U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) Quarterly report under Section 13 of 15(d) of the Securities Exchange Act
of 1934.
For the quarterly period ended NOVEMBER 30, 1997 or
( ) Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the transition period from to .
--------------- ---------------
Commission file number 0-19866
----------------
CELOX LABORATORIES, INC.
(Exact name of small business issuer
as specified in its charter)
MINNESOTA 36-3384240
- ----------------------------------- ---------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1311 HELMO AVENUE, SAINT PAUL, MINNESOTA 55128
- ------------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Issuers telephone number, including area code: (612) 730-1500
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Act of 1934 during the past 12 months (or
for such shorter periods that the issuer 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 the issuer's classes of common
equity, as of the latest practicable date.
THE NUMBER OF SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE, OUTSTANDING ON
DECEMBER 31, 1997 WAS 2,742,169.
Transitional small business format disclosure:
Yes _______ No ___X___
<PAGE>
Table of Contents
CELOX LABORATORIES, INC.
Report on Form 10-QSB
for fiscal quarter ended
November 30, 1997
PART I -- FINANCIAL INFORMATION Page
----
ITEM 1. Financial Statements
Balance Sheet as of August 31, 1997
and November 30, 1997 3
Statement of Operations -- Three months ended
November 30, 1997 and November 30, 1996 5
Statement of Changes in Shareholders' Equity
for the year ended August 31, 1997 and the
three months ended November 30, 1997 6
Statement of Cash Flows -- Three months ended
November 30, 1997 and November 30, 1996 7
Notes to Financial Statements 8
ITEM 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations 10
PART II -- OTHER INFORMATION 14
<PAGE>
PART I -- FINANCIAL INFORMATION
ITEM 1 -- FINANCIAL STATEMENTS
CELOX LABORATORIES, INC.
BALANCE SHEET
November 30, August 31,
ASSETS 1997 1997
----------- -----------
CURRENT ASSETS
Cash and cash equivalents $ 309,491 $ 408,274
Certificates of deposit 736,886 737,119
Trade receivables 78,934 26,562
Investor settlement receivable -- current 6,639 22,446
Accrued interest receivable 20,841 16,956
Inventories 43,891 46,855
Prepaid expenses 626 1,058
----------- -----------
Total current assets 1,197,308 1,259,270
----------- -----------
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Laboratory and production equipment 204,882 204,882
Office furniture and equipment 88,131 78,764
Leasehold improvements 115,558 115,558
----------- -----------
408,571 399,204
Less accumulated depreciation (240,110) (229,010)
----------- -----------
168,461 170,194
OTHER ASSETS
Patents, net 18,237 18,789
----------- -----------
TOTAL ASSETS $ 1,384,006 $ 1,448,253
=========== ===========
See Notes to Financial Statements.
<PAGE>
CELOX LABORATORIES, INC.
BALANCE SHEET
November 30, August 31,
LIABILITIES AND SHAREHOLDERS' EQUITY 1997 1997
----------- -----------
CURRENT LIABILITIES
Accounts payable $ 31,381 $ 26,321
Accrued liabilities 33,300 31,246
Bank note payable - current 90,915 94,879
----------- -----------
Total current liabilities 155,596 152,446
----------- -----------
SHAREHOLDERS' EQUITY
Common stock 27,422 27,422
Additional contributed capital 5,251,756 5,251,756
----------- -----------
5,279,178 5,279,178
Accumulated deficit (4,050,768) (3,983,371)
----------- -----------
Total Shareholders' Equity 1,228,410 1,295,807
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,384,006 $ 1,448,253
=========== ===========
See Notes to Financial Statements.
<PAGE>
CELOX LABORATORIES, INC.
