SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1997
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 0-22019
Specialty Care Network, Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 62-1623449
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
44 Union Boulevard, Suite 600, 80228
Lakewood, Colorado (Zip Code)
(Address of Principal Executive Offices)
Registrant's Telephone Number, Including Area Code (303) 716-0041
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
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes No X
--- ---
On April 30, 1997, 15,059,151 shares of the Registrant's common stock,
$.001 par value, were outstanding.
<PAGE>
Specialty Care Network, Inc. and Subsidiary
Index
Part I. Financial Information:
Item 1. Consolidated Condensed Balance Sheets -
March 31, 1997 and December 31, 1996............................1
Consolidated Statements of Income -
Three Months Ended March 31, 1997 and 1996......................2
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1997 and 1996......................3
Notes to Consolidated Condensed Financial Statements............4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.............................8
Part II. Other Information:
Item 2. Changes in Securities..........................................11
Item 6. Exhibits and Reports on Form 8-K...............................11
<PAGE>
Part I. Financial Information
Specialty Care Network, Inc. and Subsidiary
Consolidated Condensed Balance Sheets
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
(Unaudited)
<S> <C> <C>
Assets
Cash and cash equivalents $17,943,778 $ 1,444,007
Accounts receivable, net 15,287,133 13,090,440
Loans to physician stockholders 976,419 976,419
Prepaid expenses and inventories 1,066,060 285,218
-------------------------------
Total current assets 35,273,390 15,796,084
Property and equipment, net 2,202,773 1,889,070
Prepaid offering costs - 747,847
Intangible assets, net 173,072 193,906
Management service agreements 6,166,513 -
Other assets 62,832 58,483
-------------------------------
Total assets $43,878,580 $18,685,390
===============================
Liabilities and stockholders' equity
Current portion of capital lease obligations $ 169,931 $ 140,151
Accounts payable and accrued expenses 976,707 1,295,901
Accrued payroll, incentive compensation and related
expenses 760,682 1,065,881
Income taxes payable 470,492 1,229,275
Due to physician groups 5,220,374 3,759,322
Deferred income taxes 835,034 667,830
-------------------------------
Total current liabilities 8,433,220 8,158,360
Line-of-credit - 4,177,681
Capital lease obligations, less current portion 876,235 964,769
Deferred income taxes 3,033,481 679,713
-------------------------------
Total liabilities 12,342,936 13,980,523
Stockholders' equity:
Preferred stock, $0.001 par value, 2,000,000
shares authorized, no shares issued or outstanding - -
Common stock, $0.001 par value, 50,000,000
shares authorized, 14,662,575 and
11,045,015 shares issued and outstanding in 1997
and 1996, respectively 14,663 11,045
Additional paid-in capital 32,509,434 6,465,205
Accumulated deficit (988,453) (1,771,383)
-------------------------------
Total stockholders' equity 31,535,644 4,704,867
-------------------------------
Total liabilities and stockholders' equity $43,878,580 $18,685,390
===============================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
1
<PAGE>
Specialty Care Network, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-----------------------------------
1997 1996
---------------------- ------------
<S> <C> <C>
Management fee revenue, including reimbursement
of clinic expenses $ 7,297,553 $ -
Costs and expenses:
Clinic expenses 4,924,705 -
Salaries, wages and benefits 703,959 65,086
General and administrative expenses 390,996 46,329
Costs to evaluate and acquire physician practices 21,782 55,000
Interest (income) expense, net (70,819) 5,311
-----------------------------------
5,970,623 171,726
-----------------------------------
Income (loss) before income taxes 1,326,930 (171,726)
Income tax expense 544,000 -
Net income (loss) $ 782,930 $ (171,726)
===================================
Net income (loss) per share $ 0.06 $
===================================
Weighted average number of common shares and
common share equivalents used in computation 13,460,504 12,266,210
===================================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
2
<PAGE>
Specialty Care Network, Inc. and Subsidiary
Consolidated Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31
1997 1996
---------------------------------
<S> <C> <C>
Operating activities
Net income (loss) $ 782,930 $(171,726)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation and amortization 305,286 -
Deferred income tax benefit (102,217) -
Changes in operating assets and liabilities, net of the non-cash effects of
the acquisitions of the net assets of physician groups:
Accounts receivable, net (1,913,058) -
Prepaid expenses and inventories and other assets (785,191) (63,869)
Accounts payable and accrued expenses (414,194) 65,573
Accrued payroll, incentive compensation and related expenses (305,199) -
