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 September 30, 1997
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
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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 September 30,
1997 was 4,108,199
Transitional Small Business Disclosure Format. Yes ____ No __X__
<PAGE>
MEDAMICUS, INC.
INDEX
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<CAPTION>
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Page #
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<S> <C>
Balance Sheets as of September 30, 1997 and December 31, 1996 3
Statements of Operations for the three and nine months ended September 30, 1997 and 1996 4
Statement of Shareholders' Equity for the nine months ended September 30, 1997 4
Statements of Cash Flows for the nine months ended September 30, 1997 and 1996 5
Condensed Notes to the Financial Statements 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 6-9
PART II. OTHER INFORMATION
ITEM 6(b). REPORTS ON FORM 8-K 10
</TABLE>
<PAGE>
MEDAMICUS, INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEP 30, 1997 DEC 31, 1996
----------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 991,588 $ 1,205,783
Accounts receivable 941,725 1,346,289
Inventories 1,169,768 1,203,372
Prepaid expenses and other assets 92,106 60,300
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TOTAL CURRENT ASSETS 3,195,187 3,815,744
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PROPERTY AND EQUIPMENT:
Equipment 1,925,838 1,819,901
Office furniture, fixtures and computers 494,215 437,053
Leasehold improvements 363,950 362,759
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2,784,003 2,619,713
Less accumulated depreciation and amortization (1,829,492) (1,477,554)
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NET PROPERTY AND EQUIPMENT 954,511 1,142,159
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LONG-TERM INVESTMENTS, RESTRICTED 19,092 28,888
PATENT RIGHTS, NET OF ACCUMULATED AMORTIZATION OF
$118,799 AND $102,613, RESPECTIVELY 21,819 34,221
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TOTAL ASSETS $ 4,190,609 $ 5,021,012
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to bank $ 418,844 $ 782,783
Accounts payable 714,523 1,109,640
Accrued expenses 230,619 174,399
Current installments of note payable to customer 6,422 14,400
Current installments of capital lease obligations 33,826 48,791
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TOTAL CURRENT LIABILITIES 1,404,234 2,130,013
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LONG-TERM LIABILITIES:
Note payable to customer, less current installments 0 2,822
Capital lease obligations, less current intallments 61,354 88,248
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TOTAL LONG-TERM LIABILITIES 61,354 91,070
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TOTAL LIABILITIES 1,465,588 2,221,083
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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 4,108,199 and 4,066,774
shares, respectively 41,082 40,668
Additional paid-in capital 8,568,250 8,515,636
Accumulated deficit (5,884,311) (5,756,375)
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TOTAL SHAREHOLDERS' EQUITY 2,725,021 2,799,929
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 4,190,609 $ 5,021,012
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</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS
<PAGE>
MEDAMICUS, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEP 30, 1997 SEP 30, 1996 SEP 30, 1997 SEP 30, 1996
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
Sales $ 1,711,548 $ 1,255,670 $ 5,280,446 $ 3,813,067
Cost of sales 974,433 858,147 2,946,491 2,517,745
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GROSS PROFIT 737,115 397,523 2,333,955 1,295,322
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OPERATING EXPENSES:
Research and development 125,952 164,894 361,410 632,212
Selling, general and administrative 672,473 556,592 2,057,098 1,709,881
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TOTAL OPERATING EXPENSES 798,425 721,486 2,418,508 2,342,093
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OPERATING LOSS (61,310) (323,963) (84,553) (1,046,771)
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OTHER INCOME (EXPENSE):
Interest expense (15,744) (13,841) (63,147) (66,071)
Interest income 11,522 19,541 36,229 40,207
Other (3,743) (516) (16,465) (3,637)
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TOTAL OTHER INCOME (EXPENSE) (7,965) 5,184 (43,383) (29,501)
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NET LOSS $ (69,275) $ (318,779) $ (127,936) $(1,076,272)
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NET LOSS PER SHARE $ (0.02) $ (0.08) $ (0.03) $ (0.29)
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WEIGHTED AVERAGE SHARES OUTSTANDING 4,108,199 4,060,774 4,084,742 3,760,409
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</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS
MEDAMICUS, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Common Stock Additional
-------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
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<S> <C> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1996 4,066,774 $40,668 $8,515,636 $(5,756,375) $ 2,799,929
Stock options exercised 40,000 400 49,600 0 50,000
Common stock issued as sales incentive 1,425 14 3,014 0 3,028
Net loss for the nine months ended Sept 30, 1997 0 0 0 (127,936) (127,936)
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BALANCES AT SEPTEMBER 30, 1997 4,108,199 $41,082 $8,568,250 $(5,884,311) $ 2,725,021
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</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS
<PAGE>
MEDAMICUS, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEP 30, 1997 SEP 30, 1996
----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (127,936) $(1,076,272)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 368,124 277,222
Interest accretion on notes payable to private investors 0 22,037
Interest added to investments (1,193) (25)
Common stock issued as sales incentive 3,028 0
Changes in operating assets and liabilities:
Accounts receivable 404,564 (170,945)
Inventories 33,604 (258,887)
Prepaid expenses and other assets (31,806) (74,836)
Accounts payable (395,117) 204,833
Accrued expenses 56,220 17,011
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NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 309,488 (1,059,862)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment, net of retirements (164,290) (295,019)
Additions to patent rights (3,784) (1,505)
Purchase of available-for-sale marketable securities, including
reinvestment of securities which matured (19,011) (28,500)
Sale of available-for-sale marketable securities, including sales
of securities which matured 30,000 996,145
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NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (157,085) 671,121
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligations (41,859) (34,471)
Proceeds from sale of stock, net of offering costs 0 1,635,321
Proceeds from exercise of stock options 50,000 20,400
Payments on notes payable to private investors 0 (500,000)
Proceeds from (payments on) note payable to bank (363,939) 548,649
Payments on note payable to customer (10,800) (10,800)
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NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (366,598) 1,659,099
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (214,195) 1,270,358
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CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,205,783 143,273
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CASH AND CASH EQUIVALENTS, END OF PERIOD $ 991,588 $ 1,413,631
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for interest $ 58,235 $ 44,034
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Capital leases incurred on purchase of equipment $ 0 $ 128,589
</TABLE>
SEE ACCOMPANYING CONDENSED NOTES TO FINANCIAL STATEMENTS
<PAGE>
CONDENSED NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED SEPTEMBER 30, 1997
(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, 1996, filed by the Company with the Securities and Exchange
Commission.
The financial statements presented herein as of September 30, 1997 and for the
three and nine months ended September 30, 1997 and 1996 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. 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:
SEPTEMBER 30, 1997 DECEMBER 31, 1996
------------------------------------------
Purchased parts and subassemblies $ 685,967 $ 655,584
Work in process 307,719 412,520
Finished goods 176,082 135,268
------------------------------------------
$ 1,169,768 $ 1,203,372
==========================================
3. NET INCOME (LOSS) PER SHARE
Net income (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 net loss per share since
they are antidilutive.
The FASB has issued Statement No. 128, EARNINGS PER SHARE, which supersedes APB
Opinion No. 15. Statement No. 128 requires the presentation of earnings per
share by all entities that have common stock or potential common stock, such as
option, warrants and convertible securities, outstanding that trade in a public
market. Those entities that have only common stock outstanding are required to
present basic earnings per-share amounts. All other entities are required to
present basic and diluted per-share amounts. Diluted per-share amounts assume
the conversion, exercise or issuance of all potential common stock instruments
unless the effect is to reduce a loss or increase the income per common stare
from continuing operations. All entities required to present per-share amounts
must initially apply Statement No. 128 for annual and interim periods ending
after December 15, 1997. Earlier application is not permitted. The adoption of
Statement No. 128 would have had no effect on reported earnings (loss) per
share.
