<PAGE> 1
UNITED STATES
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 December 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
for the transition period from to .
--------------- -----------------
Commission File Number: 0-22390
-------------------
SHARPS COMPLIANCE CORP.
(Name of Small Business Issuer in its Charter)
DELAWARE 74-2657168
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9050 KIRBY DRIVE, HOUSTON, TEXAS 77054
(Address of principal executive offices) (Zip Code)
(713) 432-0300
Registrant's telephone number
Securities Registered under 12(g) of the Exchange Act: Title of Each Class
-------------------
Common Stock, $0.01
Par Value
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Number of shares outstanding of the issuer's Capital Stock as of February 11,
2000: 7,626,444
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE> 2
SHARPS COMPLIANCE CORP.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - December 31, 1999 (Unaudited) and June 30,
1999...............................................................................3
Condensed Consolidated Statements of Operations (Unaudited) - For the three
months ended December 31, 1999 and 1998............................................4
Condensed Consolidated Statements of Operations (Unaudited) - For the six
months ended December 31, 1999 and 1998............................................5
Condensed Consolidated Statements of Cash Flows (Unaudited) - For the six
months ended December 31, 1999 and 1998............................................6
Notes to Condensed Consolidated Financial Statements (Unaudited).......................7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations..............................................................8
PART II. OTHER INFORMATION............................................................11
Item 4. Submission of Matters to a Vote of Security Holders...................................11
Item 6. Exhibits and Reports on Form 8-K......................................................11
SIGNATURE......................................................................................11
</TABLE>
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
SHARPS COMPLIANCE CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS DECEMBER 31, JUNE 30,
1999 1999
--------------- ---------------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 416,000 $ 15,000
Short-term investments -- 1,300,000
Accounts receivable, net 817,000 474,000
Inventory 341,000 132,000
Prepaids and other 46,000 83,000
--------------- ---------------
1,620,000 2,004,000
PROPERTY AND EQUIPMENT, net 182,000 189,000
INTANGIBLE ASSETS, net 71,000 81,000
NOTE RECEIVABLE FROM STOCKHOLDER 320,000 320,000
--------------- ---------------
Total assets $ 2,193,000 $ 2,594,000
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 139,000 $ 162,000
Accrued liabilities 186,000 148,000
Accrued disposal costs 1,371,000 1,073,000
Current maturities of long-term debt 8,000 23,000
--------------- ---------------
Total current liabilities 1,704,000 1,406,000
LONG-TERM DEBT, net of current maturities 12,000 15,000
--------------- ---------------
Total liabilities 1,716,000 1,421,000
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value per share; 20,000,000 shares
7,626,444 shares issued and outstanding 76,000 76,000
Preferred stock, $.01 par value per share; 1,000,000 shares
0 shares issued and outstanding -- --
Additional paid-in capital 4,371,000 4,371,000
Deferred compensation (6,000) (11,000)
Accumulated deficit (3,964,000) (3,263,000)
--------------- ---------------
Total stockholders' equity 477,000 1,173,000
--------------- ---------------
Total liabilities and stockholders' equity $ 2,193,000 $ 2,594,000
=============== ===============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
3
<PAGE> 4
SHARPS COMPLIANCE CORP. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED DECEMBER 31,
1999 1998
----------- -----------
<S> <C> <C>
REVENUES:
Sales, net $ 989,000 $ 509,000
Consulting services 40,000 --
----------- -----------
Total revenues 1,029,000 509,000
COSTS AND EXPENSES:
Cost of revenues 576,000 331,000
Selling, general and administrative 821,000 617,000
Depreciation and amortization 24,000 15,000
----------- -----------
Operating loss (392,000) (454,000)
INTEREST INCOME 13,000 39,000
----------- -----------
Net loss $ (379,000) $ (415,000)
=========== ===========
BASIC AND DILUTED NET LOSS PER SHARE $ (.05) $ (.05)
=========== ===========
WEIGHTED AVERAGE SHARES USED IN
COMPUTING DILUTED NET LOSS PER SHARE 7,626,444 7,619,379
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
4
<PAGE> 5
SHARPS COMPLIANCE CORP. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
REVENUES:
Sales, net $ 1,964,000 $ 1,088,000
