<PAGE>
FORM 10-Q SB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1999
OR
( ) 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 0-20947
----------
ON-SITE SOURCING, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 54-1648470
------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1111 N. 19TH STREET, SUITE 600, ARLINGTON, VA 22209
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 276-1123
--------------
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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of November 15, 1999.
COMMON STOCK 0.01 PAR VALUE NUMBER OF SHARES
--------------------------- ----------------
NO CLASS 4,824,669
PREFERRED STOCK 0.01 PAR VALUE
------------------------------
NO CLASS NONE
<PAGE>
ON-SITE SOURCING,INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. FINANCIAL INFORMATION.
Item 1. Financial Statements
Balance sheets -
September 30, 1999 and December 31, 1998 3
Statements of Operations -
Three and nine months ended September 30, 1999 and 1998 4
Statements of Stockholders Equity
Nine months ended September 30, 1999 and 1998 5
Statements of Cash Flows -
Three and nine months ended September 30, 1999 and 1998 6
Condensed notes to financial statements 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 10-12
PART II. OTHER INFORMATION
SIGNATURES 12
</TABLE>
Page 2 of 12
<PAGE>
ON-SITE SOURCING,INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
Unaudited
Sept 30, December 31,
1999 1998
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ -- $ --
Accounts receivable, net 5,589,520 5,922,027
Prepaid supplies 530,595 449,366
Prepaid expenses 341,735 136,758
------------ ------------
Total current assets 6,461,850 6,508,151
Property and equipment, net 4,001,697 4,367,996
Other assets, net 29,868 75,062
------------ ------------
10,493,415 10,951,209
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ 1,585,533 $ 2,018,248
Line of Credit 420,150 141,345
Accrued and other liabilities 695,401 694,334
Current portion of long-term debt 383,388 472,824
Provision for income taxes, current --
------------ ------------
Total current liabilities 3,084,471 3,326,751
Long-term debt net of current portion 852,546 1,169,454
Deferred rent 121,911 121,911
Provision for Income taxes, net of current portion --
Deferred taxes 197,182 197,182
Commitments and contingencies -- --
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 20,000,000 shares authorized
4,851,669 and 4,824,669 shares issued and outstanding 48,517 48,247
Preferred stock,$.01 par value, 1,000,000 shares
Authorized, no shares issued and outstanding -- --
Subscription receivable (50,400) (50,400)
Additional paid in capital 6,489,921 6,432,691
Treasury stock (5,000 shares of common stock at cost) (25,000) (25,000)
------------ ------------
Accumulated Earnings (Deficit) (225,734) (269,627)
------------ ------------
$ 6,237,304 $ 6,135,911
------------ ------------
10,493,415 10,951,209
------------ ------------
</TABLE>
See notes to financial statements
Page 3 of 12
<PAGE>
ON-SITE SOURCING, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 19,277,240 $ 18,050,060 $ 6,355,283 $ 6,601,801
Costs and expenses
Cost of sales 14,601,679 15,543,482 4,709,173 5,376,156
------------ ------------ ------------ ------------
4,675,561 2,506,578 1,646,110 1,225,645
------------ ------------ ------------ ------------
Selling expense 1,716,918 2,011,197 647,113 727,123
Administrative expense 2,786,324 2,137,751 1,074,960 805,270
------------ ------------ ------------ ------------
4,503,241 4,148,948 1,722,073 1,532,393
------------ ------------ ------------ ------------
Earnings from operations 172,320 (1,642,370) (75,963) (306,748)
Other income (expense)
Other income 67,872 203,915 690 31,858
Other expense (176,298) (175,775) (84,271) (100,484)
------------ ------------ ------------ ------------
(108,426) 28,140 (83,581) (68,626)
------------ ------------ ------------ ------------
Earnings (Loss) before income taxes 63,893 (1,614,230) (159,544) (375,374)
Income tax (benefit)expense -- (489,000) (38,500)
------------ ------------ ------------ ------------
Net (Loss) Earnings $ 63,893 $ (1,125,230) $ (159,544) $ (336,874)
------------ ------------ ------------ ------------
Basic earnings (loss) per common share $ 0.01 $ (0.23) $ (0.03) $ (0.07)
Diluted earnings per share $ 0.01 $ N/A $ (0.03) $ N/A
</TABLE>
See notes to financial statements
Page 4 of 12
<PAGE>
ON-SITE SOURCING, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
Unaudited
<TABLE>
<CAPTION>
Additional Treasury
Common Common Paid in Subscriptions Stock Retained
Shares Stock Capital Receivable (Common) Earnings Total
--------- ---------- ---------- ------------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1998 4,824,669 $ 48,247 $6,432,691 $(50,400) $(25,000) $ (269,628) $6,135,910
