UNITED STATES
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 JUNE 30, 1999 or
---------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACTS OF 1934
For the transition period from ______________ to ______________
Commission file number 000-21659
---------
ENTERTAINMENT DIGITAL NETWORK, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 94-173300
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification
No.)
One Union Street, San Francisco, California 94111
- --------------------------------------------------------------------------------
Address of principal executive offices (Zip Code)
Issuer's telephone number, including area code (415) 274-8800
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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
--- ---
Number of shares outstanding of the issuer's Common Stock as of June 30, 1999:
23,186,298
Transitional Small Business Disclosure Format (Check one): Yes No X
--- ---
1
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<TABLE>
<CAPTION>
Part I. FINANCIAL INFORMATION
Entertainment Digital Network, Inc.
CONSOLIDATED BALANCE SHEETS
As of June 30, 1999 and September 30, 1998
ASSETS 06/30/99 09/30/98
(Unaudited) (Audited)
------------ ------------
CURRENT ASSETS
<S> <C> <C>
Cash $ 380,009 $ 88,470
Accounts receivable, net of allowance
for doubtful accounts of $8,308 and $8,500 at
June 30, 1999 and September 30, 1998, respectively 640,962 574,800
Accounts receivable, escrow 100,000 -
Accounts and interest receivable - related party 14,474 33,008
Inventories 492,058 122,986
Prepaid expenses 10,640 4,601
Other current assets 7,949 826
------------ ------------
TOTAL CURRENT ASSETS $ 1,646,092 $ 824,691
------------ ------------
PROPERTY AND EQUIPMENT, NET 312,714 380,416
------------ ------------
OTHER ASSETS 2,833 6,455
------------ ------------
TOTAL ASSETS $ 1,961,639 $ 1,211,562
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 559,087 $ 543,104
Deferred revenue 12,876 33,421
Line of credit 50,000 8,214
Notes payable - related party 290,500 240,500
Current portion of capital lease obligations 14,840 17,147
------------ ------------
TOTAL CURRENT LIABILITIES 927,303 842,386
------------ ------------
Capital lease obligations 5,476 15,058
------------ ------------
TOTAL LIABILITIES 932,779 857,444
------------ ------------
STOCKHOLDERS' EQUITY
Common stock; par value $0.001 per share
Authorized 50,000,000 shares; 23,186,298 and 16,761,836
issued and outstanding at June 30, 1999 and
September 30, 1998, respectively 22,506 16,761
Capital paid in excess of par value of common stock 7,405,659 6,755,443
Subscription receivable (244,973) -
Secured note receivable (283,746) (283,746)
Accumulated deficit (5,870,586) (6,134,340)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 1,028,860 354,118
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,961,639 $ 1,211,562
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
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<TABLE>
<CAPTION>
Entertainment Digital Network, Inc.
