<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the quarterly period ended March 31, 2000.
Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934. For the Transition period from to .
Commission File No. 0-18809
_______________________________________________________________________________
CE SOFTWARE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Delaware 41-1614808
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1801 Industrial Circle, P.O. Box 65580, West Des Moines, Iowa 50265
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (515) 221-1801
Former name, former address and former fiscal year, if changed since last
report: No changes.
_______________________________________________________________________________
Indicate by mark (X) 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 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
March 31, 2000 Common Stock 1,130,097
<PAGE>
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
Table of Contents
Part I FINANCIAL INFORMATION
Item 1. Financial Statements: Page
Consolidated Balance Sheets
March 31, 2000 and September 30, 1999 3
Consolidated Statements of Operations and
Comprehensive Loss
Three Months and Six Months Ended March 31, 2000 and 1999 4
Consolidated Statements of Cash Flows
Six Months Ended March 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Part II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
CE Software Holdings, Inc., and Subsidiaries
March 31, 2000 and September 30, 1999
<TABLE>
<CAPTION>
March 31 September 30
Assets (unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 2,593,635 $ 4,126,637
Investments - 1,278,601
Trade accounts receivable 400,764 500,185
Notes receivable 2,806,344 -
Recoverable income taxes 176,121 176,121
Inventories 178,789 250,208
Other current assets 199,144 313,579
___________ ___________
Total current assets 6,354,797 6,645,331
Property, fixtures, and equipment:
Land 82,877 91,796
Building 1,312,016 1,312,016
Fixtures and equipment 2,720,316 2,716,807
___________ ___________
Total property, fixtures, and equipment 4,115,209 4,120,619
Less accumulated depreciation 2,844,821 2,710,159
___________ ___________
Net property, fixtures, and equipment 1,270,388 1,410,460
Other intangible assets, net of amortization 15,947 21,927
Other assets 51,770 19,285
___________ ___________
Total assets $ 7,692,902 $ 8,097,003
___________ ___________
___________ ___________
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 104,324 $ 100,237
Trade accounts payable 202,336 207,259
Accrued payroll and benefits 225,743 146,143
Other accrued payables 114,089 120,057
Deferred revenue 7,463 9,444
___________ ___________
Total current liabilities 653,955 583,140
Long-term debt, net of current portion 187,588 240,859
___________ ___________
Total liabilities 841,543 823,999
___________ ___________
Stockholders' equity:
Common stock 113,010 110,567
Additional paid-in capital 6,017,657 5,927,619
Retained earnings 720,692 1,234,818
___________ ___________
Total stockholders' equity 6,851,359 7,273,004
___________ ___________
Total liabilities and stockholders' equity $ 7,692,902 $ 8,097,003
___________ ___________
___________ ___________
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3
<PAGE>
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Loss
For the three and six months ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31, Six Months Ended March 31,
2000 1999 2000 1999
<C> <S> <S> <S> <S>
Net revenues $ 734,766 580,416 1,650,284 1,448,904
Cost of revenues 218,280 163,692 433,358 370,583
__________ __________ __________ __________
Gross profit 516,486 416,724 1,216,926 1,078,321
Sales and marketing 254,376 474,562 483,775 867,338
General and administrative 591,667 416,260 1,006,319 820,412
Research and development 185,719 308,449 378,471 605,036
__________ __________ __________ __________
Operating expenses 1,031,762 1,199,271 1,868,565 2,292,786
__________ __________ __________ __________
Operating loss (515,276) (782,547) (651,639) (1,214,465)
Other income (expense):
Gain on sale of investments - - - 1,827
Loss on sale of land - (25,000) - (25,000)
Change in market value of trading securities - (454,459) - (107,096)
Interest income 78,661 54,981 147,388 107,860
Interest expense (5,958) (9,058) (12,476) (18,820)
Miscellaneous income 2,601 - 2,601 -
__________ __________ __________ __________
Total other income (expense) 75,304 (433,536) 137,513 (41,229)
Loss before income tax benefit (439,972) (1,216,083) (514,126) (1,255,694)
Income tax benefit (expense) - 443,000 - 458,935
