<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended APRIL 30, 1999
------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934
For the transition period from_________________________to_______________________
Commission File Number 0-22964
---------
SEL-DRUM INTERNATIONAL, INC.
----------------------------
(Exact name of small business issuer as specified in its charter)
NEW YORK 84-1236134
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
501 AMHERST STREET, BUFFALO, NEW YORK 14207-2913
------------------------------------------------
(Address of principal executive offices)
905-335-2766
------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(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 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 [ ]
State the number of shares outstanding for each of the issuer's classes
of common equity, as of the latest practicable date:
COMMON STOCK, $.01 PAR VALUE
7,459,167 SHARES ISSUED AND OUTSTANDING AS OF JUNE 11, 1999
Transitional Small Business Disclosure Format (check one:)
Yes [ ] No [X]
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Unaudited Consolidated Balance Sheets as of April 30, 1999
and July 31, 1998
Unaudited Consolidated Statements of Income for the three
and nine months ended April 30, 1999 and April 30, 1998
Unaudited Consolidated Statements of Cash Flow for the
nine months ended April 30, 1999 and April 30, 1998
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
- 2 -
<PAGE> 3
SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS (U.S.$)
CURRENT ASSETS April 30, 1999 July 31, 1998*
- -------------- -------------- --------------
<S> <C> <C>
Cash and cash equivalents $ 153,051 $ 285,750
Accounts receivable, net 2,406,678 1,826,182
Inventories 3,046,163 3,457,466
Deferred income taxes 34,000 34,000
Refundable income taxes 15,302 121,155
Other current assets 65,991 107,751
----------- -----------
TOTAL CURRENT ASSETS 5,721,185 5,832,304
PROPERTY
- --------
Equipment 1,513,549 1,332,078
Vehicles 38,757 38,757
Furniture and fixtures 82,502 65,314
Leasehold improvements 420,080 406,696
----------- -----------
2,054,888 1,842,845
Less accumulated
depreciation and amortization (1,223,834) (1,024,905)
----------- -----------
831,054 817,940
OTHER ASSETS
- ------------
Organization costs, net 6,225 7,006
Purchased and developed technology, net 38,248 43,258
Non-competition agreement, net 130,711 130,711
Deposits 11,667 11,593
Loans received from related parties 120,238 160,084
----------- -----------
307,089 352,652
----------- -----------
$ 6,859,328 $ 7,002,896
=========== ===========
</TABLE>
* Derived from the July 31, 1998 Form 10-KSB
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<PAGE> 4
SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED BALANCE SHEETS (CONT'D)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY (U.S.$)
CURRENT LIABILITIES April 30, 1999 July 31, 1998*
- ------------------- -------------- --------------
<S> <C> <C>
Bank overdraft $ 103,041 $ 314,104
Notes payable to bank 206,030 311,121
Current portion of long-term debt 41,993 148,263
Accounts payable 512,341 688,451
Other current liabilities 242,078 136,300
----------- -----------
TOTAL CURRENT LIABILITIES 1,105,483 1,598,239
OTHER LIABILITIES
- -----------------
Long-term debt 225,911 257,724
Deferred income taxes 103,816 49,913
----------- -----------
329,727 307,637
SHAREHOLDERS' EQUITY
- --------------------
Common Stock 76,425 76,425
Additional paid-in capital 706,846 706,846
Preferred Stock 4,499,805 4,499,805
Cumulative foreign currency translation
adjustment (228,790) (274,643)
Retained earnings 575,664 261,087
----------- -----------
5,629,950 5,269,520
Less Common stock, subject to "put rights" (122,500) (172,500)
----------- -----------
5,507,450 5,097,020
Less Common stock in treasury (83,332) --
----------- -----------
5,424,118 5,097,020
----------- -----------
$ 6,859,328 $ 7,002,896
=========== ===========
</TABLE>
*Derived from the July 31, 1998 Form 10-KSB
- 4 -
<PAGE> 5
SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(U.S.$)
QUARTER ENDED
--------------------------
APRIL 30
--------------------------
1999 1998
----------- -----------
<S> <C> <C>
Net sales $ 4,303,357 $ 3,757,049
Cost of goods sold 3,132,634 2,599,740
----------- -----------
GROSS PROFIT 1,170,723 1,157,309
Selling, operating and general and administrative
expenses 837,924 803,309
Provision for bad debts 23,024 13,715
----------- -----------
INCOME FROM OPERATIONS 309,775 340,285
Other income (expense):
Interest Income 1,884 3,748
Interest Expense (17,725) (14,300)
Foreign currency transaction gain (loss) (37,210) 8,372
----------- -----------
(53,051) (2,180)
----------- -----------
INCOME BEFORE INCOME TAXES 256,724 338,105
Income Taxes:
