Form 10-Q Quarterly Report
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
ACT OF 1934
Commission File Number 0-22693
SYSCOMM INTERNATIONAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2889809
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
20 Precision Drive
Shirley, N.Y. 11967
(Address of Principal Executive Offices and Zip Code)
(516) 205-1000
(Registrant's telephone number, including area code)
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 ________
Number of shares outstanding of the issuer's Common Stock, par value $.01
per share, as of May 7, 1999: 4,744,205 shares.
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
SYSCOMM INTERNATIONAL CORPORATION
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
3/31/99 3/31/98 3/31/99 3/31/98
<S> <C> <C> <C> <C>
Net sales $ 14,354,827 $ 22,227,999 $ 41,683,897 $ 50,290,282
Cost of sales 12,433,725 20,354,849 36,923,683 45,602,875
------------- ------------- ------------- -------------
Gross profit 1,921,102 1,873,150 4,760,214 4,687,407
------------- ------------- ------------- -------------
Selling & administrative expenses 1,553,255 2,024,003 3,454,705 4,029,204
------------- ------------- ------------- -------------
Income (loss) from operations 367,847 (150,853) 1,305,509 658,203
------------- ------------- ------------- -------------
Other income (expenses)
Interest expenses (79,567) (208,075) (181,215) (455,869)
Other 1,617 3,788 17,202 6,294
------------- ------------- ------------- -------------
Total other expenses (77,950) (204,287) (164,013) (449,575)
------------- ------------- ------------- -------------
Income (loss) from operations
before income taxes 289,897 (355,140) 1,141,496 208,628
Provision (benefit) for income taxes 118,000 (159,000) 459,000 88,000
------------- ------------- ------------- -------------
Net income (loss) $ 171,897 $ (196,140) $ 682,496 $ 120,628
============= ============= ============= =============
Net income (loss) per common share
Basic $ .04 $ (.04) $ .14 $ .03
Diluted $ .04 $ (.04) $ .14 $ .02
Weighted average number of common
shares outstanding
Basic 4,752,477 4,555,540 4,759,914 4,555,540
Diluted 4,758,935 4,981,619 4,759,914 4,987,451
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SYSCOMM INTERNATIONAL CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1999 September 30, 1998
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 1,941,765 $ 914,509
Accounts receivable, net 12,948,336 19,612,934
Inventory 681,853 2,586,236
Other 587,859 894,549
---------- ----------
Total current assets 16,159,813 24,008,228
---------- ----------
Property, plant and equipment, net 3,383,571 3,509,345
Other assets 363,692 339,692
---------- ----------
Total assets $ 19,907,076 $ 27,857,265
=============== =============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Supplier credit facility - 0 - $ 3,020,234
Accounts payable and accrued liabilities 5,559,857 11,578,993
Income taxes payable 399,627 - 0 -
Other current liabilities 97,298 94,764
--------- ----------
Total current liabilities 6,056,782 14,693,991
Long-term liabilities 1,659,102 1,611,355
--------- ----------
Total liabilities 7,715,884 16,305,346
--------- ----------
Stockholders' Equity:
Preferred stock, no par value - 0 - - 0 -
Common stock, $.01 par value 55,152 55,152
Additional paid-in capital 6,317,617 6,317,617
Retained earnings 6,605,032 5,922,536
Less: Treasury stock (at cost) (786,609) (743,386)
---------- ----------
Total stockholders' equity 12,191,192 11,551,919
---------- ----------
Total liabilities and
stockholders' equity $ 19,907,076 $ 27,857,265
================= ==============
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SYSCOMM INTERNATIONAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended March 31
1999 1998
<S> <C> <C>
Cash Flows From Operating Activities
Net Income $ 682,496 $ 120,628
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 165,000 136,800
Changes in assets and liabilities
Accounts receivable 6,747,294 2,977,314
Inventory 1,904,383 4,721,827
Prepaid expenses 25,714 - 0 -
Recoverable income taxes 198,280 - 0 -
Other assets (24,000) (363,671)
Accounts payable and accrued liabilities (6,019,136) (3,708,819)
Income taxes payable 399,627 (499,214)
--------- ---------
Net Cash Provided by Operating Activities 4,079,658 3,384,865
--------- ---------
Cash Flows from Investing Activities
Purchase of fixed assets (39,226) (1,996,229)
-------- -----------
Net Cash Used in Investing Activities (39,226) (1,996,229)
