<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15 (d) of the
- ------- Securities Exchange Act of 1934
For quarterly period ended March 31, 1997
---------------------------------------
Transition report under Section 13 or 15 (d) of the
- --------- Exchange Act
For the transition period from to
--------------- -----------------
Commission file number 000-21326
-------------------------------------------
Anika Therapeutics, Inc.
- -----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Massachusetts 04-3145961
- ------------------------------- -------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
236 West Cummings Park, Woburn, Massachusetts 01801
- -----------------------------------------------------------------
(Address of Principal Executive Offices)
(617) 932-6616
- -----------------------------------------------------------------
(Issuer's Telephone Number, Including area code)
- -----------------------------------------------------------------
(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 and 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:
On May 9, 1997, 5,033,060 shares of common stock, par value $0.01
per share, were outstanding.
Transitional Small Business Disclosure Format: Yes No X
---- -----
<PAGE>
PART 1: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
ANIKA THERAPEUTICS, INC.
<TABLE>
<CAPTION>
BALANCE SHEETS (UNAUDITED) AS OF, MARCH 31, 1997 DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS $2,591,866 $2,704,665
ACCOUNTS RECEIVABLE 709,443 539,004
INVENTORIES 2,476,566 2,481,646
PREPAID EXPENSES 437,268 375,302
- -------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 6,215,143 6,100,617
- -------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT 3,889,999 3,865,330
LESS ACCUMULATED DEPRECIATION 3,124,284 3,046,286
- -------------------------------------------------------------------------------
NET PROPERTY AND EQUIPMENT 765,715 819,044
- -------------------------------------------------------------------------------
LOAN RECEIVABLE DUE FROM OFFICER 75,000 -
TOTAL ASSETS $7,055,858 $6,919,661
===============================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $684,774 $550,314
ACCRUED EXPENSES 574,737 1,055,234
DEFERRED REVENUE 200,000 200,000
- -------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 1,459,511 1,805,548
- -------------------------------------------------------------------------------
OTHER LONG-TERM LIABILITIES 138,158 142,775
REDEEMABLE CONVERTIBLE PREFERRED STOCK; $.01
PAR VALUE: AUTHORIZED 750,000 SHARES;
ISSUED AND OUTSTANDING 126,259 SHARES,
RESPECTIVELY; LIQUIDATION AND REDEMPTION
VALUE OF $20.00 PER SHARE PLUS ACCRUED
DIVIDENDS 2,661,487 2,602,527
STOCKHOLDERS' EQUITY:
UNDESIGNATED PREFERRED STOCK, $.01 PAR VALUE:
AUTHORIZED 1,250,000 SHARES; NO SHARES
ISSUED AND OUTSTANDING - -
COMMON STOCK, $.01 PAR VALUE: AUTHORIZED
15,000,000 SHARES; ISSUED AND OUTSTANDING
5,023,838 SHARES AND 4,930,719 SHARES,
RESPECTIVELY 50,238 49,307
ADDITIONAL PAID-IN CAPITAL 11,903,661 11,693,070
ACCUMULATED DEFICIT (9,157,197) (9,373,566)
- -------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 2,796,702 2,368,811
- -------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $7,055,858 $6,919,661
===============================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
ANIKA THERAPEUTICS,INC.
STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1997 1996
- ------------------------------------------------------------
<S> <C> <C>
NET SALES $1,927,350 $1,036,797
COST OF SALES 1,019,413 1,157,047
- ------------------------------------------------------------
GROSS PROFIT (LOSS) 907,937 (120,250)
OPERATING EXPENSES:
RESEARCH AND DEVELOPMENT 323,115 344,181
SELLING, GENERAL AND
ADMINISTRATIVE 394,421 271,381
INTEREST INCOME, NET (30,384) (10,153)
- -----------------------------------------------------------
TOTAL OPERATING EXPENSES 687,152 605,409
- -----------------------------------------------------------
INCOME (LOSS) BEFORE INCOME
TAXES 220,785 (725,659)
INCOME TAXES 4,416 -
- -----------------------------------------------------------
NET INCOME (LOSS) $216,369 ($725,659)
===========================================================
PRIMARY EARNINGS (LOSS) PER SHARE $0.04 ($0.19)
PRIMARY SHARES OUTSTANDING 6,084,111 3,787,240
FULLY DILUTED EARNINGS (LOSS)
PER SHARE $0.03 ($0.19)
FULLY DILUTED SHARES OUTSTANDING 7,455,522 3,787,240
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
ANIKA THERAPEUTICS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED,
MARCH 31,
1997 1996
- ----------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME (LOSS) $216,369 ($725,659)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH USED FOR OPERATING
ACTIVITIES:
DEPRECIATION AND AMORTIZATION 77,998 85,090
COMMON STOCK ISSUED TO 401(K) PLAN 65,350 18,898
CHANGES IN OPERATING ASSETS AND
LIABILITIES:
ACCOUNTS RECEIVABLE (170,439) (166,629)
LOAN RECEIVABLE DUE FROM OFFICER (75,000) -
INVENTORIES 5,080 31,276
PREPAID EXPENSES (61,966) 23,354
ACCOUNTS PAYABLE AND ACCRUED
EXPENSES (346,036) 237,159
OTHER LONG-TERM LIABILITIES (4,617) -
- ----------------------------------------------------------------------------
NET CASH USED FOR OPERATING
ACTIVITIES (293,261) (496,511)
- ----------------------------------------------------------------------------
CASH FLOWS USED FOR INVESTING ACTIVITIES:
ADDITIONS TO PROPERTY AND EQUIPMENT (24,669) (24,360)
- ----------------------------------------------------------------------------
NET CASH USED FOR INVESTING
ACTIVITIES (24,669) (24,360)
- ----------------------------------------------------------------------------
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES:
PAYMENTS ON DEBT - (800,000)
EXPENSES FROM ISSUANCE OF PREFERRED STOCK - (22,583)
PROCEEDS FROM ISSUANCE OF COMMON STOCK - 3,563,033
PROCEEDS FROM EXERCISE OF STOCK OPTIONS 205,131 50,081
- ----------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING 205,131 2,790,531
- ----------------------------------------------------------------------------
(DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (112,799) 2,269,660
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 2,704,665 1,742,637
- ----------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,591,866 $4,012,297
============================================================================
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements (Continued)
Anika Therapeutics, Inc.
Notes to Financial Statements
This Form 10-QSB contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results could differ materially
from those set forth in the forward-looking statements. Certain factors
that might cause such a difference are discussed throughout this form 10-
QSB and are discussed in the section entitled "Certain Factors Affecting
Future Operating Results" of this Form 10-QSB.
(1) Nature of Business
------------------
Anika Therapeutics, Inc. ("Anika" or the "Company") develops and
manufactures hyaluronic acid ("HA") products for use in surgical and
therapeutic medical applications. Hyaluronic acid is a naturally occurring
biopolymer found in the body that coats, protects, and lubricates soft
tissues.
Anika currently manufactures AMVISC (1), an HA-based viscoelastic used in
ophthalmic surgery for Chiron Vision, a subsidiary of Chiron Corporation.
Anika also manufactures HYVISC , an HA-based product used to treat equine
osteo-arthritis, for Boehringer Ingelheim Animal Health, Inc. in the United
States and ORTHOVISC , an HA-based product for use in osteoarthritis and
temporomandibular joint dysfunction. ORTHOVISC is sold in Canada, Holland
and Turkey.
(2) Basis of Presentation
---------------------
The accompanying financial statements have been prepared by the Company
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission. In the opinion of the Company, these financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the financial position of the
Company as of March 31, 1997, the results of operations for the three
months ended March 31, 1997 and 1996 and the cash flows for the three
months ended March 31, 1997 and 1996.
The accompanying financial statements and related notes should be read in
conjunction with the Company's annual financial statements filed with the
Annual Report on Form 10-KSB for the year ended August 31, 1996. The
results of operations for the three months ended March 31, 1997 are not
necessarily indicative of the results to be expected for the full year.
1) AMVISC is a registered trademark of Chiron Vision
<PAGE>
On January 1, 1997 the Company began reporting on a calendar quarter and
calendar year basis.
(3) Earnings Per Share
------------------
Earnings per share (E.P.S.) is computed based on the weighted average
number of common shares outstanding, adjusted, when dilutive, for the
number of shares issuable upon the conversion of Series A Redeemable
Convertible Preferred Stock and the assumed exercise of stock options and
warrants after the assumed repurchase of shares with the related proceeds.