Income taxes payable (758,783) -
Due to physician groups 1,461,052 -
---------------------------------
Net cash used in operating activities (1,729,374) (170,022)
Investing activities
Purchases of property and equipment (512,122) (110,930)
Acquisitions of physician groups (134,992) -
---------------------------------
Net cash used in investing activities (647,114) (110,930)
Financing activities
Proceeds from initial public offering and underwriters' overallotment, net
of current period offering costs 23,112,694 -
Proceeds from line-of-credit agreement 1,400,000 -
Proceeds from convertible debentures - 500,500
Principal repayments on line of credit agreement (5,577,681) -
Principal repayments on capital lease obligations (58,754) -
Advances from officers and stockholders - -
---------------------------------
Net cash provided by financing activities 18,876,259 500,500
---------------------------------
Net increase in cash and cash equivalents 16,499,771 219,548
Cash and cash equivalents at beginning of period 1,444,007 11,100
---------------------------------
Cash and cash equivalents at end of period $ 17,943,778 $ 230,648
=================================
Supplemental cash flow information
Interest paid $ 87,701 $ -
=================================
Income taxes paid $ 1,405,000 $ -
=================================
Supplemental schedule of noncash investing and financing activities
Effects of the acquisitions of the net assets of physician groups:
Assets acquired $ 6,536,181 $ -
Liabilities assumed (95,000) -
Income tax liabilities assumed (2,623,189) -
Cash outlay (134,992) -
---------------------------------
$ 3,683,000 $ -
=================================
</TABLE>
See accompanying notes to consolidated condensed financial statements.
3
<PAGE>
Specialty Care Network, Inc. and Subsidiary
Notes to Consolidated Condensed Financial Statements (Unaudited)
March 31, 1997
NOTE 1 - Basis of Presentation
The accompanying unaudited consolidated condensed financial statements of
Specialty Care Network, Inc. and subsidiary (collectively the "Company") have
been prepared in accordance with generally accepted accounting principles for
interim financial information and the instructions to Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, these statements include all
adjustments (consisting of normal recurring accruals) considered necessary for a
fair presentation of the results of the interim periods reported herein.
Operating results for the three months ended March 31, 1997 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1997. For further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996.
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. At March 31, 1997, the Company maintained approximately $16.5
million in a money market fund.
Service Agreements: In connection with its affiliation with a physician
group, the Company enters into a long-term service agreement with the physician
group. The Company's acquisition, through an asset purchase, a share exchange
and a merger, of substantially all of the assets of five physician groups on
November 12, 1996, were accounted for pursuant to Securities and Exchange
Commission Staff Accounting Bulletin No. 48, "Transfers of Nonmonetary Assets by
Promoters or Shareholders". In connection with subsequent affiliations with
practice groups, a substantial portion of the consideration paid to the
physician owners of the practice is allocated to the service agreement. The
Company also recognizes the income tax effects of temporary differences related
to all identifiable acquisition intangible assets, including the service
agreements. Such service agreements are amortized over the term of the
underlying agreements, which are generally forty years.
Net Income per Share (1997): Net income per share of common stock is
computed by dividing net income by the weighted average number of common shares
and any dilutive common share equivalents outstanding, including stock options
to purchase 132,500 shares of common stock granted on March 24, 1997. Fully
diluted net income per share is not materially different from primary net income
per share.
4
<PAGE>
Specialty Care Network, Inc. and Subsidiary
Notes to Consolidated Condensed Financial Statements (Unaudited)
(continued)
NOTE 1 - Basis of Presentation (continued)
Net Loss per Share (1996): Net loss per common share is based upon the
weighted average number of common and common equivalent shares outstanding
during the period. Primary and fully diluted loss per share are the same.
Pursuant to Securities and Exchange Commission Staff Accounting Bulletins and
staff policy, common and common share equivalents issued during the 12-month
period prior to the Company's initial public offering at prices below the public
offering price are presumed to have been issued in contemplation of the public
offering, even if antidilutive, and have been included in the calculation as if
these common and common equivalent shares were outstanding for the entire period
presented (using the treasury stock method and the initial public offering price
of $8.00 per share for the Company's common stock).