-------- -----------
Cash Flows From Financing Activities
Net proceeds of term loan 100,000 - 0 -
Net payments under supplier credit facility (3,020,234) (1,180,586)
Payments of long-term liabilities (49,719) (21,235)
Purchase of treasury stock (43,223) - 0 -
----------- -----------
Net Cash Used by Financing Activities (3,013,176) (1,201,821)
----------- -----------
Net Increase in Cash and Cash Equivalents 1,027,256 186,815
Cash and Cash Equivalents at Beginning of Period 914,509 437,594
----------- ----------
Cash and Cash Equivalents at End of Period $ 1,941,765 $ 624,409
============= ===========
Supplemental Disclosures of Cash Flow Information
Cash paid during the year for:
Income taxes $ 188,500 $ 788,500
Interest 181,215 455,869
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
SYSCOMM INTERNATIONAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. The condensed consolidated financial statements of SysComm International
Corporation (the "Company") are unaudited (except for the balance sheet
information as of September 30, 1998, which is derived from the Company's
audited financial statements) and reflect all adjustments (consisting only of
normal recurring adjustments) which are, in the opinion of management, necessary
for a fair presentation of the financial position and operating results for the
interim periods. The condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes thereto,
contained in the Company's Annual Report. The results of operations for the six
months ended March 31, 1999 are not necessarily indicative of the results for
the entire fiscal year ending September 30, 1999, or any future interim period.
2. Commitments and Contingencies
(A) Employment Agreements
Effective June 17, 1997, the Company entered into two-year employment
agreements with four senior executives. These contracts expire on September 30,
1999. The employment agreements include base salary and incentive plans, which
are reviewed on an annual basis by the Company's Compensation Committee. For
fiscal 1999, John H. Spielberger and Thomas J. Baehr will receive a base salary
of $128,000 each and Dennis R. Wilson will receive a base salary of $112,000.
Under the incentive plan for fiscal year 1999, John H. Spielberger and Thomas J.
Baehr will each receive 2 1/2% of the earnings before income taxes on a
quarterly basis and will receive on an annual basis an additional 1% of the
earnings before taxes. Dennis R. Wilson will receive on an annual basis 1% of
the earnings before taxes. In addition, all three executives have certain annual
goals and objectives, which if met, could earn them additional incentives.
Norman M. Gaffney, although still a director of the Company, ceased being a
senior executive in January 1999.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Conditions and
Results of Operations.
Results of Operations:
Three Months Ended March 31, 1999 Compared with Three Months Ended March
31, 1998
Net income for the three months ended March 31, 1999 was $171,897 or $.04
per share compared to a net loss of $196,140 or $.04 per share. The improvement
in net income was the result of higher gross margins and lower selling and
administrative and interest expenses.
Revenues
Sales for the three months ended March 31, 1999 were $14,354,827 compared
with $22,227,999 for the same period last year, a decrease of $7,873,172 or
35.4%. This decrease in sales reflects what the Company believes is an overall
industry slowdown partly attributable to customers deferring purchases of new
computer systems due to Year 2000 uncertainties. In addition, sales have also
been affected by the decision to forego business that cannot meet minimum
standards of profitability.
Gross Profit
Gross Profit as a percentage of sales increased to 13.4% for the three
months ended March 31, 1999 compared to 8.4% for the same period last year. This
increase reflects the Company's strategy of focusing on mid-range computer sales
and services. In addition, the Company has received more favorable pricing
through its new distributor-based supply arrangement than it previously had.
Selling & Administrative Expenses
Selling and administrative expenses for the three months ended March 31,
1999 decreased by $470,748 or 23.2% to $1,553,255 from $2,024,003 for the same
period last year. This decrease in expenses is due to a reduction in payroll and
payroll related expenses as well as the result of a company-wide initiative
focused on cost containment.