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
NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1996
Total revenues were $5,280,446 for the nine months ended September 30, 1997
compared to $3,813,067 for the nine months ended September 30, 1996,
representing a 38.5% increase. Sales of vessel introducers, primarily to
<PAGE>
Medtronic under an exclusive distribution arrangement, were $3,055,780 for the
nine months ended September 30, 1997, compared to $2,351,918 for the nine months
ended September 30, 1996. This increase was primarily due to two factors. First,
Medtronic rebuilt its inventories of introducers during the first four months of
1997 which were depleted during the third quarter of 1996 because of a component
supply problem. Second, Medtronic's sales of introducers to their customers has
increased in 1997 over 1996 which has led to increased purchases from the
Company. The Company expects introducer sales in the fourth quarter to be
consistent with third quarter sales.
Contract manufacturing sales were $311,646 for the nine months ended September
30, 1997, compared to $338,666 for the nine months ended September 30, 1996.
This decrease was primarily due to two factors. First, one of the Company's
contract manufacturing customers decided to manufacture their product internally
during 1997. While the Company benefited from some additional orders from them
during the second quarter, the Company does not anticipate any additional
business from them. Second, the Company's other contract manufacturing customer
placed some large orders with the Company during the first quarter of 1997 and
then informed the Company that they had excess inventory and would not be
placing any additional orders for product for most of 1997. The Company does not
expect this customer to increase their orders until the first quarter of 1998.
The Company also does some contract research and development work periodically
for Medtronic and realized sales of $14,467 for the nine months ended September
30, 1997 compared to $127,888 for the nine months ended September 30, 1996. 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 ("LuMax(TM) System") were $1,898,553 for the nine months
ended September 30, 1997, compared to $994,595 for the nine months ended
September 30, 1996, representing a 90.9% increase. Monitor sales increased 65.5%
or $529,620 and catheter and accessory sales increased 201.4% or $374,338 over
the comparable period. The Company has continued to actively market the upgraded
version of its LuMax System into the gynecology and urology office markets by
adding sales management, attending major trade shows and conducting various
direct mail and telemarketing campaigns.
Total gross profit increased from $1,295,322 for the nine months ended September
30, 1996, to $2,333,955 for the nine months ended September 30, 1997, an
increase of 80.2%. Total gross profit as a percent of sales increased from 34.0%
to 44.2% in such periods. The gross profit percentage on vessel introducers and
contract manufacturing totaled 53.1% for the nine months ended September 30,
1997, compared to 42.5% in the nine months ended September 30, 1996. The
increase in the gross profit percentage on vessel introducers and contract
manufacturing was primarily due to increased sales to Medtronic, which resulted
in the existing overhead being allocated over more units. The Company lowered
prices to Medtronic in May 1997 on many of the kit sizes that they purchase and
will be lowering prices on the remaining kit sizes in September 1997. The
Company expects to see lower gross margin percentages in the fourth quarter as
the price reductions take effect.
For fiber optic products, the gross profit percent totaled 28.3% or $537,294 for
the nine month period ended September 30, 1997 compared to 9.9% or $98,547 for
the nine month period ended September 30, 1996. This increase was primarily due
to increased sales which resulted in the existing overhead being allocated over
more units. While the Company was pleased with the increased gross profit
percentage, the Company continues to look at optimizing its catheter
manufacturing processes to increase yields and lower costs. 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 $361,410 or 6.8% of sales for
the nine months ended September 30, 1997, compared to $632,212 or 16.6% of sales
for the nine months ended September 30, 1996. This decrease is due to lower
spending on the development of the LuMax system during the first nine months of
1997 compared to the first nine months of 1996. The Company plans to increase
spending on research and development in the fourth quarter as it continues
working on improving catheter yields.