CONSOLIDATED STATEMENTS OF INCOME
For the Three and Nine Months ended June 30, 1999 & 1998
Nine Months Three Months
Ended June 30 Ended June 30
(Unaudited) (Unaudited)
---------------------- ---------------------
1999 1998 1999 1998
---------- ---------- --------- ----------
Revenue:
<S> <C> <C> <C> <C>
Usage fees 1,128,458 957,559 373,219 368,948
Equipment sales 846,311 737,065 313,193 190,313
Installation and monthly fees 481,731 458,006 169,737 149,158
Web design and consulting 248,205 855,872 - 300,975
Webcasting 129,760 - 104,075 -
Rental fees 65,722 75,954 30,157 15,139
Other 7,490 16,514 - 7,876
---------- ---------- --------- ----------
2,907,677 3,100,970 990,381 1,032,409
Cost of sales 2,022,979 2,049,393 679,837 682,867
---------- ---------- --------- ----------
Gross Profit 884,698 1,051,577 310,544 349,542
Sales and marketing expenses 362,375 494,347 145,040 195,289
General and administrative expenses 917,599 768,237 304,041 311,394
---------- ---------- --------- ----------
1,279,974 1,262,584 449,081 506,683
Loss from operations before other income(expenses)
and provision for income taxes and extraordinary item (395,276) (211,007) (138,537) (157,141)
---------- ---------- --------- ----------
Other income:
Gain on sale of subsidiary 663,530 - - -
Gain on sale of investment - 422,225 - -
Forgiveness of debt - 200,000 - 100,000
Interest income(expense) 10,304 (55,082) 2,873 (21,621)
Other income(expense) (7,305) 3,160 (2,960) (25,693)
---------- ---------- --------- ----------
Total other income(expense), net 666,529 570,303 (87) 52,686
---------- ---------- --------- ----------
Income(loss) before provision for income taxes and
extraordinary item 271,253 359,296 (138,624) (104,455)
Income taxes 7,434 2,400 3,434 -
---------- ---------- --------- ----------
Income(loss) before extraordinary item 263,819 356,896 (142,058) (104,455)
---------- ---------- --------- ----------
Extraordinary item-gain on restructuring of debt (no
applicable income taxes) - 710,488 - 710,488
---------- ---------- --------- ----------
Net income(loss) 263,819 1,067,384 (142,058) 606,033
---------- ---------- --------- ----------
Basic income (loss) per share:
Income (loss) before extraordinary item 0.01 0.04 (0.01) (0.01)
Net income (loss) 0.01 0.13 (0.01) 0.06
Diluted income (loss) per share:
Income (loss) before extraordinary item 0.01 0.03 (0.01) (0.01)
Net income (loss) 0.01 0.08 (0.01) 0.04
========== ========== ========= ==========
</TABLE>
3
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<TABLE>
<CAPTION>
Entertainment Digital Network, Inc.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the Nine Months ended June 30, 1999 and 1998
06/30/99 06/30/98
(Unaudited) (Unaudited)
------------ ------------
Cash flows from operating activities:
<S> <C> <C>
Net income 263,819 1,067,384
Adjustments to reconcile net income to
cash used in operating activities:
Depreciation and amortization 96,179 146,796
Sale of property and equipment - (3,160)
Decrease(increase)provision in doubtful accounts 12,556 (3,389)
Noncash compensation expenses - 21,244
Gain from sale of assets - IBS (663,530) (422,225)
Gain on write-off of note payable - (200,000)
(Increase)decrease in accounts receivable (226,321) 6,497
Decrease in accounts receivable-related party 18,534 -
Increase in accounts receivable-escrow (100,000)
(Increase)decrease in inventory (369,072) 76,302
Inventory write-off - 49,061
Noncash debt restructure - (773,026)
Increase in prepaid expenses (63,897) (58,823)
(Increase)decrease in other current assets (7,123) 17,869
Decrease(increase) in other assets 3,622 (6,474)
Decrease in accounts payable
and accrued expenses (79,019) (853,811)
Decrease in deferred revenue (34,666) (75,159)
------------ ------------
Net cash used by operating activities (1,148,918) (1,010,914)
------------ ------------
Cash flows from investing activities:
Purchase of property and equipment (150,428) (26,181)
Proceeds from sale of assets 1,000,000 588,892
------------ ------------
Net cash provided by investing activities 849,572 562,711
------------ ------------
Cash flows from financing activities:
Proceeds from borrowings 550,000 (131,755)
Repayment on borrowings (308,214) (83,762)
Change in line of credit - (25,755)
Repayment on settlement of claim in equity (50,000) -
Repayments on capital leases (11,889) (17,914)
Proceeds from exercise of options/warrants 410,988 739,124
------------ ------------
Net cash provided by financing activities 590,885 479,938
------------ ------------
Net increase in cash 291,539 31,735
============ ============
Cash at beginning of period 88,470 1,176
------------ ------------
Cash at end of period $ 380,009 $ 32,911
============ ============
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
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ENTERTAINMENT DIGITAL NETWORK, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
-----------------------
The interim, condensed, consolidated financial statements of Entertainment
Digital Network, Inc. (the "Company") included herein have been prepared in
conformity with generally accepted accounting principles. The principles
applied are consistent in all material respects with those used in the Company's
Transition Report on Form 10-QSB for the transition period July 1, 1998 to
September 30, 1998. The interim financial statements are unaudited but reflect
all normal adjustments which are, in the opinion of management, necessary to
provide fair, condensed, consolidated balance sheets, statements of income and
cash flows for the interim periods presented. The interim financial statements
should be read in conjunction with the financial statements in the Company's
Transition Report on Form 10-QSB for the transition period July 1, 1998 to
September 30, 1998.
