U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
--------------
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-18881
-------
BRADLEY PHARMACEUTICALS, INC.
-----------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 22-2581418
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
383 Route 46 West, Fairfield, NJ
--------------------------------
(Address of principal executive offices)
(973) 882-1505
--------------
N/A
---
(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
---- ----
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Title of Each Class Number of Shares Outstanding
of Common Stock as of May 1, 2000
-------------------- ------------------------------
Common Stock, $.01 Par Value 8,200,212
Class B, $.01 Par Value 431,552
Transitional Small Business Disclosure Format (check one):
Yes No X
----- -----
BRADLEY PHARMACEUTICALS, INC.
INDEX TO FORM 10 - QSB
March 31, 2000
Page
Number
------
Part I - Financial Information
Financial Statements (unaudited):
Condensed Consolidated Balance Sheet -
March 31, 2000 3
Condensed Consolidated Statements of
Operations-three months ended March 31,
2000 and 1999 4
Condensed Consolidated Statements of Cash
Flows - three months ended March 31, 2000
and 1999 5
Condensed Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis 11
Part II - Other Information
Item 1. Legal Proceedings 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
2
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
BALANCE SHEET
March 31, 2000
(UNAUDITED)
ASSETS
Current assets
- --------------
Cash and cash equivalents $ 114,348
Accounts receivable-net 2,977,886
Finished goods inventory 2,065,784
Prepaid samples and materials 557,339
Prepaid expenses and other 102,755
Refundable income tax 362,577
------------
Total current assets 6,180,689
Property and equipment - net 264,410
Intangibles - net 8,742,109
Other assets 150,506
------------
Total Assets $ 15,337,714
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
- -------------------
Current maturities of long-term debt $ 433,973
Revolving credit line 770,428
Accounts payable 1,975,306
Accrued expenses 1,948,568
------------
Total current liabilities 5,128,275
Long-term debt, less current maturities 1,006,164
Commitments & contingencies
Stockholders' equity
- --------------------
Preferred stock, $.01 par value;
authorized, 2,000,000 shares; issued, none -
Common stock, $.01 par value, authorized
26,400,000; issued 8,200,212 shares at
March 31, 2000 14,761,050
Common, Class B, $.01 par value, authorized
900,000 shares, issued and outstanding,
431,552 shares at March 31, 2000 845,448
Treasury stock, at cost (736,918 shares at
March 31, 2000) (1,108,787)
Accumulated deficit (5,294,436)
-------------
9,203,275
-------------
Total Liabilities & Stockholders' Equity $ 15,337,714
=============
See Notes to Condensed Consolidated Financial Statements
3
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended
March 31,
----------------------------
2000 1999
----------------------------
Net sales $ 2,797,292 $ 5,128,470
Cost of sales 877,965 1,309,227
---------- ----------
1,919,327 3,819,243
---------- ----------
Selling, general and
administrative expenses 2,900,137 2,538,184
Depreciation and amortization 244,632 323,006
Interest expense - net 57,447 74,728
Loss due to impairment of asset 3,897,000 -
---------- ----------
7,099,216 2,935,918
---------- ----------
Income (loss) before
income taxes (5,179,889) 883,325
Income tax expense (benefit) (500,000) 327,000
---------- ----------
Net income (loss) $ (4,679,889) $ 556,325
========== ==========
Net income (loss)
per common share
Basic & Diluted $ (0.59) $ 0.07
========== ==========
Weighted average number
of common shares
Basic 7,890,000 8,120,000
========== ==========
Diluted 7,890,000 8,192,000
========== ==========
See Notes to Condensed Consolidated Financial Statements
4
BRADLEY PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
March 31,
--------------------------
2000 1999
------------ ----------
Cash flows from operating activities:
Net income (loss) $ (4,679,889) $ 556,325
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities
Depreciation & amortization 244,632 323,006
Loss on sale of fixed assets - 6,905
Loss due to impairment of asset 3,897,000 -
Noncash compensation and consulting
services 2,039 10,765
Changes in operating assets and liabilities
Accounts receivable 2,969,380 (1,346,295)
Inventory and prepaid samples and
materials 194,138 372,490
Prepaid expenses and other (19,598) (97,649)
Accounts payable (56,720) (213,830)
