U.S. 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 March 31, 1998
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from ______________ to ______________
Commission file number 0-20887
TELIDENT, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
MINNESOTA 41-1533060
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
ONE MAIN STREET S.E., SUITE 85
MINNEAPOLIS, MINNESOTA 55414
(Address of principal executive offices) (Zip Code)
(612) 623-0911
(Issuer's Telephone Number, Including Area Code)
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 _____.
APPLICABLE ONLY TO CORPORATE ISSUERS
Number of shares outstanding of each of the issuer's classes of equity
securities, as of March 31, 1998: i) 2,786,735 shares of Common Stock, par value
$.08 per share and ii) 37,500 shares of Series I Class A Convertible Preferred
Stock, par value $.08 per share.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I FINANCIAL INFORMATION..............................................................3
ITEM I - Financial Statements................................................................3
Condensed Balance Sheets (unaudited) as of March 31, 1998 and June 30, 1997............3
Condensed Statements of Operations (unaudited) for the three-month and nine-month
periods ended March 31, 1998 and 1997..................................................4
Statements of Shareholders' Equity (unaudited) for the nine months ended
March 31, 1998 ........................................................................5
Condensed Statements of Cash Flows (unaudited) for the nine month periods ended
March 31, 1998 and 1997................................................................6
Notes to Consolidated Financial Statements.............................................7
ITEM 2 Management Discussion and Analysis...................................................9
PART II OTHER INFORMATION........................................................................11
ITEM 6 Exhibits and Reports on Form 8-K....................................................11
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS.
TELIDENT, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 364,461 $ 22,319
Trade accounts receivable, net of allowance for doubtful
accounts of $29,500 and $40,000, respectively 464,918 432,111
Inventories 319,752 430,506
Other 90,840 37,710
------------ ------------
Total current assets 1,239,971 922,646
FURNITURE AND OFFICE EQUIPMENT, less accumulated
depreciation of $266,455 and $198,355, respectively 233,656 264,051
INTANGIBLE ASSETS, less accumulated amortization of $162,218
and $108,868, respectively 285,483 99,429
OTHER ASSETS 76,592 30,855
------------ ------------
$ 1,835,702 $ 1,316,981
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade accounts payable $ 242,800 $ 299,684
Accrued expenses 128,341 113,229
Deferred revenue 8,559 1,950
Current portion of long-term debt 51,175 15,913
Notes payable - bank 171,504 101,716
Debentures and interest payable 56,250 77,875
------------ ------------
Total current liabilities 658,629 610,367
LONG TERM DEBT, less current portion 44,472 20,903
DEBENTURES PAYABLE -- 87,500
------------ ------------
Total liabilities 703,101 718,770
------------ ------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $.08 par value, 2,500,000 authorized
Series I Class A, cumulative dividend at an annual rate of the prime
rate plus 1% convertible into common stock at the rate of one
common share for each preferred share, 37,500 shares
outstanding at both dates 3,000 3,000
Series II Class A, cumulative dividend equal to the Series I Class
A, if any, convertible into common stock for a period of one
year at i) one common share for each preferred share or ii) if the
Average Price, as defined, is less than $4.50, then each share
of preferred shall be convertible into the number of shares of
common stock equal to $4.50 divided by 80% of the Average
Price, or iii) if the Company issues or sells Common Stock (as
defined) or Convertible Securities (as defined) at less than
$4.50, then each share of preferred shall be convertible into the
number of shares of common stock equal to the Conversion
Price (as defined in effect prior to such issuance ($4.50)
multiplied by the number of shares the preferred is convertible
into prior to the adjustment (277,778)) and dividing the product
thereof by the Conversion Price resulting from such issuance
277,778 shares outstanding at March 31, 1998 22,222
Common stock, $.08 par value, 10,000,000 shares authorized,
1,734,546 and 1,737,131 shares outstanding, respectively 138,764 138,971
Additional paid-in capital 14,677,603 13,517,626
Accumulated deficit (13,708,988) (13,061,386)
------------ ------------
Total shareholders' equity 1,132,601 598,211
------------ ------------
$ 1,835,702 $ 1,316,981
============ ============
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
TELIDENT, INC.