Consulting services 71,000 --
------------ ------------
Total revenues 2,035,000 1,088,000
COSTS AND EXPENSES:
Cost of revenues 1,171,000 685,000
Selling, general and administrative 1,544,000 1,328,000
Depreciation and amortization 48,000 25,000
------------ ------------
Operating loss (728,000) (950,000)
INTEREST INCOME 27,000 84,000
------------ ------------
Net loss $ (701,000) $ (866,000)
============ ============
BASIC AND DILUTED NET LOSS PER SHARE $ (.09) $ (.11)
============ ============
WEIGHTED AVERAGE SHARES USED IN
COMPUTING DILUTED NET LOSS PER SHARE 7,626,444 7,604,868
============ ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
5
<PAGE> 6
SHARPS COMPLIANCE CORP. AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS
ENDED DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (701,000) $ (866,000)
Adjustments to reconcile net loss to net cash
used in operating activities-
Depreciation and amortization 43,000 25,000
Amortization of deferred compensation 5,000 --
Changes in operating assets and liabilities-
Increase in accounts receivable (343,000) (126,000)
(Increase) decrease in inventory (209,000) 15,000
Decrease in other current assets 37,000 14,000
Increase (decrease) in accounts payable and
liabilities 15,000 (154,000)
Increase in accrued disposal costs 298,000 254,000
------------- -------------
Net cash used in operating activities (855,000) (838,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (26,000) (75,000)
Sales of short-term investments 1,300,000 600,000
------------- -------------
Net cash provided by investing activities 1,274,000 525,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (18,000) (18,000)
------------- -------------
Net cash used in financing activities (18,000) (18,000)
------------- -------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 401,000 (331,000)
CASH AND CASH EQUIVALENTS, beginning of period 15,000 444,000
------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 416,000 $ 113,000
============= =============
SUPPLEMENTAL DISCLOSURE OF NON-CASH
FINANCING ACTIVITIES:
Issuance of common stock to satisfy accrued liabilities $ -- $ 85,000
============= =============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
6
<PAGE> 7
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
1. ORGANIZATION AND BACKGROUND:
ORGANIZATION
The accompanying consolidated financial statements include the accounts of
Sharps Compliance Corp. ("SCC") (formerly U.S. Medical Systems, Inc.) and its
wholly owned subsidiary, Sharps Compliance of Texas, Inc., d.b.a. Sharps
Compliance, Inc. d.b.a. Inscite ("SCI") (collectively, the "Company" or
"Sharps"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
BUSINESS
Sharps provides products for disposal of certain medical sharps products (i.e.,
needles, razors and syringes) as well as other systems to provide the home
healthcare industry with cost effective alternatives to traditional methods of
transporting medical equipment from home healthcare patients. Sharps' products
are designed primarily to facilitate small waste generators' compliance with
local, state and federal regulations for the disposal of medical waste. Sharps
also provides consulting services to other entities related to medical sharps
products.
Waste generators that use the Sharps Disposal By Mail System (the "Mail Disposal
System") are responsible for mailing the systems to a third party for
incineration. Sharps is responsible for paying the postage and burn costs
associated with the Mail Disposal Systems that are mailed directly to the
third-party incinerators by the customer. Sharps records accrued disposal costs
for estimated future postage and burn costs based on Mail Disposal Systems sold
that management estimates will eventually be returned for incineration. The
estimated returns are based on historical experience. The accrued disposal costs
are adjusted prospectively for revisions in the estimated costs. Depending upon
the experience of Sharps, such revisions could be significant.
Prior to August 1, 1999, Sharps contracted through a third party who held an
exclusive contract to incinerate medical waste at a facility in the City of
Carthage, Texas (the "facility"). Sharps was notified by the City of Carthage in
August 1999 that, effective July 31, 1999, the third party's exclusivity for
medical waste incineration at the facility had been terminated. Sharps continues
to utilize the facility and is currently negotiating directly with the City of
Carthage to allow Sharps to continue to incinerate its medical waste products at
the facility. Sharps signed a contract with an additional disposal facility on
February 9, 2000. This contract provides Sharps with an additional disposal
facility to utilize as operational needs dictate.