__________ __________ __________ __________
Net loss (439,972) (773,083) (514,126) (796,759)
Other comprehensive loss, before tax
Unrealized loss on securities - (516,667) - (319,113)
Income tax benefit related to items of other
comprehensive loss - 214,500 - 132,000
__________ __________ __________ __________
Comprehensive loss $(439,972) (1,075,250) (514,126) (983,872)
__________ __________ __________ __________
__________ __________ __________ __________
Basic net loss per share $ (.39) (.71) (.46) (.73)
Shares used in per share calculation - basic 1,115,322 1,095,900 1,115,322 1,095,900
Diluted net loss per share $ (.39) (.71) (.46) (.73)
Shares used in per share calculation - diluted 1,115,322 1,095,900 1,115,322 1,095,900
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4
<PAGE>
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the six months ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net loss $(514,126) $(796,759)
Adjustments to reconcile net loss to
net cash (used in) provided by operating activities:
Depreciation and amortization:
Property, fixtures, and equipment 134,662 186,259
Purchased software 2,991 20,085
Amortization of premium 8,601 -
Accretion of discount - (12,905)
Change in market value trading securities - 107,096
Proceeds from sale of trading securities - 967,922
Gain on sale of trading securities - (1,827)
Decrease in deferred income taxes payable - (386,000)
Loss on sale of land - 25,000
Decrease in trade accounts receivable 99,421 28,330
Decrease (increase) in other current assets and other assets 84,939 (148,253)
Decrease in inventories 71,419 132,473
Increase (decrease) in accounts payable and accrued expenses 68,709 (65,609)
Decrease in deferred revenue (1,981) (10,741)
Decrease in income taxes payable - (382,935)
___________ ___________
Net cash (used in) provided by operating activities (45,365) (337,864)
Cash flows from investing activities:
Purchase of held-to-maturity investments - (1,571,475)
Increase in notes receivable (2,806,344) -
Proceeds upon maturity of held-to-maturity investments 1,270,000 87,110
Proceeds from sale of land 8,919 200,000
Purchase of property and equipment and other intangible assets (3,509) (87,287)
___________ ___________
Net cash used in investing activities (1,530,934) (1,371,652)
Cash flows from financing activities:
Payment of long-term debt (49,184) (42,868)
Proceeds from exercise of stock options 92,481 -
___________ ___________
Net cash provided by (used in) financing activities 43,297 (42,868)
___________ ___________
Net increase (decrease) in cash and cash equivalents (1,533,002) (1,752,384)
Cash and cash equivalents at beginning of period 4,126,637 4,106,493
___________ ___________
Cash and cash equivalents at end of period $2,593,635 $2,354,109
___________ ___________
___________ ___________
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $12,734 $18,590
Income taxes - 310,000
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5
<PAGE>
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2000
(Unaudited)
1) Accounting policies
During interim periods, CE Software Holdings, Inc. follows the accounting
policies set forth in its Annual Report to Stockholders and its Report on Form
10-KSB filed with the Securities and Exchange Commission. Users of financial
information produced for interim periods are encouraged to refer to the
footnotes contained in the Annual Report to Stockholders when reviewing interim
financial results.
Results of Operations
The results of operations for the interim period reported are not necessarily
indicative of results to be expected for the year. The information reflects
all the adjustments (none of which were other than normal recurring items)
which are, in the opinion of management, necessary to present a fair statement
of the results for the interim period.
2) Investments
Investments consist of held-to-maturity securities.
3) Stockholders' Equity
At March 31, 2000, options to purchase an aggregate of 179,829 shares were
held by 32 persons, at exercise prices of from $2.16 to $46.25 per share.
Page 6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following discussion should be read in conjunction with the consolidated
financial statements and related notes included elsewhere herein. Historical
results and percentage relationships are not necessarily indicative of the
operating results for any future period. Within this discussion and analysis
all dollar amounts (except for per share amounts) have been rounded to the
nearest thousand.
