SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM 10-Q
------------------
Quarterly Report pursuant to section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended September 30, 1998 Commission File No. 0-19893
Alpha Pro Tech, Ltd.
(exact name of registrant as specified in its charter)
Delaware, U.S.A. 63-1009183
- ---------------- ----------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
Suite 112, 60 Centurian Drive
Markham, Ontario, Canada L3R 9R2
- ------------------------ -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (905) 479-0654
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by section 3 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 October 30, 1998
----------------
Common stock, $.01 par value..... 24,112,449
<PAGE>
Alpha Pro Tech, Ltd.
Table of Contents
PART I. FINANCIAL INFORMATION
ITEM 1 Consolidated Financial Statements (Unaudited) Page No.
a) Consolidated Balance Sheet -
September 30, 1998 (unaudited) and December 31, 1997 1
b) Consolidated Statement of Operations
for the three months and nine months ended
September 30, 1998 and September 30, 1997 (unaudited) 2
c) Consolidated Statement of Shareholder's Equity
for the nine months ended September 30, 1998 (unaudited) 3
d) Consolidated Statement of Cash Flows
for the nine months ended September 30, 1998
and September 30, 1997 (unaudited) 4
e) Notes to Consolidated Financial Statements 5-6
ITEM 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-13
SIGNATURES 14
<PAGE>
Alpha Pro Tech, Ltd.
Consolidated Balance Sheet
- --------------------------------------------------------------------------------
September 30, December 31,
1998 1997
Assets
(Unaudited)
Current Assets:
Cash $ 235,000 $ 490,000
Marketable securities-restricted 17,000 21,000
Accounts receivable, net of allowance for
doubtful accounts of $67,000 and $91,000 2,749,000 2,805,000
Income taxes receivable 5,000 5,000
Inventories 3,229,000 3,697,000
Prepaid expenses and other assets 353,000 393,000
------------ ------------
6,588,000 7,411,000
Property and equipment, net of accumulated
depreciation and amortization of $1,356,000
and $1,088,000 2,111,000 2,084,000
Intangible assets, net of accumulated
amortization of $124,000 and $92,000 306,000 305,000
Other assets 226,000 185,000
------------ ------------
$ 9,231,000 $ 9,985,000
============ ============
Liabilities & Shareholders' Equity
Current Liabilities:
Accounts payable $ 1,214,000 $ 2,142,000
Accrued liabilities 560,000 494,000
Loans payable, current portion 1,039,000 1,051,000
Capital leases, current portion 113,000 112,000
------------ ------------
2,926,000 3,799,000
Loans payable, less current portion 267,000 320,000
Capital leases, less current portion 186,000 229,000
------------ ------------
3,379,000 4,348,000
------------ ------------
Shareholders' Equity
Common stock, $.01 par value, 50,000,000
shares authorized, and 24,112,449
issued and outstanding at September 30, 1998
and December 31, 1997 241,000 241,000
Additional paid-in capital 24,338,000 24,338,000
Accumulated deficit (18,727,000) (18,942,000)
------------ ------------
5,852,000 5,637,000
------------ ------------
$ 9,231,000 $ 9,985,000
============ ============
1
<PAGE>
Alpha Pro Tech, Ltd.