Interest Expense
Interest expense for the three months ended March 31, 1999 decreased
$128,508 or 61.7% to $79,567 from $208,075 for the same period last year. The
decrease is attributed to a reduction in borrowing as a result of the Company's
reduction in inventory to $681,853 from $7,922,516 as of the same quarter-end
last year and a reduction in accounts receivable to $12,948,336 from $20,231,842
as of the same quarter-end last year. The inventory reduction is due primarily
to the Company's decision to utilize a new distributor-based supply arrangement.
Accounts receivable is lower due to reduced sales levels and more stringent
monitoring of collections.
<PAGE>
Income (loss) from Operations before Income Taxes
Income before income taxes for the three months ended March 31, 1999 was
$289,897 compared with a loss of $355,140 for the same period last year. The
increase of $645,037 was attributable to both increased gross profit margins and
reductions in selling and administrative expenses and interest expense.
Taxes
The Company's effective tax rate for the three months ended March 31, 1999
was 40.7% compared to a tax benefit of $159,000 for the same period last year.
Six Months Ended March 31, 1999 Compared With Six Months Ended March 31,
1998.
Net income for the six months ended March 31, 1999 increased by $561,688 to
$682,496 from $120,628 for the same period last year. Basic earnings per share
were $.14 for the six months ended March 31, 1999 compared to $.03 for the same
period last year. Basic earnings per share was calculated using 4,759,914 common
shares outstanding for the six months ended March 31, 1999 versus 4,555,540 for
the same period last year. The improved net income is the result of higher gross
profit margins and lower selling and administrative expenses and interest
expense.
Revenues
Sales for the six months ended March 31, 1999 decreased by $8,606,385 or
17.1% to $41,683,897 from $50,290,282 for the same period last year. This
decrease reflects what the Company believes is an overall industry slowdown
partly attributable to customers deferring purchases of new computer systems due
to Year 2000 uncertainties. Also, sales have been affected by the Company's
decision to forego business that cannot meet minimum standards of profitability.
Gross Profit
Gross profit as a percentage of sales were 11.4% for the six months ended
March 31, 1999 compared to 9.3% for the same period last year. The increase
reflects the Company's strategy to focus on mid-range computer sales and
services. Additionally, the Company has received better pricing through its new
distributor based supply arrangement for purchasing product.
Selling & Administrative Expenses
Selling and administrative expenses for the six months ended March 31, 1999
decreased $574,499 or 14.3% to $3,454,705 from $4,029,204 for the same period
last year. The decrease in expenses is due to a company-wide initiative focused
on cost containment as well as a reduction in payroll and payroll related
expenses, the Company had 69 employees as of March 31, 1999 compared to 80
employees as of March 31, 1998.
<PAGE>
Interest Expense
Interest expense for the six months ended March 31, 1999 decreased $274,654
or 60.3% to $181,215 compared to $455,869 for the same period last year. The
decrease in interest expense is directly related to the significant decreases in
both inventory and accounts receivable.
Income from Operations before Income Taxes
Income from operations before income taxes for the six months ended March
31, 1999 was $1,141,496, an increase of $932,868 from the $208,628 in the same
period last year. The increase is attributable to the increase in gross profit
margins and the reduction in selling and administrative expenses and interest
expenses.
Taxes
The Company's effective tax rate for the six months ended March 31, 1999
was 40.2% compared to 42.2% for the same period last year.
Liquidity and Capital Resources
The Company's current ratio at March 31, 1999 and 1998 was 2.67 and 1.41,
respectively. Working capital at March 31, 1999 was $10,103,031 an increase of
$1,534,188 over the same period last year. Working capital increased due to the
receipt of the proceeds of the mortgage taken on its Shirley facility.
