UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 25, 1998
Commission File Number 0-28429
ZOMAX OPTICAL MEDIA, INC.
(Name of issuer in its charter)
Minnesota 41-1833089
(state or other juris- (I.R.S. Employer
diction of incorporation) Identification No.)
5353 Nathan Lane, Plymouth, MN 55442
(Address of principal executive offices) (zip code)
Issuer's telephone number, including area code:
(612) 553-9300
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 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 ( )
As of November 9, 1998, the issuer had 7,185,198 shares of Common Stock, no par
value, outstanding.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ZOMAX OPTICAL MEDIA, INC.
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
Sep 25, 1998 Dec 26, 1997
------------ ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $30,792,122 $ 5,213,417
Accounts receivable, net of allowance for doubtful
accounts of $1,363,000 and $881,000 8,641,125 7,160,198
Inventories 2,039,744 1,603,170
Deferred income taxes 897,000 897,000
Prepaid expenses and deposits 770,802 879,714
----------- -----------
Total current assets 43,140,793 15,753,499
Property and equipment, net of accumulated depreciation
of $6,935,000 and $4,609,000 19,009,491 14,002,694
Goodwill, net 1,174,923 1,228,023
Other assets, net 3,091 42,194
----------- -----------
$63,328,298 $31,026,410
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of notes payable $ 1,462,221 $ 2,293,950
Accounts payable 4,790,411 3,524,892
Accrued expenses:
Accrued royalties 2,918,354 2,994,768
Accrued compensation 1,321,051 1,155,298
Other 710,612 494,882
Income taxes payable 375,382 240,882
----------- -----------
Total current liabilities 11,578,031 10,704,672
Notes payable, net of current portion 1,975,664 3,103,975
Deferred income taxes 774,000 755,000
Shareholders' Equity:
Common stock, no par value, 15,000,000 authorized
shares, 7,185,198 and 5,250,817 shares issued
and outstanding 42,656,151 12,721,513
Retained earnings 6,344,452 3,741,250
----------- -----------
Total shareholders' equity 49,000,603 16,462,763
----------- -----------
$63,328,298 $31,026,410
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
-2-
<PAGE>
ZOMAX OPTICAL MEDIA, INC.
Consolidated Statements Of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- ----------------------------
Sep 25, Sep 26, Sep 25, Sep 26,
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Sales $ 14,832,418 $ 13,841,719 $ 43,611,346 $ 33,334,927
Cost of sales 11,309,686 8,916,594 31,870,603 22,972,556
------------ ------------ ------------ ------------
Gross profit 3,522,732 4,925,125 11,740,743 10,362,371
Selling, general and
administrative expenses 2,446,240 2,729,930 7,575,863 7,010,636
------------ ------------ ------------ ------------
Operating income 1,076,492 2,195,195 4,164,880 3,351,735
Interest expense (87,377) (108,423) (300,151) (294,318)
Interest income 374,869 43,051 576,301 182,759
Other income (expense), net -- 29,598 (277,828) 117,023
------------ ------------ ------------ ------------
Income before income taxes 1,363,984 2,159,421 4,163,202 3,357,199
Provision for income taxes 545,000 383,000 1,560,000 798,000
------------ ------------ ------------ ------------
Net income $ 818,984 $ 1,776,421 $ 2,603,202 $ 2,559,199
============ ============ ============ ============
PRO FORMA:
Net income before income taxes 2,159,421 4,163,202 3,357,199
Provision for income taxes 853,000 1,665,000 1,326,000
------------ ----------------------------
Net income $ 1,306,421 $ 2,498,202 $ 2,031,199
============ ============================
Earnings Per Share
Basic $ 0.11 $ 0.25 $ 0.41 $ 0.39
============ ============ ============ ============
Diluted $ 0.11 $ 0.24 $ 0.39 $ 0.38
============ ============ ============ ============
Weighted average number of
shares outstanding
Basic 7,184,831 5,250,024 6,094,594 5,215,285
============ ============ ============ ============
============
Diluted 7,496,452 5,426,862 6,478,799 5,287,826
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements
-3-
<PAGE>
ZOMAX OPTICAL MEDIA, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
