[X]
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
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[ ]
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934
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New
York
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14-1568099
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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Large
Accelerated Filer |_|
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Accelerated
Filer |_|
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Non
Accelerated Filer |_| (Do not check if a smaller
reporting company)
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Smaller
reporting company |X|
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Outstanding
as of
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Class
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October 5,
2009
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Common
Stock, par value $.01 per share
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14,415,214
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Part
I – Financial Information
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Page
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Item
1 – Consolidated Financial Statements:
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1
- 3
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Consolidated
Balance Sheets – August 31, 2009 (Unaudited) and February 28,
2009
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1
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Consolidated
Statements of Income – Six Months and Three Months Ended August 31, 2009
and 2008 (Unaudited)
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2
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Consolidated
Statements of Cash Flows – Six Months Ended August 31, 2009 and 2008
(Unaudited)
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3
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Notes
to Consolidated Financial Statements
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4
- 7
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Item
2 – Management's Discussion and Analysis of Financial Condition and
Results of Operations
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8
- 12
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Item
3 – Quantitative and Qualitative Disclosures about Market
Risk
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13
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Item
4 – Controls and Procedures
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13
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Part
II – Other Information
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14 - 15
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Signatures
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16
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August
31,
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||||||||
2009
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February
28,
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|||||||
Unaudited
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2009
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|||||||
ASSETS
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||||||||
Current
Assets:
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||||||||
Cash
and cash equivalents
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$ | 1,504,203 | $ | 1,472,054 | ||||
Accounts
receivable (less allowance of $18,500 at August 31 and February
28)
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698,990 | 801,290 | ||||||
Inventories
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1,674,211 | 1,663,574 | ||||||
Prepaid
expenses and other current assets
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57,323 | 98,805 | ||||||
Total
current assets
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3,934,727 | 4,035,723 | ||||||
Equipment,
furnishings and leasehold improvements (less accumulated depreciation of
$1,409,982 and $1,274,793 at August 31 and February 28,
respectively)
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497,939 | 588,109 | ||||||
Intangible
assets, net
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62,968 | 57,778 | ||||||
Other
assets
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7,171 | 7,171 | ||||||
TOTAL
ASSETS
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$ | 4,502,805 | $ | 4,688,781 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
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||||||||
Current
Liabilities:
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||||||||
Accounts
payable
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$ | 406,213 | $ | 385,825 | ||||
Accrued
expenses
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384,763 | 478,413 | ||||||
Line
of credit – Bank
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250,000 | 250,000 | ||||||
Current
maturities of long term debt
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20,143 | 23,633 | ||||||
Total
current liabilities
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1,061,119 | 1,137,871 | ||||||
Long
term debt, less current maturities
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11,190 | 19,220 | ||||||
Total
liabilities
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1,072,309 | 1,157,091 | ||||||
Commitments
and Contingencies
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- | - | ||||||
Stockholders’
Equity
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||||||||
Common
stock, $.01 par value; 25,000,000 shares authorized, 14,415,214 and
14,414,714 shares issued and outstanding at August 31 and February 28,
respectively
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144,153 | 144,148 | ||||||
Additional
paid-in capital
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8,517,753 | 8,490,071 | ||||||
Accumulated
deficit
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(5,231,410 | ) | (5,102,529 | ) | ||||
Total
stockholders’ equity
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3,430,496 | 3,531,690 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
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$ | 4,502,805 | $ | 4,688,781 |
Six
Months Ended August 31,
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Three
Months Ended August 31,
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|||||||||||||||
2009
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2008
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2009
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2008
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|||||||||||||
Net
Sales
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$ | 3,148,612 | $ | 3,226,003 | $ | 1,683,883 | $ | 1,605,482 | ||||||||
Cost
of Goods Sold
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1,584,089 | 1,678,928 | 776,743 | 847,271 | ||||||||||||
Gross
Profit
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1,564,522 | 1,547,075 | 907,141 | 758,211 | ||||||||||||
Operating
Expenses
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||||||||||||||||
Research
and product development costs
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340,550 | 419,460 | 169,519 | 213,890 | ||||||||||||
Marketing
and selling expenses
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865,824 | 843,755 | 456,528 | 429,846 | ||||||||||||
General
and administrative costs
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488,058 | 606,298 | 240,443 | 297,642 | ||||||||||||
Total
Operating Expenses
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1,694,432 | 1,869,513 | 866,490 | 941,378 | ||||||||||||
Operating
(Loss) Income
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(129,910 | ) | (322,438 | ) | 40,651 | (183,167 | ) | |||||||||
Interest
Expense
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(5,532 | ) | (1,480 | ) | (3,286 | ) | (677 | ) | ||||||||
Interest
Income
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1,243 | 10,502 | 694 | 3,717 | ||||||||||||
Other
Income
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3,775 | 5,662 | 944 | 2,831 | ||||||||||||
(Loss)
Income from Operations Before Income Taxes
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(130,424 | ) | (307,754 | ) | 39,003 | (177,296 | ) | |||||||||
Income
Tax (Benefit)
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(1,543 | ) | - | (1,543 | ) | - | ||||||||||
Net
(Loss) Income
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$ | (128,881 | ) | $ | (307,754 | ) | $ | 40,546 | $ | (177,296 | ) | |||||
Basic
Earnings Per Share
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$ | (0.01 | ) | $ | (0.02 | ) | $ | 0.00 | $ | (0.01 | ) | |||||
Diluted
Earnings Per Share
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$ | (0.01 | ) | $ | (0.02 | ) | $ | 0.00 | $ | (0.01 | ) | |||||
Weighted
Average Shares - Basic
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14,414,728 | 14,364,732 | 14,414,741 | 14,368,374 | ||||||||||||
Weighted
Average Shares - Diluted
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14,414,728 | 14,364,732 | 14,476,241 | 14,368,374 |
Six
Months Ended August 31,
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||||||||
Unaudited
