<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MARCH 31, 1998
COMMISSION FILE NUMBER 0-22081
__________________________________________________
ELECTRONIC PROCESSING, INC.
MISSOURI 48-1056429
(State or Other Jurisdiction of (IRS Employer Identification Number)
Incorporation or Organization)
501 KANSAS AVENUE, KANSAS CITY, KANSAS 66105-1300
(Address of Principal Executive Office)
913-321-6392
(Issuer's Telephone Number)
Check 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. Yes X No
--- ---
The number of shares outstanding of registrants common stock at April 30, 1998,
was 3,487,968 shares
Transitional Small Business Disclosure Format (Check one): Yes No X
--- ---
<PAGE>
ELECTRONIC PROCESSING, INC.
FORM 10-QSB
QUARTER ENDED MARCH 31, 1998
CONTENTS
PAGE
----
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
Statements of Income -
Three months ended March 31, 1997 and 1998 3
Balance Sheets - December 31, 1997 and March 31, 1998 4
Statements of Cash Flows -
Three months ended March 31, 1997 and 1998 6
Notes to Financial Statements - March 31, 1997 and 1998 7
Item 2. Management's Discussion and Analysis of Financial Condition and 8
Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
<PAGE>
ELECTRONIC PROCESSING, INC.
STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1998
---------- ----------
<S> <C> <C>
OPERATING REVENUES $1,857,120 $2,535,796
---------- ----------
COST OF GOODS SOLD AND DIRECT COSTS
Processing costs 670,489 891,835
Depreciation and amortization 232,152 285,419
---------- ----------
902,641 1,177,254
---------- ----------
GROSS PROFIT 954,479 1,358,542
---------- ----------
OPERATING EXPENSES
General and administrative 682,961 884,036
Depreciation and amortization 23,928 39,736
---------- ----------
706,889 923,772
---------- ----------
INCOME FROM OPERATIONS 247,590 434,770
---------- ----------
OTHER INCOME (EXPENSE)
Interest income 11,980 21,105
Interest expense (83,154) (37,653)
Other 817 325
---------- ----------
(70,357) (16,223)
---------- ----------
NET INCOME BEFORE INCOME TAXES $177,233 418,547
PROVISION FOR INCOME TAXES
Current 81,300 147,629
Deferred (11,300) 20,371
Deferred - Related to Conversion to "C" Corporation 272,900
---------- ----------
342,900 168,000
---------- ----------
NET INCOME PER SHARE ($165,667) $250,547
---------- ----------
---------- ----------
Basic ($.06) $.07
---------- ----------
---------- ----------
Diluted ($.06) $.07
---------- ----------
---------- ----------
PRO FORMA DATA
Income before income taxes 177,233 418,547
Provision for income taxes 72,100 168,000
---------- ----------
PRO FORMA NET INCOME $105,133 $250,547
---------- ----------
---------- ----------
PRO FORMA EARNINGS PER SHARE
Basic $.04 $.07
---------- ----------
---------- ----------
Diluted $.04 $.07
---------- ----------
---------- ----------
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic 2,795,556 3,410,085
---------- ----------
---------- ----------
Diluted 2,795,556 3,600,573
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ELECTRONIC PROCESSING, INC.