----------------------------
Sept. 25, Sept 26,
1998 1997
------------ ------------
<S> <C> <C>
Operating Activities:
Net income $ 2,603,202 $ 2,559,199
Adjustments to reconcile net income to net
cash provided by operating activities-
Depreciation and amortization 2,762,642 1,647,399
Deferred income taxes 19,000 9,000
Changes in operating assets and liabilities:
Accounts receivable (1,480,927) (672,032)
Inventories (436,574) (1,043,858)
Prepaid expenses and deposits 108,912 (506,732)
Accounts payable 1,265,519 172,725
Accrued expenses 305,069 1,708,443
Income taxes payable 134,500 (513,819)
------------ ------------
Net cash provided by operating activities 5,281,343 3,360,325
------------ ------------
Investing Activities:
Purchase of property and equipment (7,715,339) (5,984,544)
Acquisition of businesses, net of cash -- (1,465,818)
Change in other assets 38,103 (6,041)
------------ ------------
Net cash used in investing activities (7,677,236) (7,456,403)
------------ ------------
Financing Activities:
Issuance of common stock 29,934,638 357,489
Proceeds from notes payable 1,124,346 3,650,000
Note payable related to acquisition -- 250,000
Repayment of notes payable (3,084,386) (2,816,974)
Bank borrowings, net -- 379,455
Dividends and distributions -- (979,064)
------------ ------------
Net cash provided by financing activities 27,974,598 840,906
------------ ------------
Net increase (decrease) in cash 25,578,705 (3,255,172)
Cash and Cash Equivalents:
Beginning of period 5,213,417 7,944,699
------------ ------------
End of period $ 30,792,122 $ 4,689,527
============ ============
Supplemental Cash Flow Disclosures:
Cash paid for interest $ 299,667 $ 300,405
============ ============
Cash paid for income taxes $ 1,425,500 $ 1,395,623
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
-4-
<PAGE>
Zomax Optical Media, Inc.
Notes to Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The accompanying interim financial statements of the Company are
unaudited; however, in the opinion of management, all adjustments necessary for
a fair presentation (consisting of only normal recurring adjustments) have been
reflected in the interim periods presented. Due principally to the seasonal
nature of some of the Company's business, results may not be indicative of
results for a full year. The accompanying financial statements should be read in
conjunction with the Company's Form 10-KSB for the year ended December 26, 1997.
2. Acquisitions
On February 4, 1998, the Company acquired all of the outstanding shares
of Primary Marketing Group, Inc. (PMG), Next Generation Services, LLC (NGS) and
Primary Marketing Group Limited (PMG Ireland) in exchange for 800,002 shares of
the Company's common stock. Prior to the acquisitions, the acquired businesses
consisted of providing manufacturers' representative services and returned
merchandise-processing services for the computer industry. The acquired
businesses were merged into a subsidiary of the Company, which provides
substantially the same products and services the acquired companies provided
prior to these transactions. In connection with the transactions described
above, Zomax acquired certain assets and assumed certain liabilities from an
unrelated third party for $1.1 million. The acquisitions of these companies have
been accounted for as a pooling-of-interests and, accordingly, the consolidated
financial statements for all periods presented have been restated to reflect the
financial effects of the transactions. Prior to the acquisitions, certain of the
acquired companies operated as non-taxable entities. A pro forma tax provision
has been established as if all consolidated companies were taxable entities for
all periods presented.
3. Secondary Stock Offering
On May 21, 1998, the Company completed the sale of 1,600,000 shares of
common stock in a secondary public offering. On June 8, 1998, the underwriters
exercised an overallotment option and purchased an additional 300,000 shares.
The Company received proceeds from the offering, net of issuance costs, of
approximately $29,729,000.
