<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
-------------
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1997
Commission File Number 1-10515
JMAR INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 68-0131180
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
3956 Sorrento Valley Blvd.
San Diego, CA 92121
(619) 535-1706
(Address, including zip code and telephone number including
area code of registrant's principal executive office)
Indicate by check mark whether the registrant 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, and has been subject to the filing requirements for at
least the past 90 days.
Yes X No __
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date (May 1, 1997).
Common Stock, $.01 par value: 16,877,169 shares
================================================================================
<PAGE> 2
JMAR INDUSTRIES, INC.
INDEX
<TABLE>
<CAPTION>
PAGE #
------
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - December 31, 1996 and
March 31, 1997 2
Consolidated Statements of Operations - Three months ended
March 31, 1997 and 1996 3
Consolidated Statements of Cash Flows - Three months ended
March 31, 1997 and 1996 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. N/A
Item 2. Changes in Securities 11
Item 3. N/A
Item 4. N/A
Item 5. N/A
Item 6. Reports on Form 8-K 11
</TABLE>
1
<PAGE> 3
JMAR INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1997 AND DECEMBER 31, 1996
<TABLE>
<CAPTION>
====================================================================================================================================
March 31, 1997 December 31, 1996
-------------- -----------------
ASSETS (Unaudited)
------
<S> <C> <C>
Current Assets:
Cash and cash equivalents ......................................... $ 2,048,908 $ 2,629,286
Accounts receivable, net .......................................... 2,764,120 2,994,762
Notes and other receivable ........................................ 14,667 902,005
Inventories (Note 2) .............................................. 3,638,318 3,855,312
Prepaid expenses and other ........................................ 839,097 721,685
----------- -----------
Total current assets ..................................... 9,305,110 11,103,050
Notes receivable ........................................................... 54,667 54,667
Receivable from employees (Note 6) ......................................... 85,010 73,824
Property and equipment, net (Note 3) ....................................... 2,940,058 2,704,460
Other assets, net .......................................................... 385,711 347,627
Goodwill, net (Note 6) ..................................................... 1,053,920 1,111,890
----------- -----------
TOTAL ASSETS ............................................. $13,824,476 $15,395,518
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable .................................................................. $ 1,023,005 $ 914,272
Accrued liabilities ............................................................... 506,723 535,885
Accrued payroll and related costs ................................................. 622,214 849,072
Customer deposits ................................................................. 14,276 742,213
Convertible notes payable ......................................................... 593,099 589,631
Notes payable and capital lease obligations ....................................... 748,168 1,728,230
------------ ------------
Total current liabilities ................................................ 3,507,485 5,359,303
------------ ------------
Notes payable and capital lease obligations, net of current portion ........................ 644,075 667,310
------------ ------------
Stockholders' equity (Notes 5 and 6):
Preferred stock, $.01 par value;
5,000,000 shares authorized; None issued and outstanding
as of March 31, 1997 and December 31, 1996 ....................................... -- --
Common stock, $.01 par value; 40,000,000 shares authorized; Issued and
outstanding 16,869,669 shares as of March 31, 1997 and
16,760,269 shares as of December 31, 1996 ........................................ 168,697 167,603
Additional-paid in capital ........................................................ 35,476,859 35,274,959
Accumulated deficit ............................................................... (25,972,640) (26,073,657)
------------ ------------
Total stockholders' equity .............................................. 9,672,916 9,368,905
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ............................... $ 13,824,476 $ 15,395,518
============ ============
====================================================================================================================================
</TABLE>
2
<PAGE> 4
JMAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
====================================================================================================================================
Three Months Ended
------------------------------
March 31, March 31,
1997 1996
------------ ------------
<S> <C> <C>
Sales .......................................................................................... $ 5,245,501 $ 2,457,395
Costs of sales ................................................................................. 3,216,994 1,419,028
------------ ------------
Gross profit .......................................................................... 2,028,507 1,038,367
------------ ------------
Operating expenses:
Selling, general and
administrative ............................................................................. 1,461,093 983,731
Research, development and
engineering ................................................................................ 444,165 273,860
------------ ------------
Total operating expenses ..................................................................... 1,905,258 1,257,591
------------ ------------
Income (loss) from operations .................................................................. 123,249 (219,224)
Interest and other income (expense), net ....................................................... 32,798 (62,688)
Interest expense ............................................................................... (55,030) (74,201)
------------ ------------
Net income (loss) .............................................................................. $ 101,017 $ (356,113)
============ ============
Primary and fully diluted net income (loss) per common