BALANCE SHEETS
DECEMBER 31, 1996 AND MARCH 31, 1997
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
December 31, 1997 March 31, 1998
----------------- --------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $1,835,233 1,651,757
Accounts receivable, trade, less allowance for
doubtful accounts of $5,000 1,114,424 1,337,606
Prepaid expenses and other 159,845 189,403
Deferred income taxes 18,823 19,000
--------- ---------
Total Current Assets 3,128,325 3,197,766
--------- ---------
PROPERTY AND EQUIPMENT, At cost
Furniture and fixtures 551,832 558,282
Computer equipment 5,152,228 5,636,297
Office equipment 325,429 325,429
Leasehold improvements 834,806 834,806
Transportation equipment 14,969 14,969
--------- ---------
6,879,264 7,369,783
Less accumulated depreciation 3,338,301 3,586,714
--------- ---------
3,540,963 3,783,069
--------- ---------
SOFTWARE DEVELOPMENT COSTS, Net of
amortization 1,397,375 1,477,844
--------- ---------
INTANGIBLE ASSETS, Net of amortization
Excess of cost over fair value of net assets acquired 61,486 60,983
--------- ---------
OTHER ASSETS 32,819 32,590
--------- ---------
$8,160,968 $8,552,252
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
December 31, 1997 March 31, 1998
----------------- ---------------
<S> <C> <C>
CURRENT LIABILITIES
Note payable - line of credit $1,000 $1,000
Current maturities of long-term debt $626,665 $690,735
Accounts payable 491,217 365,730
Accrued expenses 200,639 144,998
Income Taxes Payable 32,960 70,589
--------- ----------
Total Current Liabilities 1,352,481 1,273,052
--------- ----------
LONG-TERM DEBT 889,046 1,081,891
--------- ----------
DEFERRED INCOME TAXES 320,452 341,000
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; authorized 10,000,000
shares; issued and outstanding 3,400,000 shares
December 31, 1997 and 3,474,068 shares March 31, 1998 34,000 34,741
Additional paid-in capital 5,202,000 5,208,032
Retained earnings (deficit) 362,989 613,536
--------- ----------
5,598,989 5,856,309
--------- ----------
$8,160,968 $8,552,252
---------- ----------
---------- ----------
</TABLE>
<PAGE>
ELECTRONIC PROCESSING, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1998
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) (165,667) 250,547
Items not requiring (providing) cash:
Deferred Income Taxes 261,600 20,371
Depreciation 191,867 248,415
Amortization of software development costs 63,710 76,237
Amortization of intangible assets 503 503
(Gain) loss on disposal of equipment (817) --------
Changes in:
Accounts receivable (9,222) (223,182)
Prepaid expenses and other assets 31,962 (29,329)
Accounts payable and accrued expenses (260,752) (143,499)
---------- ---------
Net cash provided by operating activities 113,184 200,063
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 2,800
Purchase of property and equipment (261,616) (56,280)
Expenditures for software development costs (132,856) (156,706)
---------- ---------
Net cash used in investing activities (391,672) (212,986)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (payments) under line-of-credit agreement (499,000)
Principal payments under capital lease obligation (492,482) (96,234)
Principal payments on long-term debt (996,126) (81,092)
Principal repayment subordinated note (400,000)
Dividends paid (250,000)
Stock issuance costs (155,434)
Exercise stock options 6,773
Proceeds stock issuance 4,938,000
---------- ---------
Net cash provided by financing activities 2,144,959 (170,553)
---------- ---------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 1,866,471 (183,476)
CASH AND CASH EQUIVALENTS,
BEGINNING PERIOD 4,882 1,835,233
---------- ---------
CASH AND CASH EQUIVALENTS,
END OF PERIOD $1,871,353 $1,651,757
---------- ----------
---------- ----------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
ELECTRONIC PROCESSING, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
AND MARCH 31, 1997 AND 1998
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF OPERATIONS
Electronic Processing, Inc. (the Company) develops, markets, and
licenses proprietary software products and provides support services for
Chapter 7 and chapter 13 bankruptcy trustees and other users of the federal
bankruptcy system. EPI serves a national client base with specialty products
that facilitate the financial and administrative aspects of bankruptcy
management and that are accompanied by a high level of coordinated support
including network integration, post-installation support and value added
services. The Company extends unsecured credit to customers throughout the
United States.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PROPERTY AND EQUIPMENT
Property and equipment are depreciated on a straight-line basis over the
estimated useful life of each asset as follows:
<TABLE>
<CAPTION>
<S> <C>
Furniture and fixtures 10 years
Computer equipment 5 years
Office equipment 5-10 years
Transportation equipment 3-5 years
</TABLE>
Leasehold improvements are depreciated over the shorter of the lease term
or the estimated useful lives (5-10 years) of the improvements.
SOFTWARE DEVELOPMENT COSTS
Certain internal software development costs incurred in the creation of
computer software products are capitalized once technological feasibility has
been established. Prior to the completion of a detail program design,
development costs are expensed. Capitalized costs are amortized based on
current and future revenue for each product with an annual minimum equal to the
straight-line amortization over the remaining estimated economic life of the
product, not to exceed five years.
INTANGIBLE ASSETS
The excess of cost over fair value of net assets acquired is being
amortized over 40 years. Organizational costs are being amortized over seven
years. All amortization is calculated using the straight-line method.