<PAGE>
4. Investment in Chumbo Holdings Corporation
On October 2, 1998, the Company acquired 4,310,345 shares of the Common
Stock of Chumbo Holdings Corporation ("Chumbo") for $5,000,000. The Company also
received warrants, exercisable over ten years at a price of $1.16 per share, to
purchase an additional 906,350 shares of Chumbo Common Stock (the "Warrant").
Chumbo conducts its operations through two wholly-owned subsidiaries,
Chumbo.com, Inc. and Point Group Corporation. Point Group Corporation is a
licensee and reseller of computer software. Chumbo.com, Inc. has developed
proprietary software for Internet commerce and operates a website
(http://www.chumbo.com) selling computer software over the Internet. As a result
of the investment, the Company will own approximately one-third of the
outstanding equity of Chumbo which will be accounted for using the equity method
of acccounting. Additionally, Zomax will have access to Chumbo's proprietary
Internet software to service customers of the Company. Mr. James T. Anderson,
the Company's President and Chief Executive Officer, will assume the additional
role of Chief Executive Officer of Chumbo. The Company has transferred the
Warrant to Mr. Anderson in recognition of his additional duties and
responsibilities.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
The Company is a leading outsource service provider to software
publishers, computer manufacturers and other producers of multimedia products.
These services include compact disc (CD) and digital versatile disc (DVD)
mastering; CD, DVD, diskette and cassette replication; graphic design; print
management; CD and DVD printing; packaging; warehousing; inventory management;
distribution and fulfillment; and Return Merchandise Authorization (RMA)
processing services. The Company records sales to its customers at the time
merchandise is shipped or as services are rendered. For certain customers,
merchandise is invoiced upon completion of orders with shipment occurring based
on written customer instructions.
The multimedia services industry has been characterized by short lead
times for customer orders. For this reason and because of the timing of orders,
delivery intervals and the possibility of customer changes in delivery
schedules, the Company's backlog as of any particular date has not been
significant and is not a meaningful indicator of future financial results.
On March 31, 1997, the Company acquired the outstanding shares of
Benchmark Media Services, a software media replicator with operations in
Plymouth, Minnesota and Indianapolis, Indiana. The Company agreed to pay
consideration based on revenues of Benchmark in 1997. Revenue levels were not
met; therefore, no consideration was paid. The Benchmark acquisition was
accounted for using the purchase method of accounting.
On May 1, 1997, the Company acquired the outstanding shares of Trotter
Technologies, Inc. (TTI), an RMA processing, warehousing and distribution
company based in San Jose, California, servicing the software publishing market.
The purchase price of TTI was $712,000 cash and 59,268 shares of the Company's
Common Stock. The acquisition of TTI was accounted for using the purchase method
of accounting whereby the purchase price was allocated to net assets acquired
based on estimated fair values and approximately $1.2 million of cost in excess
of net assets acquired was recorded as goodwill.
On February 4, 1998, PMG, NGS and PMG Ireland were merged with and into
a subsidiary of the Company. As a result of these transactions, all ownership
interests in the acquired companies were exchanged for 800,002 shares of the
Company's Common Stock. Prior to these transactions, the businesses of PMG, NGS
and PMG Ireland consisted of providing manufacturer's representative services
and RMA processing services to the computer industry. PMG, NGS and PMG Ireland
operated their respective businesses from facilities located in and around San
Jose, California; Boston, Massachusetts; and Dublin, Ireland. In connection with
the transactions described above, the Company acquired certain assets and
assumed certain liabilities from an unrelated third party for $1.1 million. The
acquisitions of PMG, NGS and PMG Ireland were accounted for using the
pooling-of-interests method of accounting, and accordingly, all periods
presented have been restated to reflect the financial effects of these
transactions.
