<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 March 31, 2000
[ ] 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 April 18, 2000:
7,626,444
Transitional Small Business Disclosure Format (check one): Yes [ ] No [x]
<PAGE> 2
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets - March 31, 2000
(Unaudited) and June 30, 1999......................................................3
Unaudited Condensed Consolidated Statements of Operations -
For the three months ended March 31, 2000 and 1999.................................4
Unaudited Condensed Consolidated Statements of Operations -
For the nine months ended March 31, 2000 and 1999..................................5
Unaudited Condensed Consolidated Statements of Cash Flows -
For the nine months ended March 31, 2000 and 1999..................................6
Notes to Unaudited Condensed Consolidated Financial Statements ........................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................................8
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K......................................................12
SIGNATURE......................................................................................12
</TABLE>
2
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1.
FINANCIAL STATEMENTS
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS MARCH 31, JUNE 30,
2000 1999
----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 287,021 $ 15,452
Short-term investments, of which $122,000 is restricted at March 31, 2000 122,000 1,300,000
Accounts receivable, net 705,961 473,702
Inventory 244,785 132,166
Prepaids and other 32,845 83,143
----------- -----------
Total current assets 1,392,612 2,004,463
PROPERTY AND EQUIPMENT, net 166,927 189,063
INTANGIBLE ASSETS, net 65,797 80,981
NOTE RECEIVABLE FROM STOCKHOLDER 320,000 320,000
----------- -----------
Total assets $ 1,945,336 $ 2,594,507
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 248,536 $ 161,985
Accrued liabilities 170,158 148,534
Accrued disposal costs 1,398,520 1,072,782
Current maturities of long-term debt 5,922 23,089
----------- -----------
Total current liabilities 1,823,136 1,406,390
LONG-TERM DEBT, net of current maturities 10,333 14,817
----------- -----------
Total liabilities 1,833,469 1,421,207
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value per share; 1,000,000 shares authorized;
-0-shares issued and outstanding -- --
Common stock, $.01 par value per share; 20,000,000 shares authorized;
7,626,444 shares issued and outstanding 76,264 76,264
Additional paid-in capital 4,370,886 4,370,886
Deferred compensation (2,750) (11,000)
Accumulated deficit (4,332,533) (3,262,850)
----------- -----------
Total stockholders' equity 111,867 1,173,300
----------- -----------
Total liabilities and stockholders' equity $ 1,945,336 $ 2,594,507
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
3
<PAGE> 4
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED MARCH 31,
2000 1999
----------- -----------
<S> <C> <C>
REVENUE
Sales, net $ 915,582 $ 551,639
Consulting services 42,790 10,696
----------- -----------
Total revenues 958,372 562,335
COSTS AND EXPENSES:
Cost of revenues 551,824 329,392
Selling, general and administrative 758,367 786,749
Depreciation and amortization 25,540 16,945
----------- -----------
Operating loss (377,359) (570,751)
INTEREST INCOME 9,047 32,153
----------- -----------
Net loss $ (368,312) $ (538,598)
=========== ===========
BASIC AND DILUTED NET LOSS PER SHARE $ (.05) $ (.07)
=========== ===========
SHARES USED IN COMPUTING NET LOSS PER
SHARE, BASIC AND DILUTED 7,626,444 7,626,444
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
4
<PAGE> 5
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED MARCH 31,
2000 1999
----------- -----------
<S> <C> <C>
REVENUES:
Sales, net $ 2,879,495 $ 1,638,756
Consulting services 114,140 10,696
----------- -----------
Total revenues 2,993,635 1,649,452
COSTS AND EXPENSES:
Cost of revenues 1,722,442 1,013,858
Selling, general and administrative 2,301,924 2,114,388
Depreciation and amortization 74,576 41,699
----------- -----------
Operating loss (1,105,307) (1,520,493)
INTEREST INCOME 35,625 116,157
----------- -----------
Net loss $(1,069,682) $(1,404,336)
=========== ===========
BASIC AND DILUTED NET LOSS PER SHARE $ (.14) $ (.18)
=========== ===========
SHARES USED IN COMPUTING NET LOSS PER
SHARE, BASIC AND DILUTED 7,626,444 7,611,955
=========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
5
<PAGE> 6
SHARPS COMPLIANCE CORP. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED MARCH 31,
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,069,682) $(1,404,336)
Adjustments to reconcile net loss to net cash
used in operating activities-
Depreciation and amortization 66,326 41,699
Amortization of deferred compensation 8,250 --
Changes in operating assets and liabilities-
(Increase) in accounts receivable (232,259) (138,842)
(Increase) decrease in inventory (112,619) 9,590
Decrease in other current assets 50,298 12,793
Increase (decrease) in accounts payable and
accrued liabilities 108,175 (180,958)
Increase in accrued disposal costs 325,738 329,447
----------- -----------
Net cash used in operating activities (855,773) (1,330,607)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (29,007) (96,866)
Sales of short-term investments 1,300,000 1,300,000
Purchase of restricted short-term investments (122,000) --
Repayment on note receivable from stockholder -- 80,000
----------- -----------
Net cash provided by investing activities 1,148,993 1,283,134
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (21,651) (26,397)
----------- -----------
Net cash used in financing activities (21,651) (26,397)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 271,569 (73,870)
CASH AND CASH EQUIVALENTS, beginning of period 15,452 444,498
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 287,021 $ 370,628
=========== ===========
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
March 31, 2000
1. ORGANIZATION AND BACKGROUND:
ORGANIZATION
The accompanying consolidated financial statements include the accounts of
Sharps Compliance Corp. ("SCC") and its wholly owned subsidiaries, Sharps
Compliance of Texas, Inc., d.b.a. Sharps Compliance, Inc. d.b.a. Inscite
("SCI"), and Sharps eTools.com, Inc. ("eTools") (collectively, the "Company" or
"Sharps"). All significant intercompany accounts and transactions have been
eliminated in consolidation.