<PAGE>
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
REVENUE RECOGNITION
For the Company's Chapter 7 bankruptcy software product, monthly fees are
received from a national financial institution after the product is installed
and deposits are transferred based on the level of trustees= deposits with that
institution. Revenues for Chapter 13 processing and noticing are recorded
monthly at the completion of the services based on the trustees= month-end
caseloads. All ancillary fees are recognized as the services are provided.
INCOME TAXES
Deferred tax liabilities and assets are recognized for the tax effects of
differences between the financial statement and tax bases of assets and
liabilities. A valuation allowance is established to reduce deferred tax assets
if it is more likely than not that a deferred tax asset will not be realized.
Prior to the Company's initial public offering (SEE NOTE 8), the Company,
with the consent of its shareholders, had elected under the Internal Revenue
Code to be taxed as an S corporation. In lieu of corporate income taxes, the
shareholders were taxed on their proportionate shares of the Company's taxable
income.
CASH EQUIVALENTS
The Company considers all liquid investments with original maturities of
three months or less (primarily money market accounts) to be cash equivalents.
INTERIM FINANCIAL STATEMENTS
The balance sheet as of March 31, 1998 and the statements of income,
shareholders' equity and cash flows for the three month periods ended March 31,
1997 and 1998 have been prepared by the Company without audit. In the opinion
of management, all adjustments (which included only normal, recurring
adjustments) necessary for fair presentation have been made. The results for
these periods are not necessarily indicative of the results to be expected for
the full year.
YEAR 2000
Many currently installed computer systems and software products are coded
to accept only two-digit entries to represent years. For example, the year
"1998" would be represented by "98." These systems and products will need to be
able to accept four digit entries to distinguish years beginning with 2000 from
prior years. As a result, systems and products that do not accept four-digit
year entries will need to be upgraded or replaced to comply with such "Year
2000" requirements. The Company believes that its currently marketed software
products are Year 2000 compliant. In addition, the Company believes that its
internal administrative systems are Year 2000 compliant or will be upgraded or
replaced prior to the need to comply with Year 2000 requirements. The expenses
associated with this project are being expensed as incurred and are not expected
to be material to the Company's financial position or results of operations.
<PAGE>
NOTE 2: INITIAL PUBLIC OFFERING
In February 1997, the Company completed a public offering of 1,600,000
shares of common stock (the IPO) and received net proceeds (prior to stock
issuance costs) of $4,938,000.
In connection with the issuance of common stock to the public, the Company
changed its income tax status to a C corporation. At the time of becoming a C
corporation, the Company accrued an income tax provision of $272,900 to record
the deferred tax effects of temporary differences between financial statement
and tax bases of assets and liabilities as follows:
<TABLE>
<CAPTION>
<S> <C>
Deferred tax assets:
Allowance for doubtful accounts $ 1,900
Accrued compensated absences 4,200
Other 1,200
---------
7,300
Deferred tax liabilities:
Property and equipment (280,200)
---------
Net deferred tax liability $(272,900)
---------
---------
</TABLE>
Pro forma earnings information has been provided to reflect the effects of
corporate income taxes on historical earnings, including the effects of
permanent and temporary differences in reporting income and expenses for tax and
financial reporting purposes, as if the Company had been subject to income taxes
for all the periods presented, including the period in 1997 prior to the IPO.
Pro forma adjustment for 1997 eleminated the initial income tax provision of
$272,900.
NOTE 3: ADDITIONAL CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
December 31, March 31
1997 1997 1998
------------ ---- ----
(unaudited)
<S> <C> <C> <C>
NONCASH INVESTING AND FINANCING
ACTIVITIES
Capital lease obligation and notes
payable incurred for equipment $1,138,134 $131,886 $434,241
ADDITIONAL CASH INFORMATION
Interest paid 181,410 89,857 36,144
Income taxes paid 390,000 110,000
</TABLE>
<PAGE>
ITEM 11. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
QUARTER ENDED MARCH 31, 1998 COMPARED TO QUARTER ENDED MARCH 31, 1997
Operating revenues increased 36.5%, or $678,676, to $2,535,796 in the
three-month period ended March 31, 1998, compared to $1,857,120 in the
three-month period ended March 31, 1997. Approximately 80.7% of the growth
in operating revenues was attributable to Chapter 7. Chapter 7 revenues
increased 85.5%, or $547,693, to $1,188,585 in the three-month period ended
March 31, 1998, compared to $640,892 in the three-month period ended March
31, 1997. The increase in Chapter 7 revenue was due primarily to the growth
in new Chapter 7 trustee clients resulting in higher monthly fees paid to
EPI. Chapter 13 revenue increased 4.4%, or $52,514, to $1,232,796 in the
three-month period ended March 31, 1998 compared to $1,180,282 in the
three-month period ended March 31, 1997. The relatively lower growth in
Chapter 13 was primarily due to the Company's focus on converting existing
Chapter 13 trustee clients to CASEPOWER and to a constant level of revenue
from legal noticing by a change in service mix.