Consolidated Statement of Operations (Unaudited)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
For the three months For the nine months
ended September 30, ended September 30,
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Sales $ 4,231,000 $ 4,708,000 $ 13,674,000 $ 13,184,000
Cost of goods sold, excluding
depreciation 2,534,000 3,250,000 8,264,000 8,466,000
------------ ------------ ------------ ------------
1,697,000 1,458,000 5,410,000 4,718,000
Expenses
Selling, general and administrative 1,512,000 1,657,000 4,748,000 4,540,000
Depreciation and amortization 102,000 82,000 300,000 230,000
------------ ------------ ------------ ------------
Income (loss) from operations 83,000 (281,000) 362,000 (52,000)
------------ ------------ ------------ ------------
Interest 42,000 72,000 147,000 219,000
------------ ------------ ------------ ------------
42,000 72,000 147,000 219,000
------------ ------------ ------------ ------------
Income (loss) before provision
for income taxes 41,000 ($ 353,000) 215,000 ($ 271,000)
Provision for income taxes 0 0 0 0
------------ ------------ ------------ ------------
Net Income (loss) $ 41,000 ($ 353,000) $ 215,000 ($ 271,000)
------------ ------------ ------------ ------------
Net Income (loss) per common share:
Basic $ 0.00 ($ 0.01) $ 0.01 ($ 0.01)
Diluted $ 0.00 ($ 0.01) $ 0.01 ($ 0.01)
Weighted average shares outstanding:
Basic 24,112,449 24,104,116 24,112,449 23,193,445
Diluted 24,227,508 25,228,687 24,278,272 24,936,905
</TABLE>
2
<PAGE>
Alpha Pro Tech, Ltd.
Consolidated Statement of Shareholders' Equity (Unaudited)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
Shares Common Additional Accumulated Total
Stock Paid-in Capital Deficit
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1997 24,112,449 $ 241,000 $ 24,338,000 ($18,942,000) $ 5,637,000
Net Income 215,000 215,000
---------- ------------ ------------ ------------ ------------
Balance at
September 30,
1998 24,112,449 $ 241,000 $ 24,338,000 ($18,727,000) $ 5,852,000
========== ============ ============ ============ ============
</TABLE>
3
<PAGE>
Alpha Pro Tech, Ltd.
Consolidated Statement of Cash Flows (Unaudited)
- -------------------------------------------------------------------------------
For the nine months ended
September 30,
1998 1997
Operating Activities:
Net Income/(loss) $ 215,000 ($ 271,000)
Adjustments to reconcile net income to cash
used for operating activities:
Depreciation and amortization 300,000 230,000
Changes in assets and liabilities:
Accounts receivable 56,000 (1,205,000)
Inventories 468,000 (360,000)
Prepaid expenses and other assets 40,000 (43,000)
Accounts payable and accrued liabilities (862,000) (387,000)
----------- -----------
Net cash provided by (used for) operating
activities: 217,000 (2,036,000)
----------- -----------
Investing Activities:
Purchase of property and equipment (295,000) (425,000)
Purchase of intangible assets (33,000) (106,000)
Purchase of other assets (41,000) 2,000
Sale of marketable securities 4,000 17,000
----------- -----------
Net cash used for investing activities (365,000) (512,000)
----------- -----------
Financing Activities:
Issuance of common stock -- 2,472,000
Net proceeds (payments) on loans payable (65,000) 105,000
Net proceeds (payments) on notes payable -- (31,000)
Net proceeds (payments) on capital leases (42,000) 54,000
----------- -----------
Net Cash provided by financing activities (107,000) 2,600,000
----------- -----------
Increase (decrease) in cash during the period (255,000) 52,000
Cash, beginning of period $ 490,000 $ 275,000
-----------
Cash, end of period $ 235,000 $ 327,000
----------- -----------
4
<PAGE>
Alpha Pro Tech, Ltd.
Notes to Consolidated Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
1. The Company
Alpha Pro Tech, Ltd. (the Company) manufactures and distributes a variety
of disposable mask, shield, shoe cover, and apparel products, and
woundcare products. Most of the Company's disposable apparel, mask and
shield products, and woundcare products are distributed to medical,
dental, industrial, and clean room markets, predominantly in the United
States.
2. Basis of Presentation
The unaudited interim financial statements reflect all adjustments which
are in the opinion of management necessary for a fair presentation of the
results for the interim period presented. All such adjustments made are of
a normal recurring nature.
There have been no significant changes since December 31, 1997 in
accounting principles and practices utilized in the presentation of these
financial statements.
3. Inventories September 30, December 31,
1998 1997
Raw Materials $1,555,000 $1,741,000
Work in process 192,000 370,000
Finished goods 1,482,000 1,586,000
---------- ----------
$3,229,000 $3,697,000
---------- ----------
4. Accrued liabilities September 30, December 31,
1998 1997
Professional fees $ 108,000 $ 145,000
Payroll and payroll taxes 341,000 267,000
Other 111,000 82,000
---------- ----------
$ 560,000 $ 494,000
========== ==========
5
<PAGE>
Alpha Pro Tech, Ltd.