Accrued expenses (832,399) 611,855
Accrued (prepaid) income tax (601,575) 303,867
---------- ----------
Net cash provided by operating activities 1,117,008 527,439
---------- ----------
Cash flows from investing activities:
Investments in trademarks, and
other intangible assets (5,333) (10,217)
Purchase of property & equipment (3,070) (33,286)
Proceeds from sale of fixed assets - 109,160
---------- ----------
Net cash provided by (used in) investing
activities (8,403) 65,657
---------- ----------
Cash flows from financing activities:
Payment of long-term debt (29,059) (20,030)
Revolving credit line, net (1,349,893) (1,508,683)
Purchase of treasury shares, net (945) (340,976)
---------- ----------
Net cash used in financing activities (1,379,897) (1,869,689)
---------- ----------
Decrease in cash and cash equivalents (271,292) (1,276,593)
Cash and cash equivalents at beginning of period 385,640 1,417,746
---------- ----------
Cash and cash equivalents at end of period $ 114,348 $ 141,153
========== ==========
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 42,000 $ 37,000
========== ==========
Income taxes $ 107,000 $ 22,000
========== ==========
See Notes to Condensed Consolidated Financial Statements
6
BRADLEY PHARMACEUTICALS, INC.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - Summary of Accounting Policies
------------------------------
The unaudited interim financial statements of Bradley Pharmaceuticals, Inc.
(the "Company") have been prepared in accordance with generally accepted
accounting principles and rules and regulations of the Securities and Exchange
Commission for interim financial information. Accordingly, they do not include
all of the information and footnote disclosures required by generally accepted
accounting principles of complete financial statements.
In the opinion of the Company, the accompanying unaudited financial
statements contain all adjustments (consisting of normal recurring entries)
necessary to present fairly the financial position as of March 31, 2000 and the
results of operations and cash flows for the three month periods ended March 31,
2000 and 1999.
The accounting policies followed by the Company are set forth in Note A of
the Company's financial statements as contained in the Form 10-KSB for the year
ended December 31, 1999 filed with the Securities and Exchange Commission. The
Form 10-KSB contains additional data and information with respect to long-term
debt, intangible assets, stock agreements, stock option plans, reserved shares,
chargebacks and rebates, related party transactions, income taxes, commitments,
economic dependency and other items and is incorporated by reference.
The results reported for the three month period ended March 31, 2000 are
not necessarily indicative of the results of operations which may be expected
for a full year.
NOTE B - Loss Due to Impairment of Asset
-------------------------------
The Company continually reevaluates whether events and circumstances have
occurred that would require adjustments to the carrying values of its intangible
assets or revisions of estimates of useful lives. To the extent such an event
or circumstance has occurred, management will assess the recoverability of the
related asset. This evaluation is based on the Company's projection of the
undiscounted cash flows of the related intangible assets.
To the extent such projections indicate that the undiscounted cash flows
are not expected to be adequate to recover the carrying amounts of the related
intangibles, such intangible assets are deemed impaired. An impairment loss is
recognized through a charge to expense in amounts equal to the excess of the
carrying amount of intangible assets over their respective fair values.
During the First Quarter 2000, the Company recorded an impairment loss
relating to the DECONAMINE(R) trademark. As a result of the Company's strategic
review process of its product lines and related intangible assets, the Company
determined that an event or circumstance occurred. The Company changed its
future sales forecast for the product during the April 2000 after it became
apparent that significant marketing attention during the Fourth Quarter 1999 had
minimal impact on the product's sales. Consequently, the fair value of the
DECONAMINE(R) trademark was calculated on the basis of discounted estimated
future cash flows and resulted in a noncash charge of $3,897,000. This charge,
which has been included in the accompanying 2000 consolidated statement of
operations, has no impact on the Company's cash flow.
