<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the quarterly period ended March 31, 1998
Commission File No. 0-27994
--------
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
(Exact name of small business issuer as specified in its charter)
FLORIDA 59-3203301
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
186 P.C.N.A. PARKWAY
LAKE HELEN, FL 32744
904-228-1000
(Address and telephone number
of principal executive offices)
Indicate by check mark whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act 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:
X Yes No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
CLASS OUTSTANDING AT MARCH 31, 1998
- --------------------------- -----------------------------
Common Stock: no par value 4,863,100
Transitional Small Business Disclosure Format (check one): Yes X No
--- ---
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
<TABLE>
<CAPTION>
INDEX
Page
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
<S> <C>
Consolidated Balance Sheets
as of March 31, 1998 (unaudited) and December 31, 1997 3
Consolidated Statements of Operations
for the three months ended March 31, 1998 and 1997 (unaudited) 4
Consolidated Statements of Cash Flows
for the three months ended March 31, 1998 and 1997 (unaudited) 5 - 6
Notes to unaudited interim financial statements 7 - 9
ITEM 2. Management's Discussion and Analysis of Interim Financial
Condition and Results of Operations 10 - 12
PART II - OTHER INFORMATION
ITEM 5. Other Information 13
ITEM 6. Exhibits and Reports on Form 8-K 13
Exhibit 27 - Financial data schedule
</TABLE>
2
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
1998 1997
---------------------------------------------
ASSETS (UNAUDITED)
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 860,667 $ 1,710,304
Available-for-sale securities 1,021,171 1,007,050
Accounts receivable, less allowance for doubtful
accounts of $365,554 at March 31, 1998
and $414,693 at December 31, 1997 833,807 1,308,884
Directories in progress 724,476 463,414
Other current assets 232,229 65,010
---------------------------------------------
Total current assets 3,672,350 4,554,662
Property and equipment, net 1,466,275 1,481,549
Goodwill, net 1,874,339 1,898,680
Other assets 100,905 116,786
---------------------------------------------
Total assets $ 7,113,869 $ 8,051,677
=============================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 349,014 $ 1,013,787
Accrued expenses 473,019 552,529
Income taxes payable 50,000 50,000
Deferred revenue 950,335 894,109
Capitalized leases 5,358 5,358
Mortgage payable 53,333 53,333
---------------------------------------------
Total current liabilities 1,881,059 2,569,116
Capitalized leases payable after one year 9,904 10,717
Mortgage payable after one year 680,000 693,333
---------------------------------------------
Total liabilities 2,570,963 3,273,166
Shareholders' equity:
Common shares, no par value:
15,000,000 shares authorized; 4,863,100 shares issued
and outstanding at March 31, 1998; 4,869,900 shares
issued and outstanding at December 31, 1997 5,834,698 5,834,698
Treasury stock, at cost (13,117) ---
Unrealized gain (loss) on available-for-sale securities 11,142 (3,033)
Accumulated deficit (1,276,588) (1,037,737)
Unearned compensation, net (13,229) (15,417)
---------------------------------------------
Total shareholders' equity 4,542,906 4,778,511
---------------------------------------------
Total liabilities and shareholders' equity $ 7,113,869 $ 8,051,677
=============================================
</TABLE>
See accompanying notes.
3
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1998 1997
------------------------------------------
<S> <C> <C>
Net sales $1,957,733 $1,433,696
Costs and expenses:
Production 446,761 365,089
Marketing and selling 1,065,143 491,102
Depreciation 45,480 33,800
Amortization 30,902 7,257
General and administrative 600,332 543,862
------------------------------------------
2,188,618 1,441,110
------------------------------------------
Loss from operations (230,885) (7,414)
Interest income (expense), net (7,966) 10,453
------------------------------------------
Net income (loss) ($238,851) $3,039
==========================================
Net income (loss) per common share - basic ($0.05) $0.00
==========================================
Net income (loss) per common share - diluted ($0.05) $0.00
==========================================
Shares used in computing net income (loss) per share - basic 4,864,537 4,118,753
==========================================
Shares used in computing net income (loss) per share - diluted 4,864,537 4,130,909
==========================================
</TABLE>
See accompanying notes.
