SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
- -----
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- ----- OF 1934
For the quarterly period ended June 30, 1996
OR
- -----
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
- ----- OF 1934
For the transition period from ____________ to ___________
COMMISSION FILE NUMBER 0-19467
MEDAMICUS, INC.
(Exact name of small business issuer in its charter)
MINNESOTA 41-1533300
(State of Incorporation) (IRS Employer Identification No.)
15301 HIGHWAY 55 WEST, PLYMOUTH, MN 55447
(Address of principal executive office, including zip code)
(612) 559-2613
(Registrant's telephone number, including area code)
N/A
Former name, former address and former fiscal year,
if changed since last report
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, as
amended, 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 ___
The number of shares of Registrant's Common Stock outstanding on June 30, 1996
was 4,060,774
Transitional Small Business Disclosure Format. Yes ____ No __X__
MEDAMICUS, INC.
INDEX
Page #
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of June 30, 1996 and December 31, 1995 3
Statements of Operations for the three months and six months ended
June 30, 1996 and 1995 4
Statement of Shareholders' Equity for the six months ended June 30, 1996 5
Statements of Cash Flows for the six months ended June 30, 1996 and 1995 6
Condensed Notes to the Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 8-10
PART II. OTHER INFORMATION
ITEM 6(b). REPORTS ON FORM 8-K 10
MEDAMICUS, INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, 1996 DECEMBER 31, 1995
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,683,464 $ 143,273
Marketable securities 0 896,145
Accounts receivable 751,973 734,926
Inventories 942,794 785,768
Prepaid expenses and other assets 12,827 23,637
----------- -----------
TOTAL CURRENT ASSETS 3,391,058 2,583,749
----------- -----------
PROPERTY AND EQUIPMENT:
Equipment 1,584,586 1,433,357
Office furniture, fixtures and computers 282,712 237,207
Leasehold improvements 330,441 326,211
2,197,739 1,996,775
Less accumulated depreciation and amortization (1,261,532) (1,100,723)
----------- -----------
NET PROPERTY AND EQUIPMENT 936,207 896,052
----------- -----------
CERTIFICATE OF DEPOSIT, RESTRICTED 0 100,000
PATENT RIGHTS, NET OF ACCUMULATED AMORTIZATION OF
$90,421 AND $77,296, RESPECTIVELY 40,983 53,198
=========== ===========
TOTAL ASSETS $ 4,368,248 $ 3,632,999
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to bank $ 299,872 $ 0
Accounts payable 730,410 640,478
Accrued expenses 142,437 209,928
Notes payable to private investors 0 477,963
Current installments of note payable to customer 14,400 14,400
Current installments of capital lease obligations 32,853 39,609
TOTAL CURRENT LIABILITIES 1,219,972 1,382,378
----------- -----------
LONG-TERM LIABILITIES:
Note payable to customer, less current installments 10,022 17,222
Capital lease obligations, less current installments 10,602 12,508
TOTAL LONG-TERM LIABILITIES 20,624 29,730
----------- -----------
TOTAL LIABILITIES 1,240,596 1,412,108
----------- -----------
SHAREHOLDERS' EQUITY:
Preferred stock-undesignated, authorized 1,000,000
shares, no shares issued or outstanding 0 0
Common stock-$.01 par value, authorized 9,000,000
shares, issued and outstanding 4,060,774 and 3,434,774
shares, respectively 40,608 34,348
Additional paid-in capital 8,529,797 6,871,803
Accumulated deficit (5,442,753) (4,685,260)
----------- -----------
TOTAL SHAREHOLDERS' EQUITY 3,127,652 2,220,891
=========== ===========
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,368,248 $ 3,632,999
=========== ===========
</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS
MEDAMICUS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30, 1995
---------------------------- ----------------------------
<S> <C> <C> <C> <C>
Sales $ 1,323,451 $ 1,373,892 $ 2,557,397 $ 2,783,810
Cost of sales 883,641 851,389 1,659,598 1,742,358
----------- ----------- ----------- -----------
GROSS PROFIT 439,810 522,503 897,799 1,041,452
----------- ----------- ----------- -----------
OPERATING EXPENSES:
Research and development 271,205 229,657 467,318 474,838
Selling, general and administrative 594,055 356,313 1,153,289 823,855
----------- ----------- ----------- -----------
TOTAL OPERATING EXPENSES 865,260 585,970 1,620,607 1,298,693
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
OPERATING LOSS (425,450) (63,467) (722,808) (257,241)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (9,268) (30,323) (52,230) (62,121)
Interest income 11,822 18,968 20,666 23,497
Other (1,369) (3,584) (3,121) (1,870)
----------- ----------- ----------- -----------