In February 1997, the Financial Accounting Standards Board (FASB)issued
Statement of Financing Accounting Standards No. 128, Earnings per Share
(Statement 128). Statement 128 will be required to be adopted by Anika for
the fourth quarter and year ended December 31, 1997. Statement 128 was
issued to simplify the computation of E.P.S. and to make the U.S. Standard
compatible with the E.P.S. standards of other countries. It will replace
the presentation of Primary E.P.S. with a presentation of Basic E.P.S. and
replace Fully Diluted E.P.S. with Diluted E.P.S. It also requires dual
presentation of Basic E.P.S. and Diluted E.P.S. on the face of the income
statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the Basic E.P.S.
computation to the numerator and denominator of the Diluted E.P.S.
computation.
Basic E.P.S., unlike Primary E.P.S., excludes all dilution while Diluted
E.P.S., like Fully Diluted E.P.S., reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity.
If Statement 128 was adopted for the quarter ended March 31, 1997, there
would have been no impact on E.P.S.
(4) Loan Receivable due from Officer
--------------------------------
Loan receivable consists of loan to an officer. The entire balance is due
at the earlier of the end of five years or at the termination of
employment. Interest accrues at an annual rate of 6% and is payable monthly
over the term of the loan.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 2: Management's Discussion and Analysis or Plan of
Operations
Results of Operations
---------------------
Net sales of hyaluronic acid products for the three months ended March 31,
1997 totalled $1,927,000, an increase of $890,000, or eighty-six percent,
over the $1,037,000 recorded in net sales for the prior year. A majority of
the increase in sales was attributable to an increase in AMVISC unit
selling prices to Chiron Vision.
Anika's gross profit as a percentage of net sales was 47.1% for the three
months ended March 31, 1997, compared to a gross loss as a percentage of
net sales of 11.6% recorded over the same period in 1996. The increase is
primarily attributable to the new five-year supply contract with Chiron
that became effective on January 1, 1997 which has higher unit selling
prices than the prior agreement.
Research and development expenses for the three months ended March 31, 1997
decreased by $21,000 to $323,000 from $344,000 for the same period last
year.
Selling, general and administrative expenses for the three months ended
March 31, 1997 increased by $123,000 to $394,000 from $271,000 for the same
period last year. The increase for the three months ended March 31, 1997 is
primarily attributable to additional marketing and administrative staff,
and increased selling and marketing costs associated with the international
commercialization of ORTHOVISC.
Liquidity and Capital Resources
-------------------------------
In March, 1996 the Company completed a financing involving the private
placement of 1,455,000 shares of newly issued Common Stock to institutional
and private accredited investors. Total gross proceeds were approximately
$4 million and net proceeds to the Company after fees and expenses were
approximately $3,542,000. In connection with the private placement, the
Company issued to the placement agent 57,036 warrants to purchase Common
Stock exercisable at $4.00 per share and 146,664 warrants to purchase
Common Stock exercisable at $3.00 per share. In addition, the Company
granted certain registration rights and filed a registration statement with
the Securities and Exchange Commission registering the securities which was
declared effective by the Securities and Exchange Commission in May 1996.
The proceeds from the private placement were used to repay the $1,000,000
debt obligation and for general working capital purposes. On May 17, 1995,
the Company raised through a private placement $2,235,642, net of offering
costs, from the issuance of 120,970 shares of Series A Redeemable
Convertible Preferred
<PAGE>
Stock ("Series A stock") at a selling price of $20.00 per share. Each share
of the Series A stock is entitled to receive an annual dividend on May 1 of
each year, at a rate of $1.80 per share, payable in additional shares of
Series A stock, with the number of dividend shares determined by the price
of Anika's underlying common stock. The Company may elect to pay the
dividend in cash if certain financial covenants are met. During each
consecutive ninety day period in which the average quarterly price of
Anika's common stock remains above $6.00 per share, no dividend will
accrue.
Anika believes that its cash on hand of $2,592,000 at March 31, 1997 will
fund calendar 1997 operating expenses including the cost of the ORTHOVISC
clinical trial. However, there can be no assurance that the cash on hand
will be sufficient for this period of time if actual costs and expenses are
higher than anticipated. On January 1, 1997, the Company commenced
supplying AMVISC to Chiron Vision under a new five year supply contract
that has selling prices that are substantially higher than the prior
contract. Although Anika has obtained profitability in the first quarter
ended March 31, 1997, there is no assurance that profitability will
continue through future quarters. The new AMVISC supply contract with
Chiron Vision requires that Chiron purchase certain minimum quantities of
AMVISC. The Company anticipates that Chiron will meet its minimum annual
unit purchase obligations by the end of June 1997. The Company can provide
no assurance that Chiron will purchase additional quantities of AMVISC in
excess of the minimum annual unit purchase obligation.