Notes to Consolidated Financial Statements (Unaudited)
- --------------------------------------------------------------------------------
5. Basic and Diluted Net Income/ (loss) per share
The Company has adopted SFAS No. 128, "Earnings per Share". SFAS No. 128
is effective for fiscal periods ending after December 15, 1997 and
requires restatement of all prior-period earnings per share (EPS) data
presented. Under this statement, both "basic" EPS and "diluted" EPS are
presented on the face of the income statement.
6. Provision for Income Tax
The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes". This statement requires an asset and liability approach for
the financial accounting and reporting of income taxes. At September 30,
1998 the Company had net operating loss (NOL) carryforwards of
approximately $8,600,000. NOL's can be carried forward up to 15 years and
are available to offset current and future taxable income. The Company's
NOL's expire in the years 2005 through 2015.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
Three months and nine months ended September 30, 1998, compared to the three
months and nine months ended September 30, 1997
Alpha Pro Tech, Ltd. ("Alpha" or the "Company") reported net income for the
three months ended September 30, 1998 of $41,000 as compared to a net loss of
$353,000 for the three months ended September 30, 1997 representing an
improvement of $394,000 or 111.6%. For the nine months ended September 30, 1998
net income rose to $215,000 from a net loss of $271,000 for the same period in
1997, representing an increase of $486,000 or 179.3%.
Sales Consolidated net sales for the three months ended September 30, 1998
decreased to $4,231,000 from $4,708,000 in 1997, representing a decrease of
$477,000 or 10.1%. Net sales for the Apparel Division for the third quarter
ended September 30, 1998 were $2,645,000 as compared to $3,170,000 for the same
period of 1997. The Apparel Division sales decrease of $525,000 or 16.6% was
primarily due to decreased sales to the Company's largest distributor, whose
sales have been affected by the Asian economic crisis . Mask and eye shield
sales increased by $79,000 or 7.9% to $1,074,000 for the third quarter of 1998
from $994,000 in the third quarter of 1997. Sales of these products should
continue to strengthen due to the introduction of a new line of masks and
shields. Sales from the Company's Extended Care Unreal Lambskin(R) and other
related products which includes a line of pet beds decreased by $32,000 or 5.9%,
to $512,000 in the third quarter of 1998 compared to $544,000 in the same period
in 1997. The small decrease in sales of $32,000 is primarily a result of the
discontinuation of a low margin rolled goods line, offset by an increase in pet
product and medical fleece product sales of $115,000.
Consolidated sales were $13,674,000 and $13,184,000 for the nine months ended
September 30, 1998 and 1997, respectively, representing an increase of $490,000
or 3.7%. Net sales for the Apparel Division for the nine months ended September
30, 1998 were $8,996,000 as compared to $8,034,000 for the same period of 1997
an increase of 12.0%. Mask and eye shield sales decreased by $196,000 or 5.9% to
$3,137,000 for the nine months ended September 30, 1998 from $3,333,000 in the
same period of 1997. Sales from the Company's Extended Care Unreal Lambskin(R)
and other related products decreased by $277,000 or 15.2% to $1,541,000 for the
nine months ended September 30, 1998 compared to $1,818,000 in the same period
in 1997.
Alpha has recently restructured its business around a new strategy of innovation
that will enable it to develop custom products to meet its customer's needs in a
very timely manner. This new approach is to satisfy customer requirements in a
way that the Company's larger competitors are unable to match.
7
<PAGE>
The Company has a profit sharing agreement with its largest distributor. Goods
shipped at cost to this distributor are to fill orders already received from the
distributor's end users. Revenue for goods shipped to this distributor, which
includes the cost of goods shipped as well as the Company's share of the
profits, are recognized at the time the goods are shipped.