TOTAL OTHER INCOME (EXPENSE) 1,185 (14,939) (34,685) (40,494)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET LOSS $ (424,265) $ (78,406) $ (757,493) $ (297,735)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NET LOSS PER SHARE $ (0.11) $ (0.02) $ (0.21) $ (0.09)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
WEIGHTED AVERAGE SHARES OUTSTANDING 3,772,532 3,268,309 3,608,576 3,218,921
----------- ----------- ----------- -----------
</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS
MEDAMICUS, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Additional
------------------------ Paid In Accumulated
Shares Amount Capital Deficit Total
--------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1995 3,434,774 $ 34,348 $ 6,871,803 $(4,685,260) $ 2,220,891
Stock options exercised 16,000 160 20,240 0 20,400
Common stock purchased by private investors,
net of offering costs 610,000 6,100 1,637,754 0 1,643,854
Net loss for the six months ended June 30, 1996 0 0 0 (757,493) (757,493)
--------- ----------- ----------- ----------- -----------
BALANCES AT JUNE 30, 1996 4,060,774 $ 40,608 $ 8,529,797 $(5,442,753) $ 3,127,652
--------- ----------- ----------- ----------- -----------
</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS
MEDAMICUS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (757,493) $ (297,735)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization 173,934 150,102
Interest accretion on notes payable to private investors 22,037 18,545
Interest added to investments 0 (14,550)
Changes in operating assets and liabilities:
Accounts receivable (17,047) (259,303)
Inventories (157,026) 58,256
Prepaid expenses and other assets 10,810 11,339
Accounts payable 89,932 211,040
Accrued expenses (67,491) 68,220
----------- -----------
NET CASH (USED IN) OPERATING ACTIVITIES (702,344) (54,086)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net of retirements (200,964) (155,073)
Additions to patent rights (910) (5,444)
Purchase of available-for-sale marketable securities, including reinvestment
of securities which matured 0 (248,744)
Sale of available-for-sale marketable securities, including sales of securities
which matured 996,145 0
----------- -----------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 794,271 (409,261)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligations (8,662) (22,792)
Proceeds from sales of stock, net of offering costs 1,643,854 477,193
Proceeds from exercise of stock options 20,400 17,340
Payments on notes payable to private investors (500,000) 0
Proceeds from note payable to bank 299,872 0
Payments on note payable to customer (7,200) (8,400)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,448,264 463,341
----------- -----------
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,540,191 (6)
----------- -----------
----------- -----------
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 143,273 3,006
----------- -----------
----------- -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,683,464 $ 3,000
----------- -----------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 30,193 $ 43,577
</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS
CONDENSED NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
1. BASIS OF PRESENTATION
The financial statements included in this Form 10-QSB have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted, pursuant to such rules and
regulations, although management believes the disclosures are adequate to make
the information presented not misleading. These statements should be read in
conjunction with the Company's annual report on Form 10-KSB for the year ended
December 31, 1995, filed by the Company with the Securities and Exchange
Commission.
The financial statements presented herein as of June 30, 1996 and for the three
and six months ended June 30, 1996 and 1995 reflect, in the opinion of
management, all material adjustments consisting only of normal recurring
adjustments necessary for a fair presentation of the financial position, results
of operations and cash flows for these interim periods.
2. COMMON STOCK
Two former employees exercised their stock options for 16,000 shares of the
Company's common stock at an exercise price of $1.275 per share, totaling
$20,400. The Company also sold 610,000 shares of stock for $3.00 per share in a
private stock offering on May 13, 1996, resulting in net proceeds to the Company
of $1,643,854. These shares are subject to registration with the Securities and
Exchange Commission after 90 days which will allow those who invested to trade
their stock on the open market.
3. CASH EQUIVALENTS AND MARKETABLE SECURITIES
Cash equivalents consist of highly liquid investments with original maturities
of less than three months. The Company terminated its line of credit agreement
to which the certificate of deposit (restricted) had been pledged.