CERTAIN FACTORS AFFECTING FUTURE OPERATING RESULTS
This Form 10-QSB contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results could differ materially
from those set forth in the forward-looking statements. Certain factors
that might cause such a difference include, among other factors noted
herein, the following:
Need for Additional Funds; Liquidity. Anika currently expects that its cash
on hand will fund calendar 1997 operating expenses including the cost of
the ORTHOVISC clinical trial. However, higher than anticipated costs and
expenses may result in insufficient cash on hand which could create a need
for additional financing. The ability of Anika to obtain financing is
dependent on the status of Anika's future business prospects as well as
conditions prevailing in the relevant capital markets. No assurance can be
given that any additional financing will be made available to Anika or will
be available on acceptable terms should such a need arise.
<PAGE>
Competition. Anika competes with many companies, including large
pharmaceutical companies, specialized medical products companies, academic
institutions, governmental agencies and other research organizations which
may be involved in research, development and commercialization of HA
products. Successful commercialization of a particular HA product will
depend in large part upon the ability of Anika to complete clinical studies
and obtain FDA marketing and foreign regulatory approvals prior to its
competitors.
History of Losses; Uncertainty of Future Profitability. Anika has incurred
operating losses since its inception in May 1993. Presently Anika has
accumulated deficit of $9,157,000 as of March 31, 1997. The continued
development of Anika's products will require the commitment of substantial
resources to conduct research, preclinical and clinical development
programs, and to establish sales and marketing capabilities. Anika incurred
substantial and increasing operating losses through December 31, 1996 and
although Anika has achieved profitability for period ending March 31, 1997,
the time required by Anika to reach sustained profitability is highly
uncertain, and Anika must among other things, successfully complete
development of certain of its products, obtain regulatory approvals and
establish sales and marketing capabilities for certain of its products.
There can be no assurance that Anika will be able to achieve profitability
on a sustained basis.
Comprehensive Government Regulation; No Assurance of FDA Approval. Anika's
research, development, manufacturing activities and the future marketing of
products by Anika are subject to regulation for safety and efficacy by
numerous governmental authorities in the United States and other countries.
These regulations can be costly, regulatory approvals may take many years,
and they can be subject to change and unanticipated delays. Anika cannot
predict what impact, if any, such changes might have on its business.
There can be no assurance that approvals of Anika's products, processes or
facilities will be granted or that Anika will obtain the financing needed
to develop certain products. Any failure to obtain, or delay in obtaining,
such approvals could adversely affect the ability of Anika to market its
products.
In addition, requirements relating to the conduct of clinical trials,
product licensing, pricing and reimbursement vary widely from country to
country. Anika or the FDA may suspend clinical trials at any time upon a
determination that the subjects or patients are being exposed to an
unacceptable adverse health risk ascribable to Anika's products. If
clinical studies are suspended, Anika may be unable to continue the
development of the investigational products affected.
<PAGE>
Dependence on Patents and Proprietary Technology. Anika has a policy of
seeking patent protection for patentable aspects of its proprietary
technology. However, no assurance can be given that any application filings
or issued patents will provide Anika with a competitive advantage or will
not be successfully challenged by third parties. Other entities have filed
patent applications for or have been issued patents concerning various
aspects of HA-related products or processes. There can be no assurance that
the products or processes developed by Anika will not infringe the patent
rights of others in the future.
Anika also relies upon trade secrets and proprietary know-how. However,
there can be no assurance that confidentiality agreements, which Anika
employees generally sign, will be effective in protecting trade secrets or
that third parties will not independently develop substantially equivalent
or better technology.
Dependence Upon Marketing Partners. Anika does not plan to directly market
and sell its products to customers. Therefore, Anika's success will be
dependent upon the efforts of its marketing partners and the terms and
conditions of Anika's relationships with such marketing partners. In
addition, Anika will need to obtain the assistance of additional marketing
partners for new products which are brought to market and existing products
brought to new markets, and there can be no assurance that such additional
partners will be available or that such partners will agree to market
Anika's products on acceptable terms.
Exposure to Product Liability Claims. The testing, marketing and sale of
human health care products entail an inherent risk of allegations of
product liability, and there can be no assurance that substantial product
liability claims will not be asserted against Anika. Although Anika has not
incurred any material product liability to date and coverage under its
$1,000,000 insurance policy may be adequate to cover such claims should
they arise, there can be no assurance that material claims will not arise
in the future or that Anika's insurance will be adequate to cover all
situations.