and common equivalent share (Note 4): ...................................................... $ .01 $ (.02)
============ ============
Weighted average common and common equivalent shares outstanding:
Primary and fully diluted ............................................................. 18,187,109 14,270,893
============ ============
====================================================================================================================================
</TABLE>
3
<PAGE> 5
JMAR INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
====================================================================================================================================
Three Months Ended
------------------------------------
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ............................................................... $ 101,017 $ (356,113)
Adjustments to reconcile net income (loss) to net cash used
in operating activities:
Depreciation and amortization ................................................... 249,360 123,269
Change in assets and liabilities net of effects from acquisition:
(Increase) decrease in:
Accounts receivable ........................................................... 230,643 (132,534)
Inventories ................................................................... 216,994 (407,286)
Prepaid expenses and other .................................................... (150,450) (98,772)
Other assets .................................................................. (63,122) (23,816)
Increase (decrease) in:
Customer deposits ............................................................. (727,937) 304,822
Accounts payable and accrued liabilities ...................................... (147,287) 488,356
----------- -----------
Net cash used in operating activities ........................................... (290,782) (102,074)
----------- -----------
Cash flows from investing activities:
Capital expenditures ............................................................ (365,444) (22,246)
Payments received on notes and other receivable ................................. 887,338 443,414
Increase in notes receivable .................................................... (11,186) (100,836)
Patent costs .................................................................... -- (3,910)
----------- -----------
Net cash provided by investing activities ............................. 510,708 316,422
----------- -----------
Cash flows from financing activities:
Net payments of short-term debt ................................................. (991,642) (346,162)
Net payments of notes payable ................................................... (11,656) --
Net proceeds from the issuance of common stock .................................. -- 148,000
Net proceeds from the exercise of warrants ..................................... 202,994 --
----------- -----------
Net cash used in financing activities .................................. (800,304) (198,162)
----------- -----------
Net increase (decrease) in cash and cash equivalents ..................................... (580,378) 16,186
Cash and cash equivalents, beginning of period ........................................... 2,629,286 1,837,647
----------- -----------
Cash and cash equivalents, end of period ................................................. $ 2,048,908 $ 1,853,833
=========== ===========
====================================================================================================================================
</TABLE>
4
<PAGE> 6
JMAR INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of JMAR Industries, Inc. (the "Company") and its subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
The accompanying consolidated financial statements have been prepared
by the Company and are unaudited except for the balance sheet as of December 31,
1996. The financial statements have been prepared in accordance with generally
accepted accounting principles, pursuant to the rules and regulations of the
Securities and Exchange Commission. In the opinion of management, the
accompanying consolidated financial statements include all adjustments of a
normal recurring nature which are necessary for a fair presentation of the
results for the interim periods presented. Certain information and footnote
disclosures normally included in financial statements have been condensed or
omitted pursuant to such rules and regulations. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. Although the Company believes that the disclosures are adequate to
make the information presented not misleading, it is suggested that these
consolidated financial statements be read in conjunction with the financial
statements and the notes thereto included in the Company's Form 10-K for the
year ended December 31, 1996. The results of operations for the three months
ended March 31, 1997 are not necessarily indicative of the results to be
expected for the full year.
(2) INVENTORIES
Inventories are carried at the lower of cost on the first-in, first-out
basis or market and are comprised of materials, direct labor and applicable
manufacturing overhead. Inventories consist of the following:
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Raw materials, components and sub-assemblies ..... $1,972,824 $2,695,803
Work-in-process .................................. 1,412,023 913,403
Finished goods ................................... 253,471 246,106
---------- ----------
$3,638,318 $3,855,312
========== ==========
</TABLE>
(3) PROPERTY AND EQUIPMENT
As of March 31, 1997 and December 31, 1996, property and equipment
consist of the following:
5
<PAGE> 7
JMAR INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
<S> <C> <C>
Equipment and machinery .................. $ 4,584,770 $ 4,243,555
Furniture and fixtures ................... 333,302 313,909
Leasehold improvements ................... 67,216 62,380
----------- -----------
4,985,288 4,619,844
Less-accumulated depreciation ............ (2,045,230) (1,915,384)
=========== ===========
$ 2,940,058 $ 2,704,460
=========== ===========
</TABLE>
(4) INCOME (LOSS) PER SHARE
Income (loss) per common and common equivalent share is based on the
weighted average number of shares of common stock outstanding and dilutive
common equivalent shares from stock options, warrants and convertible notes
using the treasury method. Common stock equivalents are not included in the
calculation of loss per share as their effect would be antidilutive.