BUSINESS
Sharps provides products and services which create logistical efficiencies to
the healthcare, hospitality and food service industries. Sharps supplies
products for disposal of certain medical sharps (i.e., needles, razors and
syringes) to the healthcare industry which provide cost effective alternatives
to traditional methods of transporting medical equipment from home healthcare
patients. The Sharps Disposal by Mail System (the "Mail Disposal System") is
designed primarily to facilitate small waste generators' compliance with local,
state and federal regulations for the disposal of medical waste. Beginning in
fiscal 2000, Sharps provides its customers with Internet based tracing and
tracking of Mail Disposal Systems and high dollar durable medical equipment.
Sharps also provides consulting services to other entities related to waste
management issues.
Waste generators who use the Mail Disposal System are responsible for mailing
the systems to a third party for disposal. Sharps is responsible for paying the
postage and destruction costs associated with the Mail Disposal Systems that are
mailed directly to a third-party disposal facility by the customer. Sharps
records accrued disposal costs for estimated future postage and destruction
costs based on the number of Mail Disposal Systems sold. During fiscal 2000,
accrued disposal costs were reduced prospectively for revisions in the estimated
number of Mail Disposal Systems sold that management estimates will eventually
be returned for destruction. The estimated returns are based on historical
experience. Depending upon the experience of Sharps, such revisions could be
significant. 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 March 31, 2000. However, the
Company does not have enough information to classify any amounts as long-term.
Prior to August 1, 1999, Sharps contracted through a third party who held an
exclusive contract to dispose of 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 disposal 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 dispose its medical waste products at
the facility. Sharps signed a contract with an additional disposal facility in
February 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 March 31, 2000. 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. Based on the Company's operating results
through March 31, 2000, the
7
<PAGE> 8
Company is not achieving its fiscal year 2000 projected sales or cash flows from
operations. Additionally, revenues decreased approximately $71,000 from the
three months ended December 31, 1999, to the three months ended March 31, 2000.
If these trends were to continue, the Company will require additional financing
in early fiscal 2001 to meet its operating cash flow needs and to enable it to
continue as a going concern. The Company has been advised by its independent
public accountants that, if these trends were to continue and sufficient
additional financing is not secured prior to the completion of their audit of
the Company's financial statements for the year ending June 30, 2000, they
expect that they will modify their auditors' report with respect to this matter.
There can be no assurances that such financing would be available on acceptable
terms; however, management believes that it will be successful in raising such
financing, if necessary.
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 March 31, 2000, and the results of its
operations for the three months and nine months ended March 31, 2000, and its
cash flows for the nine months ended March 31, 2000 and 1999. The results of
operations for the nine months ended March 31, 2000, 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:
Sharps has a $320,000 personal, full recourse note receivable with a stockholder
and officer of Sharps. The note, as amended, 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 March 31, 2000, approximately $9,600 in accrued interest was owed under the
note.
4. RECENT ACCOUNTING PRONOUNCEMENTS:
In December 1999, the SEC issued Staff Accounting Bulletin 101. "Revenue
Recognition in Financial Statements" (SAB 101), which provides guidance related
to revenue recognition based on interpretations and practices followed by the
SEC. SAB 101 is effective the first fiscal quarter of fiscal years beginning
after December 15, 1999, and requires companies to report any changes in revenue
recognition as a cumulative change in accounting principle at the time of
implementation. Management is continuing to assess the effects, if any, of SAB
101 on Sharps' financial position or results of its operations.
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 subsidiaries 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 SCC 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.
8
<PAGE> 9
GENERAL
The Company's revenues decreased $71,000, or 7%, for the quarter ended March 31,
2000, from the prior quarter ended December 31, 1999. The Company believes that
the ultimate use of its products by end users increased from the quarter ended
December 31, 1999, to the quarter ended March 31, 2000. However, this was not
reflected in the Company's revenues as distributors 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 decreased $60,000, or 7%, for the
quarter ended March 31, 2000, from the quarter ended December 31, 1999. The
decrease is due in large part to a $40,000 executive bonus recorded during the
quarter ended December 31, 1999. The bonus was paid in January 2000.
