<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-Q
------------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED FEBRUARY 28, 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 0-27046
------------------------
QUINTEL ENTERTAINMENT, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 22-3322277
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
<TABLE>
<S> <C>
ONE BLUE HILL PLAZA
PEARL RIVER, NEW YORK 10965
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
</TABLE>
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (914) 620-1212
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 [ ]
The number of shares outstanding of the Registrant's common stock is
16,679,746 (as of 4/13/98).
================================================================================
<PAGE> 2
QUINTEL ENTERTAINMENT, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
QUARTER ENDED FEBRUARY 28, 1998
ITEMS IN FORM 10-Q
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements........................................ 3
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................... 8
Item 3. Quantitative and Qualitative Disclosures about Market
Risk........................................................ N/A
PART II OTHER INFORMATION
Item 1. Legal Proceedings........................................... N/A
Item 2. Changes in Securities and Use of Proceeds................... N/A
Item 3. Defaults Upon Senior Securities............................. N/A
Item 4. Submission of Matters to a Vote of Security Holders......... N/A
Item 5. Other Information........................................... N/A
Item 6. Exhibits and Reports on Form 8-K............................ 12
SIGNATURES
</TABLE>
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
QUINTEL ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
FEBRUARY 28, NOVEMBER 30,
1998 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents................................. $ 11,449,620 $ 10,063,717
Marketable securities..................................... 26,759,690 24,730,706
Accounts receivable, trade................................ 42,792,207 46,310,960
Deferred income taxes..................................... 8,250,815 10,021,057
Due from related parties.................................. 76,660 237,485
Prepaid expenses and other current assets................. 3,369,661 4,096,452
------------ ------------
Total current assets.............................. 92,698,653 95,460,377
Property and equipment, at cost, net of accumulated
depreciation.............................................. 1,199,879 1,041,790
Intangible assets, net...................................... 19,005,523 19,496,608
------------ ------------
$112,904,055 $115,998,775
============ ============
LIABILITIES:
Current liabilities:
Accounts payable.......................................... $ 3,982,508 $ 4,653,862
Accrued expenses.......................................... 8,490,431 7,956,308
Reserve for customer chargebacks.......................... 31,970,680 38,196,114
Due to related parties.................................... 570,288 979,405
Income taxes payable......................................
------------ ------------
Total current liabilities......................... 45,013,907 51,785,689
Deferred income taxes....................................... 497,496 506,789
------------ ------------
Total liabilities................................. 45,511,403 52,292,478
------------ ------------
STOCKHOLDERS' EQUITY:
Preferred stock -- $.001 par value; 1,000,000 shares
authorized: none issued and outstanding
Common stock -- $.001 par value; authorized 50,000,000
shares; issued and outstanding 18,649,347 and 18,649,347
shares, respectively...................................... 18,649 18,649
Additional paid-in capital.................................. 39,027,700 39,027,700
Retained earnings........................................... 28,352,315 24,663,931
Unrealized (loss) gain on marketable securities............. (6,012) (3,983)
------------ ------------
Total stockholders' equity........................ 67,392,652 63,706,297
------------ ------------
$112,904,055 $115,998,775
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 4
QUINTEL ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
FEBRUARY 28, FEBRUARY 28,
1998 1997
------------ ------------
<S> <C> <C>
Net revenue................................................. $36,635,601 $44,059,812
Cost of sales............................................... 26,136,574 30,516,792
----------- -----------
Gross profit........................................... 10,499,027 13,543,020
Selling, general and administrative expenses................ 4,975,613 4,779,142
----------- -----------
5,523,414 8,763,878
Interest expense............................................ (30,447) (18,184)
Other income, net........................................... 654,339 299,461
----------- -----------
6,147,306 9,045,155
Provision for income taxes.................................. 2,458,922 3,609,758
----------- -----------
Net income............................................. $ 3,688,384 $ 5,435,397
=========== ===========
Basic earnings per share (Note 2):
Net income................................................ $ .20 $ .29
----------- -----------
Average shares outstanding............................. 18,649,347 18,459,305
=========== ===========
Diluted income per common share (Note 2):
Net income................................................ $ .20 $ .29
----------- -----------
Average shares outstanding............................. 18,712,302 18,771,071
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 5
QUINTEL ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