--------- ---------- ---------- ------------- --------- ---------- ----------
Sale of common stock 27,000 270 37,230 37,500
Net Income 63,893 63,893
--------- ---------- ---------- -------- -------- ---------- ----------
Balance at Sept 30, 1999 4,851,669 $ 48,517 $6,469,921 $(50,400) (25,000) $ (205,735) $6,237,304
--------- ---------- ---------- -------- -------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
Additional Treasury
Common Common Paid in Subscriptions Stock Retained
Shares Stock Capital Receivable (Common) Earnings Total
--------- ----------- ----------- ------------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 4,802,221 $ 48,022 $ 6,367,379 $(50,400) -- $ 727,986 $ 7,092,987
--------- ----------- ----------- -------- -------- ----------- -----------
Sale of common stock 22,448 224 65,312 65,536
Net loss (1,125,230) (1,125,230)
--------- ----------- ----------- -------- -------- ----------- -----------
Balance at Sept 30, 1998 4,824,669 $ 48,246 $ 6,432,691 $(50,400) -- $ (397,244) $ 6,033,293
--------- ----------- ----------- -------- -------- ----------- -----------
</TABLE>
See notes to financial statements
Page 5 of 12
<PAGE>
ON-SITE SOURCING, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
Sept 30, Sept 30, Sept 30, Sept 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Cash flows from operating activities
Net earnings (loss) $ 63,893 $(1,125,230) $ (159,544) $ (336,874)
----------- ----------- ----------- -----------
Adjustments to reconcile net earnings to net cash
(used in) provided by operations
Depreciation and amortization 779,738 754,569 267,531 271,729
Loss (gain) on disposition of equipment -- --
Changes in assets and liabilities
(Increase) decrease in accounts receivable, net 332,507 (595,018) 598,639 8,726
(Increase) decrease in prepaid supplies (81,229) (41,138) 9,555 6,669
(Increase) decrease in prepaid expenses (204,977) 3,565 (60,980) (39,233)
(Increase) decrease in other assets 45,194 47,462 27,631 8,134
Increase in accounts payable - trade (432,715) (524,588) (277,284) (175,350)
Increase in accrued and other liabilities 1,067 445,027 266,850 349,789
Increase (decrease) in deferred rent -- -- -- --
Increase (decrease) in provison for income taxes -- (455,057) -- (38,500)
Increase (decrease) in deferred taxes -- (33,943) -- --
----------- ----------- ----------- -----------
Total Adjustments 439,585 (399,121) 831,942 391,964
----------- ----------- ----------- -----------
Net cash provided by (used in) operations 503,478 (1,524,351) 672,398 55,090
----------- ----------- ----------- -----------
Cash flows from investing activities
Capital expenditures (413,439) (1,085,022) (27,521) (246,240)
----------- ----------- ----------- -----------
Net cash used in investing activities (413,439) (1,085,022) (27,521) (246,240)
----------- ----------- ----------- -----------
Cash flows from financing activities
Proceeds from sale of common stock and
exercise of warrants 37,500 65,536 -- --
Proceeds of long-term debt agreements -- 316,000 -- --
Payments under long-term debt agreements (406,344) (323,864) (137,027) (118,850)
Net borrowings (payments) under line of credit agreement 278,805 1,061,000 (507,850) 310,000
----------- ----------- ----------- -----------
Net cash provided by financing activities (90,039) 1,118,672 (644,877) 191,150
----------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (0) (1,490,702) 0 --
Cash and cash equivalents, beginning -- 1,490,702 -- --
----------- ----------- ----------- -----------
Cash and cash equivalents, ending $ (0) $ (0) $ (0) $ (0)
----------- ----------- ----------- -----------
</TABLE>
See notes to financial statements
Page 6 of 12
<PAGE>
ON-SITE SOURCING, INC.
Condensed Notes to Financial Statements
(unaudited)
================================================================================
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
NOTE A--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed financial statements have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Certain information and note disclosures normally
included in the annual financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to those rules and regulations, although the Company believes that
the disclosures made are adequate to make the information presented not
misleading.
In the opinion of management, the accompanying condensed financial
statements reflect all necessary adjustments and reclassifications that are
necessary for fair presentation for the periods presented. It is suggested
that these condensed financial statements be read in conjunction with the
financial statements and the notes filed in the Company's Annual Report on
Form 10-KSB. The results of operations for the nine months ended September
30, 1999 are not necessarily indicative of the results to be expected for
the full year.