CONDENSED STATEMENTS 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 $ 450,503 $ 14,950 $ 1,581,078 $ 1,466,737
Cost of sales 173,081 39,832 525,243 492,515
----------- ----------- ----------- -----------
Gross profit (loss) 277,422 (24,882) 1,055,835 974,222
Operating expenses:
Sales and marketing 208,765 439,645 629,434 1,096,625
Research and development 177,157 322,733 450,886 899,452
General and administrative 198,279 306,516 606,020 897,317
Restructuring -- 391,519 -- 391,519
----------- ----------- ----------- -----------
Total operating expenses 584,201 1,460,413 1,686,340 3,284,913
----------- ----------- ----------- -----------
Loss from operations (306,779) (1,485,295) (630,505) (2,310,691)
Interest income 7,363 4,941 26,883 35,628
Interest expense (15,402) (38,253) (43,980) (190,278)
----------- ----------- ----------- -----------
Net loss $ (314,818) $(1,518,607) $ (647,602) $(2,465,341)
=========== =========== =========== ===========
Preferred stock dividends deemed paid, including $134,037
of cumulative dividends at March 31, 1998 $ (41,625) $ -- $ (432,087) $ --
=========== =========== =========== ===========
Net loss applicable to common stock $ (356,443) $(1,518,607) $(1,079,689) $(2,465,341)
=========== =========== =========== ===========
Net loss per common share - basic and diluted $ (.21) $ (.99) $ (.62) $ (1.66)
=========== =========== =========== ===========
Weighted average number of common shares outstanding 1,734,546 1,541,198 1,727,960 1,488,285
=========== =========== =========== ===========
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
TELIDENT, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
<TABLE>
<CAPTION>
Number of Number of Amount of Amount of Additional
common preferred preferred common paid-in Accumulated
shares issued shares issued stock stock capital deficit
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, June 30, 1997 1,737,131 37,500 $ 3,000 $ 138,971 $ 13,517,626 $(13,061,386)
Preferred stock issued in private
placement, net of offering
expenses of $56,373 -- 277,778 22,222 -- 1,171,405 --
Common stock offset against
note receivable (2,585) -- -- (207) (11,428) --
Net loss -- -- -- -- -- (647,602)
------------ ------------ ------------ ------------ ------------ ------------
BALANCE, March 31, 1998 1,734,546 315,278 $ 25,222 $ 138,764 $ 14,677,603 $(13,708,988)
============ ============ ============ ============ ============ ============
</TABLE>
See accompanying notes to condensed financial statements.
<PAGE>
TELIDENT, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
March 31,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (647,602) $(2,465,341)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 121,450 498,207
Common stock issued for services -- 21,500
Changes in assets and liabilities:
Trade accounts receivable (32,807) 201,292
Inventories 110,754 (85,526)
Other assets (43,752) 154,266
Trade accounts payable (56,884) (104,094)
Other liabilities 20,096 65,812
----------- -----------
Net cash used in operating activities (528,745) (1,713,884)
Cash flows from investing activities:
Payments for intangible assets (239,404) (117,716)
Purchase of furniture and office equipment (20,519) (87,916)
----------- -----------
Net cash used in investing activities (259,923) (205,632)
Cash flows from financing activities:
Payments on notes payable-bank (1,603,650) (1,454,464)
Borrowings from notes payable-bank 1,673,438 1,523,500
Payments on borrowings from others (132,605) --
Borrowings from others -- (1,116,366)
Proceeds from issuance of preferred stock 1,193,627 36,833
Proceeds from issuance of common stock -- 2,930,422
Preferred stock dividends -- (48,190)
Preferred stock redemption -- (150,000)
----------- -----------
Net cash provided by financing activities 1,130,810 1,721,735
Net increase, decrease in cash and cash equivalents for the period 342,142 (197,781)
Cash and cash equivalents beginning of period 22,319 448,654
----------- -----------
Cash and cash equivalents end of period $ 364,461 $ 250,873
=========== ===========
Supplemental non-cash financing activities:
Common stock offset against note receivable $ 11,635 $ --
----------- -----------
Conversion of notes payable to common stock $ -- $ 229,340
=========== ===========
Common stock issued for services $ -- $ 21,500
=========== ===========
</TABLE>
<PAGE>
TELIDENT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The condensed financial statements included in this Form 10-QSB are
unaudited. However, in the opinion of management of Telident, Inc. (the
"Company"), the financial statements include all adjustments, consisting of
normal recurring adjustments, necessary for the fair presentation of the results
of operations and financial position for the interim periods.