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||||||||
2009
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2008
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|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
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||||||||
Net
(Loss)
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$ | (128,881 | ) | $ | (307,754 | ) | ||
Adjustments
to reconcile net (loss) to net cash provided by
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||||||||
(used
in) operating activities:
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||||||||
Depreciation
and amortization
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154,723 | 104,420 | ||||||
Stock
based compensation expense
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27,477 | 84,149 | ||||||
Gain
on sale of equipment
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53,309 | 23,384 | ||||||
Decrease
(Increase) in:
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||||||||
Accounts
receivable
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102,300 | (202,352 | ) | |||||
Inventories
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(10,637 | ) | (436,608 | ) | ||||
Prepaid
expenses and other current assets
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41,482 | (17,662 | ) | |||||
(Decrease)
Increase in:
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||||||||
Accounts
payable and accrued expenses
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(73,262 | ) | (190,944 | ) | ||||
Net
Cash Provided by (Used In) Operating Activities
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166,511 | (943,367 | ) | |||||
CASH
FLOW FROM INVESTING ACTIVITIES:
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||||||||
Patent
application costs
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(7,983 | ) | (18,073 | ) | ||||
Purchase
of equipment and furnishings
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(115,069 | ) | (84,369 | ) | ||||
Net
Cash (Used In) Investing Activities
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(123,052 | ) | (102,442 | ) | ||||
CASH
FLOW FROM FINANCING ACTIVITIES:
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||||||||
Proceeds
from exercise of stock options
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210 | 6,000 | ||||||
Repayments
of notes payable and loans
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(11,520 | ) | (14,342 | ) | ||||
Net
Cash (Used In) Financing Activities
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(11,310 | ) | (8,342 | ) | ||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
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32,149 | (1,054,151 | ) | |||||
CASH
AND CASH EQUIVALENTS
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||||||||
Beginning
of period
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1,472,054 | 2,339,550 | ||||||
End
of period
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$ | 1,504,203 | $ | 1,285,399 | ||||
SUPPLEMENTAL
DISCLOSURE:
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||||||||
Interest
paid
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$ | 4,722 | $ | 1,351 |
August 31,
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February 28,
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|||||||
2009
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2009
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Finished
goods
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$ | 949,862 | $ | 811,119 | ||||
Work
in process
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466,856 | 553,447 | ||||||
Consignment
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9,042 | 9,042 | ||||||
Raw
materials and subassemblies
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572,648 | 596,164 | ||||||
Total
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1,998,408 | 1,969,772 | ||||||
Less:
Allowance
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(324,197 | ) | (306,198 | ) | ||||
Net
inventories
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$ | 1,674,211 | $ | 1,663,574 |
2009
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2008
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Expected
life
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4
years
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4
years
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Risk
free interest rate
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1.07%
- 3.13%
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4.01%
- 4.97%
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Expected
volatility
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56%
- 137%
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47%
- 57%
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Expected
dividend yield
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0%
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0%
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August 31, 2009
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August 31, 2008
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|||||
Denominator
for basic earnings per share
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14,414,728 | 14,364,732 | ||||
Dilutive
effect of stock options
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- | - | ||||
Denominator
for diluted earnings per share
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14,414,728 | 14,364,732 |
Item
1.
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Legal
Proceedings
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None
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Item
2.
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Unregistered
Sales of Equity Securities and Use of Proceeds.
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None
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Item
3.
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Defaults
Upon Senior Securities
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None
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Item
4.
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Submission
of Matters to a Vote of Security Holders
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The
following matters were voted upon at the Company’s annual meeting of
shareholders held on August 20,
2009:
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1.
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The
election of one (1) director of the Company to serve until the Company’s
2010 annual meeting of
shareholders.
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For
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Against
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|||||
Eric
Haskell
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11,089,063
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364,715
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||||
There were no broker
non-votes.
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2.
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The
election of three (3) directors of the Company to serve until the
Company’s 2011 annual meeting of
shareholders.
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For
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Against
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|||||
Christopher
L. Coccio
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9,974,894
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1,478,884
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||||
Joseph
Riemer
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10,132,326
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1,421,452
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Philip
Strasburg
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10,125,326
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1,428,452
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There were no broker
non-votes.
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Edward
J. Handler, Donald F. Mowbray and Samuel Schwartz, who were not standing
for re-election, continued to serve as Directors following the annual
meeting.
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3.
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The
ratification of the appointment of Sherb & Co., LLP as the Company’s
independent auditors for the fiscal year ending February 28,
2010.
For 11,344,385; Against 72,893;
Abstained 36,500
There were no broker
non-votes.
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Item
5.
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Other
Information
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None
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Item
6.
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Exhibits
and Reports
|
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31.1
– 31.2 – Rule 13a - 14(a)/15d – 14(a) Certification
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32.1
– 32.2 – Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of
2002.
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By:
/s/ Christopher L. Coccio
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By:
/s/
Stephen J. Bagley
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