4
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1998 1997
---------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) ($238,851) $3,039
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 76,382 41,057
Accretion of unearned compensation 2,188 4,989
Bad debt expense 136,296 199,878
Exchange of advertising for machinery & equipment --- (3,588)
(Increase) decrease in accounts receivable 338,781 (375,593)
Increase in directories in progress (261,062) (71,581)
Increase in other assets (157,845) (117,840)
Increase (decrease) in accounts payable (664,773) 28,075
Decrease in accrued expenses (79,510) (13,592)
Increase in deferred revenue 56,226 116,010
---------------------------------------------
Net cash used in operating activities (792,168) (189,146)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available-for-sale --- (399,782)
Purchases of property, plant and equipment (30,206) (57,785)
---------------------------------------------
Net cash used in investing activities (30,206) (457,567)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of mortgage principal (13,333) (13,334)
Repayment of capital lease obligation (813) ---
Purchase of treasury stock (13,117) ---
---------------------------------------------
Net cash used in financing activities (27,263) (13,334)
Net decrease in cash and cash equivalents (849,637) (660,047)
Cash and cash equivalents at beginning of period 1,710,304 1,760,831
---------------------------------------------
Cash and cash equivalents at end of period $860,667 $1,100,784
=============================================
</TABLE>
5
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, MARCH 31,
SUPPLEMENTAL CASH FLOW INFORMATION 1998 1997
----------------------------------
<S> <C> <C>
Interest paid $15,976 $11,266
==================================
Exchange of advertising for supplies $8,045 $6,957
==================================
</TABLE>
\
See accompanying notes.
6
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of The Publishing
Company of North America, Inc. and subsidiary (the "Company") have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310(b)
of Regulation S-B. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included in the accompanying unaudited consolidated financial statements.
The results of operations of any interim period are not necessarily indicative
of the results of operations for the fiscal year.
2. CONSOLIDATION
The consolidated financial statements include the accounts of the Company's bar
and medical association directory publishing division ("PCNA") and its
wholly-owned subsidiary, College Directory Publishing, Inc. ("CDP") since the
acquisition of CDP on July 3, 1997 (see Note 11).
Intercompany transactions have been eliminated in consolidation.
3. CASH AND CASH EQUIVALENTS
The Company considers all highly-liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
4. AVAILABLE-FOR-SALE SECURITIES
Available-for-sale securities are carried at fair value, with the unrealized
gains and losses reported in a separate component of shareholders' equity. Fair
value is determined by readily available market quotations. Realized gains and
losses and declines in value judged to be other-than-temporary are included in
investment income. The cost of securities sold is based on the specific
identification method. Interest and dividends are included in investment income.
5. ACCOUNTS RECEIVABLE
Accounts receivable are comprised primarily of amounts due from advertisers in
the bar association and campus directories. The Company's allowance for doubtful
accounts is estimated by management as a percentage of sales. Prior to December
31, 1997, amounts outstanding more than six months but less than one year were
included as accounts receivable but fully provided for in the allowance for
doubtful accounts. At December 31, 1997 all amounts outstanding in excess of six
months are written off.
7
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
6. REVENUE RECOGNITION
Revenues and related costs are recorded by the Company upon shipment of
directories. Costs accumulated under directories in progress are stated at
estimated costs, not in excess of estimated realizable value. Deferred revenue
represents amounts received from advertisers prior to shipment of the related
directories.
7. GOODWILL
Goodwill resulting from the acquisition of CDP is being amortized using the
straight-line method over twenty years. (See Note 11.)