Current 91,145 153,180
Deferred -- --
----------- -----------
91,145 153,180
----------- -----------
NET INCOME $ 165,579 $ 184,925
=========== ===========
Number of common shares outstanding 7,459,167 7,642,500
Net income per common share $ .02 $ .02
=========== ===========
</TABLE>
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<PAGE> 6
SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
(U.S.$)
NINE MONTHS ENDED
----------------------------
APRIL 30
----------------------------
1999 1998
------------ ------------
<S> <C> <C>
Net sales $ 11,006,239 $ 10,874,126
Cost of goods sold 7,945,612 7,612,533
------------ ------------
GROSS PROFIT 3,060,627 3,261,593
Selling, operating and general and administrative expenses 2,408,754 2,365,522
Provision for bad debts 55,493 50,780
------------ ------------
INCOME FROM OPERATIONS 596,380 845,291
Other income (expense):
Interest Income 2,764 16,658
Interest Expense (45,718) (49,424)
Foreign currency transaction gain (loss) (28,536) (5,238)
------------ ------------
(71,490) (38,004)
------------ ------------
INCOME BEFORE INCOME TAXES 524,890 807,287
Income Taxes:
Current 210,313 359,945
Deferred -- --
------------ ------------
210,313 359,945
------------ ------------
NET INCOME $ 314,577 $ 447,342
============ ============
Number of common shares outstanding 7,459,167 7,642,500
Net income per common share $ .04 $ .06
============ ============
</TABLE>
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<PAGE> 7
SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
(U.S.$)
NINE MONTHS ENDED
--------------------------
APRIL 30
--------------------------
CASH FLOWS - OPERATING ACTIVITIES 1999 1998
- --------------------------------- ---- ----
<S> <C> <C>
Net Income $ 314,577 $ 447,342
Adjustments to reconcile net income to net cash provided from
(used for) operating activities:
Provision for bad debts 55,493 50,780
Depreciation and amortization 183,247 150,141
Deferred income taxes 53,903 44,064
Gain on Disposal of Property -- --
Changes in certain assets and liabilities affecting operations:
Accounts receivable (631,919) 172,673
Inventories 411,303 (447,239)
Other current assets 147,613 11,524
Deposits (74) 6,292
Accounts payable (176,110) (294,021)
Income taxes payable -- 18,279
Other current liabilities 105,778 161,989
----------- -----------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 463,811 321,824
CASH FLOWS - INVESTING ACTIVITIES
- ---------------------------------
Purchases of property (164,658) (58,763)
----------- -----------
NET CASH (USED FOR) INVESTING ACTIVITIES (164,658) (58,763)
CASH FLOWS - FINANCING ACTIVITIES
- ---------------------------------
Redemption of preferred shares -- (300,375)
Bank overdraft (211,063) --
Loans receivable - related parties 39,846 (51,975)
Short-term borrowings net (105,091) (784,000)
Repayments on long-term debt (138,083) (63,766)
Repurchase of Common Stock (83,332) --
----------- -----------
NET CASH (USED FOR) PROVIDED FROM FINANCING ACTIVITIES (497,723) (1,200,116)
Effect of exchange rate changes on cash 65,871 (82,967)
----------- -----------
NET (DECREASE) INCREASE IN CASH (132,699) (1,020,022)
Cash and Cash Equivalents at beginning of period 285,750 1,084,954
----------- -----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 153,051 $ 64,932
=========== ===========
</TABLE>
- 7 -
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
GENERAL
- -------
Sel-Drum International, Inc., a New York corporation ("Sel-Drum" or the
"Company") is a leading independent distributor of high mortality copier and
printer replacement parts and supplies. As one of the largest independent high
mortality copier parts distribution companies in North America, Sel-Drum
provides a link between parts manufacturers, sellers and buyers. Sel-Drum is
also developing strong relationships with suppliers who seek advanced inventory
management and order processing.
Sel-Drum is the successor corporation to Dakota Equities, Ltd., a
publicly-held "blind pool." On February 1, 1995, the Company acquired all of the
outstanding common shares of Sel-Drum Imaging Corporation, the parent
corporation of Sel-Drum Corporation, a privately held Canadian corporation which
was founded in 1978. Through its Sel-Drum Imaging Corporation subsidiary, the
Company has two wholly-owned subsidiaries, Sel-Drum Corporation (U.S.A.), Inc.
and Sel-Drum Corporation. On November 1, 1996, Micron Imaging Corporation and
Sel-Drum Corporation combined their operations into one entity, which continued
to do business as Sel-Drum Corporation (now the Kelowna Facility). Unless
otherwise indicated, all references to "Sel-Drum" or the "Company" include the
Company, Sel-Drum Imaging Corporation, Sel-Drum Corporation (U.S.A.), Inc. and
Sel-Drum Corporation.