The Company's net loss narrowed 3% from $379,000 for the quarter ended December
31, 1999, to $368,000 in the quarter ended March 31, 2000.
RESULTS OF OPERATIONS
The discussion below analyzes changes in the consolidated operating results and
financial condition of the Company during the three and nine months ended March
31, 2000 and 1999.
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 NINE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales 100% 100% 100% 100%
Costs and expenses:
Cost of revenues (58)% (59)% (58)% (61)%
Selling, general and administrative (79)% (140)% (77)% (128)%
Depreciation and amortization (2)% (3)% (2)% (3)%
---- ---- ---- ----
Total operating expenses (139)% (202)% (137)% (192)%
---- ---- ---- ----
Loss from operations (39)% (102)% (37)% (92)%
Total other income (expense) 1% 6% 1% 7%
---- ---- ---- ----
Net loss (38)% (96)% (36)% (85)%
==== ==== ==== ====
</TABLE>
QUARTER ENDED MARCH 31, 2000 COMPARED TO QUARTER ENDED MARCH 31, 1999
Revenues increased $396,000, or 70%, from $562,000 for the quarter ended March
31, 1999, to $958,000 for the quarter ended March 31, 2000. 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 $11,000 for the quarter ended March 31, 1999,
to $43,000 for the quarter ended March 31, 2000. The increase is due to the
formation of INSCITE, Sharps' consulting division, on March 1, 1999, and its
activities since inception.
9
<PAGE> 10
The increase in cost of revenues of $222,000, or 67%, 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 decreased $26,000, or 3%, from
$787,000 to $761,000. The decrease is due to a $173,000 executive stockholder
bonus paid in the quarter ended March 1999, but was offset by increased support
and sales staff salaries resulting in only a small net decrease in expenses.
NINE MONTHS ENDED MARCH 31, 2000 COMPARED TO NINE MONTHS ENDED MARCH 31, 1999
Revenues increased $1,344,000, or 81%, from $1,649,000 for the nine months ended
March 31, 1999, to $2,994,000 for the nine months ended March 31, 2000. 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 Sharps' logistical products as cost effective solutions for
the primary user of its products, home healthcare facilities.
Consulting revenue increased from $11,000 for the nine months ended March 31,
1999, to $114,000 for the nine months ended March 31, 2000. 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 $709,000, or 70%, 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 downward
revisions to the estimated rate of return for mail disposal units expected to be
returned for incineration.
Selling, general and administrative expenses increased $196,000, or 9%, from
$2,114,000 to $2,310,000. 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. 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 disclosed in the
Company's 10-KSB for the year ended June 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000, Sharps had approximately $409,000 in cash and cash
equivalents and short-term investments. The working capital deficit at March 31,
2000, was $430,000.
Inventory increased $113,000 during the nine months ended March 31, 2000, due to
the timing of material purchases during the second quarter of fiscal 2000.
During the three months ended March 31, 2000, inventory decreased $96,000. At
March 31, 2000, Sharps had short-term investments of $122,000 which were
restricted to secure letters of credit for inventory purchases scheduled in the
fourth quarter of fiscal 2000.
Capital expenditures during the nine months ended March 31, 2000, were
approximately $29,000 and consisted mainly of computer equipment. Sharps
realized an increase in operating cash flows for the nine months ended March 31,
2000, due to the decline in its net loss.
At March 31, 2000, total long-term debt outstanding was approximately $10,000.
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 sales 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
March 31, 2000, the Company is not achieving its fiscal year 2000 projected
sales or cash flows from operations. Additionally, revenues decreased
approximately $71,000 from the three months ended
10
<PAGE> 11
December 31, 1999, to the three months ended March 31, 2000. If these trends
were to continue, the Company will require additional financing in early fiscal
2001 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.
11
<PAGE> 12
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.
ITEMS 1, 2, 3, 4, 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: May 10, 2000 By: /s/ LINDA L. CLARK
---------------------------------------
Linda L. Clark, Chief Accounting Officer
Dated: May 10, 2000 By: /s/ DR. BURT KUNIK
---------------------------------------
Dr. Burt Kunik, President and Chief
Executive Officer
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 2000 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> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 409,021
<SECURITIES> 0
<RECEIVABLES> 673,246
<ALLOWANCES> 27,381
<INVENTORY> 244,785
<CURRENT-ASSETS> 1,392,612
<PP&E> 281,208
<DEPRECIATION> 114,281
<TOTAL-ASSETS> 1,945,336
<CURRENT-LIABILITIES> 1,823,136
<BONDS> 10,333
0
0
<COMMON> 76,264
<OTHER-SE> 35,603
<TOTAL-LIABILITY-AND-EQUITY> 1,945,336
<SALES> 915,582
<TOTAL-REVENUES> 958,372
<CGS> 536,790
<TOTAL-COSTS> 551,824
<OTHER-EXPENSES> 783,907
<LOSS-PROVISION> 3,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 368,312
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 368,312
<EPS-BASIC> .05
<EPS-DILUTED> .05
</TABLE>