4. INVENTORIES
Inventories are stated at the lower of cost, determined on a first-in, first-out
(FIFO) basis, or market. Inventories consist of the following:
JUNE 30, 1996 DECEMBER 31, 1995
--------------- -------------------
Purchased parts and subassemblies $549,806 $419,314
Work in process 249,995 170,353
Finished goods 142,993 196,101
=============== ===================
$942,794 $785,768
=============== ===================
5. NET LOSS PER SHARE
Net loss per common share is determined by dividing the net loss by the weighted
average number of shares of common stock outstanding. Common stock equivalents
have been excluded from the calculation of the net loss per share since they are
antidilutive.
6. NOTES PAYABLE
In March 1996, the Company obtained a revolving line of credit with a financial
institution. The line of credit availability is $1,200,000, subject to borrowing
base requirements, bears interest at 3% over the financial institution's base
rate, is secured by substantially all assets and expires in May, 1997. Advances
on the line are at the discretion of the lender. The line of credit also
contains a net worth covenant to which the Company will have to adhere. The
Company used the line to retire the $500,000 notes payable to private investors
which were due June 30, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion and analysis provides information that the Company's
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial condition. This discussion should
be read in conjunction with the accompanying financial statements and footnotes.
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995
Total revenues were $2,557,397 for the six months ended June 30, 1996 compared
to $2,783,810 for the six months ended June 30, 1995, representing a 8.1%
decline. Sales of vessel introducers, primarily to Medtronic and Bard Access
Systems under exclusive distribution arrangements, were $1,618,282 for the six
months ended June 30, 1996, compared to $2,290,070 for the six months ended June
30, 1995. In both the first and second quarters of 1995, Medtronic made an
unusually large purchase of vessel introducers in support of its launch of new
pacemaker and defibrillator lines. Without this large purchase from Medtronic to
build their inventory, sales during the comparable periods would have been
approximately the same.
Contract manufacturing sales were $197,533 for the six months ended June 30,
1996, compared to $182,353 for the six months ended June 30, 1995. The primary
reason for the increase is that one of the Company's contract manufacturing
customers placed orders on hold in the second quarter of 1995 in order to
deplete excess inventory and to convert to new manufacturing facilities. The
Company expects contract manufacturing revenues for the second half of 1996 to
approximate those of the first half. The Company also does some contract
research and development work periodically for Medtronic and realized sales of
$127,888 for the six months ended June 30, 1996 compared to $5,373 for the six
months ended June 30, 1995. This contract research and development work is not
expected to be a continuous revenue item for the Company.
Sales of the Company's fiber optic pressure sensing catheter and monitor
transducer products were $613,694 for the six months ended June 30, 1996,
compared to $306,014 for the six months ended June 30, 1995. Monitor sales
increased 83.1% or $230,221 and catheter and accessory sales increased 267% or
$77,459 over the comparable period. The Company continued to actively market the
LuMax(TM) System into the gynecology office market during the second quarter,
but postponed the launch of an upgraded version of its LuMax System to the
urology market. The delay negatively impacted the anticipated sales for the
LuMax System during the second quarter. The Company anticipates the launch of
this product to occur in the third quarter.
Total gross profit decreased from $1,041,452 for the six months ended June 30,
1995, to $897,799 for the six months ended June 30, 1996, a decline of 13.8%.
Total gross profit as a percent of sales decreased from 37.4% to 35.1% in such
periods. The gross profit percentage on vessel introducers and contract
manufacturing totaled 41.7% for the six months ended June 30, 1996, compared to
46.1% in the six months ended June 30, 1995. The decrease in the gross profit
percentage was primarily due to the lower sales to Medtronic, which resulted in
the existing overhead being allocated over less units. The Company has also had
some employee turnover in the introducer and contract manufacturing area which
has resulted in additional training costs which have impacted the gross profits.
For fiber optic products, the gross profit percent totaled 14.2% or $87,324 for
the six month period ended June 30, 1996 compared to a loss of $100,354 for the
six month period ended June 30, 1995. As the Company's revenues increase, the
gross profit percent related to fiber optic products should improve as a result
of greater efficiencies and more effective utilization of manufacturing
capabilities.