It should be noted that approximately 90% of the Kelowna Facility's
remanufactured product is sold directly to the other operating divisions.
Sel-Drum Corporation (U.S.A.), Inc. and Sel-Drum Corporation employ a number of
sales agents and telemarketers who directly contact the copier machine dealers
throughout North America. There are approximately 5,000 such dealers marketing
various brands of copier products. The Company estimates that the potential
marketplace for high mortality replacement parts, drums and toner, not
controlled by the Original Equipment Manufacturers ("O.E.M's") to be
approximately $750 million in North America.
The Company's primary business is the distribution of high mortality
copier and printer replacement parts, toners, and photoreceptors ("Drums")
including, to a limited extent, the manufacturing of Drums. On August 1, 1995,
the Company added remanufactured facsimile and printer cartridges to its product
offering. The Company markets in the United States and Canada through a direct
network of sales agents and telemarketers. Outside of North America, the Company
is represented by several distributors with their sales accounting for less than
5% of the total revenues.
On March 7, 1997, the Company and certain principal shareholders
terminated discussions with JRCS Corp. regarding the sale of substantially all
of the outstanding capital stock of the Company.
On October 29, 1997, the Company announced that it had hired Raymond C.
Sparks as its new Chief Executive Officer and President, replacing Brian F.
Turnbull who has agreed to remain with the Company as Chairman of the Board.
- 8 -
<PAGE> 9
In December 1997, the Company reorganized its sales staff and began
implementing this reorganization during the month of January 1998.
On January 15, 1998, the Company repurchased 172 shares of Class C and
241 shares of Class D Preferred Stock in the Company's Sel-Drum Imaging
Corporation subsidiary held by two of the Company's principal shareholders. The
total purchase price was $300,000, of which approximately $175,000 was delivered
during the quarter ended January 31, 1998, and approximately $125,000 was
delivered during the quarter ended April 30, 1998. The Company does not
anticipate funding additional repurchases of Sel-Drum Imaging Corporation's
Preferred Stock at any time in the foreseeable future.
At the Annual Meeting of Shareholders of the Company held on December 1,
1998, three nominees were proposed for election as directors. Prior to the vote
on the election of directors, Robert E. Asseltine withdrew his name as a
nominee. Brian F. Turnbull and Robert M. Orr were elected directors of the
Company to serve until the next Annual Meeting of Shareholders and until their
successors are elected or appointed and qualify. As of the date of this report,
the vacancy created by Mr. Asseltine's withdrawal has not been filled by the
Board of Directors.
During the first four months of 1999, the Company purchased an aggregate
of 125,000 shares of the Company's Common Stock from a former consultant to the
Company at $.40 per share. The total purchase price was $50,000, of which
$33,333 was delivered during the quarter ended April 30, 1999, with the balance
of $16,667 to be delivered during the quarter ended July 31, 1999.
On June 2, 1999, the Kelowna Facility received ISO 9002 certification.
ISO 9002 is an international quality standard recognized by suppliers,
distributors and manufacturers as a benchmark for quality assurance.
- 9 -
<PAGE> 10
RESULTS OF OPERATIONS
- ---------------------
The Company's results of operations are affected by numerous factors
such as general economic conditions, competition and inventory costs. The
largest component of the Company's cost of sales is inventory cost, which may
vary slightly from period to period based upon timing of purchases and exchange
rate fluctuations which indirectly affect the Company's inventory costs.
The Company has restated its cost of goods sold to include additional
costs associated, directly or indirectly, with product costs. These newly
incorporated costs include direct and indirect costs associated with the
acquisition of inventory.
The following table sets forth for each of the periods presented,
certain income statement data for the Company expressed as a percentage of net
sales.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
April 30, April 30, April 30, April 30,
--------- --------- --------- ---------
Statement of Operations Data 1999 1998 1999 1998
- ---------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales 100.0% 100.0% 100.0% 100.0%
As a Percentage of Net Sales:
Cost of Goods Sold 72.8% 69.2% 72.2% 70.0%
Gross Profit 27.2% 30.8% 27.8% 30.0%
Selling, General and 19.5% 21.4% 21.9% 21.8%
Administrative Expenses
Provision for Bad Debt 0.5% 0.3% 0.5% 0.4%
Income from Operations 7.2% 9.1% 5.4% 7.8%
Other Income (Expense) (1.2%) (0.1%) (0.6%) (0.4%)
Income Before Taxes 6.0% 9.0% 4.8% 7.4%
Net Income 3.8% 4.9% 2.9% 4.1%
</TABLE>
Net sales for the three months ended April 30, 1999 were $4,303,357 as
compared with $3,757,049 for the three months ended April 30, 1998, an increase
of 14.5%. For the nine months ended April 30, 1999, net sales were $11,006,239,
as compared with $10,874,126 for the nine months ended April 30, 1998, an
increase of 1.2%. The increase in net sales for the three months and nine months
ended April 30, 1999 is due primarily to improved parts sales into both the
United States and Canada.
