Delaware

04-2793022

(State or Other Jurisdiction
of Incorporation or Organization)

(I.R.S. Employer
Identification No.)

30 Ossipee Road, P.O. Box 9101, Newton, Massachusetts 02464

(Address of Principal Executive Offices) (Zip Code)

(617)969-5452

(Registrant’s Telephone Number, Including Area Code)

PART I.

FINANCIAL INFORMATION

ITEM 1.

Financial Statements

Condensed Consolidated Balance Sheets as of March 31, 2004 (unaudited) and December 31, 2003

Condensed Consolidated Statements of Operations (unaudited) for the three months ended March 31, 2004 and March 31, 2003

Condensed Consolidated Statements of Cash Flows(unaudited) for the three months ended March 31, 2004 and March 31, 2003

Notes to Condensed Consolidated Financial Statements

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

ITEM 4.

Disclosure Controls and Procedures

PART II.

OTHER INFORMATION

ITEM 5.

OTHER INFORMATION

ITEM 6.

Exhibits and Reports on Form 8-K

Signatures

Certifications

Exhibit Index

ASSETS

March 31,
2004
(Unaudited)

December 31,
2003

Current Assets:

Cash and cash equivalents

$

1,778,087

$

50,270

Accounts receivable, less allowance for doubtful accounts of $64,500 at March 31, 2004 and $58,500 at December 31, 2003

1,787,313

1,814,584

Inventories, net

2,297,939

1,683,703

Note receivable – NuSil

100,000

—

Note receivable – current

20,536

16,429

Prepaid expenses

126,987

207,210

Other current assets

26,329

38,749

Assets available for sale

—

1,383,118

TOTAL CURRENT ASSETS

6,137,191

5,194,063

Property and Equipment, at cost:

Furniture, fixtures and office equipment

361,422

330,022

Machinery and equipment

212,374

219,765

Leasehold improvements

59,274

50,568

633,070

600,355

Less: Accumulated depreciation and amortization

(436,067

)

(418,066

)

Net property and equipment

197,003

182,289

Note receivable – long-term

50,654

54,761

Patents, licenses and other assets (net of accumulated amortization of $304,735 at March 31, 2004 and $303,785 at December 31, 2003)

55,028

55,978

TOTAL ASSETS

$

6,439,876

$

5,487,091

LIABILITIES AND STOCKHOLDERS’ EQUITY

March 31,
2004
(Unaudited)

December 31,
2003

Current Liabilities:

Line of credit

$

18,585

$

2,425,613

Accounts payable and accrued expenses

1,034,837

1,061,897

Accrued interest- related party

743

2,639

Accrued compensation and vacation pay

102,135

111,855

Customer advances

413,110

223,501

Current portion of term note payable

250,000

58,735

Current portion of long-term debt-related party

62,500

75,000

Liabilities associated with assets available for sale

—

661,095

TOTAL CURRENT LIABILITIES

1,881,910

4,620,335

Long-term debt, net of current portion- related party

—

6,250

Term note

750,000

—

Stockholders’ Equity:

Common Stock, par value $.01 per share, 20,000,000 shares authorized; 9,704,381 and 8,288,604 shares issued; 9,443,935 and 8,028,158 shares outstanding at March 31, 2004 and December 31, 2003, respectively

97,043

80,281

Additional paid-in capital

16,368,123

13,150,862

Accumulated deficit

(11,969,499

)

(11,682,936

)

Less: Treasury Stock, at cost, 260,446 shares at March 31, 2004 and December 31, 2003, respectively

(687,701

)

(687,701

)

TOTAL STOCKHOLDERS’ EQUITY

3,807,966

860,506

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

6,439,876

$

5,487,091

Three months ended
March 31,

(Unaudited)

2004

2003

Revenues

$

2,251,452

$

2,949,677

Cost of goods sold

1,012,873

1,457,754

Gross profit

1,238,579

1,491,923

Operating expenses:

Research and development

199,129

136,060

Selling

545,624

506,025

General and administrative

532,976

414,793

Total operating expenses

1,277,729

1,056,878

(Loss) income from continuing operations

(39,150

)

435,045

Interest expense

(16,863

)

(31,563

)

Interest income

830

2,089

Net (loss) income from continuing Operations