The results of operations for the three-month and nine-month periods ended
March 31, 1998 do not necessarily indicate the results to be expected for the
full year. These statements should be read in conjunction with the Company's
consolidated financial statements and notes thereto, contained in the Company's
Annual Report on Form 10-KSB for the year ended June 30, 1997.
Certain reclassifications have been made to the condensed statements of
operations for the three and nine months ended March 31, 1997 and the condensed
statement of cash flows for the nine months ended March 31, 1997. Such
reclassifications had no effect on net loss or shareholders' equity as
previously reported.
2. INVENTORIES
Inventories are stated at the lower of cost or market using the first in,
first out method, and consisted of the following:
March 31, June 30,
1998 1997
---- ----
Raw materials $ 329,977 $ 416,735
Work in progress 26,924 336
Finished goods 52,851 103,435
Inventory reserve (90,000) (90,000)
------------ ------------
$ 319,752 $ 430,506
============ ============
3. SHAREHOLDERS' EQUITY
REVERSE STOCK SPLIT - On January 2, 1998 the Board of Directors declared a
one-for-four reverse stock split effective January 13, 1998. All references in
the financial statements to number of shares, per share amounts and the
statement of shareholders' equity have been restated to reflect the split.
ISSUANCE OF SERIES II CLASS A CONVERTIBLE PREFERRED STOCK - On July 27,
1997, FAMCO II LLC ("FAMCO"), a Minnesota limited liability corporation,
purchased 277,778 shares of the Company's Series II Class A Convertible
Preferred Stock for $1,250,000 ($4.50 per share). FAMCO is managed by Family
Financial Strategies, Inc.
The Series II Class A Convertible Preferred Stock contained a beneficial
conversion feature. The value of the beneficial conversion feature, $312,500,
was recorded as a deemed preferred stock dividend at the date of issuance, which
increased the net loss applicable to common stock in the calculation of net loss
per share
CUMULATIVE UNDECLARED DIVIDENDS - The Company has not paid dividends on
either series of its preferred stock since March 31, 1997. At March 31, 1998,
there are $134,037 of cumulative undeclared dividends on its two series of
preferred stock.
POTENTIAL FUTURE ISSUANCE - In April 1998, the Company entered into an
agreement to obtain 400,000 shares of Series III Convertible Preferred Stock
with two institutional investors in exchange for $1,000,000. Each share of the
Series III Convertible Preferred Stock is convertible at the option of the
holder into Common Stock. Upon any such conversion, each share of Series III
Preferred Stock shall be converted into a number of fully paid and nonassessable
shares (calculated as to each conversion to the nearest 1/100th of a share) of
Common Stock of the Corporation equal to the quotient of (x) the Per Share
Purchase Price (appropriately adjusted to reflect stock splits, stock dividends,
reorganizations, consolidations and similar changes hereafter effected) of such
share of Series III Preferred Stock, divided by (y) the lessor of (i) the
Conversion Price (as defined) and (ii) 80% of the average of the closing bid
price for the shares of COmmon Stock on the ten (10)
<PAGE>
trading days prior to the date that the Corporation receives written notice of
conversion from a holder of such Series III Preferred Stock. These investors
will also receive a warrant to purchase 400,000 shares of common stock. The
warrant is exercisable at $3.125 per share and will expire two years from the
closing date of this transaction. The proceeds from the sale were released into
an escrow account during April 1998. This transaction has not closed and there
can be no assurance that it will.