FEBRUARY 28, FEBRUARY 28,
1998 1997
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 3,688,384 $ 5,435,397
Items not affecting cash:
Depreciation and amortization.......................... 552,875 740,561
Reserve for customer chargebacks....................... (6,225,434) (1,333,393)
Deferred income taxes.................................. 1,760,949 708,966
Other.................................................. (5,286) (221,079)
Changes in assets and liabilities:
Accounts receivable.................................... 3,518,753 (4,725,132)
Prepaid expenses and other current assets.............. 726,791 (194,373)
Accounts payable....................................... (671,354) 1,946,919
Income tax payable..................................... (1,544,241)
Due to related parties, net............................ (248,292) (371,451)
Other, principally accrued expenses.................... 534,123 3,370,116
------------ -----------
Net cash provided by operating activities......... 3,631,509 3,812,290
------------ -----------
Cash flows from investing activities:
Purchases of securities................................... (29,000,000) (8,219,121)
Proceeds from sales of securities......................... 26,974,273 2,500,000
Other, principally capital expenditures................... (219,879) (202,230)
------------ -----------
Net cash (used in) investing activities........... (2,245,606) (5,921,351)
------------ -----------
Cash flows from financing activities:
Proceeds from exercise of stock options................... 126,395
-----------
Net cash provided by financing activities......... 126,395
------------ -----------
Net increase (decrease) in cash and cash equivalents........ 1,385,903 (1,982,666)
Cash and cash equivalents, beginning of period.............. 10,063,717 14,140,987
------------ -----------
Cash and cash equivalents, end of period.................... $ 11,449,620 $12,158,321
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 6
QUINTEL ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL:
The consolidated financial statements for the three month periods ended
February 28, 1998 and February 28, 1997 are unaudited and reflect all
adjustments (consisting only of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
position and operating results for the interim period. The consolidated
financial statements should be read in conjunction with the consolidated
financial statements and notes thereto, together with management's discussion
and analysis of financial condition and results of operations, contained in the
Company's Annual Report on Form 10-K for the fiscal year ended November 30,
1997. The results of operations for the three months ended February 28, 1998 are
not necessarily indicative of the results for the entire fiscal year ending
November 30, 1998.
2. EARNINGS PER SHARE:
In 1997, the Financial Accounting Standards Board adopted Statement No.
128, "Earnings per Share" ("SFAS No. 128"). SFAS No. 128 replaced the
calculation of primary and fully diluted earnings per share with basic and
diluted earnings per share. Earnings per share amounts for all periods have been
restated to conform to the SFAS No. 128 requirements.
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Denominator:
Denominator for basic earnings per
share -- weighted-average shares....................... 18,649,347 18,459,305
Effect of dilutive securities:
Stock options.......................................... 62,955 271,665
Warrants............................................... 40,101
---------- ----------
62,955 311,766
---------- ----------
Dilutive potential common shares:
Denominator for diluted earnings per share -- adjusted
weighted-average shares and assumed conversions...... 18,712,302 18,771,071
========== ==========
</TABLE>
Options and warrants to purchase 949,944 and 56,250 shares of common stock
were outstanding for the quarters ended February 28, 1998 and 1997,
respectively, but were not included in the computation of diluted earnings per
share because their effect would be anti-dilutive.
3. ADVERTISING EXPENSES:
The Company generally expenses advertising costs, which consist primarily
of print, media, production, telemarketing and direct mail related charges, when
the related advertising occurs. For interim purposes, certain telemarketing and
production expenses are deferred and charged to operations over their expected
period of benefit. All such amounts will be expensed prior to year end. Total
advertising expense incurred for the three months ended February 28, 1998 and
February 28, 1997 were approximately $11,722,000 and $14,132,000, respectively.
Included in prepaid expenses and other current assets is approximately $400,800
and $488,300 relating to prepaid advertising at February 28, 1998 and November
30, 1997, respectively.
4. SUBSEQUENT EVENTS:
On March 13, 1998, the Company had purchased from a director of the
Company, 1,969,601 shares of the Company's common stock for an aggregate
purchase price of $8,165,000, of which $8,000,000 was paid at closing of the
transaction and $165,000 is to be paid in 12 consecutive monthly installments of
$13,750. At the same time, the seller's employment by the Company was terminated
and she resigned from all directorships and offices she had held at the Company
or any affiliate thereof.
4
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is a discussion of the financial condition and results of
operations of the Company for the three month periods ended February 28, 1998
and February 28, 1997. It should be read in conjunction with the interim
condensed consolidated financial statements of the Company, the Notes thereto
and other financial information included elsewhere in this report.