The following table sets forth certain data derived from the consolidated
statements of operations, expressed as a percentage of net revenues for the
quarters ended March 31, 2000 and 1999.
<TABLE>
<CAPTION>
Quarter Ended March 31, Six Months Ended March 31,
<C> <S> <S> <S> <S>
2000 1999 2000 1999
Percentage of net revenues:
Net revenues 100% 100% 100% 100%
Cost of revenues 30 28 26 25
___ ___ ___ ___
Gross profit 70 72 74 75
Sales and marketing 35 82 29 60
General and administrative 80 72 61 57
Research and development 25 53 23 42
___ ___ ___ ___
Total operating expenses 140 207 113 159
Operating loss (70) (135) (39) (84)
Other income, net 10 (74) 8 (3)
___ ___ ___ ___
Loss before income taxes (60) (209) (31) (87)
Income tax benefit - 76 - 32
___ ___ ___ ___
Net loss (60)% (133)% (31)% (55)%
___ ___ ___ ___
___ ___ ___ ___
</TABLE>
Three months ended March 31, 2000
Net Revenues
Net revenues for the second quarter of the current year were $735,000 compared
to $580,000 for the second quarter of the prior year. Revenues were up in both
the Personal Application and Messaging groups compared to same period a year
ago.
Revenues from the Company's Personal Application products increased 52%
compared to the prior year, and as a percentage of net revenues, accounted
for approximately 40% of the Company's current revenues compared to 33% a year
ago. Nearly all of these revenues are from the sales of QuicKeys, the Company's
productivity enhancing utility. A new version of QuicKeys for Windows was
released in the first quarter of fiscal year 1999. During the second quarter
of the current fiscal year, approximately 9% of the Personal Application
revenue resulted from sales of QuicKeys for Windows, down from 23% during
the second quarter a year ago.
Page 7
<PAGE>
As a percentage of net revenues, approximately 60% of the Company's current
revenues were from the Messaging product group compared to 67% a year ago.
The Company's Messaging product revenues were up 14% over the same period a
year ago. The majority of these revenues consists of the QuickMail Pro/Office
product line which is a cross-platform, open standards messaging products
available for both Microsoft Windows and Macintosh environments.
Historically, these revenues were primarily derived from QuickMail LAN, the
Company's Macintosh server based, E-mail solution, but over the past few years,
revenues from QuickMail LAN declined significantly and the product was
discontinued in fiscal 1999. The Company's efforts to promote QuickMail
Pro/Office to its QuickMail LAN users for a year 2000 solution resulted in
the current increase in the Messaging product revenues from the prior year.
Despite the increase, in management's opinion, these revenues will continue to
be negatively impacted by the development of strong competition within the
E-mail market. This competition includes the prevalence of inexpensive and in
some cases free, E-mail software. Such competition is expected to continue and
may hinder substantial, long-term growth of this product group.
Net revenues from international channels increased to approximately $290,000
in the second quarter of the current year, from $197,000 in the second quarter
of the prior year, representing 39% and 34% of net revenues, respectively. The
increase was primarily within the European market as a result of upgrades
associated with the year 2000 and the release of translated versions of
QuickMail.
Cost of Revenues
The Company's cost of revenues is composed primarily of: 1) the costs of
product materials such as manuals, CD-ROMs, diskettes, and packaging; 2)
amortization of capitalized purchased software; 3) royalties paid to outside
developers for the use of certain software included with some of the Company's
products; 4) manufacturing expenses; and 5) amortization of capitalized
translation costs.
Cost of revenues increased $55,000 in the second quarter of fiscal 2000 compared
to the same period a year ago. As a percentage of net revenues, cost of
revenues increased to 30% from 28%. The increase is due to increasing the
obsolete inventory valuation.