4. NET LOSS PER COMMON SHARE - BASIC AND DILUTED
Effective December 15, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128, EARNINGS PER SHARE, (SFAS No. 128). Net loss per
common share amounts presented for the three and nine months ended March 31,
1997 have been restated for the adoption of SFAS No. 128.
5. SUBSEQUENT EVENTS
In February 1998, the Company issued a Director warrants to purchase
100,000 shares of common stock. The warrants are excercisable at $1.188 per
share, vest based upon certain performance conditions and expire on February 25,
2000. In accordance with the provisions associated with the series II Class A
Convertible Preferred Stock, FAMCO III LLC ("FAMCO") had a conversion option
which allowed it at anytime prior to June, 19998 to convert such Series II Class
A Convertable Preffered Stock into common stock based on a exercise price of the
warrant or $1.188 per share. In April 1998, FAMCO exercised its conversion right
and convereted 277,778 shares of Series II Class A Preferred Stock into
1,052,189 shares of common stock. Assuming the conversion had taken place in
July 1997, the Company's basis and diluted loss per share would have been $.12
and $.26 for the three month and nine month periods ended March 31, 1998
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
This discussion and analysis contains forward-looking terminology such as
"believes," "anticipates," "expects" and "intends," or comparable terminology.
Such statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected. Potential purchasers
of the Company's securities are cautioned not to place undue reliance on such
forward-looking statements which are qualified in their entirety by the cautions
and risks described herein.
Telident, Inc. (the "Company") designs, manufactures and markets
proprietary hardware and software systems which provide the exact location of a
911 telephone call to the emergency dispatcher who receives the call. The
Company's systems provide information which can shorten the response time to a
911 call, reduce the costs associated with responses to incorrect locations and
improve the safety of individuals within a private branch exchange ("PBX")
telephone system. In addition, the Company manufactures and markets network
hardware that provides switching, selective routing and data interfacing
capabilities to public and private telephone networks and city, county and state
government agencies. The Company also provides these customers with a variety of
emergency information processing and management software systems.
RESULTS OF OPERATIONS
For the three-month and nine-month periods ended March 31, 1998, the
Company recorded a net loss of $314,818 and $647,602 compared to a net loss of
$1,518,607 and $2,465,341 for the same periods in fiscal year 1997.
REVENUES
Revenues consist of equipment sales of the Company's hardware and software
systems for enhanced 911 service, mainly from its Station Translation System
("STS") for PBX systems. The Company also generates revenues from services and
extended warranty contracts.
Revenues for the three-month and nine-month periods ended March 31, 1998
were $450,503 and $1,581,078 compared to $14,950 and $1,466,737 for the same
periods in fiscal year 1997. The Company increased revenues by focusing selling
efforts on its core PBX 9-1-1 products including its on-site notification
software and 9-1-1 database software applications. In addition, software and
systems sales increased after the Company introduced new packaging and selling
strategies.
GROSS MARGIN (LOSS)
Gross margin (loss) for the three-month and nine-month periods ended March
31, 1998 increased to 61.6% and 66.8%, compared to (166.4%) and 66.4% for the
same periods in fiscal year 1997. This increase resulted from increased
shipments of the Company's core PBX 9-1-1 products, software sales, and improved
cost controls for resold products and installation services.
SELLING
Selling expenses for the three-month and nine-month periods ended March
31, 1998 decreased to $208,765 and $629,434 from $439,645 and $1,096,625 for the
same periods in fiscal year 1997. This decrease resulted from the closing of
several under-producing sales offices, a reduction in sales personnel and
marketing expenses, and an overall reduction in operating expenses as a
continuation of the Company's cost containment and restructuring measures which
were implemented in the second half of fiscal year 1997. The Company has
recently shifted the focus of its selling efforts away from a field sales force
to direct marketing to end users and distributors. This strategy is resulting in
increased sales while at the same time decreasing the Company's sales and
marketing expenses.