RESULTS OF OPERATIONS
Net revenue for the three months ended February 28, 1998 was $36,635,601, a
decrease of $7,424,211, or 17%, as compared to $44,059,812, for the three months
ended February 28, 1997. The decrease was attributable to decreases in net
revenues from the Company's "900" number entertainment services of $14,083,515
and AT&T strategic corporate partnership of $448,180. The Company marketed
AT&T's long distance products under the terms of the strategic corporate
partnership. See "Strategic Corporate Partnership." Such net revenue decreases
were partially offset by increases in net revenues from the Club 900 product of
$4,261,421 and enhanced voice mail networks ("VM services") of $2,164,205.
Additionally, the Company's other product and service net revenues increased
$681,858 over the comparable prior year quarter. The other product and service
revenues were principally derived from the Company's cellular phone related
activities. For the three months ended February 28, 1998, "900" entertainment
services, the AT&T strategic corporate partnership, Club 900 product
memberships, VM services and other products approximated 50%, 14%, 12%, 19% and
4% of net revenues, respectively. For the three months ended February 28, 1997,
"900" entertainment services, the AT&T strategic corporate partnership, Club 900
product memberships, VM services and other products approximated 74%, 13%, 1%,
11% and 2% of net revenues respectively.
The provisions for chargebacks for the three months ended February 28, 1998
were $24,890,639, an increase of $9,855,491, or 66%, as compared to $15,035,148
for the three months ended February 28, 1997. The increase is primarily
attributable to increased chargeback rate experience by the Company's "900"
entertainment services in the quarter ended February 28, 1998 as compared to the
prior year comparable quarter. During the three months ended February 28, 1998,
gross revenues from "900" entertainment services were approximately $33,234,000,
with corresponding chargeback allowances of approximately $14,901,000, resulting
in an approximate chargeback rate of 45%. During the three months ended February
28, 1997, gross revenues from the "900" entertainment services were
approximately $44,543,000, with corresponding chargeback allowances of
approximately $12,127,000, resulting in an approximate chargeback rate of 27%.
Additionally, the provisions for chargebacks increased, in absolute terms, as a
result of an increase in gross revenues in the Company's 900 Club product and VM
services. The chargeback rates for the Club 900 product and VM services were 52%
and 38%, respectively, during the quarter ended February 28, 1998, as compared
to 44% and 35%, respectively, during the quarter ended February 28, 1997. The
chargeback allowance rates, as recognized in the quarter ended February 28,
1998, reflect the expected chargeback rate that will impact the Company in
future quarters. The Company's other products and services contributed an
immaterial amount to chargebacks during the quarters ended February 28, 1998 and
1997. AT&T strategic corporate partnership revenues are not encumbered by
chargebacks.
Cost of revenues for the three months ended February 28, 1998 was
$26,136,574, a decrease of $4,380,218, or 14%, as compared to $30,516,792 for
the three months ended February 28, 1997. The decrease is directly attributable
to reductions in service bureau fees related to the decrease in the level of
"900" entertainment services provided by the Company and decreases in
advertising costs expended for such services. These decreases were offset by
increases in service bureau fees and marketing costs related to the gross
revenue increases recognized in the Company's VM services and Club 900 product.
Additionally, increases in the Company's test marketing costs of the prepaid
cellular phone business, which approximated $1,513,000 during the three months
ended February 28, 1998, further offset such decreases. Cost of revenues as a
percentage of gross revenues decreased to approximately 42.5% for the quarter
ended February 28, 1998 from approximately 51.6% for the quarter ended February
28, 1997. This gross margin improvement is attributable to increased returns
from the Company's marketing expenditures relating to the current quarter volume
recognized on the "900" entertainment services and Club 900 product, offset by
the costs incurred from the test marketing of the prepaid cellular business.
Gross revenues for the quarter ended February 28,
5
<PAGE> 8
1998 were approximately $61,526,000, with marketing costs of approximately
$14,415,000, or 23.4% of such gross revenues. Gross revenues for the quarter
ended February 28, 1997 were approximately $59,095,000, with marketing costs of
approximately $16,384,000, or 27.7% of such gross revenues. Service bureau fees
for the three months ended February 28, 1998 and 1997 were approximately
$11,722,000 and $14,132,000, respectively.
Selling, general and administrative expenses (SG&A) for the three months
ended February 28, 1998 were $4,975,613, an increase of $196,471, or 4% as
compared to $4,779,142 for the three months ended February 28, 1997. The
increase is primarily attributable to increases in personnel costs of
approximately $471,000 associated with the Company's diversification into new
products and services offset by decreases in amortization expense of
approximately $218,000.