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------
Three months ended
November 30, November 30,
1997 1996
- -------------------------------------------------------------------------------
REVENUES
Net sales $ 104,497 $ 85,705
Cost of products sold 48,804 39,667
- -------------------------------------------------------------------------------
GROSS MARGIN 55,693 46,038
- -------------------------------------------------------------------------------
OPERATING EXPENSES
Research and development 16,220 19,794
Marketing and sales 45,443 30,340
Administration 78,340 81,016
- -------------------------------------------------------------------------------
Total operating expenses 140,003 131,150
OPERATING LOSS (84,310) (85,112)
OTHER INCOME (EXPENSE)
Interest and investment income 14,496 19,574
Other income 4,250 1,041
Interest Expense (1,833) 0
- -------------------------------------------------------------------------------
Total other income, net 16,913 20,615
NET LOSS $ (67,397) $ (64,497)
===============================================================================
LOSS PER COMMON SHARE $ (0.02) $ (0.02)
===============================================================================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,742,169 2,742,169
===============================================================================
See Notes to Financial Statements.
<PAGE>
CELOX LABORATORIES, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Additional Unrealized
Common Stock Paid-in Accumulated Gain on Inv.
---------------------- Capital Deficit Avail. for Total
Shares Amount Sale
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT AUGUST 31, 1995 2,742,169 $27,422 $5,251,756 ($3,210,874) $38,798 $2,107,102
Net change in unrealized (38,798) (38,798)
gains for the year
Net loss for the period (384,024) (384,024)
- -------------------------------------------------------------------------------------------------------------------------
BALANCE AT AUGUST 31, 1996 2,742,169 $27,422 $5,251,756 ($3,594,898) $0 $1,684,280
Net loss for the period (388,473) (388,473)
- -------------------------------------------------------------------------------------------------------------------------
BALANCE AT AUGUST 31, 1997 2,742,169 $27,422 $5,251,756 ($3,983,371) $0 $1,295,807
Net loss for the period (67,397) (67,397)
- -------------------------------------------------------------------------------------------------------------------------
BALANCE AT NOVEMBER 30, 1997 2,742,169 $27,422 $5,251,756 ($4,050,768) $0 $1,228,410
</TABLE>
See Notes to Financial Statements.
<PAGE>
CELOX LABORATORIES, INC.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three months ended
November 30,
------------------------
1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss for the period $(67,397) $(64,497)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 11,100 9,989
Amortization of ViaStem(TM)patent 552 0
Deferred rent expense 0 (773)
Changes in assets and liabilities:
(Increase) decrease in:
Accounts receivable (52,371) (9,872)
Accrued interest receivable (3,884) 11,491
Inventories 2,965 13,139
Prepaid expenses 432 (6,534)
Increase (decrease) in:
Accounts payable 5,060 (9,059)
Accrued liabilities 2,052 (377)
- ----------------------------------------------------------------------------------------------------------
Net cash used in operating activities (101,491) (56,492)
- ----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturity (Purchase) of bank certificates of deposit, net 233 478,658
Proceeds from investor settlement receivables 15,807 57,328
Capital expenditures (9,367) 0
- ----------------------------------------------------------------------------------------------------------
Net cash from (used for) investing activities 6,673 535,986
- ----------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING:
Principal payments on bank note payable (3,965) 0
- ----------------------------------------------------------------------------------------------------------
Net cash used in financing activities (3,965) 0
Net increase (decrease) in cash
and cash equivalents (98,783) 479,494
CASH AND CASH EQUIVALENTS:
Beginning of period 408,274 420,222
- ----------------------------------------------------------------------------------------------------------
End of period $ 309,491 $ 899,716
==========================================================================================================
</TABLE>
See Notes to Financial Statements.
<PAGE>
CELOX LABORATORIES, INC,
NOTES TO FINANCIAL STATEMENTS -- NOVEMBER 30, 1997
NOTE A -- BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-QSB and Item 310 of Regulation S-B.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) considered necessary for a fair presentation have been
included.
The organization and business of the Company, accounting policies followed
by the Company and other information are contained in the notes to the Company's
financial statements filed as part of the Company's August 31, 1997 Form 10-KSB.