REVENUE RECOGNITION
Revenue from facilities management is recognized based on monthly fixed
fees and, in certain cases, variable per copy fees, as contained in
facilities management agreements. Revenue from reprographic and imaging
services is recognized on a per copy or image basis upon completion of the
services. Revenue from information technology services is billed on an
hourly basis.
PROPERTY AND EQUIPMENT
Property and equipment consists of copy center equipment, office furniture
and fixtures, and delivery equipment. Depreciation is provided for in
sufficient amounts to relate the cost of depreciable assets to operations
over their estimated service lives, ranging from two to fifteen years.
During 1999, management determined that the useful life of certain
equipment was longer than originally estimated. A change in accounting
estimate was recognized to reflect this decision, resulting in an increase
in net income of $82,784. The straight-line method is followed for
financial reporting purposes. Accelerated methods are used for tax
purposes.
INCOME TAXES
The provision for income taxes presented in the statements of earnings is
based upon the estimated effective tax rate for the year, and is largely
determined by management's estimate as of the interim date of projected
taxable income for the entire fiscal year.
Page 7 of 12
<PAGE>
ON-SITE SOURCING, INC.
Condensed Notes to Financial Statements--Continued
(unaudited)
================================================================================
SEPTEMBER 30, 1999
- --------------------------------------------------------------------------------
EARNINGS PER COMMON SHARE
Basic earnings per share is calculated using the average number of shares
outstanding and excludes dilution. Diluted earnings per share is computed
on the basis of the average number of shares outstanding plus the effect of
outstanding options using the "treasury stock method". Prior year earnings
per share have been restated to conform to this method.
NOTE B--CREDIT FACILITIES
The Company entered into an agreement for a working capital line of credit
with a financial institution for $2,500,000. The line of credit bears
interest at the financial institution's prime rate or the 30 day LIBOR rate
plus 2.25%, payable monthly. Any remaining principal balance and accrued
interest is due at the maturity date of April 30, 2000.The line of credit
is secured by certain assets of the Company, including accounts receivable
and certain fixed assets. As of September 30, 1999 there were advances made
under the line of credit of $420,150.
During 1997, the Company entered into a term note with a financial
institution to provide $1,100,000 to refinance certain capitalized lease
obligations. The note is payable in 48 monthly installments, bears interest
at the rate of 9.02%, and matures on April 30, 2001. The note is
collateralized by specific equipment and is subject to certain financial
covenants. The balance of the term note at September 30, 1999 was $412,500.
During 1997, the Company financed certain equipment purchases of
approximately $361,000 with notes with terms of 36 to 48 months and
interest rates of 5.0% to 9.7%. During 1998 the Company financed additional
equipment purchases under similar terms. The balance of these notes as of
September 30, 1999 was approximately $228,745.
NOTE C--RELATED PARTY TRANSACTIONS
TRANSACTIONS WITH AN OFFICER/SHAREHOLDER
During the nine months ended September 30, 1999 and 1998, the Company
recorded the following transaction with an officer/shareholder:
During the Nine months ended September 30, 1998 the Company incurred
approximately $44,000 for legal services rendered by the
officer/shareholder. During the Nine months ended September 30, 1998
the Company recorded revenue of approximately $16,500 for reprographic
services with the officer/shareholder. There were no related
transactions for the nine months ended September 30, 1999.
Page 8 of 12
<PAGE>
SUBSCRIPTION RECEIVABLE -- SHAREHOLDER
The Company has a note receivable from an officer/director for $89,900 in
connection with the exercise of stock options. The note bears interest at
6% per year with the remaining principal and interest due April 1, 2000.
The balance of the note at September 30, 1999 was $50,400.
During the first quarter of 1999 the Company revalued options to its original
Underwriter, M.H. Meyerson & Co., Inc. The original agreement included an option
to purchase 96,000 Units (Units consists of two shares of common stock and one
common stock warrant) at an exercise price of $10.00. The units are exercisable
starting July 9, 1997 for a period of four years. Under the new agreement the
options are exercisable at a price of $3.50. All other terms remain unchanged.
NOTE D--COMMITMENTS
The Company has annual rental and lease commitments with a term of one year
or more for its offices and production facilities that expire at various
times through 2006. The minimum annual rent is approximately $1,400,000.