Total cost of goods sold and direct costs increased 30.4%, or $274,613,
to $1,177,254 in the three-month period ended March 31, 1998, compared to
$902,641 in the three-month period ended March 31, 1997. Total cost of goods
sold and direct costs as a percentage of operating revenues decreased to
46.4% in the three-month period ended March 31, 1998, compared to 48.6% in
the three-month period ended March 31, 1997, primarily due to TCMS for
Chapter 7, which has a higher gross margin, comprising a greater percentage
of operating revenues in the three-month period ended March 31, 1998.
Processing costs increased 33.0%, or $221,346, to $891,835 in the three-month
period ended March 31, 1998, compared to $670,489 in the three-month period
ended March 31, 1997. The increase in 1998 resulted principally from an
increase in customer service expense to support the growth in Chapter 7 sales
and support the new Chapter 13 product, CASEPOWER. Depreciation and
amortization increased 22.9%, or $53,267, to $285,419 in the three-month
period ended March 31, 1998, compared to $232,152 in the three-month period
ended March 31, 1997, primarily due to the purchase of computer equipment for
the Company's Chapter 7 product.
Operating expenses increased 30.7%, or $216,883, to $923,772 in the
three-month period ended March 31, 1998, compared to $706,889 in the
three-month period ended March 31, 1997. Operating expenses as a percentage
of operating revenues decreased to 36.4% in the three-month period ended
March 31, 1998 from 38.1% in the three-month period ended March 31, 1997.
The dollar increase in operating expenses was due to increases in general and
administrative infrastructure necessary to support a higher level of
revenues, including additional sales and marketing expenses related to growth
of the Company's Chapter 7 product. Sales and marketing expenses increased
32.8%, or $70,675, to $285,857 in the three-month period ended March 31,
1998, compared to $215,183 in the three-month period ended March 31, 1997.
Other income (expense), which includes interest income and interest
expense, was ($16,223) in the three-month period ended March 31, 1998,
compared to ($70,357) in the three-month period ended March 31, 1997. This
resulted from a reduction in net interest expense due to interest income from
the investment of the net proceeds from the sale of 1,600,000 shares of
Common Stock in the Company's February 1997 initial public offering and the
reduction in interest expense due to the debt paid with a portion of such net
proceeds.
In connection with the Company's initial public offering, the Company
changed its income tax status to a C corporation. Pro forma earnings
information for the three-month
<PAGE>
period ended March 31, 1997 reflects the effects of corporate income taxes on
historical earnings as if the Company had been subject to federal taxes for
that period. The Company's effective tax rates were 40.0% and 41.0% (pro
forma) for the three-month periods ended March 31, 1998 and March 31, 1997,
respectively.
Pro forma net income increased 138.3%, or $145,414, to $250,547 in the
three-month period ended March 31, 1998, compared to pro forma net income of
$105,133 in the three-month period ended March 31, 1997. Pro forma net income
as a percentage of operating revenues increased to 9.9% in the three-month
period ended March 31, 1998 from 5.7% in the three-month period ended March 31,
1997.
Liquidity and Capital Resources
The Company's liquidity position is strong with total cash and cash
equivalents of $1,651,757 at March 31, 1998 and working capital of $1,924,714.
Net cash provided by operation activities was $113,184 and $200,063 for the
three-months ended March 31, 1997, and March 31, 1998 respectively. The net
cash provided by operating activities in the three-months ended March 31, 1997
consisted primarily of net income before deferred taxes of $95,933 depreciation
and amortization of $256,080 offset primarily by a decrease in accounts payable
accrued expense of $260,752. The increase in depreciation and amortization
relates primarily to the purchase of computer equipment for the installations of
the Company's Chapter 7 product.