Additionally during the First Quarter 2000, the Company revised its
estimate of the useful life of DECONAMINE(R). The Company believes that a
remaining useful life of 13 years is appropriate.
The Company believes the remaining carrying amounts of its intangible
assets at March 31, 2000 are recoverable.
NOTE C - Revolving Credit Facility
-------------------------
On May 15, 2000, LaSalle Business Credit, Inc. ("LaSalle") waived the
existing defaults due to violations of certain covenants. In addition, LaSalle
amended the Loan Agreement by eliminating any future funding through the use of
the $2.5 million acquisition note, decreasing the revolving asset-based credit
facility by $2 million, increasing the interest rate by 1% for the previous
outstanding balance from the acquisition note, increasing the interest rate by
1% for the revolving asset-based credit facility, and reduced certain covenants
to more favorable terms for future quarters.
The amended Loan Agreement is now comprised of a $3 million revolving
asset-based credit facility and a previously funded $1.1 million acquisition
note. Advances under the revolving credit facility are calculated pursuant to a
formula, which based on the Company's then eligible accounts receivable and
inventory levels. This loan agreement has an initial term of three years,
requires an annual fee, and is subject to an unused credit line percentage fee.
Interest accrues on amounts outstanding under this Loan Agreement at the rate
equal to the prime rate of interest, announced from time to time, by LaSalle
National Bank plus 2% for the revolving credit facility and plus 3% for the
amount outstanding for the acquisition note. The Company's obligations under
this loan have been collateralized by granting to LaSalle a lien on
substantially all the assets of the Company.
NOTE D - Net Income (Loss) Per Common Share
----------------------------------
The Company computes income per share in accordance with Statement of
Financial Accounting Standards No. 128 Earnings per Share (SFAS 128) which
specifies the compilation, presentation and disclosure requirements for income
per share for entities with publicly held common stock or instruments which are
potentially common stock.
Basic net income per common share is determined by dividing the net income
by the weighted average number of shares of common stock outstanding. Diluted
net income per common share is determined by dividing the net income by the
weighted number of shares outstanding and dilutive common equivalent shares from
stock options and warrants. A reconciliation of the weighted average basic
common shares outstanding to weighted average diluted common shares outstanding
follows:
Three Months Ended Three Months Ended
March 31, 2000 March 31, 1999
Basic Shares 7,890,000 8,120,000
Dilution: Stock Options and
Warrants -0- 72,000
--------- ---------
Diluted Shares 7,890,000 8,192,000
========= =========
Income (loss) available to
Common shareholders $(4,679,889) $556,325
Basic earnings (loss) per share $(0.59) $0.07
Diluted earnings (loss) per share $(0.59) $0.07
For the First Quarter 2000, stock options and warrants were not considered
as they would be antidilutive.
Note E - Business Segment Information
----------------------------
The Company's two reportable segments are Kenwood Therapeutics
(nutritional, respiratory, personal hygiene and internal medicine brands) and
Doak Dermatologics, Inc. (dermatological brands).
The accounting policies used to develop segment information correspond to
those described in the 1999 10-KSB's summary of significant accounting policies.
The reportable segments are distinct business units operating in different
industries with no intercompany sales. The following information about the two
segments are for the three months ended March 31, 2000 and 1999.
2000 1999
---- ----
Net sales:
Kenwood Therapeutics $1,408,000 $3,281,000
Doak Dermatologics, Inc. 1,389,000 1,847,000
---------- ----------
$2,797,000 $5,128,000
========== ==========
Depreciation and
amortization:
Kenwood Therapeutics $183,000 $252,000
Doak Dermatologics, Inc. 62,000 71,000
---------- ----------
$245,000 $323,000
========== ==========
Net income (loss):
Kenwood Therapeutics ($4,491,000) $286,000
Doak Dermatologics, Inc. (189,000) 270,000
---------- ----------
($4,680,000) $556,000
========== ==========
Segment assets:
Kenwood Therapeutics $12,791,000 $18,062,000
Doak Dermatologics, Inc. 2,547,000 3,902,000
---------- ----------
$15,338,000 $21,964,000
========== ==========
Geographic information
(revenues):
Kenwood Therapeutics
United States $1,279,000 $3,159,000
Other countries 129,000 122,000
---------- ----------
$1,408,000 $3,281,000
========== ==========
Doak Dermatologics, Inc.