<PAGE>
Results of Operations
The following table sets forth for the three months and nine months ended
September 25, 1998 and September 26, 1997, certain operating data as a
percentage of sales for the periods presented:
Three Months Ended Nine Months Ended
September 25, September 26, September 25, September 26,
1998 1997 1998 1997
------------ ------------ ------------ ------------
Sales 100.0% 100.0% 100.0% 100.0%
Cost of sales 76.2 64.4 73.0 68.9
----- ----- ----- -----
Gross profit 23.8 35.6 27.0 31.1
Selling, general and
admin. expenses 16.4 19.7 17.3 21.0
----- ----- ----- -----
Operating income 7.4 15.9 9.7 10.1
Interest expense (0.5) (0.8) (0.6) (0.8)
Interest income 2.5 0.3 1.3 0.5
Other 0.2 (0.6) 0.3
----- ----- ----- -----
Income before provision
for income taxes 9.4 15.6 9.8 10.1
Pro forma provision
for income taxes(1) 3.7 6.1 3.6 3.9
----- ----- ----- -----
Pro forma net income (1) 5.7% 9.5% 6.2% 6.2%
----- ----- ----- -----
(1) A pro forma tax provision has been established as if all consolidated
companies were taxable entities for all periods presented.
Sales. The Company's sales for the third quarter of 1998 were $14.8
million, an increase of 7.2% from $13.8 million for the third quarter of 1997.
For the nine months ended September 1998, sales were $43.6 million, an increase
of 31.0% from sales of $33.3 million for the first nine months of 1997. In the
third quarter of 1998, the Company's CD sales mix changed, reflecting less print
and assembly services as compared to prior quarters. This mix change and a
reduction in diskette sales in the third quarter resulted in lower sales and
gross margin. In the third quarter of 1997, the Company had a non-recurring RMA
project of approximately $1.0 million. The increase in total sales for the nine
month period in 1998 resulted primarily from a 52.7% increase in CD related
sales and the Company's operation of a new assembly and distribution warehouse
facility in San Jose, California. These increases were partially offset by
decreases in audio cassette and diskette sales.
Cost of sales. Cost of sales for the third quarter of 1998 was 76.2% as
a percentage of sales as compared to 64.4% for the third quarter of 1997. For
the first nine months of 1998, cost of sales was 73.0% as compared to 68.9% for
the same period in 1997. The increase in cost of sales percentages in 1998 was
due to the change in the product mix discussed above. In addition, the nine
months ended September 1998 included the startup expenses incurred at our new CD
facility in San Jose, California.
<PAGE>
Selling, general and administrative expense. Selling, general and
administrative expenses for the third quarter of 1998 were $2.4 million, as
compared to $2.7 million for third quarter of 1997. As a percentage of sales,
selling, general and administrative expenses decreased from 19.7% in the third
quarter of 1997 to 16.4% in the third quarter of 1998. Selling, general and
administrative expenses for the first nine months of 1998 were $7.6 million, or
17.3% of total sales as compared to $7.0 million or 21.0% for 1997. Selling,
general and administrative expenses have decreased as a percentage of sales in
1998 as sales have increased and the Company has achieved operational
efficiencies from fully integrating its acquisitions.
Interest income and expense. Interest income was $375,000 for the third
quarter of 1998, as compared to $43,000 for the third quarter of 1997. Interest
income was $576,000 for the first nine months of 1998 as compared to $183,000 in
1997. Interest income increased in 1998 with the investment income earned on the
secondary offering proceeds. Interest expense was $87,000 for the third quarter
of 1998, as compared to $108,000 for the third quarter of 1997. Interest expense
was $300,000 for the first nine months of 1998 as compared to $294,000 in 1997.
Other income (expense) net. In the first quarter of 1998, the Company
incurred expenses totaling $278,000 related to the acquisition of PMG, NGS and
PMG Ireland. These costs were expensed as incurred following the provisions of
pooling of interests accounting. In 1997, PMG generated other income as a result
of representing certain manufacturers' products.
Pro forma provision for income taxes. The pro forma effective income
tax rate for the first nine months of 1998 was 40.0% as compared to 39.5% for
the first nine months of 1997.
Pro forma net income. Pro forma net income for the third quarter of
1998 was $819,000, a decrease of 37% from $1,306,000 for the third quarter of
1997. Pro forma net income for the first nine months of 1998 was $2.5 million,
an increase of 25% from $2.0 million for the first nine months of 1997.