Sales and Marketing
Sales and marketing expenses decreased $220,000 or 46%, during the second
quarter of fiscal 2000 compared to the second quarter of fiscal 1999. The
major variances are primarily decreases in marketing/advertising expenses,
$173,000 and salaries and benefits, $15,000. Marketing/advertising expenses
decreased as a result of a more focused marketing strategy and no products
being launched during the second quarter. A smaller sales and marketing
workforce accounted for the decrease in salaries and benefits.
General and Administrative
General and administrative expenses are composed principally of salaries of
general, administrative, and technical support personnel, fees for professional
services, amortization of other intangible assets, and facilities expenses.
These expenses for the second quarter increased 42% or $175,000 from the
second quarter of the prior year, representing 80% and 72% of net revenues for
second fiscal quarter of the current year and prior year, respectively. The
major changes in expenses are mainly due to higher salaries and related expenses
of $133,000 due to a workforce restructure in the second quarter of fiscal 2000;
an increase in legal and accounting and other outside services of $84,000,
resulting from expenses associated with the pending merger with Lightning Rod
Software, Inc., formerly known as ATIO Corporation USA, Inc.; and a decrease in
depreciation and amortization of $40,000 due to a portion of intangible assets
and fixed assets becoming fully amortized or depreciated.
Page 8
<PAGE>
Research and Development
Research and development expenses decreased to $186,000 in the second quarter
of fiscal 2000, compared to $308,000 in the second quarter of the prior year,
representing 25% and 53% of net revenues, respectively. The primary areas that
decreased in the second quarter of fiscal 2000 were salaries and benefits of
$65,000, associated with workforce reductions and contract labor and temporary
help of $47,000, due to a more focused development.
Income Tax Benefit
No income tax benefit was recorded by the Company for the second quarter of
fiscal 2000 due to continued losses.
Six Months ended March 31, 2000
Net Revenues
Net revenues for the first six months of the current year were $1,650,000
compared to $1,449,000 for the same period last year. The 14% increase in net
revenues was due to a $134,000 increase in revenues from the Company's Messaging
products and a $67,000 increase in revenues from the Company's Personal
Applications products.
Approximately 34% of the revenues for the first six months of the current and
prior fiscal years are from Personal Application products. Nearly all of these
revenues are from the sales of QuicKeys, the Company's productivity enhancing
utility program. During fiscal 1998, this product was only available for the
Apple Macintosh market. The Macintosh's smaller market share over the last few
years has negatively impacted these revenues and in the opinion of management,
the new version of QuicKeys for Windows, released in this first quarter of
fiscal year 1999 offers meaningful long-term growth potential even though during
the first six months of the current fiscal year, approximately 10% of the
Personal Application revenue resulted from the release of QuicKeys for Windows
compared to 21% a year ago.
Revenues from Messaging products accounted for 66% of total net revenues. The
majority of these revenues consist of the QuickMail Pro/Office product line
which is a cross-platform, open standards messaging products available for both
Microsoft Windows and Macintosh environments. Historically, these revenues were
primarily derived from QuickMail LAN, the Company's Macintosh server based,
E-mail solution, but over the past few years, revenues from QuickMail LAN
declined significantly and the product was discontinued in fiscal 1999. The
Company's efforts to promote QuickMail Pro/Office to its QuickMail LAN users
for a year 2000 solution resulted in the current increase in the Messaging
product revenues from the prior year. Despite the increase, in management's
opinion, these revenues will continue to be negatively impacted by the
development of strong competition within the E-mail market. This competition
includes the prevalence of inexpensive and in some cases free, E-mail software.
Such competition is expected to continue and may hinder substantial, long-term
growth of this product group.
Approximate net revenues by product group for the six-month periods ended March
31, 2000 and 1999 are as follows:
2000 1999
Messaging $1,092,000 $958,000
Personal Applications 558,000 491,000
__________ __________
Total net revenues $1,650,000 $1,449,000
Page 9
<PAGE>
Net revenues from international channels increased to approximately $634,000 in
the first six months of the current year, from $473,000 in the same period a
year ago, representing 38% and 33% respectively, of total net revenues in both
periods. The increase was primarily within the European market as a result of
upgrades associated with the year 2000 and the release of translated versions
of QuickMail.