The Company used a portion of the proceeds from the initial public offering
of its common stock (see Note 4) to repay borrowings under the Company's
Revolving Loan and Security Agreement (the "Credit Facility"). If shares issued
to repay amounts outstanding under the Company's Credit Facility were
outstanding for the three months ended March 31, 1997 and 1996, the net income
(loss) per common share would not have changed from the amounts reported.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, Earnings per Share, which is required
to be adopted on December 31, 1997. At that time, the Company will be required
to change the method currently used to compute earnings per share and to restate
all prior periods. Under the new requirements for calculating primary earnings
per share, the dilutive effect of stock options will be excluded. The impact of
Statement No. 128 on the calculation of primary and fully diluted earnings per
share for the quarters ended March 31, 1997 and 1996 is not expected to be
material.
NOTE 2 - Physician Practice Acquisitions
In March 1997, the Company acquired, through merger, substantially all of
the assets and certain liabilities of three single physician practices in
Florida, Maryland and Georgia. The aggregate consideration paid was 409,222
common shares of the Company and approximately $135,000 in cash. These
transactions were afforded the purchase method of accounting treatment. The
successors to the physician practices entered into service agreements with terms
that were substantially identical to those contained in the service agreements
discussed in Note 11 to the Company's Annual Report on Form 10-K.
5
<PAGE>
Specialty Care Network, Inc. and Subsidiary
Notes to Consolidated Condensed Financial Statements (Unaudited)
(continued)
NOTE 3 - Summarized Physician Group Financial Information
Reconstructive Orthopaedic Associates II, P.C. (successor to Reconstructive
Orthopaedic Associates, Inc.) is an orthopaedic physician practice which
services Philadelphia, Pennsylvania and its surrounding communities. This
physician group is the only practice that contributed in excess of 20% of the
Company's management fee revenue, exclusive of reimbursed clinic expenses, for
the three months ended March 31, 1997.
Reconstructive Orthopaedic Associates, Inc. (the "Predecessor Practice")
entered into an agreement on November 12, 1996, whereby the Company acquired,
through merger, substantially all the net assets of the Predecessor Practice.
Concurrent with the acquisition, the physician shareholders of the Predecessor
Practice formed Reconstructive Orthopaedic Associates II, P.C. (the "Successor
Practice") and entered into a long-term service agreement with the Company. This
transaction constitutes a disposition of certain net practice assets with no
significant change in the operations or ownership between the Predecessor and
Successor Practices, and effectively represents a continuation of the business.
Summarized below is certain financial information of the Successor and
Predecessor Practices.
For the Three Months
Ended March 31
1997 1996
----------------------------------
(Successor (Predecessor
Practice) Practice)
Net patient revenue $4,664,662 $3,975,159
Total revenue $4,681,742 $4,275,614
Total operating expenses $4,086,834 $4,056,970
Income (loss) from operations $ 594,908 $ 218,644
NOTE 4 - Initial Public Offering
In February and March 1997, the Company received net proceeds from its
initial public offering (including proceeds derived from the exercise of the
underwriters' overallotment option) of approximately $22.3 million.
Approximately $5.6 million of the proceeds were utilized to repay all
outstanding borrowings under the Credit Facility
6
<PAGE>
Specialty Care Network, Inc. and Subsidiary
Notes to Consolidated Condensed Financial Statements (Unaudited)
(continued)
NOTE 5 - Contingency
On January 8, 1997, the Company was sued by Michael A. Feiertag, M.D. (a
former physician at Vero Orthopaedics, P.A.) for alleged breach of his
employment agreement. Dr. Feiertag is seeking damages in excess of $500,000. The
Company filed an answer to the complaint denying liability and intends to
vigorously contest the action. On February 3, 1997, the Company initiated
proceedings to have the case removed to the United States District Court for the
Southern District of Florida. The Company believes that the ultimate resolution
of the case will not have a material adverse effect on the Company's financial
position or result of operations.
NOTE 6 - Subsequent Event
On April 4, 1997, the Company acquired, through merger, substantially all
of the assets and certain liabilities of the predecessor to The Orthopaedic and
Sports Medicine Center II, P.A., a Maryland professional association ("OSMC"),
pursuant to the terms of an agreement dated March 24, 1997. OSMC is an
orthopaedic practice with headquarters in Annapolis, Maryland and additional
offices in Prosten and Severna Park, Maryland. In connection with the merger,
the common stock of the predecessor to OSMC was exchanged for $3,246,630 in cash
and 493,909 shares of the Company's common stock. The cash portion of the
consideration was paid from the Company's available funds. The transaction will
be afforded the purchase method of accounting treatment.
The assets acquired from the predecessor to OSMC pursuant to the merger
include certain equipment used in the practice of orthopaedic medicine. In
connection with the acquisition, the Company entered into a long-term service
agreement with OSMC, a new orthopaedic practice formed by the former physician
shareholders of the predecessor to OSMC, pursuant to which the Company has
agreed to provide management, administrative and development services to OSMC.