2. Consolidation
-------------
The consolidated financial statements include the accounts of the Company
and its wholly owned subsidiary: Entertainment Digital Network (EDN). Material
inter-company transactions and balances have been eliminated. The Company is
51% owned by Visual Data Corporation ("VDC").
3. Earnings per Share
--------------------
Basic earnings (loss) per share are computed using the weighted-average
number of shares of Common Stock outstanding during the periods. Diluted
earnings per share are computed using the weighted-average number of common
shares and common share equivalents outstanding during the periods. The
computation of net income (loss) per share was as follows:
<TABLE>
<CAPTION>
Income Shares Per Share
Numerator Denominator Amount
------------ ----------- ------
<S> <C> <C> <C>
Nine months ended June 30, 1999:
Basic
- -----
Income before extraordinary item $ 263,819 18,124,577 $.01
Extraordinary item - -
------------ ----------- ----
Net income $ 263,819 18,124,577 $.01
============ =========== ====
Income Shares Per Share
Numerator Denominator Amount
------------ ----------- ------
Diluted
- -------
Income before extraordinary item $ 263,819 18,124,577 $.01
Effect of dilutive stock options and warrants - 4,862,795 -
Extraordinary item - -
------------ ----------- ----
Net income $ 263,819 22,987,372 $.01
============ =========== ====
5
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Income Shares Per Share
Numerator Denominator Amount
------------ ----------- ------
Nine months ended June 30, 1998:
Basic
- -----
Income before extraordinary item $ 356,896 8,511,970 $.04
Extraordinary item 710,488 $.08
------------ ----------- ----
Net Income $ 1,067,384 8,511,970 $.13
============ =========== ====
Income Shares Per Share
Numerator Denominator Amount
------------ ----------- ----
Diluted
- -------
Income before extraordinary item $ 356,896 8,511,970 $.04
Effect of dilutive stock options and warrants - 4,237,775 -
------------ ----------- ----
Subtotal 12,749,745
Extraordinary item 710,488 $.06
------------ ----------- ----
Net income $ 1,067,384 12,749,745 $.08
============ =========== ====
</TABLE>
At June 30, 1999, options and warrants for the purchase of 2,731,286 common
shares at prices ranging from $1.25 to $2.50 per share were not included in the
computation of diluted earnings per share as the exercise price was greater than
the average market price of common shares.
4. Secured Note Receivable - Related Party
--------------------------------------------
A note receivable with face value of $283,746, due from VDC is part of the
payment resulting from VDC's purchase of 8,563,417 shares of the Company's
Common Stock. VDC has 51% ownership of the Company. The acquired Common Stock
and a second mortgage secure the note. Principal payment of $56,749 plus
interest is due annually commencing July 1, 1999 until July 1, 2003; the note
bears a fixed interest rate of 7% per annum.
As of June 30, 1999, the Company recognized interest revenue of $20,461 on the
VDC note receivable.