Cost of Revenues
The Company's cost of revenues is composed of: 1) the costs of product
materials such as manuals, diskettes, and packaging; 2) amortization of
capitalized translation costs; 3) amortization of capitalized manufacturing
expenses; 4) royalties paid to outside developers for the use of certain
software included with some of the Company's products; and 5) amortization of
capitalized purchased software.
Cost of revenues, as a percentage of net revenues, increased from 25% to 26% in
the first six months of fiscal 1999, compared to the same period a year ago. The
increase is due to increasing the obsolete inventory valuation.
Sales and Marketing
Sales and marketing expenses in the first six months of fiscal 2000 were reduced
$384,000, or 44% compared to the first six months of fiscal 1999. The decrease
was primarily a result of lower marketing/advertising expenses of $333,000 and
contract labor and temporary help of $16,000. The lower expenses were due to
the continued focus of marketing programs and advertising.
General and Administrative
General and administrative expenses are composed principally of salaries and
benefits of administrative and technical support personnel, fees for
professional services, amortization of intangible assets and facilities
expenses. These expenses for the first six months of fiscal 2000 increased
$186,000, or 23% from the same period a year ago. The largest of the increases
were in salaries and benefits of $159,000, resulting from additional expenses
related to workforce reductions and legal and accounting expenses of $138,000,
due to merger related activity. These increases were primarily offset by
decreases in contract labor and temporary help of $40,000, due to the lower
expenses associated with a system conversion and decreases in depreciation
and amortization expense of $66,000 as a result of a portion of intangible
assets and fixed assets becoming fully amortized or depreciated
Research and Development
Research and development expenses decreased to approximately $378,000 for the
first six months of the current year from $605,000 in the same period last
year, representing 23% and 42% of net revenues, respectively. The primary
areas that decreased in the first six months of fiscal 2000 were salaries
and benefits of $98,000 and contract labor of $94,000. The decrease in salaries
and benefits and contract labor and temporary help were the result of workforce
reductions and a more focused development effort.
Income Tax Benefit
No income tax benefit was recorded by the Company for the second quarter of
fiscal 2000 due to continued losses.
Page 10
<PAGE>
Liquidity and Capital Resources
Cash and cash equivalents decreased by $1,533,000 to $2,594,000 at the end of
the second quarter of fiscal 2000 from $4,127,000 at the end of fiscal 1999.
The decrease in cash and cash equivalents was primarily the net result of the
proceeds from the maturity of short-term investments of $1,270,000 and a
$2,806,000 loan to Lightning Rod Software, Inc., formerly ATIO Corporation
USA, Inc. The loan is due April 2000 with an interest rate of 7% and is in
accordance with the merger agreement between the Company and Lightning Rod, Inc.
The Company believes it can fund its working capital needs from operations,
available cash and investments.
Recent Developments
The Company announced the signing of a definitive agreement to merge with
Minneapolis, Minnesota-based Lightning Rod Software, Inc., formerly ATIO
Corporation USA, Inc., a privately held producer of CyberCall, a fully
integrated E-business customer care solution.
Terms of the Merger Agreement
Subject to conditions described in the merger agreement, the transaction is
expected to close in the first or second quarter of 2000. At the effective
time of the merger, Lightning Rod Software, Inc. will merge into CESH and
current Lightning Rod Software, Inc. shareholders will receive one CESH share
per 15.5 Lightning Rod Software, Inc. shares. The merger is structured to be
treated as a tax-free reorganization under the Internal Revenue Code. The
post-merger company will initially trade on the Nasdaq Small Cap market under
the symbol "CESH", with a change in symbol to "LROD" to occur in the days
immediately following the merger.