Sharps has sole-sourced the majority of its manufacturing, assembly and
transportation functions and its disposal function. Sharps may be affected by
its dependence on the suppliers of these functions. The risk is mitigated by the
long-standing business relationships with and reputation of Sharps' suppliers.
Although there are no assurances with regard to future business associations
after expirations of certain agreements between Sharps and its suppliers,
management believes that alternative sources would be available at similar costs
and terms.
Sharps has received limited revenues to date, has incurred cumulative losses
since its inception and has a working capital deficit at December 31, 1999. The
future success of Sharps is dependent upon many factors, including environmental
regulation, continuity of its license and disposal agreements, successful
completion of its product development activities, the identification and
penetration of markets for its products and services, and obtaining funds
necessary to complete these activities. Management cannot accurately predict
when Sharps will be required to fund the disposal costs, but management believes
it will not have to pay all of the accrued disposal costs within one year of
December 31, 1999; however, the Company does not have enough information to
classify any amounts as long-term. Based on the Company's operating results
through December 31, 1999, the Company is not achieving its fiscal year 2000
projected sales or cash flows from operations. If this trend were to continue,
the Company may require additional financing in calendar 2000 to meet its
operating cash flow needs and to enable it to continue as a going concern.
7
<PAGE> 8
2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission and, accordingly, do not include all information and
footnotes required under generally accepted accounting principles for complete
financial statements. In the opinion of management, these interim condensed
consolidated financial statements contain all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation of the
financial position of the Company as of December 31, 1999, and the results of
its operations for the three months and six months ended December 31, 1999 and
its cash flows for the six months ended December 31, 1999 and 1998. The results
of operations for the six months ended December 31, 1999 are not necessarily
indicative of the results to be expected for the entire fiscal year ending June
30, 2000. These condensed consolidated financial statements should be read in
conjunction with the Company's Annual Report on Form 10-KSB for the year ended
June 30, 1999.
3. NOTE RECEIVABLE FROM STOCKHOLDER:
In November 1997, Sharps entered into a $400,000 personal, full recourse note
receivable with a stockholder and officer of Sharps. In November 1999, the terms
of the note for the remaining balance due of $320,000 were amended. The amended
note bears interest at 8 percent with interest due annually beginning in
November 2000 and principal and accrued but unpaid interest due in November 2002
In January 2000, the stockholder paid approximately $26,000 of accrued interest.
At December 31, 1999, approximately $29,000 in accrued interest was owed under
the note.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
This quarterly report on Form 10-QSB contains certain forward-looking statements
and information relating to SCC and its subsidiary that are based on the beliefs
of the Company's management as well as assumptions made by and information
currently available to the Company's management. When used in this report, the
words "anticipate," "believe," "estimate" and "intend" and words or phrases of
similar import, as they relate to the Company or its subsidiaries or Company
management, are intended to identify forward-looking statements. Such statements
reflect the current risks, uncertainties and assumptions related to certain
factors including, without limitations, competitive factors, general economic
conditions, customer relations, relationships with vendors, governmental
regulation and supervision, seasonality, distribution networks, product
introductions and acceptance, technological change, changes in industry
practices, onetime events and other factors described herein. Based upon
changing conditions, should any one or more of these risks or uncertainties
materialize, or should any underlying assumptions prove incorrect, actual
results may vary materially from those described herein as anticipated,
believed, estimated, expected or intended. The Company does not intend to update
these forward-looking statements.
GENERAL
The Company's revenues increased $23,000 or 2% for the quarter ended December
31, 1999 over the quarter ended September 30, 1999. The increase in revenues is
attributed to the increased acceptance of the Company's Sharps Disposal by Mail
and Trip LesSystem(TM). This increase was partially offset by a significant
decrease in sales to one large distributor. The Company believes that the
ultimate use of its product by end users increased from the quarter September
30, 1999 to the quarter ended December 31, 1999; however, this was not reflected
in the Company's revenues as this distributor used previously purchased
inventory to fill a larger portion of its orders than during the previous
quarter. The Company expects that its results of operations will continue to
fluctuate between periods based upon the timing and level of sales to
distributors.