This quarterly report should be read in connection with such annual report.
NOTE B -- FORWARD LOOKING INFORMATION
Information contained in this Form 10-QSB contains "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995, which can be identified by the use of forward-looking terminology such
as "may", "will", "expect", "plan", "anticipate", "estimate" or "continue" or
the negative thereof or other variations thereon or comparable terminology.
There are certain important factors that could cause results to differ
materially from those anticipated by some of these forward-looking statements.
Investors are cautioned that all forward-looking statements involve risks and
uncertainty. The factors, among others, that could cause actual results to
differ materially include the Company's ability to execute its business plan.
NOTE C -- CASH AND CASH EQUIVALENTS
For purposes of reporting the statements of cash flows, the Company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents.
NOTE D -- SHORT-TERM INVESTMENTS
The Company had invested excess cash in the Piper Jaffray Institutional
Government Income Portfolio Fund (Piper Fund). During the quarter ended February
29, 1996, the Company sold all remaining shares in this Fund.
As an alternative to the Piper Fund, the Company has utilized Bank
Certificates of Deposit. As of November 30, 1997 the Company had investments of
$736,886 in Certificates of Deposit. Certificates of Deposit are made only with
the highest rated banks and less than $100,000 is deposited at any one bank. The
Company also utilizes a money market fund, which is restricted by its charter to
Tier 1 instruments, for a portion of its investments.
<PAGE>
NOTE E -- NOTES PAYABLE BANK
During April, 1997 the Company borrowed $100,000 from a local bank with the
proceeds used for financing a portion of the tenant improvements in the
Company's new facility. The loan is secured by a certificate of deposit at this
bank. The interest rate for this loan, currently 7.5%, is tied to the
certificate of deposit rate. The loan will be renegotiated in February, 1998.
NOTE F -- REPURCHASE OF COMMON STOCK
Effective July 30, 1993, the Board of Directors authorized the repurchase
of up to 300,000 shares of the Company's common stock in open market
transactions at prices not to exceed $1.75 per share. At November 30, 1997 the
Company had repurchased 136,700 shares at prices ranging from $0.85 to $1.58 per
share.
NOTE G -- FACILITY LEASE AGREEMENT
The Company's new facility is located at 1311 Helmo Avenue in Saint Paul,
Minnesota. A new Lease Agreement was executed on December 6, 1996 and calls for
the lease of 9,500 square feet of office, laboratory and warehouse space. The
term of the lease is seven (7) years with an option to renew for extended
periods. Base rent for each of the seven (7) years is $73,725 plus charges for
common area maintenance and other tenant expenses. The initial lease payment
commenced on April 1, 1997.
NOTE H -- LOSS PER COMMON SHARE
Loss per share is computed based upon the weighted average number of common
shares outstanding during the period. The Company has determined that under the
modified treasury stock method, there would be no change in earnings per share
due to outstanding common stock equivalents. Fully diluted and primary loss per
share are the same amounts for each of the periods presented.
<PAGE>
ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
Celox Laboratories, Inc. ("Celox" or the "Company") is a biotechnology
company formed in 1985 that researches, develops, manufactures and markets cell
biology products used in the propagation of cells derived from mammals,
including humans, and other species. These specialized cell growth products are
used primarily in academic, pharmaceutical, diagnostic and other commercial
laboratories to improve the growth condition, productivity and quality of
cell-derived medical and other biological products such as vaccines, monoclonal
antibodies, interferons and human growth factor. The Company focuses primarily
on solving the fundamental problems associated in culturing cells with the use
of serum, which is derived from the whole blood of animals and humans. The
Company's research activities have resulted in proprietary technology which has
been used to commercialize its non-serum growth media, cell freezing solutions
and other cell biology products.
Celox currently manufactures and markets over 30 products. Celox's
proprietary products consist of four serum replacement products, TCM,
TM-235(TM), TCH(TM), and VaxMax(TM) and a cell freezing medium, Cellvation(TM).