The definitive agreement is subject to the following funding requirements, all
of which must occur by closing: (a) approximately $5 million from CESH, (b)
$964,000 from Minneapolis-based Venturian Corp. (NASDAQ: VENT) and (c) a minimum
of $1.5 million pursuant to a private offering by CESH prior to closing, the
terms and conditions of which are yet to be determined. The private offering by
CESH will not be registered with the SEC and the securities acquired through the
private offering could not be sold or offered in the United States absent
registration or an applicable exemption from registration.
Immediately following the closing, but without considering the effect of the
private offering, current CESH shareholders will own approximately 51% and
Venturian will hold approximately 15% of the shares of the post-merger company.
The agreement contemplates that in the first half of 2000 ATIO International, a
current Lightning Rod Software, Inc. shareholder, will purchase 314,062 shares
of the post-merger company, priced at $6.48 per share, for a total of
approximately $2.1 million in cash.
Additional conditions to the completion of the merger include the restructuring
of certain Lightning Rod Software, Inc. agreements, the restructuring of
Lightning Rod Software, Inc. debt or conversion of Lightning Rod Software,
Inc. debt into equity and the ongoing commitment and availability of key
Lightning Rod Software, Inc. managers and staff. CESH shareholders will vote
to approve the merger at the CESH annual meeting to be held on April 27, 2000.
As a further condition of the merger, CESH's subsidiary company CE Software,
Inc., will be distributed to current CESH shareholders simultaneous with the
merger with Lightning Rod Software, Inc. It is anticipated that development,
sales and support of CE Software's products,
Page 11
<PAGE>
QuicKeys and QuickMail, will continue uninterrupted and CE Software's
headquarters will remain in West Des Moines, IA.
Risk and Uncertainty
The preceding statements under "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in this Form 10-QSB which are
not historical facts are forward looking statements. These forward looking
statements involve risks and uncertainties that could render them materially
different, including, but not limited to, the risk that new products and product
upgrades may not be effected on a timely basis; the risk that such products may
not achieve market acceptance within the Windows or Macintosh markets; the risk
that the prevalence and functionality of available free E-mail software will
increase and further erode revenues; the risk that the Company would not be
able to fund its working capital needs from cash flows; and the risk that the
merger with Lightning Rod Software, Inc. will not close as anticipated.
Page 12
<PAGE>
CE SOFTWARE HOLDINGS, INC. AND SUBSIDIARIES
PART II: OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
(27) Financial Data Schedule - for SEC filing only
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the
quarter ended March 31, 2000.
Page 13
<PAGE>
SIGNATURES
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.
CE SOFTWARE HOLDINGS, INC.
(Registrant)
Signature Title Date
/s/ Christian F. Gurney April 26, 2000
_________________________ President, Chief Executive _________________
(Christian F. Gurney) Officer, and Director
/s/ John S. Kirk April 26, 2000
_________________________ Secretary, Treasurer, and _________________
(John S. Kirk) Director
/s/ Curt W. Lack April 26, 2000
_________________________ Chief Financial Officer _________________
(Curt W. Lack)
Page 14
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
27 Financial Data Schedule - for SEC filing only
Page 15
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,593,635
<SECURITIES> 0
<RECEIVABLES> 400,764
<ALLOWANCES> 0
<INVENTORY> 178,789
<CURRENT-ASSETS> 6,354,797
<PP&E> 4,115,209
<DEPRECIATION> 2,844,821
<TOTAL-ASSETS> 7,692,902
<CURRENT-LIABILITIES> 653,955
<BONDS> 0
0
0
<COMMON> 113,010
<OTHER-SE> 6,738,349
<TOTAL-LIABILITY-AND-EQUITY> 7,692,902
<SALES> 1,650,284
<TOTAL-REVENUES> 1,650,284
<CGS> 433,358
<TOTAL-COSTS> 1,868,565
<OTHER-EXPENSES> 137,513
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (12,476)
<INCOME-PRETAX> (514,126)
<INCOME-TAX> 0
<INCOME-CONTINUING> (514,126)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (514,126)
<EPS-BASIC> (.46)
<EPS-DILUTED> (.46)
</TABLE>