In March, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per
Share", which changes the method of calculating earnings per share. SFAS 128 is
effective for financial statements issued after December 15, 1997. The earnings
per share of the Company for the three months ended March 31, 1997 and 1996
would be the same under SFAS 128 as that presented herein.
(5) EQUITY TRANSACTIONS
During the three months ended March 31, 1997, the Company received net
proceeds of approximately $203,000 from the exercise of warrants into 105,400
shares of common stock.
(6) ACQUISITION OF CALIFORNIA ASIC, INC.
On May 23, 1996, the Company acquired (the "Acquisition") approximately
94 percent of the outstanding common stock of California ASIC Technical
Services, Inc., a Nevada corporation, (subsequently renamed California ASIC
("Cal ASIC")). The Acquisition involved a private tender offer to the
shareholders of Cal ASIC (the "Sellers"). As consideration for the Acquisition,
the Company issued to the Sellers an aggregate of 1,427,526 shares of its Common
Stock. The shares issued by the Company are unregistered, however, the Company
anticipates that such shares will be registered in the near future. The purchase
price was negotiated at arm's length.
In addition, concurrent with the closing, the Company loaned $400,000
of its funds to Cal ASIC (in addition to $100,000 previously loaned) and agreed
to loan an additional $1,000,000 over an eighteen month period, of which
$500,000 was loaned in 1996, and $250,000 was loaned in the quarter ended March
31, 1997, to be used by Cal ASIC for equipment purchases and working capital
purposes. In addition, the Company agreed to loan the two majority shareholders
of Cal ASIC up to $250,000, of which $10,000 was loaned in the quarter ended
March 31, 1997, secured by the JMAR stock they received in the Acquisition.
6
<PAGE> 8
Cal ASIC is engaged in the design, fabrication, assembly and testing of
application specific integrated circuits for the electronics industry and will
be operated as a division of the Company.
The Company has accounted for the acquisition as a purchase effective
June 1, 1996. The allocation of the purchase price of Cal ASIC reflected in the
accompanying financial statements has been prepared based upon an independent
appraisal of certain of the acquired assets and using management's estimate of
fair value for the remaining net assets. The Company will continue to review its
allocation of the purchase price to the acquired assets and liabilities.
Goodwill related to this acquisition is being amortized over five years.
The following unaudited pro forma information gives effect to the
acquisition of Cal ASIC as if the acquisition occurred on January 1, 1996. In
connection with the Acquisition, Cal ASIC entered into agreements with several
of its creditors which reduced the related liabilities due those creditors by
approximately $850,000. Such debt reductions were not reflected in the statement
of operations of the Company. The pro forma loss from continuing operations
excludes any impact from the debt settlements of Cal ASIC directly attributable
to the Acquisition. These statements do not purport to be indicative of the
results of operations which actually would have occurred had the acquisition of
Cal ASIC occurred on January 1, 1996 or which may be expected to occur in the
future.
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1996
-----------------------------------------
Proforma Actual
---------- -----------
<S> <C> <C>
Total revenues ............................ $2,457,000 $ 2,457,000
========== ===========
Loss from continuing operations ........... $ (568,000) $ (356,000)
========== ===========
Loss per share ............................ $ (.04) $ (.02)
========== ===========
</TABLE>
7
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM 2.
Results of Consolidated Operations
On May 23, 1996, the Company acquired approximately 94 percent of the
outstanding common stock of California ASIC ("Cal ASIC"). The Company has
accounted for the acquisition as a purchase effective June 1, 1996. JMAR's
Operating and Net Income for the three months ended March 31, 1997, $123,249 and
$101,017, respectively, include operating and net losses of $254,448 and
$260,501, respectively, generated from Cal ASIC's startup operations.
Accordingly, JMAR's operating income and net income, excluding the startup loss
from Cal ASIC, were $377,697 and $361,518, respectively, for the three months
ended March 31, 1997. The Company's outlook for fiscal year 1997 is positive for
operations that existed prior to the acquisition of Cal ASIC. However, the
Company expects a continuing adverse impact on profits in the near term from Cal
ASIC, including a non-cash charge of approximately $195,000 per year for
goodwill amortization. Furthermore, certain of the Company's revenues are to a
limited number of customers. As a result, the timing of receipt and shipment of
orders for these customers could have a material impact on quarterly results.