In return, the Company will earn a service fee based on a percentage of adjusted
pre-tax income, subject to a minimum base service fee for the first three years
of the service agreement.
7
<PAGE>
Item 2:
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This Quarterly Report on Form 10-Q contains forward-looking statements that
address, among other things, the manner in which the Company will account for
future acquisitions in connection with affiliations (see "Accounting Treatment"
below) and the Company's plans to assist practices affiliated with the Company
(see "Results of Operations" below). Actual events or results may differ
materially from those discussed in the forward-looking statements as a result of
various factors, including the nature of any future acquisitions, changes in
accounting principles, regulatory changes and unanticipated capital
requirements, as well as those discussed under "Risk Factors" in Item 1 of the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
Recent Affiliations
In March 1997, the Company affiliated with three single physician practices
(the "Single Physician Practices"). These practices conduct business as separate
entities obtaining services from the Company under service agreements. See Note
2 to the Consolidated Condensed Financial Statements included in this report for
additional information.
On April 4, 1997, the Company affiliated with The Orthopaedic and Sports
Medicine Center II, P.A. ("OSMC"), a nine physician practice with headquarters
in Annapolis, Maryland. OSMC conducts business as a separate entity obtaining
services from the Company under a service agreement. See Note 6 to the
Consolidated Condensed Financial Statements included in this report for
additional information.
Accounting Treatment
The acquisition of assets in March 1997 in connection with the Company's
affiliation with the Single Physician Practices and in April 1997 in connection
with the affiliation with OSMC are accounted for by the purchase method. Future
acquisitions will most likely be accounted for by the purchase method.
Costs of obtaining service agreements are amortized using the straight-line
method over the life of the agreements, currently forty years. Under the service
agreements between the Company and each of its affiliated practices (the
"Affiliated Practices"), the Company is the sole and exclusive manager and
administrator of all day-to-day business functions during the term of the
agreement. In the event of early termination of a service agreement, the related
8
<PAGE>
affiliated practice is required to purchase (except in certain instances where
the purchase is at the Company's option) all of the clinic assets, including the
unamortized portion of intangible assets, generally at the then current market
value and assume all contracts, payables and leases which relate to the
performance of the Company's obligations that are performed at the practice
locations under the service agreement.
Results of Operations
Revenue. During the first quarter 1997, the Company recorded service fees
(including reimbursement of clinic expenses) of approximately $7.3 million.
During the first quarter 1996, the Company was in its start-up phase and,
consequently, the first quarter 1996 revenues are not comparable with the first
quarter 1997 revenues.
In connection with its affiliation with Affiliated Practices, the Company
entered into service agreements (the "Service Agreements") with the Affiliated
Practices. Pursuant to the terms of the Service Agreements, the Company, among
other things, provides facilities and management, administrative and development
services, and employs most non-medical personnel, in return for management
service fees. Such fees are payable monthly and consist of the following: (i)
service fees based on a percentage (the "Service Fee Percentage") ranging from
20%-33% of the Adjusted Pre-Tax Income (as defined in the Service Agreements) of
the Affiliated Practices related to professional services less amounts equal to
certain clinic expenses of the Affiliated Practices ("Clinic Expenses," as
defined more fully in the Service Agreements), not including physician owner
compensation or most benefits to physician owners, and (ii) amounts equal to
Clinic Expenses. For the first three years following affiliation, however, the
portion of the service fees described under clause (i) is the greater of the
calculated service fee or a fixed dollar amount (the "Base Service Fee"), which
was generally determined by applying the respective Service Fee Percentage of
Adjusted Pre-Tax Income for each Affiliated Practice for the twelve months prior
to affiliation. The annual Base Service Fees for Affiliated Practices, including
OSMC, is approximately $11.0 million in the aggregate.
Significant factors that influence revenue of the Affiliated Practices
include patient volume, number of physicians, specialty and subspecialty mix,
payor mix and associated ancillary services. The Company plans to assist the
Affiliated Practices by providing management, capital and other resources
required to develop new services, to recruit additional physicians to its
Affiliated Practices and to secure managed care contracts.
Operating Expenses. The operating costs of the Company were approximately
$6.0 million during the first quarter 1997. During the first quarter 1996, the
Company was in its start-up phase and, consequently, the first quarter 1996
costs are not comparable with the first quarter 1997 costs.