VaxMax(TM) was developed specifically for use in the production of veterinary
vaccines.
Celox also manufactures ten basal media formulations, a series of buffered
salt solutions, other cell biology reagents and a variety of custom
formulations.
An additional proposed product, ViaStem(TM), continues to undergo further
analysis in pre-clinical testing. This product was developed to improve the
preservation of critical cells (e.g. stem cells) which are required for bone
marrow transplantation. Other potential applications for ViaStem(TM) include the
preservation of umbilical cord blood and platelets. Currently, Memorial Blood
Centers of Minnesota and the University of Cincinnati's Hoxworth Blood Center
are providing additional pre-clinical data on ViaStem(TM).
During the quarter ended November 30, 1996, the Company received notice
from the United States Patent and Trademark Office (USPTO) that a patent for
ViaStem(TM) would be issued in early December, 1996. The actual patent was
received by the Company in the first week of December. The Company has also
filed the documents needed for an International Patent Application as required
by the Patent Cooperation Treaty.
During February, 1996 the Company entered into an agreement with the
Department of the Army, Walter Reed Army Institute of Research (WRAIR) that
provides for a Cooperative Research and Development Agreement for Material
Transfer which encompasses the Company's ViaStem(TM) product.
The Company has received its first Drug Master File classification from the
Food and Drug Administration (FDA) for TCM. This classification will expedite
the FDA approval process for customers who want to use the Company's TCM product
in the manufacture of drugs or drug substances for human use. The Company is in
the process of gaining similar status for its other proprietary products.
<PAGE>
In April, 1994, the Company entered into an agreement with American Type
Culture Collection (ATCC), Rockville, MD, the world's largest public archive of
living biological cultures and genetic materials. ATCC serves the international
scientific community by acquiring, preserving and distributing strains of the
most diverse collection of organisms and derivative biological materials in the
world. Under the agreement, ATCC will distribute cell lines adapted to the
Company's non-serum products as well as other associated products worldwide.
Orders for growth media under this agreement have continued during the current
fiscal year.
During July of 1995, the Company completed a non-exclusive world-wide
distribution agreement with ICN Pharmaceuticals, Inc., Costa Mesa, CA. Under the
agreement, ICN is marketing Celox's TCM, TCH(TM), TM-235(TM) serum replacement
products as well as Cellvation(TM). Initial orders under this agreement were
shipped in the last quarter of fiscal 1995. Additional orders have been received
during this fiscal year.
The Company has also entered into an agreement with ICN to provide the rest
of the Company's products (except for ViaStem(TM)) to ICN for worldwide
distribution. The first shipment of these additional products occurred in the
third quarter of fiscal 1997.
ICN manufactures and markets a broad range of prescription and
over-the-counter pharmaceuticals, medical diagnostic products and biotechnology
research products in North and Latin America, Eastern and Western Europe and the
Pacific Rim countries.
In fiscal 1997, the Company began providing its proprietary products to
Sigma Chemical Company under a private label distribution agreement. The first
shipment under this agreement occurred during the quarter ended November 30,
1996.
During November, 1997, the Company entered into a non-exclusive
distribution agreement with TaKaRa Shuzo Co., Ltd., Biomedical Group, Kyoto,
Japan. Under the agreement, TaKaRa will initially market Celox' proprietary
product Cellvation(TM). TaKaRa's Biomedical Group leads the industry in several
areas owing to the international scope of its research operations which span
from the People's Republic of China to North America and Europe. TaKaRa will
market Cellvation(TM) in Japan, Taiwan, Korea and People's Republic of China.
RESULTS OF OPERATIONS
The Company had recorded an Investor Settlement Receivable in the amount of
$133,000 on the Balance Sheet in order to reflect the expected settlement
proceeds from a class action lawsuit which was brought on behalf of investors in
the Piper Fund. In December, 1995, the District Court Judge approved the Class
Action Settlement. Payments from the Piper Fund have been received in accordance
with the schedule agreed upon in the settlement. As of November 30, 1997 the
Investor Settlement Receivable is $6,639.
