<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One)
/X/ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended: September 30, 1998
___ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from __________ to __________
Commission File Number 0-23678
BIOSEPRA INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 04-3216867
(State or Other Jurisdiction of (IRS Employer Identification Number)
Organization or Incorporation)
111 LOCKE DRIVE, MARLBOROUGH, MASSACHUSETTS 01752
(Address of Principal Executive Offices) (Zip Code)
(508) 357-7500
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Common Stock, par value $.01 per share 8,439,500
- -------------------------------------- --------------------------
<S> <C>
Class Outstanding at November 4, 1998
</TABLE>
<PAGE> 2
BioSepra Inc.
INDEX
Page
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Condensed Balance Sheets as of
September 30, 1998 and December 31, 1997 3
Consolidated Condensed Statements of Operations for the
Three-months and Nine-Months Ended September 30, 1998
and 1997 4
Consolidated Condensed Statements of Cash Flows for the Nine-months
Ended September 30, 1998 and 1997 5
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II - OTHER INFORMATION 11
SIGNATURES 12
Page 2
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BioSepra Inc.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
September 30, December 31,
ASSETS
1998 1997
---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,798 $ 2,370
Restricted cash -- 146
Accounts receivable 1,371 2,376
Inventories (Note 2) 3,623 2,722
Prepaid and other current assets 92 57
-------- --------
Total current assets 7,884 7,671
Property and equipment, net (Note 3) 1,432 1,509
Goodwill, net 4,994 5,288
Other assets 513 438
-------- --------
Total assets $ 14,823 $ 14,906
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable, current portion of long-term
debt and capital lease obligations $ 2,400 $ 488
Accounts payable 610 1,307
Related party payable (Note 4) 354 325
Accrued expenses 1,693 1,534
Accrued restructuring -- 161
Deferred contract revenue 87 21
-------- --------
Total current liabilities 5,144 3,836
Long-term debt and capital lease obligations, 374 690
net of current portion
-------- --------
Total liabilities 5,518 4,526
Stockholders' equity:
Common stock 84 84
Additional paid-in capital 40,555 40,515
Unearned compensation (40) (161)
Accumulated deficit (31,219) (29,722)
Cumulative translation adjustment (75) (336)
-------- --------
Total stockholders' equity $ 9,305 $ 10,380
-------- --------
Total liabilities and stockholders' equity $ 14,823 $ 14,906
======== ========
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
Page 3
<PAGE> 4
BioSepra Inc.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three - months Nine - months
ended Sept 30, ended Sept 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Product sales $ 1,178 $ 1,523 $ 4,683 $ 6,517
License fees -- -- 88 600
Research and development 48 56 206 184
------- ------- ------- -------
Total revenue 1,226 1,579 4,977 7,301
Costs and expenses:
Cost of products sold 941 811 2,916 3,737
Selling, general and administrative 1,020 1,182 2,562 3,733
Research and development 274 361 955 1,393
Amortization expense 141 202 424 666
Restructuring costs (benefit)(Note 7) -- -- (351) --
------- ------- ------- -------
Total costs and expenses 2,376 2,556 6,506 9,529
------- ------- ------- -------
Loss from operations (1,150) (977) (1,529) (2,228)
Other income (expenses), net 64 9 33 162
------- ------- ------- -------
Net Loss $(1,086) $ (969) $(1,496) $(2,066)
======= ======= ======= =======
Basic and diluted net loss per share $ (0.13) $ (0.11) $ (0.18) $ (0.25)
Weighted average number of common
shares outstanding, Basic and Diluted 8,446 8,426 8,437 8,421
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
Page 4
<PAGE> 5
BioSepra Inc.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Nine- months
ended September 30,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,496) $(2,066)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 827 1201
Provision for doubtful accounts (209) 276
Loss on disposition of long-term assets 7 4
Changes in operating assets and liabilities:
Accounts receivable 1,094 718
Inventories (669) (439)
Prepaid and other current assets (35) (82)
Accounts payable (733) (341)
Related party payable (53) 214
Accrued expenses 105 (198)
Accrued restructuring (161) (13)
Deferred revenue 60 (509)
------- -------
Net cash used in operating activities (1,263) (1,235)
Cash flows from investing activities:
Additions to property and equipment (286) (282)
Proceeds from sales of equipment 12 --
Decrease in marketable securities -- 18
Decrease in restricted cash 146 --
Increase in other assets (94) (131)
------- -------
Net cash used in investing activities (222) (35)
------- -------
Cash flows from financing activities:
Proceeds from issuance of common stock 40 23
Borrowings under line of credit agreements 2,002 36
Long-term borrowings -- 49
Repayment of long-term borrowings (365) (358)
------- -------
Net cash provided by (used in) financing activities 1,677 (250)
------- -------
Effect of exchange rate changes on cash
and cash equivalents 236 (140)
------- -------
Net increase (decrease) in cash and cash equivalents 428 (1,660)
Cash and cash equivalents at beginning of period 2,370 4,142
------- -------
Cash and cash equivalents at end of period $ 2,798 $ 2,482
======= =======
</TABLE>
The accompanying notes are an integral part of the
consolidated condensed financial statements.