Revenues for the three months ended March 31, 1997 and 1996 were
$5,245,501 and $2,457,395, respectively. The increase of $2,788,106 for the
three months ended March 31, 1997 compared to the three months ended March 31,
1996 is primarily attributable to the overall increased volume of orders in the
latter part of 1996 for Disk Head Inspection Workstations and new products,
primarily the Mirage tabletop video measurement system. In addition, the
revenues for the three months ended March 31, 1996 were low due to delays in
shipping certain products in order to incorporate customer engineering upgrades
to an existing product and the dilution of senior management's time as a result
of the negotiations and due diligence activities in connection with the proposed
acquisition of Cal ASIC.
Gross margins for the three months ended March 31, 1997 and 1996 were
38.7% and 42.3%, respectively. The lower gross margins for the three months
ended March 31, 1997 versus the three months ended March 31, 1996 is primarily
due to competitive pressures on certain products. The Company expects these
competitive pressures to continue on certain products in the future. The Company
is taking action to improve its gross margins, however, there is no assurance
that it will achieve significant improvements, or any improvements, in the near
or longer term.
Selling, general and administrative ("SG&A") expenses for the three
months ended March 31, 1997 and 1996 were $1,461,093 and $983,731, respectively.
The increase in SG&A expenses in 1997 is due to (i) SG&A expenses of $248,388
related to Cal ASIC in 1997 compared to none in 1996; (ii) higher sales and
marketing costs related to the Company's increased sales volume; and (iii)
higher payroll costs.
The Company's research, development and engineering program (RD&E)
consists of two types: Customer-Funded RD&E (U.S. government and other
companies) and Company-Funded RD&E. Both types of RD&E are expensed when
incurred. Customer-Funded RD&E costs incurred, included in "Contract Costs of
Sales" expenses totaled $216,973 and $266,819 for the three months ended March
31, 1997 and 1996, respectively. Company-Funded RD&E costs are shown in
"Operating Expenses" and totaled $444,165 and $273,860, respectively. Hence,
total RD&E expenses for the three month periods were $661,138 and $540,679 for
1997 and 1996, respectively. The increase in RD&E is primarily related to the
engineering development of a new generation of its disk drive inspection systems
and the development of new software for the Company's test and measurement
systems.
Interest and other income (expense) for 1996 includes a non-recurring
charge of $80,000 relating to an investment disposed of in a prior year.
8
<PAGE> 10
Interest expense was $55,030 and $74,201 for the three months ended
March 31, 1997 and 1996, respectively. The decrease in interest expense in 1997
versus 1996 is due to the conversion of $1,000,000 of convertible notes into
JMAR common stock in October 1996.
CONSOLIDATED LIQUIDITY AND FINANCIAL CONDITION
Working capital as of March 31, 1997 was $5,797,625 compared to
$5,743,747 at December 31, 1996.
Cash and cash equivalents at March 31, 1997 and December 31, 1996 were
$2,048,908 and $2,629,286, respectively. The decrease in cash and cash
equivalents for the three months ended March 31, 1997 was $580,378 as compared
to an increase of $16,186 for the three months ended March 31, 1996. The
decrease in cash for the three months ended March 31, 1997 resulted from
payments of short-term debt of $991,642, capital expenditures of $365,444 and
cash used in operations of $290,782 offset in part by payments received on notes
and other receivables of $887,338 and proceeds from the exercise of warrants of
$202,994. The Company anticipates that its quarterly capital expenditures in the
next few foreseeable quarters will be less than experienced during the quarter
ended March 31, 1997. Cash from net income (loss) plus non-cash operating items
improved from a use of cash of $232,844 for the three months ended March 31,
1996 to a provision of cash of $350,377 for the three months ended March 31,
1997.
JMAR operations will continue to require the use of working capital.
The working capital of PPL is generally funded through its $3,000,000 working
capital line (the "Line") with a bank (the "Bank") plus customer advanced
payments made at the time of order placements. The operations of JTC are
currently funded through third party contracts. As of March 31, 1997 PPL's
availability pursuant to the Line was approximately $2,345,000 of which
approximately $453,000 was borrowed at that time by PPL. The Line contains
several covenants relating to, among other matters, the maintenance of certain
minimum income levels and financial ratios, which if not met by the Company
could impact the availability of advances pursuant to the Line. Subsequent to
March 31, 1997, the Bank orally agreed to increase the Line to $3,500,000 and
reduce the interest rate to the prime rate plus one-half percent. Concurrent
with the closing of the acquisition (the "Acquisition") of Cal ASIC, the Company
loaned $400,000 of its funds to Cal ASIC (in addition to $100,000 previously
loaned) and agreed to loan an additional $1,000,000 over an eighteen month
period, of which $500,000 was loaned in 1996, and $250,000 was loaned in the
quarter ended March 31, 1997, to be used by Cal ASIC for equipment purchases and
working capital purposes. In addition, the Company agreed to loan the two
majority shareholders of Cal ASIC up to $250,000, of which $10,000 was loaned in
the quarter ended March 31, 1997, secured by the JMAR stock they received in the
Acquisition. During 1996, the Company entered into a $950,000 lease financing
agreement with Leasing Technologies International, Inc., the proceeds of which
are used to finance Cal ASIC equipment and software financing requirements.