8. EARNINGS PER SHARE
In 1997, the Financial Accounting Standards Board issued SFAS No. 128, EARNINGS
PER SHARE. SFAS 128 replaced the calculation of primary and fully diluted
earnings per share with basic and diluted earnings per share. Unlike primary
earnings per share, basic earnings per share excludes any dilutive effects of
options. Diluted earnings per share is very similar to the previously reported
fully diluted earnings per share. Earnings per share amounts for 1997 have been
restated to conform to the Statement 128 requirements. The following table sets
forth the computation of basic and diluted earnings per share:
<TABLE>
<CAPTION>
Three months ended March 31,
1998 1997
-----------------------------
Numerator:
<S> <C> <C>
Net income (loss) from continuing operations ($238,851) $3,039
-----------------------------
Numerator for basic earnings per share - income
(loss) available to common shareholders (238,851) 3,039
Effect of dilutive securities --- ---
-----------------------------
Numerator for diluted earnings per share -
income (loss) available to common
shareholders after assumed conversions (238,851) 3,039
Denominator:
Denominator for basic earnings per share -
weighted-average shares 4,864,537 4,118,753
Effect of dilutive securities - stock options --- 12,156
----------------------------
Denominator for diluted earnings per share -
Adjusted weighted-average shares and
assumed conversions 4,864,537 4,130,909
Basic earnings per share ($0.05) $0.00
============================
Diluted earnings per share ($0.05) $0.00
============================
</TABLE>
8
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
8. EARNINGS PER SHARE (continued)
In computing diluted EPS for 1998, options for 97,000 common shares were
excluded from the diluted earnings per share computation because their effects
would have been antidilutive.
9. STOCK-BASED COMPENSATION
The Company follows Statement of Financial Accounting Standards (SFAS) No. 123,
ACCOUNTING AND DISCLOSURE OF STOCK-BASED COMPENSATION. SFAS No. 123 allows
companies to continue to measure compensation cost for stock-based employee
compensation plans using the intrinsic value method of accounting as prescribed
in Accounting Principles Board (APB) Opinion No. 25, ACCOUNTING FOR STOCK ISSUED
TO EMPLOYEES and related interpretations. The Company has elected to continue
its APB Opinion No. 25 accounting treatment for stock-based compensation, and
has adopted the provisions of SFAS No. 123 requiring disclosure of the proforma
effect on net earnings and earnings per share as if compensation cost had been
recognized based upon the estimated fair value at the date of grant for options
awarded. Such proforma disclosures are not required in interim financial
statements.
10. USE OF ESTIMATES
The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
11. ACQUISITION OF COLLEGE DIRECTORY PUBLISHING, INC.
On July 3, 1997, the Company, through a wholly-owned subsidiary, acquired 100%
of the outstanding capital stock of CDP. The acquisition was accounted for under
the purchase method of accounting, and accordingly, the results of operations
have been included in the Company's consolidated statements of operations since
the date of acquisition. The purchase price was allocated to assets acquired and
liabilities assumed based on fair market value at the date of acquisition. This
resulted in an excess of purchase price over net assets acquired of $1,947,282
which is being amortized on a straight line basis over 20 years. As of March 31,
1998, $72,743 of goodwill had been amortized.
12. SUBSEQUENT EVENT
On April 2, 1998, the Company's Board of Directors approved a resolution to sell
CDP to an investment group including the two former shareholders and current
management of CDP ("the Acquirer"). The agreement executed on April 14, 1998
specifies a close date of June 2, 1998, contingent on the Acquirer's ability to
obtain the requisite financing. The close date has since been extended to June
10, 1998. The agreement provides for a cash payment of $1,400,000, of which
$300,000 was issued as consideration in the acquisition of CDP and $1,100,000 is
in satisfaction of outstanding loans to CDP, a $100,000 promissory note due no
later than December 15, 1999, and $200,000 of preferred stock of the Acquirer,
convertible into $1,000,000 of the Acquirer's common stock upon certain
conditions. Additionally, CDP will return the 750,000 common shares of the
Company issued as consideration in the acquisition.
9
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
INTERIM FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth the Company's results of operations
for the quarters ended March 31, 1998 and 1997, showing the results of PCNA and
CDP separately and on a consolidated basis:
<TABLE>
<CAPTION>
Three months ended Three months ended
March 31, 1998 March 31, 1998 March 31, 1997
PCNA CDP Consolidated PCNA
---------------------------------------- ----------------------------------------
<S> <C> <C> <C> <C>
Net sales $1,957,733 --- $1,957,733 $1,433,696
Costs and expenses:
Production 446,761 --- 446,761 365,089
Marketing and selling 1,000,175 $64,968 1,065,143 491,102
Depreciation 40,219 5,261 45,480 33,800
Amortization 30,902 --- 30,902 7,257
General and administrative 486,539 113,793 600,332 543,862
---------------------------------------- ----------------------------------------
2,004,596 184,022 2,188,618 1,441,110
---------------------------------------- ----------------------------------------
Loss from operations (46,863) (184,022) (230,885) (7,414)
Other income (expense) 4,956 (12,922) (7,966) 10,453
---------------------------------------- ----------------------------------------
Net income (loss) ($41,907) ($196,944) ($238,851) $3,039
======================================== ========================================
</TABLE>
PCNA's revenues increased 37% for the quarter ended March 31, 1998
from the same period a year earlier. As previously disclosed, CDP's business is
highly seasonal; it recognizes most of its revenues in the fourth quarter and
very little, if any, revenues in the first two quarters. CDP's seasonality in
1998 was expected to have a significant negative impact in the first two
quarters and a lesser, but expected negative, impact in the third quarter. If
the Company sells CDP by the anticipated June 10, 1998 close date (see Note 12
to the Unaudited Interim Financial Statements), the effect of its losses will be
reduced in the second quarter and eliminated in the third quarter.