Total research and development expenditures were $467,318 or 18.2% of sales for
the six months ended June 30, 1996, compared to $474,838 or 17.1% of sales for
the six months ended June 30, 1995. The Company had anticipated a reduction in
research and development expenditures in 1996 compared to 1995 but, due to
unforeseen software development issues in completing the development work on the
upgraded LuMax System, the overall expenditures remained relatively constant
during the comparable periods.
Selling, general and administrative expenses increased from $823,855 for the six
months ended June 30, 1995 to $1,153,289 for the six months ended June 30, 1996.
Sales and marketing expenses increased $266,787 for the six months ended June
30, 1996 over the comparable period in 1995 as the Company continued to invest
heavily in sales and marketing activities in 1996 compared to 1995. The Company
is now supporting approximately 77 independent sales representatives, attending
many shows and conventions, and advertising in several key publications relating
to the Ob/Gyn and urology markets. General and administrative expenses increased
$62,647 for the first six months of 1996 over the comparable period in 1995.
This increase is primarily due to additional spending on outside consultants,
investor relations and salaries expense. The Company has contracted with an
outside consulting firm to provide MIS support for the Company in 1996. The
Company has also hired a public relations firm to assist with investor
relations. Salary expense increased in the first six months of 1996 from the
comparable period in 1995 because of one additional head count in the accounting
department and general salary increases from last year.
Interest expense decreased from $62,121 for the six months ended June 30, 1995
to $52,230 for the six months ended June 30, 1996. The decrease in interest
expense is due to the Company retiring the $500,000 notes payable to investors
in April 1996 which was at a 15% interest rate, resulting in smaller average
outstanding borrowings.
As a result, the Company incurred a net loss of $757,493 or $.21 per share for
the six months ended June 30, 1996, compared to a net loss of $297,735 or $.09
per share for the six months ended June 30, 1995.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
Total revenues were $1,323,451 for the three months ended June 30, 1996 compared
to $1,373,892 for the three months ended June 30, 1995, representing a 3.7%
decline. Sales of vessel introducers, primarily to Medtronic and Bard Access
Systems under exclusive distribution arrangements, were $763,315 for the three
months ended June 30, 1996, compared to $1,111,056 for the three months ended
June 30, 1995. In the second quarter of 1995, Medtronic made an unusually large
purchase of vessel introducers in support of its launch of new pacemaker and
defibrillator lines. Without this large purchase from Medtronic to build their
inventory, sales of vessel introducers during the comparable periods would have
been approximately the same.
Contract manufacturing sales were $77,784 for the three months ended June 30,
1996, compared to $54,032 for the three months ended June 30, 1995. Contract
research and development sales were $127,888 for the three months ended June 30,
1996 compared to $0 for the three months ended June 30, 1995. These sales
increases are primarily due to those factors discussed above.
Sales of the Company's fiber optic pressure sensing catheter and monitor
transducer products were $354,464 for the three months ended June 30, 1996,
compared to $208,804 for the three months ended June 30, 1995. Monitor sales
increased 56.8% or $106,854 and catheter and accessory sales increased 188% or
38,806 in the three months ended June 30, 1996 over the comparable period in
1995. As stated above, the Company's second quarter results were negatively
impacted due to a delay in the release of the upgraded LuMax System. The Company
is continuing to strengthen its sales and marketing efforts for these products
and expects to see increased sales growth in the future.
Total gross profit decreased from $522,503 for the three months ended June 30,
1995, to $439,810 for the three months ended June 30, 1996, a decline of 15.8%.
Total gross profit as a percent of sales decreased from 38% in the three months
ended June 30, 1995 to 33.2% in the comparable period in 1996. The gross profit
percentage on vessel introducers and contract manufacturing totaled 40.7% in the
second quarter of 1996, compared to 49.3% in the second quarter of 1995,
primarily due to the factors discussed above. For fiber optic products, the
gross profit percent totaled 12.8% or $45,247 in the second quarter of 1996
compared to a loss of $52,299 in the second quarter of 1995. As the Company's
revenues for these products increase, the gross profit percentage should
increase due to improved efficiencies.