Page 5
<PAGE> 6
BioSepra Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying consolidated condensed financial statements of BioSepra
Inc. (the "Company") are unaudited and have been prepared on a basis
substantially consistent with the annual audited financial statements. The
consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All material intercompany balances and
transactions have been eliminated in consolidation.
Certain information and footnote disclosures normally included in the
Company's annual statements have been condensed or omitted. The
consolidated financial statements, in the opinion of management, reflect
all adjustments (including normal recurring accruals) necessary for a fair
statement of the results for the periods ended September 30, 1998 and
1997.
The results of operations for the nine months ended September 30, 1998 are
not necessarily indicative of the results of operations to be expected for
the fiscal year. These consolidated financial statements should be read in
conjunction with the audited financial statements included in the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1997.
2. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---------- -----------
<S> <C> <C>
Raw materials $ 858 $ 600
Work in progress 201 129
Finished goods 2,564 1,993
----- -----
$3,623 $2,722
====== ======
</TABLE>
3. Property and Equipment
Property and equipment consists of the following:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------ --------------
<S> <C> <C>
Property and equipment $ 4,366 $ 3,878
Less accumulated depreciation
and amortization (2,934) (2,405)
------- -------
1,432 1,473
Construction in progress -- 36
------- -------
$ 1,432 $ 1,509
======= =======
</TABLE>
Page 6
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4. Related party transactions
The payable to related party represents amounts due for certain services
and facilities provided by Sepracor Inc. ("Sepracor"), the Company's
majority stockholder.
In January 1996, the Company entered into a promissory note for $350,000
with Sepracor. This amount is payable to Sepracor over sixty months and
does not bear interest. The Company utilized the funds for leasehold
improvements to the Company's facilities. As of September 30, 1998,
$184,000 was outstanding under the promissory note.
5. Basic and Dilutive Net Loss Per Share
Basic net loss per common share is computed by dividing net loss by the
weighted average number of common shares outstanding during the period.
Diluted net loss per share is the same as basic net loss per share as the
effects of common stock equivalents are antidilutive for all periods
presented. Total antidilutive shares of 1,657,000 for the three months
ended September 30, 1998 have been excluded from the calculation of
weighted average number of potentially diluted common shares outstanding.
6. Statements of Cash Flows
Cash payments for interest for the nine months ended September 30, 1998
and 1997 were $139,000 and $52,000, respectively.
7. Distribution Agreement
On March 26, 1998, the Company, Sepracor, and Beckman Instruments, Inc.
("Beckman") entered into an agreement pursuant to which the Company
amended its Distribution Agreement with Beckman and Sepracor amended its
Stock Purchase Agreement with Beckman. Under the amendment, the Company
granted to Beckman a non-exclusive right to manufacture instruments, is
relieved of its obligation to manufacture the instruments for Beckman and
sold the discontinued instrument product inventory to Beckman for
$250,000. The Company recorded the sale of the inventory as a reduction to
the previously recorded restructuring charge in the first quarter.
8. Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), "Reporting Comprehensive Income", effective January 1, 1998.
SFAS 130 established standards for reporting and display of comprehensive
income and its components in the financial statements. The Company's only
item of other comprehensive income relates to foreign currency translation
adjustments, and is presented separately on the balance sheet as required.
If presented on the statement of operations for the nine months ended
September 30, 1998 and 1997, comprehensive loss would be approximately
$260,000 lower and $386,000 greater than reported net loss, respectively,
due to foreign currency translation adjustments.
9. New Accounting Pronouncements
The Financial Accounting Standards Board (FASB) issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information."
SFAS No. 131 specifies new guidelines for determining a company's
operating segments and related requirements for disclosure. This statement
will become effective for fiscal years beginning after December 15, 1997.
The Company believes that the adoption of this new accounting standard
will not have a material impact on the Company's financial statements.