Selling, general and administrative expenses increased $98,000, or 13%, from the
quarter ended December 31, 1999 over the quarter ended September 30, 1999. The
increase is due to staffing increases as well as a $40,000 executive bonus
earned during
8
<PAGE> 9
the quarter ended December 31, 1999. The bonus was paid in January 2000.
The Company's net loss widened 18% from $322,000 for the quarter ended September
30, 1999, to $379,000 in the quarter ended December 31, 1999.
RESULTS OF OPERATIONS
The discussion below analyzes changes in the consolidated operating results and
financial condition of the Company during the three and six months ended
December 31, 1999 and 1998.
The following table sets forth, for the periods indicated, certain items from
the Company's Condensed Consolidated Financial Statements of Operations,
expressed as a percentage of revenue:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales 100% 100% 100% 100%
Costs and expenses:
Cost of revenues (56)% (650% (58)% (63)%
Selling, general and administrative (80)% (121)% (76)% (122)%
Depreciation and amortization (2)% (3)% (2)% (2)%
---------- ---------- ---------- ----------
Total operating expenses (138)% (189)% (136)% (187)%
---------- ---------- ---------- ----------
Loss from operations (38)% (89)% (36)% (87)%
Total other income (expense) 1% (8)% 1% (7)%
---------- ---------- ---------- ----------
Net loss (37)% (81)% (35)% (80)%
========== ========== ========== ==========
</TABLE>
QUARTER ENDED DECEMBER 31, 1999 COMPARED TO QUARTER ENDED DECEMBER 31, 1998
Revenues increased $520,000, or 102%, from $509,000 for the quarter ended
December 31, 1998 to $1,029,000 for the quarter ended December 31, 1999. The
increase in revenues is the result of continued market penetration and
acceptance of Sharps' logistical solutions for the home healthcare industry. The
Sharps Disposal by Mail System ("Mail Disposal System") is being accepted as a
more cost-effective means of disposing of contaminated sharps. The home
healthcare industry is also increasing its acceptance of Sharps Trip
LesSystem(TM) and the Sharps Pitch-It series of disposable IV poles as they
focus on reducing costs associated with trips to the patient's home to retrieve
used sharps containers, infusion pumps and IV poles.
Consulting revenue increased from $-0- for the quarter ended December 31, 1998
to $40,000 for the quarter ended December 31, 1999. The increase is due to the
formation of INSCITE, Sharps' consulting division, on March 1, 1999 and its
activities since inception.
The increase in cost of revenues of $245,000, or 74%, is due to the increase in
the Company's sales volume. Cost of revenues decreased as a percentage of sales
primarily due to increased coverage of fixed costs through increased sales
volume. Cost of revenues also decreased as a percentage of sales due to a
downward revision of management's estimate of the rate of return for mail
disposal units expected to be returned for incineration.
Selling, general and administrative expenses increased $204,000, or 33%, from
$617,000 to $821,000. The increase is due to additional support and sales
staffing, the expenses related to the consulting division and travel expenses
associated with Sharps' sales personnel. The increase was also due to a $40,000
executive bonus earned during the quarter ended December 31, 1999.
9
<PAGE> 10
SIX MONTHS ENDED DECEMBER 31, 1999 COMPARED TO SIX MONTHS ENDED DECEMBER 31,
1998
Revenues increased $947,000, or 87%, from $1,088,000 for the six months ended
December 31, 1998 to $2,035,000 for the six months ended December 31, 1999. The
sales increase can be attributed to increased marketing efforts, which include
additional personnel and advertising. These continuing efforts have created a
wider acceptance of the Mail Disposal System and the Trip LesSystem(TM) as cost
effective logistical solutions for Sharps' primary customer, home healthcare
facilities.
Consulting revenue increased from $-0- for the six months ended December 31,
1998 to $71,000 for the six months ended December 31, 1999. The increase is due
to the formation of INSCITE, Sharps' consulting division, on March 1, 1999 and
its activities since inception.
The increase in cost of revenues of $486,000, or 71%, is due to the increase in
the Company's sales volume. Cost of revenues decreased as a percentage of sales
primarily due to increased coverage of fixed costs through increased sales
volume. Cost of revenues also decreased as a percentage of sales due to
adjustments made to the estimated rate of return for mail disposal units
expected to be returned for incineration.