5. Sale of Subsidiary
--------------------
On December 11, 1998, the Company completed the sale of substantially all of the
assets of the Company's wholly-owned subsidiary Internet Business Solutions,
Inc. ("IBS"), a California corporation, to Enterprise Communications Consulting,
Inc., a Washington Corporation ("Buyer"), a wholly-owned subsidiary of
Attachmate Corporation of Bellevue, Washington. The transaction was completed
for a total of $1,000,000, of which $100,000 was deposited into an escrow
account. The balance is to be released in full to the Company in increments
upon the termination of the statute of limitations governing certain potential
claims against IBS or the Buyer connected with the disposition of IBS's assets,
or upon the earlier agreement of the Buyer. Pursuant to the sales agreement,
$50,000 is to be disbursed in June 1999 and the remaining balance of $50,000 to
be paid in December 1999. The company received the first payment of $50,000 on
July 8, 1999.
6
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6. Subscription Receivable
------------------------
A subscription receivable in the amount of $244,973 was due from VDC for
exercising 2,449,730 warrants of the Company's stock. The funds were received
on July 8, 1999.
7. Notes Payable
--------------
On May 17, 1999, a Promissory Note ("Note") in the amount of $250,000 was
executed between the Company and Eric Jacobs, a member of the Company's and
VDC's Board of Directors. These funds are used for purchasing inventory.
Notes payable-related party consist of the following:
<TABLE>
<CAPTION>
June 30, Sept 30,
1999 1998
---------- ---------
<S> <C> <C>
Note payable to Eric Jacobs, a director of VDC and the
Company, with principal of $250,000 at 12% interest. The
principal balance and accrued interest is due on August 17,
1999. Accrued interest payable as of June 30, 1999 is
$1,068.49. $ 250,000 $
-
Note payable to Eric Jacobs with original
principal of $200,000 at 12% interest was paid in full with
accrued interest on December 30, 1998. _
200,000
Notes payable to officers, interest at 6% per annum, unsecured.
Accrued interest payable as of June 30, 1999 is $1,215. The
notes are subordinated to the $250,000 credit line discussed
below. 40,500 40,500
---------- --------
Total notes payable-related party $ 290,500 $240,500
========== ========
</TABLE>
ENTERTAINMENT DIGITAL NETWORK, INC
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
For the three months ended June 30, 1999, our revenues were $990,381
representing a decrease of 4% compared to revenues of $1,032,409 in the
comparable period last year. Revenues for the nine months ended June 30, 1999
decreased 6% to $2,907,677 compared to revenues of $3,100,970 in the comparable
period last year. The decrease in gross revenues was primarily due to the sale
of our wholly owned subsidiary IBS, which took place in December 1998 as part of
our overall strategy to concentrate on audio/video digital transmission and
webcasting. Our former subsidiary IBS contributed an equivalent of $613,000 to
the total revenue for the nine months ended June 30, 1998. Despite a loss of
revenue from IBS, the net decrease in revenues was only $193,293 due to an
increase in the core revenue of the company of $419,703. This increase can be
attributed to an increase in equipment sales of $109,246, usage of $170,900, and
webcasting of $129,760.
7
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Gross Profit decreased to $310,544 or 31% of sales, in the three months ended
June 30, 1999 compared to $349,542, or 34% of sales, in the comparable period
last year. For the nine months ended June 30, 1999 gross profit decreased to
$884,698 or 30% of sales, from $1,051,577, or 34% of sales in the comparable
period last year. The year to date decrease in gross profit is primarily
because of the sale of the IBS assets, which had contributed $471,849 to the
gross profit year-to-date in the prior year as compared to $124,159 in the
current year. This reduction is offset by the increase in core revenues in the
current year as discussed above.
The decrease in gross profit percentage is primarily due to the change in sales
mix. The two largest sales components contributing to this change are equipment
sales and web design and consulting which operate at a 24% and a 52% gross
profit percentage, respectively. Total equipment sales increased by 65% for the
3 months ended June 30, 1999 as compared to the corresponding quarter in the
prior year and increased 15% for the nine months ended June 30, 1999 as
compared to the corresponding period in the prior year. The loss of IBS's
web design and consulting services, which had contributed 29% of the revenues
for the quarter ended June 30, 1998, also resulted in a decreased
contribution of 9% for the nine months ended June 30, 1999 as compared to
28% when compared to the corresponding period in the prior year.