10
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
RESULTS OF OPERATIONS (CONTINUED)
The following table sets forth PCNA's results of operations in
percentages of revenues for the quarters ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
Three months ended One year ended
March 31, 1998 March 31, 1997 Dec. 31, 1997
PCNA PCNA PCNA
---------------------------------------------------------------------
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Costs and expenses:
Production 22.8% 25.5% 29.1%
Marketing and selling 51.1% 34.2% 48.3%
Depreciation 2.1% 2.4% 2.5%
Amortization 1.6% 0.5% 1.3%
General and administrative 24.8% 37.9% 33.2%
---------------------------------------------------------------------
102.4% 100.5% 114.4%
---------------------------------------------------------------------
Income (loss) from operations -2.4% -0.5% -14.4%
</TABLE>
PCNA's production expense for the most recent quarter was 23% of
revenues, compared to an average of 29% for all of fiscal 1997. Approximately
half of the improvement was in in-house labor costs and the other half was in
third-party costs (printing, binding, etc.).
An increase in PCNA's marketing and selling expense as a percentage
of revenues was the primary cause of its loss for the most recent quarter. These
expenses averaged 48% of revenues for all of fiscal 1997 and 44% of revenues for
all of fiscal 1996. As described in its annual report on Form 10-KSB, the
Company has experienced inefficiencies while endeavoring to expand its sales
force to keep pace with its increasing contract base. In late 1997 a number of
actions intended to improve efficiencies were implemented. In January, 1998 a
new national sales manager with thirty years of management experience in
directory publishing started at PCNA. This new national sales manager is
expected to continue the effort to improve efficiencies which will permit PCNA
to again expand the sales force while increasing productivity and lowering costs
as a percentage of revenues. No assurances can be given that sales efficiencies
will improve over the balance of 1998.
The Company is continuing to explore additional methods of reducing
costs. The Company's executive vice president recently resigned and will not be
replaced, resulting in a savings of approximately $100,000 per year.
Additionally, the Company's president, Peter S. Balise, has voluntarily agreed
to reduce his salary by 50% beginning in mid-May, 1998, resulting in a savings
of approximately $55,000 per year.
General and administrative expenses were lower in the first quarter
of 1998 from the same period in 1997 primarily as a result of a reduction in bad
debt expense, which was 7% of revenues for the most recent quarter compared to
14% for the same period in 1997. A contributing factor to this reduction was
improved documentation of the authorization of orders by advertisers.
Administrative payroll and professional services (other than legal and
accounting) each decreased approximately 2% of revenues in the first quarter of
1998 from the same period in 1997.
Amortization expense rose as in 1998 from 1997 solely due to the
amortization of the goodwill relating to the acquisition of CDP in July, 1997.
11
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had $860,667 in cash and equivalents
and $1,021,171 in marketable securities, primarily U.S. Treasury securities.
This compares to $1,710,304 and $1,007,050, respectively, at December 31, 1997.
The Company used approximately $792,000 of cash in operating
activities in the first quarter of 1998, compared to approximately $189,000 used
in the same period in 1997. The primary uses of cash in the most recent quarter
were a reduction of $664,773 in Accounts Payable, the net loss of $238,050 and
an increase of $261,062 in Directories in Progress, which are costs incurred for
directories to be published in future periods. A reduction of $338,781 in
Accounts Receivable provided cash in the quarter ended March 31, 1998, due
mostly to receipts relating to the high volume of advertising published by CDP
in the last quarter of 1997. During the quarter ended March 31, 1997, which was
prior to the acquisition of CDP, Accounts Receivable increased $375,593.
