> 474,038<F1>
<ALLOWANCES> 0
<INVENTORY> 1,073,137
<CURRENT-ASSETS> 3,150,765
<PP&E> 334,392<F2>
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,891,236
<CURRENT-LIABILITIES> 1,462,691
<BONDS> 0
0
0
<COMMON> 56,536
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,891,236
<SALES> 2,003,817
<TOTAL-REVENUES> 2,003,817
<CGS> 1,373,026
<TOTAL-COSTS> 1,373,026
<OTHER-EXPENSES> 766,257
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (14,516)<F3>
<INCOME-PRETAX> (119,250)
<INCOME-TAX> 2,685
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (121,935)
<EPS-PRIMARY> (0.09)
<EPS-DILUTED> (0.09)
<FN>
<F1>Net of allowance for doubtful accounts
<F2>Net of accumulated depreciation
<F3>Interest expense is net with interest income
The Board of Directors approved a one-for-four reverse split of the Company's
Common Stock, effective for shareholders of record as of December 15, 1997.
Prior financial data schedules have not been restated to reflect the reverse
stock split.
</FN>
</TABLE>