Total research and development expenditures were $271,205 or 20.5% of sales for
the three months ended June 30, 1996, compared to $229,657 or 16.7% of sales for
the three months ended June 30, 1995. The increase in research and development
expenditures is primarily due to the additional work required in completing the
development of the uroflow upgrade for the LuMax System.
Selling, general and administrative expenses increased from $356,313 for the
three months ended June 30, 1995 to $594,055 for the three months ended June 30,
1996. Sales and marketing expenses increased $177,473 and general and
administrative expenses increased $60,269 in the second quarter of 1996 compared
to the second quarter of 1995 primarily for the reasons discussed above.
Interest expense decreased from $30,323 for the three months ended June 30, 1995
to $9,268 for the three months ended June 30, 1996 primarily due to the factors
stated above.
As a result, the Company incurred a net loss of $424,265 or $.11 per share for
the three months ended June 30, 1996, compared to a net loss of $78,406 or $.02
per share for the three months ended June 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities for the six months ended June 30, 1996 was
$702,344, consisting of a net loss of $757,493 less adjustments for depreciation
and amortization of $173,934 and interest accretion of $22,037. In addition,
cash was used to fund net changes in operating assets and liabilities of
$140,822. The Company has experienced increased inventory in 1996 in
anticipation of the sales growth of its LuMax System, and expects to see
increases in accounts receivable and inventory levels as sales of these products
continue to grow.
Net cash provided by investing activities for the six months ended June 30, 1996
was $794,271. Marketable securities of $996,145 were sold and $200,964 of
equipment was purchased during the period.
Net cash provided by financing activities for the six months ended June 30, 1996
was $1,448,264. At the end of March 1996, the Company used its new revolving
line of credit (described below) to retire the $500,000 notes payable to private
investors and began to use the line for working capital. The Company had a
balance due on the line of $299,872 as of June 30, 1996. Additionally, two
former employees exercised stock options for 16,000 shares of the Company's
common stock at an exercise price of $1.275 per share, totaling $20,400. The
Company also sold 610,000 shares of stock at $3.00 per share in a private stock
offering, netting $1,643,854 in proceeds. The Company also made principal debt
payments totaling $15,862.
As a result, the Company's cash and cash equivalents and marketable securities
were $1,683,464 as of June 30, 1996 compared to $1,039,418 at December 31, 1995.
Working capital increased from $1,201,371 as of December 31, 1995 to $2,171,086
as of June 30, 1996.
In March 1996, the Company entered into a fifteen month agreement with a
financial institution for a $1,200,000 revolving line of credit. The
availability under the line is subject to borrowing base requirements, and
advances are at the discretion of the lender. The agreement calls for interest
at the rate of 3% over the financial institution's base rate with minimum
interest due over the term of the agreement of $75,000. The line is secured by
substantially all of the Company's assets.
If sales estimates and working capital needs meet the Company's projections, the
Company believes its available cash and investments, along with borrowing
availability under its $1,200,000 line of credit will be sufficient to meet the
Company's anticipated operating expenses and cash requirements for the
foreseeable future. If the sales estimates are not realized or working capital
requirements exceed those projected, the Company may need to secure additional
capital or, if capital is not available, to curtail its marketing efforts.
PART II - OTHER INFORMATION
ITEM 6(B) - REPORTS ON FORM 8-K
None
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) 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:
MEDAMICUS, INC.
Date: August 8, 1996 By: /s/ James D. Hartman
President, Chief Executive
Officer and Chief Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 1,683,464
<SECURITIES> 0
<RECEIVABLES> 751,973
<ALLOWANCES> 0
<INVENTORY> 942,794
<CURRENT-ASSETS> 3,391,058
<PP&E> 2,197,739
<DEPRECIATION> 1,261,532
<TOTAL-ASSETS> 4,368,248
<CURRENT-LIABILITIES> 1,219,972
<BONDS> 20,624
0
0
<COMMON> 40,608
<OTHER-SE> 3,087,044
<TOTAL-LIABILITY-AND-EQUITY> 4,368,248
<SALES> 2,557,397
<TOTAL-REVENUES> 2,557,397
<CGS> 1,659,598
<TOTAL-COSTS> 1,659,598
<OTHER-EXPENSES> 271,205
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,268
<INCOME-PRETAX> (424,265)
<INCOME-TAX> 0
<INCOME-CONTINUING> (424,265)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (424,265)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