Operating expenses (including Sales & Marketing, and General & Administrative)
decreased to $449,081 in the three months ended June 30, 1999 compared to
$506,683 in the comparable period last year. Operating expenses for the quarter
have increased compared to the same period last year due to our continued
development of corporate infrastructure. Infrastructure development includes
but is not limited to increases in internal and external staffing and support.
These costs are primarily the result of bringing new product lines, webcast and
ClipMail Pro, to market. For the nine months ended June 30, 1999 operating
expenses increased to $1,279,974 from $1,262,584 in the comparable period last
year. The company has also experienced increased professional fees from
accounting, legal and consulting services. There were significant expenditures
for the current nine months ended such as: costs associated with the IBS sale,
change in fiscal year, re-incorporation, S-3 Registration, the first
shareholders' meeting and accounting quarterly reviews.
The decrease in other income from a gain of $52,686 to an expense of $87 for the
quarter ended June 30, 1999 compared to the corresponding period last year was
primarily attributable to the write-off of a note payable for $100,000, interest
expense of $21,621 and other expense of $25,693. For the nine-month periods
ended June 30, 1999, and June 30, 1998, other income increased to $666,529 from
$570,303. The current year to date other income was attributable to the IBS
sale. The prior year to date other income was due to the restructuring of
accounts payable and the gain from the sale of our investment in Breakthrough
Software.
The decrease in interest expense and increase in interest income is due to the
restructuring of senior notes on June 30, 1998 and interest income accrued of
$16,287 on both the notes receivable from VDC and the $100,000 in escrow due
from the sale of IBS. This resulted in lowering interest expense from $21,621 to
interest income of $2,873 for the three months ended June 30, 1999 and
decreasing interest expense from $55,082 to interest income of $10,304 for the
nine months ended June 30, 1999 versus the comparable periods in the prior year.
8
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For the three months ended June 30, 1999, we incurred a net loss of $142,058 or
$(.01) basic earnings per share based on a weighted-average of 20,200,059 shares
outstanding, which is in line with our forecast. This compares with a net
income of $606,033, or $.06 basic earnings per share based on a weighted-average
of 9,625,655 shares outstanding in the prior year for the comparable period.
Net income for the nine months ended June 30, 1999 of $263,819, or $.01 basic
earnings per share based on a weighted-average of 18,124,577 shares outstanding,
compares with a net income of $1,067,384, or $.13 basic earnings per share,
based on a weighted-average of 8,511,970 shares in the prior year.
Our webcasting service has grown from sales in the second quarter of $25,685 to
$104,075, a growth of 300%. The strategic partnership that EDN has with PR
Newswire to do their webcasting has been satisfying to their clients and we look
forward to major growth in this area. We are presently in the process of
expanding our services to other organizations.
We have received our first production units of ClipMail Pro in April and May and
have deployed them as demo units in various advertising, production companies,
corporate A/V departments and broadcasting facilities. One of the major
accomplishments was sending dailies of a syndicated cable series, entitled
"Beastmaster: The Legend Continues". This series is being shot in Brisbane,
Australia and the dailies are being sent via ClipMail over the Internet to
other ClipMail units in Toronto, Canada and Hollywood, California. This is
the first time that large files (two hours of dailies) are being sent over
the Internet on a daily basis.
We executed "Private Branding" agreements for wideband, high-speed ISP services
with both Concentric and UUNET during the past quarter. We have been designated
by the developers and manufacturers of the ClipMail Pro as the preferred
national Internet connectivity provider of their product. In the month of July,
we have ordered a number of wide band Internet connections for potential
of the ClipMail customers.
FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES
At June 30, 1999, we had an accumulated deficit of $5,870,586 and a positive net
working capital of $718,789. This compares to a June 30, 1998 accumulated
deficit of $6,191,090 and a negative net working capital of $96,354. Our
working capital improved from a negative $17,695 at September 30, 1998 to a
positive $718,789 at June 30, 1999. This recent improvement was in part due
to the IBS sale and also to the exercise of warrants and options.