Cost of Goods Sold Cost of goods sold decreased to $2,534,000 for the three
months ended September 30,1998 from $3,250,000 for the same period in 1997. As a
percentage of net sales, cost of goods sold decreased to 59.9% in 1998 from
69.0% in 1997. Gross profit margin increased to 40.1% for the three months ended
September 30, 1998 from 31.0% for the three months ended September 30, 1997.
For the nine months ended September 30, 1998 as compared to 1997, cost of goods
sold decreased to $8,264,000 from $8,466,000. As a percentage of net sales for
the nine months, cost of goods sold decreased to 60.4% from 64.2%. Gross profit
margin increased to 39.6% from 35.8% for the nine months ended September 30,
1998 and 1997, respectively.
The improvement in gross profit is a result of the Company's new strategic
emphasis of developing innovative high gross profit products, especially for its
largest customer, and also on improved manufacturing efficiency as a result of
recent capital expenditures. Management expects gross profit margin to continue
to remain strong through its strategic emphasis of developing innovative
products and processes, but there can be no assurance that these margin
improvements will be sustained.
Selling, General and Administrative Expenses Selling, general and administrative
expenses decreased by $145,000 to $1,512,000 for the three months ended
September 30, 1998 from $1,657,000 for the three months ended September 30,
1997. As a percentage of net sales, selling, general and administrative expenses
increased marginally to 35.7% in the three months ended September 30,1998 from
35.2% in the same period of 1997. The decrease in selling, general and
administrative expenses primarily consists of increased payroll related costs of
$5,000; decreased marketing, commissions and travel expenses of $13,000;
decreased public company expenses of $36,000, including investor relations,
options/warrants issued for services, stock transfer costs, and costs associated
with SEC reporting requirements; decreased professional fees of $103,000 and
increased general office, rent, insurance, and telecommunication expenses of
$3,000. Management expects selling, general and administrative expenses as a
percentage of net sales to decrease as sales increase.
8
<PAGE>
Selling, general and administrative expenses increased by $208,000 to $4,748,000
for the nine months ended September 30, 1998 from $4,540,000 for the nine months
ended September 30, 1997. As a percentage of net sales, selling, general and
administrative expenses increased slightly to 34.7% in the nine months ended
September 30,1998 from 34.4% in the same period of 1997. The increase in
selling, general and administrative expenses for the nine months ended September
30, 1998 is primarily due to increased payroll related costs of $154,000;
increased marketing, commissions and travel expenses of $107,000; decreased
public company expenses of $62,000, including investor relations,
options/warrants issued for services, stock transfer costs, and costs associated
with SEC reporting requirements; decreased professional fees of $112,000 and
increased general office, rent, insurance and telecommunications expenses of
$98,000.
The $154,000 increase in payroll related costs for the nine months ended
September 30, 1998 primarily comprised of a $36,000 decrease in administrative
salaries and a $200,000 increase in factory indirect expenses of which $175,000
is attributable to the Apparel Division which had an increase in sales of 12.0%.
As a percentage of Apparel Division sales, payroll costs for the Apparel
Division increased to 13.0% for the first nine months of 1998 as compared to
12.4% for the first nine months of 1997.
Marketing, commissions and travel expenses, which increased $107,000 in the nine
months ended September 30, 1998 as compared to the same period in 1997,
increased as a percentage of net sales to 6.7% from 6.1%. These expenses are the
result of additional focus being placed on customers other than the Company's
largest customer.
Depreciation & Amortization Depreciation and amortization expense increased by
$20,000 to $102,000 for the three months September 30, 1998 from $82,000 for the
same period in 1997 and increased by $70,000 to $300,000 from $230,00 for the
nine months ended September 30, 1998 compared to 1997. This increase is
primarily attributable to an increase in equipment.
Net Interest Interest expense decreased by $30,000 or 42.9% to $42,000 for the
three months ended September 30, 1998 from $72,000 for the three months ended
September 30, 1997. Interest expense decreased by $72,000 or 32.9% to $147,000
for the nine months ended September 30, 1998 as compared to $219,000 for the
same period in 1997. The decrease in net interest expense is due to a decrease
in the cost of capital partially offset by increases in interest on additional
capital leases acquired. In December 1997, the Company entered into a new
three-year $2,900,000 credit facility with an asset-based lender at prime plus
2%. Alpha's previous credit facility was at prime plus 5%.