The clinic expenses incurred by the Company include the salaries, wages and
benefits
9
<PAGE>
of personnel located at the Affiliated Practices (other than physician owners
and certain technical medical personnel), supplies, and expenses involved in
administering the clinical functions of the Affiliated Practices. Reimbursement
for the clinic expenses incurred by the Company, pursuant to the terms of the
Service Agreements, is a component of the management fee revenue recorded by the
Company. In addition, the Company incurs personnel and administrative expenses
in connection with its corporate offices, which provides management,
administrative and development services to the Affiliated Practices. These
personnel and administrative expenses are included in salaries, wages and
benefits and general and administrative expenses.
Liquidity and Capital Resources
In February and March 1997, the Company received net proceeds from its
initial public offering of approximately $22.3 million. Approximately $5.6
million of the proceeds were utilized to repay all outstanding borrowings under
its credit facility with a bank (the "Credit Facility"). In addition,
approximately $3.2 million of the proceeds were utilized to acquire, through
merger, substantially all of the assets and certain liabilities of the
predecessor to OSMC.
The Company has a $30.0 million Credit Facility, including a $25.0 million
Acquisition Facility and $5 million Working Capital Facility. However, the
Company's aggregate borrowing cannot exceed an established borrowing base, which
is a multiple of the Company's trailing twelve months cash flow, subject to
certain adjustments, less existing indebtedness. At April 30, 1997, the
Company's borrowing base under the Credit Facility was $14.8 million. At May 9,
1997, the Company did not have any borrowings outstanding under the Credit
Facility.
10
<PAGE>
PART II. Other Information
Item 2. Changes in Securities
In March 1997, the Company acquired, through merger, substantially all of
the assets and certain liabilities of three single physician practices in
Tallahassee, Florida, Thomasville, Georgia and Baltimore, Maryland. In
connection with the transactions, the Company issued to the physician owners of
the practices an aggregate of 409,222 shares of Common Stock.
The Company effected the foregoing transactions in reliance on the
exemption from registration provided under Section 4(2) of the Securities Act of
1933. In this regard, the Company believes that all of such transactions
complied with the requirements of Rule 506 under the Act. No commissions were
paid in connection with the transactions.
Item 6. Exhibits and Reports on Form 8-K
The following is a list of exhibits filed as part of this quarterly report
on Form 10-Q.
Exhibit
Number Description
11 Statement re: computation of per share earnings
27 Summary financial data schedule
(b) No reports were filed on Form 8-K during the quarter for which this
report is filed.
11
<PAGE>
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 thereunto duly authorized.
SPECIALTY CARE NETWORK, INC.
Date_________________________ By:____________________________
D. Paul Davis
Vice President of Finance/Controller
(Principal Accounting Officer)
12
<PAGE>
Specialty Care Network, Inc.
Exhibit 11 - Computation of Per Share Earnings
<TABLE>
<CAPTION>
For the Quarter For the Quarter
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
Average weighted shares outstanding 12,786,995 1,690,000
Net effect of convertible debentures - 2,020,901
Acquisition shares issued - 7,659,115
Dividends paid to promoters using
treasury stock method - 192,234
Stock sold to Tallahassee Orthopedic
Clinic, P.A. - 100,000
Net effect of common stock options
based on the treasury stock method
using initial public offering price 673,508 603,961
----------- -----------
Total weighted average number of
common shares and common share
equivalents 13,460,503 12,266,211
Net income (loss) $ 782,930 $ (171,726)
----------- -----------
Net income (loss) per common share $ 0.06 $ (0.01)
=========== ===========
</TABLE>
13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1.000
<CASH> 1,451,693
<SECURITIES> 16,492,085
<RECEIVABLES> 28,210,762
<ALLOWANCES> 16,804,939
<INVENTORY> 61,224
<CURRENT-ASSETS> 34,431,493
<PP&E> 4,716,628
<DEPRECIATION> 2,513,855
<TOTAL-ASSETS> 43,950,270
<CURRENT-LIABILITIES> 8,392,350
<BONDS> 0
0
0
<COMMON> 14,663
<OTHER-SE> 31,541,331
<TOTAL-LIABILITY-AND-EQUITY> 43,950,270
<SALES> 7,297,553
<TOTAL-REVENUES> 7,297,553
<CGS> 0
<TOTAL-COSTS> 5,970,623
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (70,819)
<INCOME-PRETAX> 1,326,930
<INCOME-TAX> 544,000
<INCOME-CONTINUING> 782,930
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 782,930
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