We believe we have sufficient working capital to fund our current plan of
operation. We anticipate increasing revenues from the introduction of new
services including: sales of the Telestream "ClipMail Pro" high quality video
delivery system; video networking services based on high speed bandwidth
connections via DSL and frame relay T1 to the ClipMail Pro systems; and
webcasting services. We have available a $250,000 Line of Credit with Union Bank
of California and several leasing facilities.
9
<PAGE>
READINESS FOR YEAR 2000
We are aware of the issues associated with the programming code in existing
computer systems as the year 2000 approaches. The year 2000 issue relates to
whether computer systems will properly recognize and process information
relating to dates in and after the year 2000. These systems could fail or
produce erroneous results if they cannot adequately process dates beyond the
year 1999 and are not corrected. Many people in the software industry are
uncertain about the potential consequences that may result from the failure of
software to adequately address the year 2000 issue.
We have reviewed the software and hardware we use internally in our support
systems to determine whether they are year 2000 compliant. We are confident that
we have already taken or soon will be able to complete the work required to make
our systems, products and infrastructure year 2000 ready. Most of our software
has already been upgraded by the manufacturer or was recently purchased and is
year 2000 compliant. There are no technological issues in the hardware or
software that we sell or rent to our clients that will be affected by year 2000
issues.
We do not believe that the aggregate cost for the year 2000 issue will be
material, but we cannot predict the effect of the year 2000 issue on many of the
entities with which we transact business. We are evaluating the year 2000
readiness of our consultants, vendors and suppliers. Where we determine that
critical suppliers are not year 2000 ready, we will monitor their progress and
take appropriate actions. In particular, the telephone companies that supply us
with services must be year 2000 ready in order to avoid major billing errors.
Though we may experience some temporary delay in our ability to accurately
rebill customers, we do not foresee any permanent liability, should some error
occur on the part of these suppliers.
DISCLOSURE PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
When used in this Management's Discussion and Analysis, the words "anticipate,"
"estimate," "expect," and similar expressions are intended to identify
forward-looking statements. These statements are subject to certain risks and
uncertainties, including, but not limited to, the following: risks associated
with fundraising and our ability to secure resources necessary to fully develop
business products; risks associated with mergers and acquisitions, the nature of
any transaction consummated, and the ability to successfully operate a merged
entity; business conditions in the t elecommunications, entertainment,
advertising and Internet-related industries, and the general economy;
competitive factors such as rival networking technology, competing products, and
competitive pricing; risks associated with development, introduction, and
acceptance of new products; our ability to manage rapid growth and attract and
retain key employees; and other risk factors. Actual results may differ
materially from management expectations as discussed here.
10
<PAGE>
PART II OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) (27) Financial Data Schedule, filed electronically
11
<PAGE>
SIGNATURE
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.
Entertainment Digital Network, Inc.
August 16, 1999 By: __________________
- ------------------ Tom Kobayashi
Chairman and CEO
By: __________________
David Gustafson
President
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1999
<CASH> 380009
<SECURITIES> 0
<RECEIVABLES> 649270
<ALLOWANCES> (8308)
<INVENTORY> 492058
<CURRENT-ASSETS> 1646092
<PP&E> 1120955
<DEPRECIATION> (808241)
<TOTAL-ASSETS> 1961639
<CURRENT-LIABILITIES> 927303
<BONDS> 0
<COMMON> 22506
0
0
<OTHER-SE> 1006354
<TOTAL-LIABILITY-AND-EQUITY> 1961639
<SALES> 846310
<TOTAL-REVENUES> 2907677
<CGS> 641878
<TOTAL-COSTS> 2022979
<OTHER-EXPENSES> 7305
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 13271
<INCOME-PRETAX> 271253
<INCOME-TAX> 7434
<INCOME-CONTINUING> 263819
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 263819
<EPS-BASIC> .01
<EPS-DILUTED> .01
</TABLE>