9
<PAGE>
Income (loss) from Operations Income from operations increased by $364,000 to
$83,000 for the three months ended September 30, 1998 from a loss from
operations of $281,000 for the three months ended September 30, 1997. The
increase in income from operations is due to an increase of gross profit of
$239,000, a decrease in selling, general and administrative expenses of $145,000
and an increase in depreciation and amortization of $20,000.
Income from operations increased by $414,000 to $362,000 for the nine months
ended September 30, 1998 compared to a loss from operations of $52,000 for the
same period in 1997. The increased income from operations for the nine months is
due to an increase in gross profit of $692,000 offset by an increase in selling,
general and administrative expenses of $208,000 and an increase in depreciation
and amortization of $70,000.
Net Income (loss) Net income for the three months ended September 30, 1998 was
$41,000 compared to a net loss of $353,000 for the three months ended September
30, 1997, an improvement of $394,000 or 111.6%. The net income increase of
$394,000 is comprised of an increase in income from operations of $364,000 and a
decrease in interest expense of $30,000.
Net income for the nine months ended September 30, 1998 was $215,000 compared to
a net loss of $271,000 for the nine months ended September 30, 1997, an
improvement of $486,000 or 179.3%. The net income increase for the nine months
of $486,000 is comprised of an increase in income from operations of $414,000
and a decrease in interest expense of $72,000.
The Company does not have any pension, profit sharing or similar plans
established for its employees, however, the chief executive officer and
president are entitled to a combined bonus equal to 10% of the pre-tax profits
of the Company.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1998, the Company had cash of $235,000 and working capital
of $3,663,000. For the nine months ended September 30, 1998, cash decreased by
$255,000 and accounts payable and accrued liabilities decreased by $862,000. The
company currently has a secured asset based lender's line of credit of
$2,900,000, based upon the level of eligible accounts receivable, inventory and
equipment, which expires in December 2000. At September 30, 1998, the maximum
line of credit was $2,174,000 for accounts receivable, inventory and equipment
of which $852,000 remained available.
Net cash provided for operations was $217,000 for the nine months ended
September 30, 1998 compared to net cash used for operations of $2,036,000 for
the same period of 1997. The Company's generation of cash from operations for
the nine months ended September 30, 1998 is due primarily to net income before
depreciation and amortization and a decrease in accounts receivable, inventory
and prepaid expenses and other assets offset by a decrease in accounts payable
and accrued liabilities.
The Company's investing activities consist primarily of expenditures for fixed
assets and intangible assets of $369,000 offset by $4,000 for the sale of
marketable securities for a total of $365,000 for the nine months ended
September 30, 1998.
The Company anticipates that its mask manufacturing capabilities are to be
improved based on customer demands at an estimated cost of $150,000. Depending
on the success of the automated shoe cover, approximately $350,000 of additional
equipment could be required. The Company intends to lease equipment whenever
possible.
During the nine months ended September 30,1998, the Company's financing
activities consisted primarily of decreases in the asset based loan of $65,000
and capital leases of $42,000, resulting in the net cash used by financing
activities of $107,000.
Management believes that it has available cash and borrowings to finance all
known financial commitments for at least 12 months.
11
<PAGE>
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information", which became effective for
fiscal years beginning after December 15, 1997 and established standards for the
way that public business enterprises report information about operating segments
in annual and quarterly financial statements. SFAS No. 131 also established
standards for related disclosures about products and services, geographic areas
and major customers. The company is currently assessing the impact of SFAS No.
131 on its financial statements.
The American Institute of Certified Public Accountants issued SOP 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal use", which became effective for fiscal years beginning after December
15, 1997 and established standards for the way that public business enterprises
account for the costs of internal use computer software. The Company is
currently assessing the impact of SOP 98-1 on its financial statements.