A separate Class Action lawsuit against the Fund's auditors, KPMG Peat
Marwick, has been certified by the Court. In March of 1997, the federal court in
Minnesota granted KPMG Peat Marwick's motion for partial summary judgement. The
effect of this decision was to dismiss all of the remaining federal claims
against KPMG Peat Marwick. Based on correspondence received from the plaintiff's
attorneys, an appeal of this decision will be made.
<PAGE>
During the quarter ended November 30, 1997, the Company had net sales of
$104,497 which was an increase of $18,792 or 22% from $85,705 reported in the
same quarter for the prior year. The increase between years for the quarter
results primarily from the timing of orders received from a large manufacturer
coupled with increasing interest in the Company's proprietary products.
The Company had a net loss of $67,397 for the quarter ended November 30,
1997 compared to a net loss of $64,497 for the same period in the previous year.
On a per share basis, the loss for the current quarter equaled 2 cents. The loss
reported for in the comparable period in fiscal 1997 was also 2 cents.
The cost of products sold was 47% of net sales for the three months ended
November 30, 1997, as compared to 46% of net sales for the three months ended
November 30, 1996. Labor, raw materials and other production costs have remained
constant between periods which results in comparable calculations between
periods.
An operating loss of $84,310 was generated for the quarter ended November
30, 1997 compared to an operating loss of $85,112 for the same period in the
previous year. The slight decrease between years results from a higher gross
margin on increased sales which is partially offset by increased sales and
marketing costs.
The Company received interest and investment income of $14,496 during the
quarter ended November 30, 1997 as compared to $19,574 in the prior year.
Investment income is derived primarily from the investment of the proceeds of
the Company's March 1992 initial public offering. The decrease in investment
income during the quarter as compared to the previous year results from reduced
investment balances as the Company uses capital in its operations as well as
lower effective interest rates resulting from a transfer of amounts from the
Piper Fund into bank certificates of deposit.
As was disclosed in previous sections of this Form 10-QSB, Piper Jaffray
and the Class Action Plantiffs have agreed to settle a lawsuit which was brought
against the Piper Fund by investors. A lawsuit filed against the Fund's
auditors, KPMG Peat Marwick, is still being pursued by investors other than the
Company. An appeal of the decision of the federal court in Minnesota to grant
summary judgement to KPMG Peat Marwick will likely be made by the attorneys for
the plaintiffs. The Company has not filed a lawsuit nor has it decided if it
will join in any future class actions, but has not eliminated these options as a
possibility in the future.
Operating expenses increased $8,853 (7%) to $140,003 from $131,150 for the
quarter ended November 30, 1997 as compared to the prior year. The increase
results from higher marketing and sales costs associated with a targeted
marketing program for the Company's proprietary products. A decrease in both
research and development and administrative expenditures offset a portion of the
increase in marketing and sales costs.
Research and development costs decreased by $3,574 (18%) to $16,220 from
$19,794 in the current quarter as compared to the previous fiscal year. The
decrease for the reporting period results from the timing of expenditures in the
areas of salaries and wages and patent expenses incurred in connection with
ViaStem(TM) product. The Company expects the costs of research and development
to fluctuate based on the status of pre-clinical trials for ViaStem(TM) .
<PAGE>
Marketing expenses increased by $15,103 (50%) to $45,443 from $30,340 for
the quarter ended November 30, 1997 as compared to the previous year. The
increase is attributable to a focused advertising and marketing strategy for the
Company's proprietary products which began in the current quarter. The Company
expects that marketing and sales expenses will trend higher during subsequent
quarters as programs and advertising materials are developed.
Administrative expenses decreased by $2,676 (3%) for the quarter ended
November 30, 1997 compared to the previous fiscal year to $78,340 from $81,016.