<PAGE>
RESEARCH AND DEVELOPMENT
Research and development expenses for the three-month and nine-month
periods ended March 31, 1998 decreased to $177,157 and $450,886 from $322,733
and $899,452 during the same periods in fiscal year 1997. This decrease was due
to a reduction in personnel, decreased use of consultants, and a concentrated
focus on research and development efforts for the Company's existing PBX 911
product line. In addition, new research and development programs were
implemented in the first nine months of fiscal year 1998. The Company believes
that these programs will continue to improve product capabilities and new
product introductions in future periods.
GENERAL AND ADMINISTRATIVE
General and administrative expenses for the three-month and nine-month
periods ended March 31, 1998 decreased to $198,279 and $606,020 from 306,516 and
$897,317 during the same periods in fiscal year 1997. This decrease was caused
by the continuing effect of the Company's cost containment and restructuring
measures implemented in the second half of fiscal year 1997, including
reductions in personnel and decreased use of consultants.
RESTRUCTURING CHARGES
Restructuring charges of $391,519 were recorded during the three-month and
nine-month periods ended March 31, 1997 as a result of a reorganization of the
Company's personnel and certain write downs of other assets.
INTEREST EXPENSE, (NET)
Interest expense, net of interest income for the three-month and
nine-month periods ended March 31, 1998 was $8,039 and $17,097 compared to
$33,312 and $154,650 for the same periods in fiscal year 1997. The decrease in
interest expense was due in part to a decrease in outstanding borrowings. The
outstanding debt from the Company's June 1996 bridge financing was fully paid
using the proceeds from the Company's common stock offering completed in August
1996. In addition, the Company converted a substantial portion of its debentures
to common stock during July 1997.
DIVIDENDS
The Company has never paid a cash dividend on its common stock. The
payments of dividends, if any in the future rest with the discretion of the
Board of Directors and will depend, among other things, upon the Company's
earnings, if any, capital requirements and financial condition. The Company has
paid a cash dividend on its preferred stock in the past. No such dividend was
paid during the nine months ended March 31, 1998, and currently the Company has
no intention to pay such dividend. The Company instead plans to retain all
earnings, if any, to further the development of the business.
INFLATION
Inflation has not had a material impact on the Company's net sales or
results of operations.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had cash and cash equivalents of $364,461
and accounts receivable of $464,918. During the nine-month period ended March
31, 1998 net cash used in the Company's operating activities was $528,745,
consisting primarily of the Company's loss from operations of $647,602. The
Company invested $239,404 in intangible assets related to the development of
Company manufactured computer software, and $20,519 for additional office
equipment and a new financial accounting system designed to streamline and
improve the efficiency of the Company's accounting activities. Funds required to
finance the Company's operations and investments during the first nine months of
fiscal year 1998 were provided by the July 1997 private placement of 277,778
shares of Series II Class A Convertible Preferred Stock, resulting in net
proceeds of approximately $1.2 million and an increase in notes payable - bank.
The Company has relied on debt and equity capital to fund its operating losses
during the first nine months of fiscal year 1998 and during prior periods.
Based on the projected revenues and expenses, the Company believes that
cash and cash equivalents, the proceeds from an existing line of credit and its
collections from accounts receivable, will be adequate to fund the Company's
working capital requirements through June 30, 1998.
At March 31, 1998, the Company had an accumulated deficit of $13,708,988
and shareholders' equity of $1,132,601. The Company currently has an agreement
which would provide it with additional equity capital. The company expects this
agreement to be finalized during the fourth quarter of fiscal year 1998. There
can be no assurance that if additional funds are required, that they will be
available on terms acceptable to the Company, or at all. The failure to obtain
additional funds if required would have a material adverse effect upon the
Company's business, operating results and financial condition. The Company has
no material commitments for capital expenditures at March 31, 1998.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
27 Financial Data Schedule
(b) Current Reports on Form 8-K
On January 2, 1998, the registrant filed a Current Report on
Form 8-K (file No. 0-20887), relating to the Company's
one-for-four reverse stock split effective January 13, 1998.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TELIDENT, INC.