United States $1,064,000 $1,706,000
Other countries 325,000 141,000
---------- ----------
$1,389,000 $1,847,000
========== ==========
The basis of accounting that is used by the Company to allocate expenses
that relate to both segments are based upon the proportionate quarterly net
sales of each segment. Accordingly, the allocation percentage used can differ
between quarters and years depending on the segments proportionate net sales
over total net sales.
BRADLEY PHARMACEUTICALS, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
------------------------------------
This document may contain forward-looking statements, which reflect
management's current views of future events and operations. These forward-
looking statements are based on assumptions and external factors, including
assumptions relating to regulatory action, capital requirements and competing
products. Any changes in such assumptions or external factors could produce
significantly different results.
RESULTS OF OPERATIONS
- ---------------------
Net Sales (net of all adjustments to sales) for the three months ended
March 31, 2000 and 1999 were $2,797,000 and $5,128,000, respectively,
representing a decrease of $2,331,000 or approximately 45.5%. This decrease
primarily reflects declines resulting from Kenwood Therapeutics' respiratory
products, mostly DECONAMINE(R) and BRONTEX(R). The decrease in product sales
was primarily due to the reduction of wholesaler stocking programs as well as
continued pressures from generic competitors, formulary restrictions, and the
launch of new competitive products. The above decrease in net sales was
partially offset by sales increases for PAMINE(R), GLUTOFAC(R), and
TRANS-VER-SAL(R).
Chargebacks and rebates are the difference between prices at which the
Company sells its products (principally DECONAMINE(R) SR) to wholesalers and the
sales price ultimately paid by the end-user (often governmental agencies and
managed care buying groups) pursuant to fixed price contracts. The Company
records an estimate of the amount either to be charged-back to the Company or
rebated to the end-user at the time of sale to the wholesaler.
The Company increased in the percentage used to adjust gross sales to net
sales for the First Quarter 2000, resulting in decreased net sales and profits
of $390,000. The increase reflects a higher proportion of charges against gross
sales because of lower gross sales; however, the trend for actual chargebacks
did not increase. Any future changes of this percentage will reflect continuing
and future analysis of this trend. There is no assurance that this trend will
continue.
Cost of Sales for three months ended March 31, 2000 and 1999 were
$878,000 and $1,309,000, respectively, representing a decrease of $431,000. The
gross profit margin for the three months ended March 31, 2000 and 1999 were 69%
and 75%, respectively. The decline in the gross profit margin is primarily due
to lower gross sales of respiratory products, and a higher percentage of
chargebacks and rebates charged against such sales during the three months
ended March 31, 2000 in comparison to the same period the prior year. The
decline in the gross profit margin was partially offset by an improvement in the
change in the Company's sales mix with greater sales of prescription products
that historically carry a higher gross profit percentage. The change in the
sales mix represented an increase in prescription products of PAMINE(R) and
GLUTOFAC(R)-ZX.
Selling, General and Administrative Expenses for the three months ended
March 31, 2000 and 1999 were $2,900,000 and $2,538,000, respectively,
representing an increase of $362,000. The increases in selling, general and
administrative expenses continue to reflect increased investment in the
Company's sales and marketing areas, with resulting increases in salaries,
employee benefits, payroll taxes, promotional and advertising expenses. The
Company, however, is taking steps designed to reduce expenses and maintain cost
controls, where applicable.
Depreciation and Amortization Expenses for the three months ended March
31, 2000 was $245,000, representing a decrease of $78,000 as compared to the
three months ended March 31, 1999. The decrease was principally due to the
reduction in amortization of the intangible asset DECONAMINE(R).
Interest Expense, Net for the three months ended March 31, 2000 was
$57,000, or a decrease of $17,000 from the three months ended March 31, 1999.