The small decrease between years is due to lower operating expenses in the new
facility along with strict cost controls, offset somewhat by increased legal
expenditures.
LIQUIDITY AND CAPITAL RESOURCES
Capital resources on hand at November 30, 1997 include cash and short-term
investments of $1,046,377 and net working capital of $1,041,712. This represents
a decrease of $99,016 (9%) in cash and short-term investments and a decrease of
$65,112 (6%) in net working capital as compared to August 31, 1997.
The lease for the Company's previous facility terminated in October, 1996.
A new facility has been completed in Saint Paul, Minnesota. The Company is
leasing approximately 9,500 square feet of office, laboratory and warehouse
space in this facility. The Company moved into the new facility during March,
1997. In the interim, the Company had leased office and warehouse space on a
month-to-month basis. As partial payment for tenant improvements in the new
facility, the Company borrowed $100,000 from a local bank. The balance of the
tenant improvements over this amount was paid with Company funds.
The Company anticipates spending approximately $50,000 in fiscal 1998 on
capital expenditures. Through November 30, 1997 the Company has made capital
expenditures in the amount of $9,367. The majority of the planned expenditures
will be used to fund additional sales, research and development, manufacturing
growth and specialized tenant improvements.
The Company believes that its capital resources on hand at November 30,
1997, together with revenues from product sales, will be sufficient to meet its
cash requirements for the near future.
<PAGE>
PART II -- OTHER INFORMATION
ITEM I. -- LEGAL PROCEEDINGS
The Company is a member of the class in the KPMG Peat Marwick action as it
relates to their audit of the Piper Jaffray Institutional Government Income
Portfolio Fund, on whose behalf litigation has been commenced in federal
district court in Minneapolis. The Company has not directly participated in the
litigation. The Company expects that attorneys for the plaintiffs in this action
will appeal the decision of the federal court in Minneapolis to grant partial
summary judgement to KPMG Peat Marwick.
On November 21, 1996, the Company filed a lawsuit in Hennepin County Court,
in the State of Minnesota, against its former landlord claiming, among other
things, that the landlord repeatedly violated the terms of the lease agreement.
Subsequently, the former landlord filed a countersuit which alleged the Company
failed to leave the leased premises in the condition required by the lease.
Currently, both parties have been ordered by the Court to participate in
mediation process.
ITEM 2. -- CHANGES IN SECURITIES
None
ITEM 3. -- DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. -- SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. -- OTHER INFORMATION
None
ITEM 6. -- (A) EXHIBITS
None
(B) REPORTS ON FORM 8-K
On November 4, 1997, the Company filed a Form 8-K that reported that the
Chairman of the Board of Directors requested and received resignations from the
Company's three outside directors. These resignations had been requested by the
Chairman based upon the strategic focus of the Company and the need for
expertise in the bio medical field. As a result, the Company does not have any
outside directors. The Company intends to identify and interview qualified
candidates for the open director positions as soon as practical.
<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.
CELOX LABORATORIES, INC.
Dated: January 13, 1998 By: /S/ Milo R. Polovina
----------------------------------
Milo R. Polovina, President &
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> NOV-30-1997
<CASH> 309,491
<SECURITIES> 736,886
<RECEIVABLES> 78,934
<ALLOWANCES> 0
<INVENTORY> 43,891
<CURRENT-ASSETS> 1,197,308
<PP&E> 408,571
<DEPRECIATION> 240,110
<TOTAL-ASSETS> 1,384,006
<CURRENT-LIABILITIES> 155,596
<BONDS> 0
0
0
<COMMON> 27,422
<OTHER-SE> 1,228,410
<TOTAL-LIABILITY-AND-EQUITY> 1,384,006
<SALES> 104,497
<TOTAL-REVENUES> 104,497
<CGS> 48,804
<TOTAL-COSTS> 94,247
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (183,297)
<INCOME-TAX> 0
<INCOME-CONTINUING> (67,397)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67,397)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