Liquidity and Capital Resources
As of September 25, 1998, the Company had working capital of $32.0
million, compared to working capital of $5.0 million as of December 26, 1997.
The increase in working capital was primarily due to issuance of common stock in
a secondary offering in which the Company received $29.7 million, net of
offering costs.
As of September 25, 1998, the Company had cash totaling $30.8 million.
Cash generated from operating activities for the first nine months of 1998 was
$5.3 million compared to $3.4 million during the first nine months of 1997. The
increase in operating cash flow is consistent with the Company's sales and net
income growth.
<PAGE>
Cash used in investing activities during the first nine months of 1998
was $7.7 million compared to $7.5 million for the first nine months of 1997. In
1998, the Company used cash primarily to purchase property and equipment
including the construction of a new CD facility in San Jose and new DVD
equipment. In 1997, the Company used $1.5 million for the acquisition of
businesses.
During the first nine months of 1998, the Company acquired certain
assets and assumed certain liabilities from an unrelated third party in exchange
for a short-term note in the principal amount of $1.1 million. During the first
nine months of 1997, the Company financed equipment purchases with long-term
debt totaling $3.7 million. During the first nine months of 1998, the Company
repaid notes payable totaling $3.1 million as compared to $2.8 million in 1997.
PMG and NGS made distributions to its owners of $979,000 in 1997. These
distributions were made in accordance with the dividend policies of these
companies. Zomax Optical Media, Inc. has never declared or paid dividends on its
Common Stock.
The Company has a revolving line of credit facility for up to $5.0
million of borrowings. Such borrowings are limited to an amount based on a
formula using eligible accounts receivable and inventories. There were no
borrowings outstanding under the revolving line of credit facility at September
25, 1998. In addition, the Company had $4.35 million available under a capital
term loan facility at September 25, 1998.
Future liquidity needs will depend on, among other factors, the timing
of capital expenditures and expenditures in connection with any acquisitions,
changes in customer order volume and the timing and collection of receivables.
The Company believes that existing cash balances, anticipated cash flow from
operations and amounts available under existing credit facilities will be
sufficient to fund its operations for the foreseeable future.
Year 2000 Compliance
The Company is currently working to fully assess and resolve the
potential impact of the Year 2000 issue on both the information technology
("IT") and non-IT systems throughout its U.S. and Ireland operations. The Year
2000 issue is the result of computer programs being written using two digits
(rather than four) to define the applicable year. Any systems that have date
sensitive software may recognize a date using "00" as the year 1900 rather than
the year 2000, which could result in system problems or failures.
Zomax has developed a Year 2000 plan, the objective of which is to
determine and assess the risks of the Year 2000 issue, and plan and institute
corrective actions to minimize those risks. The Company's goal is to ensure
current business operations will continue to function accurately with no
material disruption into and beyond year 2000. The Company has formed an
internal review team, which is finalizing an agreement with an independent Year
2000 consulting firm to provide advice regarding the Company's Year 2000
compliance. The Year 2000 plan addresses (a) information technology such as
software and hardware, (b) non-information system or embedded technology
contained in manufacturing equipment and facilities, and (c) readiness of key
third party suppliers.
<PAGE>
Zomax implemented a new enterprise wide financial and information
system in 1997 to meet its growing business needs. The Company also implemented
this financial and information system in new businesses acquired in 1997 and
1998. The new business systems are represented to be Year 2000 compliant by the
respective vendors and the Company has performed initial tests confirming this
compliance. The Company has identified embedded technology in its manufacturing
equipment and facilities and is testing such technology and contacting vendors
regarding the Year 2000 readiness of such technology. The Company is also in the
process of contacting material suppliers and customers to address their exposure
to Year 2000 related risks.
The Company expects to substantially complete its assessment of Year
2000 compliance with regard to embedded technology and material suppliers and
customers by the end of the first quarter of 1999. During the balance of 1999,
the Company will work to remedy any Year 2000 problems identified and formulate
contingency plans, if appropriate, to reduce risks and exposure to Year 2000
related issues.