Page 7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Overview
BioSepra Inc. and subsidiaries (the "Company") develops, manufactures and sells
chromatographic media and systems for use by biopharmaceutical companies in the
purification and production of biopharmaceuticals. The Company's products enable
pharmaceutical companies to reduce the time and cost required to develop and
manufacture biopharmaceuticals. The Company supplies its process chromatography
media and other proprietary products to drug manufacturers for use in the
commercial production of a wide range of biopharmaceuticals. Among these are
interferon, insulin, human growth hormone, special enzymes and vaccines.
Three and nine months ended September 30, 1998 and 1997
Revenue decreased to $1,178,000 for the three months ended September 30, 1998
from $1,523,000 for the same period in 1997. Revenue for the nine months ended
September 30, 1998 decreased to $4,977,000 compared to $7,301,000 for the same
period in 1997. The decrease in revenue is attributed to $600,000 of
non-recurring licensing revenue recognized in the second quarter of 1997, and to
the discontinuation of the instrument product line at the end of 1997.
Cost of products sold as a percentage of product sales was 79.9% for the three
months ended September 30, 1998 compared to 53.3% for the same period in 1997.
For the nine months ended September 30, 1998 and 1997 the cost of products sold
as a percentage of product sales was 62.3% and 57.3%, respectively. The increase
cost percentage is a result of the cost to implement improvements in
manufacturing processes and an adverse yield for a specific product sale in the
three months ended September 30, 1998.
Selling, general and administrative expenses decreased to $1,020,000 for the
three months ended September 30, 1998 from $1,182,000 for the three months ended
September 30, 1997. For the first nine months of 1998, selling, general and
administrative expenses decreased to $2,562,000 from $3,733,000 for the
comparable period in 1997. The decrease in expenditures is related primarily to
a reduction in overall personnel costs associated with the cost reduction
program implemented in December 1997.
Research and development expenses decreased to $274,000 for the third quarter of
1998 from $361,000 for the third quarter of 1997. For the first nine months of
1998, research and development expenses decreased to $955,000 from $1,393,000
for the comparable period in 1997. This decrease is primarily attributable to
the instrument product line discontinued at the end of 1997.
Amortization expenses decreased to $141,000 for the third quarter of 1998 from
$202,000 in the third quarter of 1997. For the first nine months of 1998,
amortization expense decreased to $424,000 from $666,000 for the comparable
period in 1997. The decrease in amortization expense is primarily attributable
to the write down, in the fourth quarter of 1997, of intangible assets to their
estimated net realizable value in accordance with SFAS No 121.
Other income, net, was $64,000 for the three months ended September 30, 1998 as
compared to other income, net of $9,000 for the comparable period in 1997. The
increase was attributable to gain on sale of an asset partially offset by higher
interest expense from borrowings under the line of credit in the beginning of
1998. Other income, net was $33,000 for the nine months ended September 30, 1998
as compared to other income, net of $162,000 for the comparable period in 1997.
This change is due to the increase in interest expense from borrowings under the
line of credit in early 1998 and foreign currency exchange gains recognized in
the previous year.
Page 8
<PAGE> 9
The Company's net loss increased to $1,086,000 for the three months ended
September 30, 1998 compared to the net loss of $969,000 for the three months
ended September 30, 1997. The increase is attributable to the reduced revenue
resulting from the discontinuation of a product line at the end of 1997 and the
increase cost of goods sold percentage described earlier. For the first nine
months of 1998, the Company's net loss decreased to $1,496,000 from $2,066,000
for the comparable period in 1997. The decrease is attributed to reduced
operating expenses offset by reduced revenue as described above.
LIQUIDITY AND CAPITAL RESOURCES
The Company has funded its operations to date primarily from net proceeds
provided from the Company's initial public offering, funds provided by Sepracor,
borrowings under a line of credit agreement, equipment financing leases and
product sales. As of September 30, 1998, the Company had $2,798,000 of cash and
cash equivalents and $2,740,000 of working capital. Cash and cash equivalents
for the quarter ended September 30, 1998 increased by $282,000 from $2,516,000
at December 31, 1997. The Company utilized cash for operations of $1,263,000
primarily to fund its operations. The Company used cash for investing activities
of $222,000 primarily due to increased patent costs and purchases of property
and equipment, partially offset by the maturity of cash held in escrow. The
Company generated cash from financing activities of $1,677,000 primarily due to
$2,000,000 additional borrowings under one of the Company's line of credit
agreements with a bank.
The Company has access to a revolving line of credit under which the Company may
borrow up to $3,000,000. Sepracor guarantees this revolving line of credit. As
of September 30, 1998, there was $2,000,000 outstanding under this agreement.