Other income for the three months ended February 28, 1998 and 1997
consisted primarily of interest income. For the quarter ended February 28, 1998,
interest income was $654,339, an increase of $354,878, or 119%, as compared to
$299,461 for the quarter ended February 28, 1997. The increase is attributable
to interest earned on the Company's marketable securities, consisting primarily
of direct U.S. government obligations and interest earned, on funds held in
reserve for future chargebacks, by the Company's primary service bureau. See
"Liquidity and Capital Resources".
The Company's effective tax rate was 40% for the three months ended
February 28, 1998 and 1997. The Company's effective tax rate is higher than the
federal statutory rate due to the addition of state income taxes and certain
deductions taken for financial reporting purposes that are not deductible for
federal income tax purposes.
LIQUIDITY AND CAPITAL RESOURCES
At February 28, 1998, the Company had working capital of $47,187,250, an
increase of $3,512,562, or 8%, as compared to $43,674,688 in working capital at
November 30, 1997. The Company continues to generate strong cash flows from
operations, as indicated by a $3,414,887 increase in marketable securities and
cash balances during the quarter ended February 28, 1998. During the prior
fiscal year ended November 30, 1997, the Company recognized substantial
increases in chargebacks experienced on its "900" entertainment service
revenues. Pursuant to such increased chargebacks, two of the Company's service
providers instituted a cash reserve policy. Under this cash reserve policy, the
service providers withhold cash flows from carrier collections in amounts that
approximated the Company's future expected chargebacks, as it related to each
service provider. As at February 28, 1998, the reserves withheld approximated
$24,700,000 and are included in the Company's accounts receivable. Historically,
the Company has financed its working capital requirements principally through
cash flow from operations and receivables financing. Although the Company is not
currently dependent on cash flow from receivables financing, credit lines for
this purpose are being maintained and the Company may avail itself of such
financing in the future. See "Forward Looking Information May Prove Inaccurate."
The Company's primary cash requirements have been to fund the cost of
advertising and promotion. On March 13, 1998, the Company purchased 1,969,601
shares of its common stock from Claudia Newman Hirsch, who simultaneously
therewith resigned as an Executive Officer and Director of the Company for
$8,165,000. The shares were purchased at a discount to market of approximately
28% and represented approximately 11% of shares outstanding. The shares will be
held as treasury stock pending final disposition or retirement. Additional funds
will be used in the purchasing of equipment and services in connection with the
commencement of several new business lines and further development of businesses
currently being test marketed. The Company currently has no other plans or
material commitments for capital expenditures or significant working capital
demands. Under currently proposed operating plans and assumptions (including the
substantial costs associated with the Company's advertising and marketing
activities), management believes that projected cash flows from operations, and
available cash resources, including available financing arrangements with
service bureaus, will be sufficient to satisfy the Company's anticipated cash
requirements for at least the next twelve months. The Company does not have any
long-term obligations and does not intend to incur any such obligations in the
future. As the Company seeks to diversify with new telecommunication products
and services, the Board of Directors, may, at its discretion, authorize the use
of existing cash reserves,
6
<PAGE> 9
long term financing, or other means to finance such diversification. See
"Forward Looking Information May Prove Inaccurate".
STRATEGIC CORPORATE PARTNERSHIPS
The Company terminated its strategic corporate partnership with AT&T during
the first quarter ended February 28, 1998. Net revenues from the strategic
corporate partnership for the three months ended February 28, 1998 and 1997 were
$5,147,432 and $5,595,612, respectively. For the quarter ending May 31, 1998,
the Company expects the final revenues from the strategic corporate partnership
to be less than $500,000. The Company terminated the partnership due to
marketing limitations imposed upon the Company by AT&T, limiting the Company's
ability to adequately contact and enlist potential new customers.
During the three months ended February 28, 1998 the Company concluded an
agreement with the long distance carrier, LCI International Telecom Corp.
("LCI"). Under this agreement the Company will provide residential long distance
customer acquisition services to LCI. The Company will use all of its direct
marketing channels to provide these customer acquisition services. The Company
earns a commission for each successful customer installation. The agreement also
calls for the Company to participate in LCI's net revenues earned from such
acquired customer's residential long distance usage. Management believes that
over the next twelve months, this new arrangement with LCI will replace a
significant portion of the revenues previously earned under the AT&T strategic
partnership. During the three months ended February 28, 1998, the Company
incurred approximately $800,000 in test marketing costs related to the LCI
agreement. See "Forward Looking Information May Prove Inaccurate."