Through September 25, 1998, costs associated with the Company's Year
2000 plan have not been material. The costs of addressing Year 2000 potential
problems are not currently expected to have a material adverse impact on the
financial position, results of operations or cash flows of the business in the
future. However, the costs relating to the resolution of Year 2000 compliance
issues cannot be fully estimated at this time. The Company has not yet formed
expectations regarding a most likely worst case scenario for the Year 2000 but
expects to do so upon completing its assessment of embedded technology and the
readiness of material vendors and customers. If significant customers or vendors
identify Year 2000 issues in the future and fail to resolve such issues in a
timely manner, such failure could result in a material adverse impact on the
company's business or results of operations.
Inflation
Historically, inflation has not had a material impact on the Company.
The cost of the Company's products is influenced by the cost of raw materials
and labor. There can be no assurance that the Company will be able to pass on
increased costs to its customers in the future.
<PAGE>
Seasonality
The demand for CDs and other multimedia consumer products is seasonal,
with increases during the fall reflecting increased demand relative to the new
school year and holiday season purchases. This seasonality could result in
significant quarterly variations in financial results, with the third and fourth
quarters generally being the strongest.
Forward-Looking Statements
This filing contains forward-looking statements regarding the
anticipated operations of the Company and the Year 2000 issue, among other
statements. Such forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. There are
certain important factors that could cause results to differ materially from
those anticipated by some of the statements herein. Investors are cautioned that
all forward-looking statements involve risks and uncertainty. Among the factors
that could cause actual results to differ materially are the following: strength
of the CD market, pricing strategies of competitors, manufacturing capacity and
efficiency, overall economic conditions, including inflation and consumer
confidence, the ability of the Company and its vendors and customers to
replace, modify or upgrade computer technology to adequately address the Year
2000 issue and other risks identified in filings with the Securities and
Exchange Commission from time to time.
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibit is included with the Form 10-Q
27 Financial Data Schedule
(included in electronic version only)
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the third quarter;
however, the Company subsequently filed a Form 8-K dated October 2,
1998 to report the purchase of an investment interest in Chumbo
Holdings Corporation.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ZOMAX OPTICAL MEDIA, INC.
Date: November 9, 1998 By /s/ James T. Anderson
James T. Anderson, President and
Chief Executive Officer (principal
executive officer)
By /s/ James E. Flaherty
James E. Flaherty
Chief Financial Officer (principal
financial and accounting officer)
<PAGE>
Zomax Optical Media, Inc.
Form 10-Q Quarterly Report
For the Quarter Ended September 25, 1998
EXHIBIT INDEX
Exhibit
Number Item
27 Financial Data Schedule (included in electronic version only)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-25-1998
<PERIOD-START> DEC-27-1997
<PERIOD-END> SEP-25-1998
<EXCHANGE-RATE> 1
<CASH> 30,792,122
<SECURITIES> 0
<RECEIVABLES> 10,004,125
<ALLOWANCES> 1,363,000
<INVENTORY> 2,039,744
<CURRENT-ASSETS> 43,140,793
<PP&E> 25,944,491
<DEPRECIATION> 6,935,000
<TOTAL-ASSETS> 63,328,298
<CURRENT-LIABILITIES> 11,578,031
<BONDS> 0
0
0
<COMMON> 42,656,151
<OTHER-SE> 6,344,452
<TOTAL-LIABILITY-AND-EQUITY> 63,328,298
<SALES> 43,611,346
<TOTAL-REVENUES> 44,187,647
<CGS> 31,870,603
<TOTAL-COSTS> 39,446,466
<OTHER-EXPENSES> 277,828
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 300,151
<INCOME-PRETAX> 4,163,202
<INCOME-TAX> 1,560,000
<INCOME-CONTINUING> 2,603,202
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,603,202
<EPS-PRIMARY> .41
<EPS-DILUTED> .39
</TABLE>