This decrease was principally due to a reduction of borrowings from the
revolving asset-based credit facility from the First Quarter 2000 versus the
same period the prior year.
Income Tax Benefit for the three months ended March 31, 2000 was
$500,000, as compared to, income tax expense of $327,000 for the same period the
prior year. The existence of the income tax benefit for the three months ended
March 31, 2000 versus an income tax expense for the prior year was due to the
loss before income taxes for the three months ended March 31, 2000, in
comparison to, income before income taxes for the same period the prior year.
The effective tax rate used to calculate the income tax benefit approximates the
federal and state statutory rates, excluding any future utilization of deferred
tax benefit (which include the impairment charge), which have been fully
reserved.
Net Loss for the three months ended March 31, 2000 was $4,680,000, as
compared to net income of $556,000 for same period the prior year, or a decrease
of $5,236,000. The decrease was principally due to a decrease in gross profit,
an increase in the selling, general and administrative expense, and the loss due
to the impairment of the intangible DECONAMINE(R), which was partially offset by
a decrease in depreciation and amortization and the recording of an income tax
benefit.
Net Loss for Kenwood Therapeutics for three months ending March 31, 2000
was $4,491,000, representing a decrease of $4,777,000 from the same period the
prior year. The decrease was principally due to a decrease in net sales, an
increase in promotional and advertising activities and the loss due to the
impairment of the DECONAMINE(R) trademark. The products DECONAMINE(R) and
BRONTEX(R) primarily contributed to the decrease in net sales, which was
partially offset by increases in PAMINE(R) and GLUTOFAC(R).
Net Loss for Doak Dermatologics for the three months ended March 31, 2000
was $189,000, representing a decrease of $459,000 from the same period the prior
year. The decrease was principally due to a decrease in net sales as a result
of reduced wholesaler stocking programs during the First Quarter 2000 versus the
same period the prior year. The products CARMOL(R) and ACIDMANTLE(R) primarily
contributed to the decrease in net sales, which was partially offset by
increases in Trans-Ver-Sal(R).
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On March 31, 2000, the Company had working capital of $1,052,000, an
increase of $315,000 over the December 31, 1999 working capital of $737,000.
The increase in the Company's working capital position at March 31, 2000 was
primarily due to the reduction in the current maturities of long-term debt and
the recording of a refundable income tax resulting from the loss in the current
period which would be available to carry back against taxes paid in prior
periods.
Working capital as of March 31, 2000 included (i) a decrease of $271,000 in
cash and cash equivalents principally due to net repayments of the revolving
credit line and a net loss, partially offset by a noncash charge for a loss due
to impairment of the trademark DECONAMINE(R); (ii) a decrease in accounts
receivable of $2,969,000, primarily due to a reduction in quarter end wholesaler
stocking programs, which is prompted by offering discounts, and an increase in
cash collections. The Company did offer discounts to fewer wholesalers during
the First Quarter 2000 in comparison to same period the prior year and expects
to reduce its reliance of such wholesaler stocking programs in the future.
Wholesaler stocking, which occurred to a greater extent during March 1999 versus
March 2000, may have the effect of reducing revenue in the Second Quarter 2000
and may have reduced revenue in the Second Quarter 1999; (iii) a decrease in
inventory and prepaid samples and materials of $194,000, primarily due to usage
of the Company's inventory stocking for Year 2000; (iv) an increase in prepaid
expenses and other of $20,000; (v) a decrease in accounts payable of $57,000
primarily due to a reduction in purchases of finished goods inventory in the
First Quarter 2000; (vi) a decrease in accrued expenses of $832,000 due to a
decrease in the chargeback and rebate accruals, which was prompted by higher
proportionate sales for products that historically have lower charges against
sales and an accrual reduction necessitated by a reduction of gross sales during
the First Quarter 2000; and (vii) an increase in refundable income tax of
$602,000 principally due to the net loss during the quarter.