Gross profit margin for the three months ending April 30, 1999 was
27.2%, as compared to 30.8% for the same period last year. For the nine months
ended April 30, 1999, gross profit margin was 27.8% as compared to 30.0% for the
nine months ended April 30, 1998. This drop in gross margin as a percentage of
sales was due to unfavorable currency fluctuations coupled with increased
competitive pricing conditions with customers. In absolute dollars, gross profit
increased from $1,157,309 for the three months ended April 30, 1998 to
$1,170,723 for the three months ended April 30, 1999. For the nine months
- 10 -
<PAGE> 11
ended April 30, 1999, absolute gross profit dollars decreased to $3,060,627 from
$3,261,593 for the nine months ended April 30, 1998. The increase in absolute
gross profit dollars of $13,414 for the three month period resulted from a
positive sales volume variance of $148,622 and a negative gross margin variance
of $135,208. The decrease in absolute gross profit dollars of $200,966 for the
nine month period resulted primarily from a positive sales volume variance of
$36,727 and a negative gross margin variance of $237,693.
Selling, general, and administrative expenses for the three months ended
April 30, 1999 increased $34,615 or 4.3% from the prior comparable period. For
the nine months ended April 30, 1999, selling, general and administrative
expenses in absolute dollars increased by $43,232 or 1.8%. Selling, general, and
administrative expenses were 19.5% of net sales for the three month period ended
April 30, 1999 as compared to 21.4% for the same period last year. Foreign
currency adjustments for the three months ended April 30, 1999 amounted to an
expense of $37,210 against income of $8,373 for the same period last year. For
the nine month period ended April 30, 1999, selling, general, and administrative
expenses were 21.9% of net sales as compared to 21.8% for the nine month period
ended April 30, 1998. Foreign currency adjustments for the nine month period
amounted to an expense of $28,536 for April 30, 1999 compared to an expense of
$5,238 for the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's principal capital requirements are to fund its working
capital needs and material inventory requirements and to fund the improvement of
facilities, machinery and equipment. Historically the Company has used income
generated by operations as well as bank financing to fund these capital needs.
Net cash provided by operating activities primarily represents net
income plus changes in working capital positions. Net cash provided by operating
activities for the nine months ended April 30, 1999 was $463,811.
On May 5, 1999, the Company renewed a revolving demand loan arrangement
with the National Bank of Canada in the amount of $3,700,000 (CDN). These
borrowings generally assist the Company with funding of accounts receivable and
inventory purchases. As of April 30, 1999, outstanding borrowings of $127,023
(U.S.) existed under this arrangement.
Cash flow from operations coupled with cash flow generated by bank
financing has provided the Company with the cash necessary to meet its cash
requirements. For the foreseeable future, the Company does not anticipate any
significant cash outlays other than those consistent with past practices.
YEAR 2000 ISSUE
- ---------------
The Year 2000 issue stems from date coding practices in both software
and hardware. Specifically, hardware and software developers have often used
two-digit numbers rather than four-digit numbers to represent years. This was
done in a conscious effort to provide cost-effective and efficient business
solutions, given resource constraints and requirements in the past.
Consequently, when the year turns to 2000, the software may calculate the date
as 1900 because the century has not been defined.
- 11 -
<PAGE> 12
Management has initiated an enterprise-wide program to prepare the
Company's computer systems and applications for the year 2000. The Company
expects to incur internal staff costs as well as consulting and other expenses
related to infrastructure and facilities enhancements necessary to prepare the
systems for the year 2000. The Company is expending significant resources to
assure that its computer systems are reprogrammed in time to effectively deal
with transactions in the year 2000 and beyond. The Company expects to spend as
much as $250,000 in order to get the systems ready for processing in the year
2000. Much of this outlay will be for new computer equipment and a new core data
processing system, which will be capitalized and amortized over five and three
years respectively. The core system purchased by the Company is a
state-of-the-art in-house, client/server based system. In addition to being Year
2000 ready, the new processing system will result in immediate cost savings
compared with the existing system. The Company does not expect the amount
required to be expensed over the next three to five years to have a material
effect on its financial position or results of operations. Cost savings from the
new system are expected to completely offset the entire expenditure within three
years.