As of September 30, 1998, there was $469,000 outstanding under a French loan,
which is guaranteed by Sepracor. In addition, Sepracor guarantees certain
capital lease obligations of the Company. The outstanding balance of the capital
lease obligation guaranteed by Sepracor was $77,000 as of September 30, 1998.
Based upon the Company's current operating plan, the Company believes that its
current cash balance is sufficient to fund the Company's operations into mid
1999. The Company's cash requirements may vary materially from those now planned
because of factors such as the timing of significant product orders, commercial
acceptance of new products, patent developments, the introduction of competitive
products, acquisitions and the factors discussed below under "Future Operating
Results." Accordingly, the Company may be required to raise additional financing
within the next year, and there can be no assurance that such financing will be
available on favorable terms, if at all.
FUTURE OPERATING RESULTS
Certain of the information contained in this Quarterly Report on Form 10-Q,
including information with respect to the ability of the Company to obtain
additional financing within the next year, the success of the Company's HyperD
media and information with respect to the Company's other plans and strategy for
its business, consist of forward-looking statements. Important factors that
could cause actual results to differ materially from the forward-looking
statements are described in the Company's Annual Report on Form 10-K for the
year ended December 31, 1997. Without limiting the foregoing, the words
"believes," "anticipates," "plans," "expects," "intends," and similar
expressions are intended to identify forward-looking statements. There are a
number of factors that could cause the Company's actual results to differ
materially from those indicated by such forward-looking statements. These
factors include, without limitation, the following:
The future success of the Company will depend largely on the success of its
HyperD media product line, which was introduced in March 1993. There can be no
assurance that the Company's HyperD media product line will achieve commercial
success and any failure of such products to achieve such success would have a
materially adverse effect on the business and results of operations of the
Company.
The Company could require additional funds in 1999 if, and to the extent, it
fails to achieve its operating plan. At such time, as the Company requires
additional financing, there can be no assurance that such financing will be
available on favorable terms, if at all. In addition, the Company is considering
various strategic alternatives with respect to its business, including, but not
limited to, strategic alliances.
Page 9
<PAGE> 10
There can be no assurance that the Company will be successful in implementing
any strategic alternative in a timely fashion or at all or on terms favorable to
the Company or its stockholders.
Sales to process customers of chromatographic media products, such as HyperD
media, typically involve long lead times, and customers generally evaluate
several different media products before committing to a volume purchase. Also,
customers are typically reluctant to change media used in the production process
for a pharmaceutical previously approved by the FDA because such a change may
require additional FDA approval. There can be no assurance that the Company will
be able to compete effectively against its existing or future competitors.
In December 1997, the Company implemented a cost reduction program that involved
the discontinuation of its instrument product line and a reduction in the number
of employees. The principal purpose of the program was to enable the Company to
focus on higher margin consumable products for the research and process segments
of the biopharmaceutical and genomics markets. In connection with this program,
the Company recorded restructuring charges totaling $851,000 in the fourth
quarter of 1997. There can be no assurance that this program will not result in
loss of customers or temporary sales or production disruptions that could have a
materially adverse effect on the Company's business, financial condition and
results of operations.
Other factors that may adversely affect the Company's future operating results
include: intense competition from other companies selling or developing
bioseperation products, the loss of any significant customer, risks attendant to
the conduct of business in foreign countries, risks relating to the Company's
ability to maintain meaningful patent protection of its proprietary information
and the risk of product liability claims associated with the testing, marketing
and sale of the Company's media products.
Because of the foregoing factors, the Company believes that period-to-period
comparisons of its financial results are not necessarily meaningful and it
expects that its results of operations may continue to fluctuate from period to
period in the future.
Year 2000
The Company has completed the assessment of its requirements to become year 2000
compliant and will begin shortly to assess the readiness of its suppliers. The
Company has determined it needs to upgrade certain of its computer hardware and
software and will be proceeding with this planned purchase before the end of
1998. Costs to become fully compliant with year 2000 requirements are expected
to be less than $100,000. In the event that it encounters year 2000 problems, it
has a contingency plan in place to minimize the disruption to its ongoing
business operations.
Euro Currency
The participating member countries of the European and Monetary Union have
agreed to adopt the Euro as the Common legal currency on January 1, 1999. On
that same date, they will establish the fixed conversion rates between their
existing sovereign currencies and the Euro. Consequently, the Company and the
computer software used by the Company with respect to its European operations
will need to be Euro-enabled. The Company intends to convert all of the tax
accounting and financial software used with respect to its French subsidiary to
the Euro System and expects that it will be able to accommodate any required
Euro changes. However, there can be no assurance that the Company's software
will contain all of the necessary changes to meet the Euro requirements.