On February 7, 2000, the Company borrowed $1,161,000 from the available
acquisition note from LaSalle Business Credit, Inc. in order to satisfy the
current note payable that was in connection with the acquisition of BRONTEX(R).
The facility with LaSalle includes various restrictive covenants
prohibiting the Company with certain limited exceptions, from, among other
things, incurring additional indebtedness and paying dividends, substantial
asset sales and certain other payments. The facility also contains financial
covenants including net worth, interest coverage ratio, debt service ratio, and
earnings before interest, taxes, depreciation, and amortization ("EBITDA").
As of March 31, 2000, the Company was in violation of the net worth, interest
coverage ratio, debt service ratio, and EBITDA covenants, which all have been
waived by LaSalle.
On May 15, 2000, LaSalle waived the existing violations of certain
covenants. In addition, LaSalle amended the Loan Agreement by eliminating any
future funding through the use of the $2.5 million acquisition note, decreasing
the revolving asset-based credit facility by $2 million, increasing the interest
rate by 1% for the previous outstanding balance from the acquisition note,
increasing the interest rate by 1% for the revolving asset-based credit
facility, and reduced certain covenants to more favorable terms for future
quarters. Currently, the Company'sborrowing capacity from LaSalle is $3,000,000
for the asset-based revolving credit and $1,137,000 for the acquisition note.
The Company had $770,000 in borrowings issued under the revolving asset-based
line of credit at March 31, 2000, with a remaining availability pursuant to a
borrowing base of $1,294,000.
In January 1999, the Company completed the repurchase program of 400,000
of its outstanding shares and also initiated the repurchasing of an additional
600,000 shares in open market transactions resulting in a cumulative repurchase
of 12% of its outstanding common stock over the next 36 months. These shares
will be held in the Company's Treasury and be used for purposes deemed necessary
by the Board of Directors, including funding the 401(k) Plan matching
contribution. Through May 1, 2000, the Company repurchased 849,000 shares of
common stock at a total cost of $1,068,000.
The Company believes that cash flow from operations and funds available
from the revolving credit facility will be sufficient to satisfy the working
capital requirements for at least the next 12 months.
Item 1. Legal Proceedings
- -------------------------
The Company is involved in legal proceedings of various types in the
ordinary course of business. While any such litigation to which the Company is
a party contains an element of uncertainty, management presently believes that
the outcome of each such proceeding or claim which is pending or known to be
threatened, or all of them combined, will not have a material adverse effect on
the Company's consolidated financial position or results from operations.
Item 5. Other Information
- -------------------------
None
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
----------
In accordance with the requirement of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BRADLEY PHARMACEUTICALS, INC.
-----------------------------
(REGISTRANT)
Date: May 15, 2000 /s/ Daniel Glassman
------------------------------
Daniel Glassman
Chairman of The Board, President and
Chief Executive Officer
(Principal Executive Officer)
Date: May 15, 2000 /s/ R. Brent Lenczycki, CPA
------------------------------
R. Brent Lenczycki, CPA
Vice President of Finance
(Principal Financial and
Accounting Representative)
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Balance Sheet, Cash Flow and Statement of Operations and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 114,348
<SECURITIES> 0
<RECEIVABLES> 2,977,886
<INVENTORY> 2,065,784
<CURRENT-ASSETS> 6,180,689
<PP&E> 1,121,722
<DEPRECIATION> 857,312
<TOTAL-ASSETS> 15,337,714
<CURRENT-LIABILITIES> 5,128,275
<LT DEBT> 1,006,164
0
0
<COMMON> 15,606,498
<OTHER-SE> (6,403,223)
<TOTAL-LIABILITY-AND-EQUITY> 15,337,714
<SALES> 2,797,292
<TOTAL-REVENUES> 2,797,292
<CGS> 877,965
<TOTAL-COSTS> 877,965
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 57,447
<INCOME-PRETAX> (5,179,889)
<INCOME-TAX> (500,000)
<INCOME-CONTINUING> (4,679,889)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,679,889)
<EPS-BASIC> (0.59)
<EPS-DILUTED> (0.59)
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