Management believes that the Company has existing resources to adequately fund
operations and working capital requirements as well as the Cal ASIC obligations
through the end of 1997 based on the current level of operations and business
conditions. However, the working capital needs of Cal ASIC may be greater than
that which the Company has currently committed to fund. If Cal ASIC requires
additional working capital funds, the Company believes it has available to it
several potential sources of capital including private offerings to individual
investors and additional debt or equity sales in the public market.
At December 31, 1996, the Company had in excess of $26 million of
Federal net operating loss carryforwards, subject to certain annual limitations.
To the extent the Company has taxable income in the future, these carryforwards
will be used by the Company to reduce its cash outlay for taxes.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
Certain statements contained in this Management's Discussion and
Analysis of Financial Condition and Results of Operations which are not related
to historical results are forward-looking
9
<PAGE> 11
statements that necessarily are based on certain assumptions and are subject to
certain risks and uncertainties that could cause actual future performance and
results to differ materially from those stated or implied in the forward-looking
statements. These risks and uncertainties include concentration of sales to
markets and customers, delays or cancellations in orders, fluctuations in
margins, timing of specific orders, customer reorganizations, demand
fluctuations, timely development, introduction and acceptance of new products,
technical obsolescence of existing products, technical problems in the
development or modification of current products, the impact of competitive
products and pricing, shifts in demand for the Company's products, the degree of
success of technology transfer (e.g., advanced lithography sources, laser blood
sampler, micromachining, etc.) to commercial products, availability of working
capital to support growth, continued government funding of advanced lithography,
successful integration of acquisitions, other competitive factors, temporary
cessation of operations at one or more of its division facilities due to acts of
nature such as floods, earthquakes and fires, and other risks detailed in the
Company's Form 10-K for the year ended December 31, 1996 and in the Company's
other filings with the Securities and Exchange Commission.
10
<PAGE> 12
JMAR INDUSTRIES, INC.
PART II. OTHER INFORMATION
Item 2. Changes in Securities
(c) In January, 1997, the Company issued to nineteen employees warrants
exercisable into 169,500 shares of Common Stock at an exercise price of
$3.00 per share. The warrants were issued pursuant to the Management
Incentive Plan Agreement dated August 15, 1996 for Pacific Precision
Laboratories, Inc. (the "PPL Warrants"). The PPL Warrants were issued
in a transaction exempt under Section 4(2) of the Securities Act of
1933. The PPL Warrants become exercisable upon the earlier of (i) forty
five days after such time as the closing high bid price of the
Company's Common Stock for 20 consecutive trading days is greater than
$6.38; or (ii) the exercise by holders of at least 90 percent of the
Company's publicly traded warrants; or (iii) nine years and six months
after the date of grant. The PPL Warrants expire ten years after date
of grant.
Item 6. Reports on Form 8-K
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the three months ended
March 31, 1997.
11
<PAGE> 13
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
JMAR INDUSTRIES, INC.
May 2, 1997 By: /s/ John S. Martinez
---------------------------
John S. Martinez, Chief Executive
Officer and Authorized Officer
By: /s/ Dennis E. Valentine
---------------------------
Dennis E. Valentine, Chief Accounting
Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,048,908
<SECURITIES> 0
<RECEIVABLES> 2,781,350
<ALLOWANCES> 17,230
<INVENTORY> 3,638,318
<CURRENT-ASSETS> 9,305,110
<PP&E> 4,985,288
<DEPRECIATION> 2,045,230
<TOTAL-ASSETS> 13,824,476
<CURRENT-LIABILITIES> 3,507,485
<BONDS> 644,075
0
0
<COMMON> 168,697
<OTHER-SE> 9,504,219
<TOTAL-LIABILITY-AND-EQUITY> 13,824,476
<SALES> 5,245,501
<TOTAL-REVENUES> 5,245,501
<CGS> 3,216,994
<TOTAL-COSTS> 3,216,994
<OTHER-EXPENSES> 1,905,258
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 55,030
<INCOME-PRETAX> 101,017
<INCOME-TAX> 0
<INCOME-CONTINUING> 101,017
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 101,017
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