The Year 2000 problem creates risk for the Company from both unforeseen
problems in its own computer systems and from problems in the computer systems
of third parties with whom the Company transacts business. Failures of the
Company's and/or third parties' computer systems could have a material adverse
impact on the Company's ability to conduct business.
The Company expects its Year 2000 date conversion project to be
completed on a timely basis. However, there can be no assurance that the systems
of other companies on which the Company's systems rely also will be timely
converted or that any such failure to convert by another company would not have
an adverse effect on the Company's systems.
The Company has installed new equipment and software and anticipates
that the system will go live on September 1, 1999.
To the extent possible, the Company has also evaluated the systems of
its major business partners and suppliers of products and services. The Company
has sent out a letter to its major suppliers of products and services. The
Company has received a majority of responses from these parties and notes no
significant Year 2000 issues.
- 12 -
<PAGE> 13
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
As previously reported in the Company's Form 10-QSB for the quarter
ended January 31, 1997, the Company was served with a lawsuit by a former sales
agent. On May 18, 1999, the Company settled the claim for an immaterial dollar
amount.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) See Index to Exhibits.
(b) Reports on Form 8-K.
There were no reports on Form 8-K filed during the quarter for which
this report is filed.
- 13 -
<PAGE> 14
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SEL-DRUM INTERNATIONAL, INC.
Date June 14, 1999 /s/ Raymond C. Sparks
------------------------------------
Raymond C. Sparks, President and CEO
Date June 14, 1999 /s/ John C. Hall
--------------------------------------
John C. Hall, Vice President - Finance
- 14 -
<PAGE> 15
INDEX TO EXHIBITS
(2) PLAN OF ACQUISITION, REORGANIZATION, ARRANGEMENT, LIQUIDATION OR
SUCCESSION
Not applicable.
(3) (a) ARTICLES OF INCORPORATION
Restated Certificate of Incorporation is incorporated by
reference to Exhibit 3(a) to the Registrant's Form 10-QSB
filed for the quarterly period ended January 31, 1998.
(b) BY-LAWS
Amended and Restated By-laws are incorporated by reference
to Exhibit 3(b) to the Registrant's Form 10-QSB filed for
the quarterly period ended January 31, 1998.
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES
The documents listed under Item (3) of this Index are incorporated
herein by reference.
(10) MATERIAL CONTRACTS
Not applicable.
(11) STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
Computation can be clearly determined the Financial Statements included
herein under Item 1.
(15) LETTER ON UNAUDITED INTERIM FINANCIAL INFORMATION
Not applicable.
(18) LETTER ON CHANGE IN ACCOUNTING PRINCIPLES
Not applicable.
(19) REPORTS FURNISHED TO SECURITY HOLDERS
Not applicable.
- 15 -
<PAGE> 16
(22) PUBLISHED REPORT REGARDING MATTERS SUBMITTED TO VOTE
Not applicable.
(23) CONSENT OF EXPERTS AND COUNSEL
Not applicable.
(24) POWER OF ATTORNEY
Not applicable.
*(27) FINANCIAL DATA SCHEDULE
The Financial Data Schedule is included herein as Exhibit 27.
(99) ADDITIONAL EXHIBITS
Not applicable.
- --------------
* Exhibit filed with this Report
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's April 30, 1999 Form 10-QSB and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> APR-30-1999
<CASH> 153,051
<SECURITIES> 0
<RECEIVABLES> 2,458,101
<ALLOWANCES> 51,423
<INVENTORY> 3,046,163
<CURRENT-ASSETS> 5,721,185
<PP&E> 2,054,888
<DEPRECIATION> 1,223,834
<TOTAL-ASSETS> 6,859,328
<CURRENT-LIABILITIES> 1,105,483
<BONDS> 0
0
4,499,805
<COMMON> 76,425
<OTHER-SE> 847,888
<TOTAL-LIABILITY-AND-EQUITY> 6,859,328
<SALES> 11,006,239
<TOTAL-REVENUES> 11,006,239
<CGS> 7,945,612
<TOTAL-COSTS> 7,945,612
<OTHER-EXPENSES> 2,464,247
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 45,718
<INCOME-PRETAX> 524,890
<INCOME-TAX> 210,313
<INCOME-CONTINUING> 314,577
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 314,577
<EPS-BASIC> .02
<EPS-DILUTED> .02
</TABLE>