Selling, general and administrative expenses increased from $1,709,881 for the
nine months ended September 30, 1996 to $2,057,098 for the nine months ended
September 30, 1997. Sales and marketing expenses increased $367,846 for the nine
months ended September 30, 1997 over the comparable period in 1996 primarily
because of increased salary, travel, depreciation and commission expense. The
Company hired two regional sales managers in
<PAGE>
1997 which were not in place during 1996. As a result of these hires, the
Company has also seen an increase in its travel expenses. Depreciation expense
has increased during the comparable periods because the Company has placed a
greater number of the new LuMax machines with our expanded independent sales
force to support the increased sales effort. Commission expense increased during
the comparable periods due to increased sales activity. General and
administrative expenses decreased $20,629 for the first nine months of 1997 over
the comparable period in 1996. This decrease is primarily due to decreased
spending on insurance and investor relations expenses during the comparable
periods. Interest expense decreased from $66,071 for the nine months ended
September 30, 1996 to $63,147 for the nine months ended September 30, 1997. This
decrease can be attributed to the prepayment of the $500,000 notes payable to
private investors in the first quarter of 1996 which resulted in the
recognition, as interest expense, of the remaining unamortized discount related
to the notes.
As a result, the Company incurred a net loss of $127,936 or $.03 per share for
the nine months ended September 30, 1997, compared to a net loss of $1,076,272
or $.29 per share for the nine months ended September 30, 1996.
THREE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1996
Total revenues were $1,711,548 for the three months ended September 30, 1997
compared to $1,255,670 for the three months ended September 30, 1996,
representing a 36.3% increase. Sales of vessel introducers, primarily to
Medtronic under an exclusive distribution arrangement, were $937,717 for the
three months ended September 30, 1997, compared to $733,636 for the three months
ended September 30, 1996. This increase was primarily due to the factors
discussed above. The Company expects fourth quarter sales to be consistent with
the third quarter.
Contract manufacturing sales were $39,142 for the three months ended September
30, 1997, compared to $141,133 for the three months ended September 30, 1996.
This decrease was primarily due to the factors discussed above. The Company
expects fourth quarter sales to be consistent with the third quarter.
Sales of the Company's LuMax System were $734,689 for the three months ended
September 30, 1997, compared to $380,901 for the three months ended September
30, 1996. Monitor sales increased 65.2% or $196,533 and catheter and accessory
sales increased 198.0% or $157,255 in the three months ended September 30, 1997
over the comparable period in 1996, primarily due to the factors discussed
above.
Total gross profit increased from $397,523 for the three months ended September
30, 1996, to $737,115 for the three months ended September 30, 1997, an increase
of 85.4%. Total gross profit as a percent of sales increased from 31.7% in the
three months ended September 30, 1996 to 43.1% in the comparable period in 1997.
The gross profit percentage on vessel introducers and contract manufacturing
totaled 49.6% in the third quarter of 1997, compared to 44.2% in the third
quarter of 1996, primarily due to the factors discussed above. For fiber optic
products, the gross profit percent totaled 34.4% or $252,451 in the third
quarter of 1997 compared to 3.0% or $11,223 in the third quarter of 1996,
primarily due to the factors discussed above.
Total research and development expenditures were $125,952 or 7.4% of sales for
the three months ended September 30, 1997, compared to $164,894 or 13.1% of
sales for the three months ended September 30, 1996, primarily due to the
factors discussed above. The Company does expect to increase research and
development expenditures in the fourth quarter as it continues to work on
improving catheter yields.
Selling, general and administrative expenses increased from $556,592 for the
three months ended September 30, 1996 to $672,473 for the three months ended
September 30, 1997. Sales and marketing expenses increased $154,374 and general
and administrative expenses decreased $38,493 in the third quarter of 1997
compared to the third quarter of 1996 primarily for the reasons discussed above.
Interest expense increased from $13,841 for the three months ended September 30,
1996 to $15,744 for the three months ended September 30, 1997 primarily due to
increased borrowing levels on the line of credit during the comparable periods.