YEAR 2000 COMPLIANCE
The Year 2000 problem concerns the inability of computer systems, equipment or
software to properly recognize and process date-sensitive information beyond
January 1, 2000.
The Company has assessed its Year 2000 risk in three categories: application
software and computer equipment, other general business equipment, and
compliance by suppliers.
APPLICATION SOFTWARE AND COMPUTER EQUIPMENT The company believes that it has
identified substantially all of the major computer equipment, software
applications and related equipment used in its internal operations that must be
modified, upgraded or replaced to minimize the possibility of a material
disruption to its business operations. The Company has commenced the process of
modifying, upgrading and replacing major computer related systems that have been
identified as potentially non-compliant and expects to complete this process by
March 1999. The Company has purchased and implemented a Year 2000 Complaint
upgrade to its financial accounting software. This system upgrade is considered
to be the most critical to continuing operations into the new millenium.
12
<PAGE>
OTHER GENERAL BUSINESS EQUIPMENT In additon to computers and related systems,
the operation of office equipment, such as fax machines, photocopiers, telephone
systems and other business equipment may be affected by the Year 2000 problem.
The Company's objective is to complete substantially all remediation and
replacement of general business equipment by June 1999. The Company is currently
assessing the costs of remediating the Year 2000 problem on its general business
equipment but does not anticipate any material adverse effect on the Company's
business or operational results.
COMPLIANCE BY SUPPLIERS The Company is initiating communications with critical
external suppliers to determine the status of their efforts to become Year 2000
compliant and to determine the extent to which the Company is vulnerable as a
result of supplier potential non-compliance. Evaluations of critical suppliers
will be followed by the development of contingency plans. To the extent that
supplier responses to Year 2000 readiness surveys are unsatisfactory, the
Company intends to change suppliers to those who have demonstrated Year 2000
readiness. However, there can be no assurance that the Company will be
successful in finding such alternatives.
Management believes that the Company has and is devoting the necessary resources
to identify and resolve any significant Year 2000 issues in a timely manner. The
Company does not foresee significant risks associated with its Year 2000
compliance at this time. The Company has not developed a comprehensive
contingency plan. However, the Company will continue to monitor the need for
such a plan based upon the results of the aforementioned Year 2000 assessments.
CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 ("Act) provides a safe
harbor for forward-looking information made on behalf of the Company. All
statements, other than statements of historical facts which address the
Company's expectations of sources of capital or which express the Company's
expectation for the future with respect to financial performance or operating
strategies can be identified as forward-looking statements. Such statements made
by the Company are based on knowledge of the environment in which it operates,
but because of the factors previously listed, as well as other factors beyond
the control of the Company, actual results may differ materially from the
expectations expressed in the forward-looking statements.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, the Registrant has dult caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Alpha Pro Tech, Ltd.
DATE: November 11, 1998 BY: /s/ Sheldon Hoffman
----------------------------------------
SHELDON HOFFMAN
CHIEF EXECUTIVE OFFICER
CHIEF FINANCIAL OFFICER
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet as of September 30, 1998 and December 31, 1997 and
the statement of operations for the three and nine months ended September 30,
1998 and September 30, 1997 and is qualified in its entirety by reference to
such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 235,000
<SECURITIES> 17,000
<RECEIVABLES> 2,816,000
<ALLOWANCES> 67,000
<INVENTORY> 3,229,000
<CURRENT-ASSETS> 6,588,000
<PP&E> 3,467,000
<DEPRECIATION> 1,356,000
<TOTAL-ASSETS> 9,231,000
<CURRENT-LIABILITIES> 2,926,000
<BONDS> 0
0
0
<COMMON> 241,000
<OTHER-SE> 24,338,000
<TOTAL-LIABILITY-AND-EQUITY> 9,231,000
<SALES> 4,231,000
<TOTAL-REVENUES> 4,231,000
<CGS> 2,534,000
<TOTAL-COSTS> 1,614,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 42,000
<INCOME-PRETAX> 41,000
<INCOME-TAX> 0
<INCOME-CONTINUING> 41,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,000
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