During the most recent quarter, the Company purchased 6,800 shares of
its common stock at an average cost of $1.93 per share. In April, 1998 the
Company purchased 50,000 shares of its common stock at $1.00 per share from its
former Executive Vice President (see Item 5 below).
Based on current cash and investment balances and the Company's
anticipated sale of its subsidiary, CDP, the Company believes that it has
sufficient cash resources to fund its operations for the next twelve months or
more. If the Company is unable to close on the sale of CDP now contemplated, the
Company anticipates that it will have sufficient cash resources to fund PCNA's
operations; however, it anticipates that in early 1999 CDP will require
additional outside financing.
FORWARD-LOOKING STATEMENTS
The statements made above relating to the Company's expectations with
regard to the future impact on results of operations by CDP, to the anticipated
sale of CDP, to the Company's expectation that the new national sales manager
will continue improved efficiencies in sales costs, and to the Company's future
liquidity are forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. The results anticipated by any or all of these forward-looking statements
may not occur. Important factors that may cause actual results to differ
materially from the forward-looking statements include the following: (1) the
sale of CDP, which is contingent primarily upon the buyer's ability to locate
suitable investors willing to take the appropriate investment risk and the
willingness of CDP's prior lendor to provide a substantial line of credit to the
buyer; (2) PCNA's results of operations for the balance of 1998, which are
contingent primarily upon its ability to improve its selling efficiencies,
publish directories within the timeframe anticipated, and otherwise manage its
growth efficiently; and (3) the abilitity of the new national sales manager to
continue to improve efficiencies in sales costs.
12
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
PART II - OTHER INFORMATION
ITEM 5. Other Information
a. Mr. D. Scott Plakon resigned as an employee on April 17, 1998; he
had served the Company as Executive Vice President since September,
1994. He remains a director of the Company. In connection with his
resignation, the Company and Mr. Plakon entered into an agreement
terminating Mr. Plakon's employment agreement with the Company
thereby eliminating the Company's liability to pay Mr. Plakon for
the remaining 13 months (May, 1999). Mr. Plakon agreed to perform
consulting services for the Company on an "as needed" basis in
exchange for the Company paying health insurance costs for Mr.
Plakon and his dependents through May, 1999. Additionally, the
Company purchased 50,000 shares of the Company's common stock at
$1.00 per share from Mr. Plakon.
ITEM 6. Exhibits and Reports on Form 8-K
a. Exhibits
1. Exhibit 27 - Financial Data Schedule
b. No reports on Form 8-K were filed during the quarter ended March
31, 1998.
13
<PAGE>
THE PUBLISHING COMPANY OF NORTH AMERICA, INC.
FORM 10-QSB - MARCH 31, 1998
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf on May 15, 1998 by the
undersigned, thereunto duly authorized.
THE PUBLISHING COMPANY OF NORTH
AMERICA, INC.
/s/ Peter S. Balise
-----------------------------------
President (Chief Executive Officer)
/s/ James M. Koller
-----------------------------------
Chief Financial Officer (Principal
Financial and Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH
31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 860,667
<SECURITIES> 1,021,171
<RECEIVABLES> 1,199,361
<ALLOWANCES> (365,554)
<INVENTORY> 0
<CURRENT-ASSETS> 3,672,350
<PP&E> 1,844,502
<DEPRECIATION> (378,227)
<TOTAL-ASSETS> 7,113,869
<CURRENT-LIABILITIES> 1,881,059
<BONDS> 733,333
0
0
<COMMON> 5,834,698
<OTHER-SE> (1,291,792)
<TOTAL-LIABILITY-AND-EQUITY> 7,113,869
<SALES> 1,957,733
<TOTAL-REVENUES> 1,957,733
<CGS> 446,761
<TOTAL-COSTS> 2,188,618
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (7,966)
<INCOME-PRETAX> (238,851)
<INCOME-TAX> 0
<INCOME-CONTINUING> (238,851)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (238,851)
<EPS-PRIMARY> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