As a result, the Company incurred a net loss of $69,275 or $.02 per share for
the three months ended September 30, 1997, compared to a net loss of $318,779 or
$.08 per share for the three months ended September 30, 1996.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities for the nine months ended September
30, 1997 was $309,488, consisting of a net loss of $127,936, less adjustments
for depreciation and amortization of $368,124, and interest accretion of $1,193.
The Company also issued 1,425 shares of the Company's common stock to its
independent sales representatives as part of a sales incentive program. The
market price on the date of issue was $2.125 per share, totaling $3,028. In
addition, cash was provided by net changes in operating assets and liabilities
of $67,465. The Company saw a decrease in accounts receivable during the first
nine months of 1997 primarily due to increased collections from its LuMax
customers and increased sales to Medtronic which resulted in faster payments.
The Company used the cash from accounts receivable collections to pay down its
note payable to the bank during the period. The Company anticipates inventory
and receivables to increase during the fourth quarter if sales of the fiber
optic products materialize as expected.
Net cash used in investing activities for the nine months ended September 30,
1997 was $157,085. The Company purchased $164,290 of equipment during the period
and had additions to patent rights of $3,784. Additionally, the $30,000 treasury
bill which was pledged as collateral to the equipment lease matured and a new
treasury bill was purchased for $19,011 to replace it.
Net cash used in financing activities for the nine months ended September 30,
1997 was $366,598. The Company paid down the credit line by $363,939 during the
period and had a balance due on the line of $418,844 as of September 30, 1997.
Additionally, a medical consultant exercised a warrant for 40,000 shares of the
Company's common stock at an exercise price of $1.25 per share, totaling
$50,000. The Company also made principal debt payments totaling $52,659.
As a result, the Company's cash and cash equivalents were $991,588 as of
September 30, 1997 compared to $1,205,783 at December 31, 1996. Working capital
increased from $1,685,731 as of December 31, 1996 to $1,760,953 as of September
30, 1997.
On June 24, 1997, the Company signed a one year extension through June 30, 1998
on its $1,200,000 revolving line of credit with a financial institution. 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 2.25% over the financial institution's base rate with minimum
interest due over the term of the agreement of $70,000. 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.
Forward-looking statements herein are made pursuant to the safe harbor
provisions of the Private Securities Litigation Act of 1995. Certain important
factors could cause results to differ materially from those anticipated by some
statements made herein. You are cautioned that all forward-looking statements
involve risks and uncertainties. Among the factors that could cause results to
differ materially are the following: delays in new product launches; lack of
market acceptance of the Company's products; introduction of competitive
products; patent and government regulation matters and the Risk Factors included
in Form 8-K filed with the Securities and Exchange Commission on November 13,
1996.
PART II - OTHER INFORMATION
ITEM 6(b) - REPORTS ON FORM 8-K
None
<PAGE>
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: October 28, 1997 By: /s/ James D. Hartman
President, Chief Executive Officer and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Sep-30-1997
<CASH> 991,588
<SECURITIES> 0
<RECEIVABLES> 949,097
<ALLOWANCES> 7,372
<INVENTORY> 1,169,768
<CURRENT-ASSETS> 3,195,187
<PP&E> 2,784,003
<DEPRECIATION> 1,829,492
<TOTAL-ASSETS> 4,190,609
<CURRENT-LIABILITIES> 1,404,234
<BONDS> 61,354
0
0
<COMMON> 41,082
<OTHER-SE> 2,683,939
<TOTAL-LIABILITY-AND-EQUITY> 4,190,609
<SALES> 5,280,446
<TOTAL-REVENUES> 5,280,446
<CGS> 2,946,491
<TOTAL-COSTS> 2,946,491
<OTHER-EXPENSES> 361,410
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 63,147
<INCOME-PRETAX> (127,936)
<INCOME-TAX> 0
<INCOME-CONTINUING> (127,936)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (127,936)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