NOTE E--INCENTIVE STOCK OPTION PLANS
In 1995 through 1998, the Company adopted incentive stock option plans,
under which pools of 510,000, 200,000, 500,000, and 700,000 shares
respectively have been reserved. The plans are administered and terms of
option grants are established by the Board of Directors. Under the terms of
the plans, options may be granted to the Company's employees and directors
to purchase shares of common stock. Options become exercisable ratably over
a vesting period as determined by the Board of Directors, and expire over
terms not exceeding ten years from the date of grant, three months after
termination of employment, or one year after the death or permanent
disability of the employee. The Board of Directors determines the option
price (not less than fair market value) at the date of grant.
Pursuant to an employment agreement, the Company had outstanding options to
sell 162,000 shares of common stock to an officer/director of the Company
at an exercise price of $.56 per share. The options, which were fully
vested during 1994, were exercised on March 29, 1996 for $90,000. In
connection with the exercise of the options, the Company loaned $89,900 to
the officer/director. The balance of the note on September 30, 1999, was
$50,400.
At September 30, 1998 the Company had outstanding options to sell 126,000
shares of common stock to an officer/director at an exercise price of $1.11
per share. As of September 30, 1998 the options are fully vested. The
options expire in December 2000.
The Company has outstanding employee stock options for 1,296,436 shares of
common stock at exercise prices ranging from $1.11 to $3.50 per share. As
of September 30, 1999, 843,845 of the shares are vested with the remainder
scheduled to vest through September, 2004.
Page 9 of 12
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
On-Site Sourcing, Inc. (On-Site or the "Company") provides reprographic,
document management, imaging, facilities management services and information
technology services to law firms, corporations, non-profit organizations,
accounting firms, financial institutions and other organizations throughout the
East Coast of the United States. In order to meet the highly specialized
requirements of each client, On-Site offers a variety of customized reprographic
and facilities management services. The Company provides reprographic and
imaging services 24 hours-per-day, seven days-per-week including copying,
binding, labeling, collating and indexing in support of complex
document-intensive litigation as well as higher volume production of manuals,
brochures and other materials for corporations and non-profit organizations.
On-Site also provides on-premises management of customers' support services
including mailroom operations, facsimile transmission, records and supply room
management and copying services. The information technology group provides a
full range of technology services to professional service organizations,
including systems design and integration, training and network management
services.
On October 1, 1999 the Company sold the Information Technology group to a
management team led by the former head of the IT group. The Company's results
in future periods will not include any operations of this group. Revenues of
the group for the first 9 months of 1999 were less than 5% of the Company's
total revenue.
This Form 10-QSB contains forward-looking statements which involve risks and
uncertainties. The Company's actual results may differ significantly from
results discussed in the forward-looking statements. Factors that might cause
such differences include, but are not limited to, demand for services, market
acceptance of the new IT group, impact of competitive services and pricing,
commercialization and technical difficulties, capacity constraints or
difficulties, general business and economic conditions and other risks detailed
in the Company's Annual Report, Form 10-KSB and other filings with the
Securities and Exchange Commission.
RESULTS OF OPERATIONS-NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Revenue for the nine months ended September 30, 1999 increased by 7%, or
$1,227,180 to $19,277,240 over the comparable period in 1998. Principal reasons
for the increase were higher demand for the Company's Reprographics, Information
Technology, and Imaging groups which offset a decline in revenue for the
Facilities Management business.
The Company's gross profit improved by 83%, or $2,168 ,983 for the nine months
ended September 30, 1999 compared to the same period in 1998, as cost of sales
decreased from 86% to 76% of sales. The gross margin percentage for the nine
months ended September 30, 1999 was 24% compared to 14% for 1998. The major
improvements in margins were from the Reprographics and Imaging groups,
reflecting improvements in labor utilization, other cost controls, and the
consolidation of the Imaging Division to our Virginia location.
Selling expenses for the nine months ended September 30,1999 decreased by
$294,279 over the same period last year. As a percentage of sales, selling
expenses were 9% and 11% for the nine months ended September 30, 1999 and 1998,
respectively. Selling expenses are primarily commissions based on sales and the
improvement reflects a revised commission rate schedule implemented in 1999.
Administrative expense for the nine months ended September 30, 1999 increased by
$648,573 over the same period last year due primarily to increases in
administrative staffing and costs associated with expansion. As a percent of
sales, administrative expense was 14% for the nine month period in 1999 as
compared to 12% for the same period last year.
.