THE YEAR 2000 PROBLEM
At the time computer programs were first being written, two digits were
used instead of four to define years on such programs. For example, the year
"1998" was written within such computer programs as "98." As a result, at the
onset of the new millennium, any programs that have time-sensitive software may
recognize a date using "00" as the year 1900 rather than the year 2000. This
could result in a major system failure or miscalculations. This potential
difficulty is commonly referred to as the "Year 2000 problem." The Company has
conducted a comprehensive review of its computer systems to identify the systems
that could be affected by the "Year 2000" problem. The Company believes that all
of its internal computer programs, software packages, systems and networks are
"Year 2000" compliant. See "Forward Looking Information May Prove Inaccurate."
Notwithstanding the foregoing, the Company is reliant on third parties,
including the providers of its various services for the operation of the
Company's day-to-day business. The Company cannot provide any assurances that
the steps being taken by such third parties, if any, will be sufficient to
eliminate any Year 2000 problem from the computer systems used by such third
parties and relied upon by the Company. The Company has corresponded with such
third parties, expressing its concerns about the impact of the Year 2000 problem
on the Company's operations. In the event modifications and conversions to the
computer systems are required by such third parties and are not completed on a
timely basis, the Year 2000 problem may have a material adverse effect on the
operations of the Company.
FORWARD LOOKING INFORMATION
MAY PROVE INACCURATE
This Quarterly Report on Form 10-Q contains certain forward-looking
statements and information relating to the Company that are based on the beliefs
of Management, as well as assumptions made by and information currently
available to the Company. When used in this document, the word "anticipate,"
"believe," "estimate," and "expect" and similar expressions, as they relate to
the Company, are intended to identify forward-looking statements. Such
statements reflect the current views of the Company with respect to future
events and are subject to certain risks, uncertainties and assumptions,
including those described in this Quarterly Report on Form 10-Q. Should one or
more of these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from those
described herein as anticipated, believed, estimated or expected. The Company
does not intend to update these forward-looking statements.
7
<PAGE> 10
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER
- -------
<C> <S>
3.1 Articles of Incorporation of the Registrant, as amended(1)
3.2 By-Laws of the Registrant(2)
27.1* Financial Data Schedule
</TABLE>
- ---------------
* Filed herewith.
(1) Filed as an Exhibit to the Registrant's Registration Statement on Form 8-A,
dated October 23, 1995, and incorporated herein by reference.
(2) Filed as an Exhibit to the Registrant's Registration Statement on Form S-1,
dated September 6, 1995 (File No. 33-96632), and incorporated herein by
reference.
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the first quarter of the fiscal
year ending November 30, 1998.
8
<PAGE> 11
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.
QUINTEL ENTERTAINMENT, INC.
By: /s/ JEFFREY L. SCHWARTZ
------------------------------------
Jeffrey L. Schwartz
Chairman and CEO
Date: April 14, 1998
By: /s/ DANIEL HARVEY
------------------------------------
Daniel Harvey
Principal Financial Officer
(Chief Financial Officer)
Date: April 14, 1998
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Quintel
Entertainment, Inc and Subsidiaries Consolidated Financial Statement as
presented in the Company's Form 10Q for the quarter ended February 28, 1998 and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1998
<PERIOD-START> DEC-01-1997
<PERIOD-END> FEB-28-1998
<CASH> $11,449,620
<SECURITIES> 26,759,690
<RECEIVABLES> 42,881,631
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 92,201,157
<PP&E> 1,477,331
<DEPRECIATION> 277,452
<TOTAL-ASSETS> 112,406,559
<CURRENT-LIABILITIES> 45,013,907
<BONDS> 0
0
0
<COMMON> 18,649
<OTHER-SE> 67,374,003
<TOTAL-LIABILITY-AND-EQUITY> 112,406,559
<SALES> 36,635,601
<TOTAL-REVENUES> 36,635,601
<CGS> 26,136,574
<TOTAL-COSTS> 26,136,574
<OTHER-EXPENSES> 4,975,615
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 30,447
<INCOME-PRETAX> 6,147,305
<INCOME-TAX> 2,458,922
<INCOME-CONTINUING> 5,523,413
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,688,383
<EPS-PRIMARY> $0.20
<EPS-DILUTED> $0.20
</TABLE>