Page 10
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PART II.
OTHER INFORMATION
Items 1 - 4. None
Item 5. Other Information
Any proposal submitted pursuant to Rule 14a-8 under the Securities
Exchange Act of 1934, as amended, that a stockholder wishes to be
considered for inclusion in the Company's proxy materials for its 1999
Annual Meeting of Stockholders must be received by the Secretary of the
Company at the principal offices of the Company no later than December 24,
1998
Written notice of shareholder proposals submitted outside the
processes of Rule 14a-8 for consideration at the 1999 Annual Meeting of
Stockholders must be received by the Company on or before March 9, 1999, in
order to be considered timely for purposes of Rule 14a-4. The persons
designated in the Company's proxy statement shall be granted discretionary
authority with respect to any shareholder proposals of which the Company
does not receive timely notice.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
10.3 Lease for new facility of BioSepra, SA (translated from
French to English)
b) Reports on Form 8-K
None
Page 11
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIOSEPRA INC.
Date: November 13, 1998 /s/ Jean-Marie Vogel
-----------------------------
Jean-Marie Vogel
President, Chief Executive
Officer and Director
(Principal Executive Officer)
Date: November 13, 1998 /s/ Philip V. Holberton
-----------------------------
Philip V. Holberton
Chief Financial Officer
(Principal Financial and Accounting Officer)
Page 12
<PAGE> 1
EXHIBIT 10.3
LEASE AGREEMENT BY NATIOCREDIMURS AND CICAMUR
FOR BIOSEPRA S.A.
CB/AF
Mr. Pascal Dufour, notary, member of the company "Pascal DUFOUR, Jean-Pierre
BENOIST, and Claudin SAVARY, associates of civil professional company owning a
notarial office," the headquarters of which are at boulevard Poissonniere 15,
PARIS, 2eme [2nd] arrondissement [ward], has received the present document in
authentic form:
AT THE REQUEST OF:
1ST: The company called NATIOCREDIMURS SOCIETE EN NOM COLLECTIF, a company
with a group name, with a capital of 150,000,000 francs, having headquarters at
"Le Metropole" building, 46/52 Rue Arago, PUTEAUX (Hauts de Seine), registered
in the Registry of Commerce and Companies of NANTERRE under number B 332,199,462
(96 B 04190),
having agreed definitively in its capacity as a financial credit
institution and as a result of a decision of the committee on credit
institutions, dated at PARIS, March 20, 1985, and of a letter from the BANK
OF FRANCE, dated May 9, 1985,
REPRESENTED BY:
Mr. Bernard DEVAUX, attorney, domiciled at 46/52 rue Rago, PUTEAUX,
Acting by virtue of the delegation of powers conferred on him
under terms of minutes of the notarial office at 15, boulevard
Poissonniere, PARIS (2eme), January 21, 1998,
by Mr. Jean-Rene BRUNON, who has acted in his capacity are
president of the administrative council of the corporation called
NATIO LOCATION, with a capital of 31,000,000 francs, having its
company headquarters at "Le Metropole" building, 46/52 Rue Arago,
PUTEAUX (Hauts de Seine), and registered in the Registry of Commerce
and Companies of NANTERRE under no. B 310,188,794, appointed for these
functions starting July 1, 1992, under terms of a decision of said
administrative council dated June 23, 1992, for the duration of his
mandate as administrator or until the end of the regular general
meeting ruling the accounts for fiscal year 1997.
Page 1 of 63
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 2,798,000
<SECURITIES> 0
<RECEIVABLES> 1,371,000
<ALLOWANCES> 0
<INVENTORY> 3,623,000
<CURRENT-ASSETS> 7,884,000
<PP&E> 4,336,000
<DEPRECIATION> 2,934,000
<TOTAL-ASSETS> 14,823,000
<CURRENT-LIABILITIES> 5,144,000
<BONDS> 374,000
0
0
<COMMON> 84,000
<OTHER-SE> 9,221,000
<TOTAL-LIABILITY-AND-EQUITY> 14,823,000
<SALES> 1,178,000
<TOTAL-REVENUES> 1,226,000
<CGS> 941,000
<TOTAL-COSTS> 941,000
<OTHER-EXPENSES> 1,435,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 53,000
<INCOME-PRETAX> (1,086,000)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,086,000)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,086,000)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