NET EARNINGS (LOSS)
Page 10 of 12
<PAGE>
For the nine months ended September 30, 1999 the Company's net earnings were
$63,893 compared to a loss of $1,125,230 for the same period last year. Profits
amounted to $ 0.01 basic earnings per share and $0.01 diluted earnings per share
compared to losses of $ 0.23 for basic and diluted for the same period last
year. Shares outstanding for the nine months ended September 30, 1999 were
4,846,669 basic and 4,938,302 diluted. For the nine months ended September 30,
1998 shares outstanding were 4,819,669 basic and 4,900,814 diluted. The Company
had an income tax benefit of $ 489,000 versus an income tax expense of $0.00 for
the nine months ended September 30, 1998 and 1999 respectively.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company believes its market risk exposure with regard to its financial
instruments is limited to changes in interest rates. Based upon the composition
of the Company's variable rate debt outstanding at September 30, 1999 which is
primarily borrowings under the working capital line of credit, the Company does
not believe that a hypothetical increase in the bank's prime rate of interest or
the 30 day LIBOR rate would be material to net income.
LIQUIDITY AND CAPITAL RESOURCES AT SEPTEMBER 30, 1999 AND SUBSEQUENT ACTIVITY
The Company has funded its expansion and growth by utilizing internally
generated cash flow and long term financing, where appropriate, for
significant capital outlays. The Company anticipates that cash flow from
operations and credit facilities will be sufficient to meet the Company's
expected cash requirements for the next twelve months. There can be no
assurances that unforeseen events will not require more working capital than
the Company has at its disposal.
The Company has a secured a $2,500,000 line of credit with a financial
institution. The line of credit bears interest at the financial institution's
prime rate or the 30 day LIBOR rate plus 2.25%, payable monthly. The line of
credit will be utilized to finance accounts receivable and other working capital
needs. As of September 30, 1999 there were advances under the line that totaled
$420,150. The Company also has a $1,100,000 term note to refinance certain
capital leases at more favorable interest rates. The note is payable in 48
monthly installments, bears interest at the rate of 9.02%, and matures on April
30, 2001. The balance on the note at September 30, 1999 was $412,500.
During the nine months ended September 30, 1999 and 1998, the Company's
principal uses of cash were to fund fixed asset purchases, pay off long-term
debt, changes in staffing requirements and relocation costs and expenses.
RESULTS OF OPERATIONS-THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Revenue for the three months ended September 30, 1999 decreased 4% or $246,518
to $6,355,283 over the same period in 1998. The decline was mainly a result of
decreased demand in the Facilities Management and Information Technology groups
offset by an increase in the Imaging Division.
The Company's gross profit improved by $420,465 or 34% for the three months
ended September 30, 1999 compared to the same period in 1998. As a percentage
of sales, the gross profit margins were 26% and 17% for the three months
ended September 30, 1999 and 1998. Improved profit margins were experienced
in all divisions of the Company in 1999.
Selling Expenses declined by $80,010 to a level of 10% of sales from 11% of
sales for the three months ended September 30, 1999 as compared to September 30,
1998 Selling expenses are mainly sales commissions, and reflect a revised sales
compensation plan implemented in 1999.
Administrative expenses increased by $269,690 over the third quarter of 1998
resulting mainly from additional support staff and costs associated with
expansion of the business.
The net loss for the three months ended September 30, 1999 was $159,544
compared to a loss of $336,874 for the comparable period in 1998. The 1998
result included a tax benefit of $38,500 compared to zero tax benefits in
1999.
Page 11 of 12
<PAGE>
YEAR 2000
The Company is aware of the issues associated with the programming code in
existing computer systems as the Year 2000 approaches. Management is in the
process of converting its computer systems. Maintenance or modification costs
will be expensed as incurred, while the costs associated with new computer
systems will be capitalized and amortized over the systems useful lives.
Management believes that with converting to new computer systems, the Year 2000
issue will not pose a significant operational problem.
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 hereunto duly authorized.
ON-SITE SOURCING, INC.
Date: November 15, 1999
By:
/s/ Christopher J. Weiler
President and
Chief Executive Officer
By:
/s/ Alfred Duncan
Vice President of Finance and
Chief Financial Officer
Page 12 of 12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 5,589,520
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,461,850
<PP&E> 4,001,697
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,493,415
<CURRENT-LIABILITIES> 3,084,471
<BONDS> 0
0
0
<COMMON> 48,517
<OTHER-SE> 6,414,521
<TOTAL-LIABILITY-AND-EQUITY> 10,493,415
<SALES> 6,355,283
<TOTAL-REVENUES> 6,355,283
<CGS> 4,709,173
<TOTAL-COSTS> 6,431,246
<OTHER-EXPENSES> 83,581
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (159,544)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (159,544)
<EPS-BASIC> (.03)
<EPS-DILUTED> (.03)
</TABLE>