Dependence upon Key Personnel. The future success of Anika is highly
dependent on the members of its management and scientific staff, the loss
of one or more of whom could have a material adverse effect on Anika. Anika
faces significant competition for highly skilled scientific, management and
marketing personnel from other companies, research and academic
institutions, government entities and other organizations. There can be no
assurance that Anika will be successfully in hiring or retaining the
personnel it requires and failure to do so could materially and adversely
affect Anika's prospects.
<PAGE>
Part II: OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Information required pursuant to Item 4 was provided for on on Anika's Form 10-
QSB for the quarterly period ended November 30, 1996 as filed by Anika on
January 14, 1997.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibit No. Description
----------- -----------
* 3.1 Amendment to amended and restated
Articles of Organization of Anika
Research, Inc. "Anika" as amended.
** 3.2 Amended and restated Articles of
Organization of Anika Research, Inc. as
amended.
*** 3.3 Certificate of Vote of Directors
Establishing a Series of Convertible
Preferred Stock.
* 3.4 Amended and restated by-laws of Anika
Research, Inc. as amended.
10.1 Loan agreement between J. Melville Engle
and Anika Therapeutics, Inc.
11 Computation of earnings per share.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K: None
--------------------
* Incorporated by reference to Exhibits to Anika's Form 10-QSB for
the quarterly period ended November 30, 1996 as filed by Anika on
January 14,1997.
** Incorporated by reference to Exhibits to the Registration
Statement on Form 10 (File No. 0-21326) filed by Anika on March 5,
1993.
*** Incorporated by reference to Exhibits to Anika's Form 10-Q/A
for the quarterly period ended May 31, 1995 as filed by Anika on
July 29, 1995.
<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.
ANIKA THERAPEUTICS, INC.
DATE: May 15, 1997 BY: /s/ J. Melville Engle
-----------------------
J. Melville Engle
Chief Executive Officer
DATE: May 15, 1997 BY: /s/ Sean F. Moran
-----------------------
Sean F. Moran
Chief Financial Officer
<PAGE>
EXHIBIT 10.1
J. MELVILLE ENGLE
LOAN
Principal Amount: $75,000
Repayment Terms: Unsecured $75,000 loan for the purchase of primary
residence. Entire amount due in balloon payment upon the
earlier of termination of employment or five years from
loan issuance on April 1, 1997.
Interest: Accrues at 6%, payable monthly over term of loan.
<PAGE>
EXHIBIT 11
ANIKA THERAPEUTICS, INC.
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
MARCH 31,
1997 1996
--------------------------
<S> <C> <C>
PRIMARY:
- -------
Net income (loss): $ 216,369 ($725,659)
Weighted average number of common
shares outstanding 4,989,521 3,787,240
Dilutive effect of:
Outstanding stock options 664,560 -
Warrants for redeemable convertible
preferred stock 361,008 -
Warrants for common stock 69,022 -
----------------------
Weighted average number of common
shares as adjusted 6,084,111 3,787,240
----------------------
Primary earnings (loss) per share $0.04 ($0.19)
======================
FULLY DILUTED:
- -------------
Net income (loss): $216,369 ($725,659)
Weighted average number of common
shares outstanding 4,989,521 3,787,240
Dilutive effect of:
Redeemable convertible preferred stock 1,262,590 -
Outstanding stock options 744,225 -
Warrants for redeemable convertible
preferred stock 379,790 -
Warrants for common stock 79,396 -
----------------------
Weighted average number of common
shares as adjusted 7,455,522 3,787,240
----------------------
Fully diluted earnings (loss) per share $0.03 ($0.19)
======================
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,591,866
<SECURITIES> 0
<RECEIVABLES> 709,443
<ALLOWANCES> 0
<INVENTORY> 2,476,566
<CURRENT-ASSETS> 6,215,143
<PP&E> 3,889,999
<DEPRECIATION> 3,124,284
<TOTAL-ASSETS> 7,055,858
<CURRENT-LIABILITIES> 1,495,511
<BONDS> 0
2,661,487
0
<COMMON> 50,238
<OTHER-SE> 2,746,464
<TOTAL-LIABILITY-AND-EQUITY> 7,055,858
<SALES> 1,927,350
<TOTAL-REVENUES> 1,927,350
<CGS> 1,019,413
<TOTAL-COSTS> 1,019,413
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 220,785
<INCOME-TAX> 4,416
<INCOME-CONTINUING> 216,369
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 216,369
<EPS-PRIMARY> 0.04
<EPS-DILUTED> 0.03
</TABLE>