During the three-months ended March 31, 1998, net cash provided by
operating activities consisted primarily of net income before deferred taxes of
$270,918 plus depreciation and amortization of $325,155, offset primarily by an
increase in accounts receivable of $223,182 and a decrease in accounts payable
and accrued expenses of $143,499. The increase in depreciation and amortization
relates primarily to the purchase of computer equipment for the installations of
the Company's Chapter 7 product. The outstanding accounts receivable balance
has increased primarily due to the growth of revenue.
The Company has available a $500,000 operating line of credit from a
financial institution as of March 31, 1998 with an interest rate of prime plus
1.0% per annum (currently 9.5%). The Company has two equipment lines of credit,
one of $5000,000, with an interest rate of the bank's base lending rate plus
1.0% per annum (currently 9.5%) and another for $1,000,000, with an interest
rate of the bank's base lending rate plus 0.5% per annum (currently 9.0%). The
balance outstanding on the equipment lines of credit totaled $1,251,945 as of
March 31, 1998.
The Company invested in property and equipment totaling $393,502 and
$490,521 during the three-months ended March 31, 1997, and March 31, 1998,
respectively, which related principally to the installation of computer
equipment for the Company's Chapter 7 product.
The Company incurred expenditures for software development costs totaling
$132,856 for the three-month period ended March 31, 1997, and $156,706 for the
three-month period ended March 31, 1998. These amounts have been capitalized
and are being amortized on a straight-line basis over a maximum five-year
period. Internal software costs incurred in the creation of computer software
products are capitalized as soon as technological feasibility has been
established. Prior to the completion of a detailed program design, development
costs are expensed. Capitalized costs are amortized based on current and future
revenue for each product with an annual minimum equal to straight-line
amortization over the remaining
<PAGE>
estimated economic life of the product, not to exceed five years.
Additionally, the Company anticipates future software development will be at
or above the spending levels of prior years.
On May 1, 1998, the Company filed a registration statement with the
Securities and Exchange Commission for the offering by the Company of
1,000,000 shares of Common Stock and 250,000 shares of Common Stock by
certain selling shareholders. The Company will also grant to the underwriter
for the offering a 45-day option to purchase up to 187,000 additional shares
of Common Stock to cover over-allotments, if any. If the offering is
completed, the Company intends to use approximately $2,000,000 of the
proceeds thereof to pay long-term indebtedness of the Company and to use the
balance of the net proceeds for general corporate purposes, which may include
software development, sales and marketing expansion, capital investment for
computer equipment , potential acquisitions of complementary business or
investments in strategic or joint-venture relationships and working capital.
The Company has no present agreements or undertakings with respect to any
potential acquisitions or strategic investments.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following Exhibit is filed by attachment to this Form 10-QSB:
<TABLE>
<CAPTION>
Exhibit
Number Description of Exhibit Page
- -------- ---------------------- ----
<S> <C> <C>
27 Financial Data Schedule 13
(b) REPORTS ON FORM 8-K:
None
</TABLE>
<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.
ELECTRONIC PROCESSING, INC.
Date: May 15, 1998 /s/ Tom W. Olofson
-----------------------------
Tom W. Olofson
Chairman of the Board
Chief Executive Officer
(Principal Executive Officer)
Director
Date: May 15, 1998 /s/ Nanci R. Trutna
-------------------------------
Nanci R. Trutna
Vice President Finance
(Principal Financial Officer)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ELECTRONIC PROCESSING, INC. STATEMENT OF INCOME FOR THE
THREE MONTHS ENDED MARCH 31, 1998 AND BALANCE SHEET AS OF
MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 1,651,757
<SECURITIES> 0
<RECEIVABLES> 1,342,606
<ALLOWANCES> 5,000
<INVENTORY> 0
<CURRENT-ASSETS> 3,197,766
<PP&E> 7,369,783
<DEPRECIATION> 3,586,714
<TOTAL-ASSETS> 8,552,252
<CURRENT-LIABILITIES> 1,273,052
<BONDS> 0
0
0
<COMMON> 35,000
<OTHER-SE> 5,821,568
<TOTAL-LIABILITY-AND-EQUITY> 8,552,252
<SALES> 2,535,796
<TOTAL-REVENUES> 2,557,226
<CGS> 1,177,254
<TOTAL-COSTS> 1,177,254
<OTHER-EXPENSES> 923,772
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,653
<INCOME-PRETAX> 418,547
<INCOME-TAX> 168,000
<INCOME-CONTINUING> 250,547
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 250,547
<EPS-PRIMARY> .07
<EPS-DILUTED> .07
</TABLE>