By: /s/ W. Edward McConaghay
W. Edward McConaghay, President
May 15, 1998 (Principal Executive Officer)
Date
By: /s/ Carolyn L. Wright
Carolyn L. Wright, Controller
May 15, 1998 (Principal Financial and Accounting Officer)
Date
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 12-MOS 3-MOS 6-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1996 JUN-30-1996 JUN-30-1997 JUN-30-1997
<PERIOD-END> MAR-31-1996 JUN-30-1996 SEP-30-1996 DEC-31-1996 MAR-31-1997
<CASH> 150,765 448,654 1,475,723 661,448 250,873
<SECURITIES> 0 0 0 0 0
<RECEIVABLES> 610,129 880,555 1,085,487 1,412,514 679,262
<ALLOWANCES> 40,000 40,000 40,000 40,000 40,000
<INVENTORY> 643,391 573,086 699,187 646,792 658,612
<CURRENT-ASSETS> 1,429,785 1,900,241 3,253,870 2,716,716 1,607,499
<PP&E> 370,884 375,175 399,528 460,624 462,406
<DEPRECIATION> 111,047 121,933 138,433 154,933 175,248
<TOTAL-ASSETS> 2,187,290 2,771,800 4,148,021 3,651,215 2,011,413
<CURRENT-LIABILITIES> 1,629,161 1,934,499 676,585 1,718,445 1,649,380
<BONDS> 585,000 993,000 993,000 0 0
0 0 0 0 0
4,000 3,750 3,500 3,250 3,000
<COMMON> 94,542 98,062 123,032 123,125 123,375
<OTHER-SE> (125,413) (257,511) 2,351,904 1,806,398 235,658
<TOTAL-LIABILITY-AND-EQUITY> 2,187,290 2,771,800 4,148,021 3,651,215 2,011,413
<SALES> 1,786,958 2,454,807 826,369 1,451,787 1,466,737
<TOTAL-REVENUES> 1,786,958 2,454,807 826,369 1,451,787 1,466,737
<CGS> 531,175 791,533 257,316 452,683 457,515
<TOTAL-COSTS> 531,175 791,533 257,316 452,683 457,515
<OTHER-EXPENSES> 0 0 0 0 0
<LOSS-PROVISION> 0 0 0 0 0
<INTEREST-EXPENSE> 279,813 441,896 112,515 152,025 190,275
<INCOME-PRETAX> (1,143,196) (1,792,627) (442,377) (946,734) (2,465,341)
<INCOME-TAX> 0 0 0 0 0
<INCOME-CONTINUING> (1,143,196) (1,792,627) (442,377) (946,734) (2,465,341)
<DISCONTINUED> 0 0 0 0 0
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> (1,143,196) (1,792,627) (442,377) (946,734) (2,465,341)
<EPS-PRIMARY> (1.14) (1.70) (0.33) (0.67) (1.69)
<EPS-DILUTED> (1.14) (1.70) (0.33) (0.67) (1.69)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<S> <C> <C> <C>
<PERIOD-TYPE> 12-MOS 3-MOS 6-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1998 JUN-30-1998
<PERIOD-END> JUN-30-1997 SEP-30-1997 DEC-31-1997
<CASH> 22,319 893,184 737,575
<SECURITIES> 0 0 0
<RECEIVABLES> 472,111 635,349 655,280
<ALLOWANCES> 40,000 37,160 29,500
<INVENTORY> 430,506 370,636 360,083
<CURRENT-ASSETS> 922,646 1,909,224 1,849,821
<PP&E> 462,406 478,852 500,111
<DEPRECIATION> 198,355 219,555 240,955
<TOTAL-ASSETS> 1,316,981 2,287,645 2,400,622
<CURRENT-LIABILITIES> 610,367 687,329 895,436
<BONDS> 108,403 17,948 57,767
0 0 0
3,000 25,222 25,222
<COMMON> 138,971 138,754 138,764
<OTHER-SE> 456,240 1,418,382 1,283,433
<TOTAL-LIABILITY-AND-EQUITY> 1,316,981 2,287,645 2,400,622
<SALES> 1,754,451 504,798 1,130,575
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0
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