Selling, general and administrative expenses increased $216,000, or 16%, from
$1,328,000 to $1,544,000. The increase is due to additional support and sales
staffing, the expenses related to the consulting division and travel expenses
associated with Sharps' sales personnel. The increase was also due to a $40,000
executive bonus earned during the quarter ended December 31, 1999. These
increases were offset by the elimination of the expenses attributable to Sharps'
former subsidiary, U.S. Medical, Inc., of $122,000. This included the net book
value of the assets and liabilities of U.S. Medical, Inc. (approximately
$92,000) which were transferred to SCC's former chief executive officer and
president as noted in the Company's 10-KSB for the year ended June 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of December 31, 1999, Sharps had approximately $416,000 in cash. The working
capital deficit at December 31, 1999 was $84,000.
Inventory increased $209,000 during the six months ended December 31, 1999 due
to the timing of material purchases during the period.
Capital expenditures during the six months ended December 31, 1999 were
approximately $26,000 and consisted mainly of computer equipment. Although
Sharps realized a decline in its net loss for the six months ended December 31,
1999, negative operating cash flows increased, primarily due to individually
significant receivables which had not been collected as of December 31, 1999.
At December 31, 1999, total long-term debt outstanding was approximately
$12,000.
Sharps expects to continue to incur substantial costs related to sales,
marketing and administrative activities. The amount and timing of anticipated
expenditures will depend upon numerous factors both within and outside Sharps'
control, including the nature and timing of marketing and sale activities.
Moreover, Sharps' ability to generate income from operations will be dependent
upon, among other things, sufficient penetration of the home healthcare,
industrial and other markets. Based on the Company's operating results through
December 31, 1999, the Company is not achieving its fiscal year 2000 projected
sales or cash flows from operations. If this trend were to continue, the Company
may require additional financing in calendar 2000 to meet its operating cash
flow needs and to enable it to continue as a going concern. There can be no
assurance that such financing would be available on acceptable terms.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 6.
EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
The following exhibit is filed as part of this report.
Exhibit No. Description
----------- -----------
27.1 Financial Data Schedule (filed herewith)
b) Reports on Form 8-K
None.
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders held on November 16, 1999, the following
matters were adopted by the margins indicated:
1. To elect directors Lee Cooke, Parris H. Holmes, Dr. Burt Kunik and
Philip C. Zerrillo to serve until the 2000 Annual Meeting of
Stockholders.
For: 5,943,071
Against: --
Abstain: 372
2. To ratify the appointment of Arthur Andersen LLP as independent public
accountants of the Company for the fiscal year ending June 30, 2000.
For: 5,943,068
Against: --
Abstain: 218
ITEMS 1, 2, 3, AND 5 ARE NOT APPLICABLE AND HAVE BEEN OMITTED.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
REGISTRANT:
SHARPS COMPLIANCE CORP.
Dated: February 14, 2000 By: /s/ Kent D. Manby
-----------------------------------
Kent D. Manby, Vice President and
Chief Financial Officer
11
<PAGE> 12
<TABLE>
EXHIBIT INDEX
<S> <C>
EXHIBIT
NUMBER DESCRIPTION
-------- -----------
27.1 Financial Data Schedule (filed herewith)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF DECEMBER 31, 1999, AND THE STATEMENT OF OPERATIONS FOR THE PERIOD
THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 416,000
<SECURITIES> 0
<RECEIVABLES> 795,000
<ALLOWANCES> 27,000
<INVENTORY> 341,000
<CURRENT-ASSETS> 1,620,000
<PP&E> 279,000
<DEPRECIATION> 97,000
<TOTAL-ASSETS> 2,193,000
<CURRENT-LIABILITIES> 1,704,000
<BONDS> 12,000
0
0
<COMMON> 76,000
<OTHER-SE> 401,000
<TOTAL-LIABILITY-AND-EQUITY> 2,193,000
<SALES> 989,000
<TOTAL-REVENUES> 1,029,000
<CGS> 556,000
<TOTAL-COSTS> 576,000
<OTHER-EXPENSES> 845,000
<LOSS-PROVISION> 3,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 380,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 380,000
<EPS-BASIC> 0.05
<EPS-DILUTED> 0.05
</TABLE>