Cash provided by operating activities was $4,079,658 and $3,384,865 for the
six months ended March 31, 1999 and 1998, respectively, due primarily to
reductions in the Company's inventory and accounts receivable. Cash used in
investing activities was $39,226 and $1,996,229 for the six months ended March
31, 1999 and 1998, respectively, and was used to purchase computer equipment in
1999 and finance the Company's new facility in 1998. Cash used in financing
activities during the six months ended March 31, 1999 and 1998 was $3,013,176
and $1,201,821, respectively, and represented net payments made under the
Supplier Credit Facility and long-term debt in 1999 and 1998 and the purchase of
treasury stock in 1999.
The Company has a credit arrangement with IBM Credit Corporation pursuant
to which it may borrow up to 85% of its eligible receivables and 100% of
eligible inventory up to a maximum of $27,500,000. In addition to the permanent
credit line, there are various credit line uplifts during the year, which can
increase the line of credit by as much as 50%. As of March 31, 1999, interest on
outstanding borrowings was prime or prime plus 6.5% should the Company fail to
meet certain collateral requirements. Throughout fiscal 1998 and the first six
months of fiscal 1999, the Company has been in a positive collateral position
with IBM Credit. The Company believes that its present line of credit with IBM
Credit Corporation, coupled with its current earnings capacity, will be
sufficient to meet its capital and operational requirements for at least the
next twelve months.
<PAGE>
Year 2000 Compliance
The Year 2000 issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Certain of the
Company's computer equipment, software and devices with embedded technology that
are time-sensitive may recognize a date using "00" as the year 1900, rather than
the year 2000. This could result in a system failure or miscalculation causing
disruptions of operations, including, among other things, a temporary inability
to process transactions, send invoices, or engage in normal business activities.
The Company has undertaken various initiatives intended to ensure that its
computer equipment and software will function properly with respect to dates in
the year 2000 and thereafter. For this purpose, the term "computer equipment and
software" includes systems that are commonly thought of as information
technology ("IT") systems, including accounting, data processing and scanning
equipment.
Based upon its identification and assessment efforts to date, the Company
believes that certain of its computer equipment and software that it currently
uses will require replacement or modification. In addition, in the ordinary
course of replacing computer equipment and software, the Company attempts to
obtain replacements that it believes are Year 2000 compliant. Utilizing internal
resources to identify and assess needed Year 2000 remediation, the Company began
its Year 2000 identification, assessment, remediation, and testing efforts in
October 1997 and anticipates it will be completed by September 30, 1999. The
Company estimates that as of March 31, 1999, it had completed approximately 85%
of the initiatives that it believes will be necessary to fully address potential
Year 2000 issues relating to its computer equipment and software. The projects
comprising the remaining 15% of the initiatives are in process and are expected
to be completed on or about September 30, 1999.
<TABLE>
<CAPTION>
Year 2000 Initiative Percent Completed
- -------------------------------------------------------------------------------------------------
<S> <C>
Initial IT systems identification and assessment 98%
Remediation and testing regarding central system issues 85%
Remediation and testing regarding branch departmental system issues 85%
Electronic data interchange trading partners conversions 75%
Identification, assessment, remediation, and testing regarding
desktop and individual system issues 85%
</TABLE>
The Company has surveyed its significant vendors and service providers to
determine the extent to which interfaces with such entities and supply sources
are vulnerable to Year 2000 issues and whether the products and services
purchased from or by such entities are Year 2000 compliant. The Company expects
all its vendors and service providers to address all such significant Year 2000
issues on a timely basis. Thus far, for vendor or service providers who
responded to our Year 2000 readiness survey, no one has indicated any
anticipation of a disruption in our business dealings due to Year 2000 concerns.
The Company believes that the cost of its Year 2000 identification,
assessment, remediation, and testing efforts, as well as currently anticipated
costs to be incurred by the Company with respect to Year 2000 issues of third
parties, will not be material. The Company presently believes that the Year 2000
issue will not pose significant operational problems for the Company. However,
if all Year 2000 issues are not properly identified, or assessment, remediation,
and testing are not effected timely with respect to Year 2000 problems that are
identified, there can be no assurance that the Year 2000 issue will not
materially adversely impact the Company's results of operations or adversely
affect the Company's relationships with customers, vendors or others.
Additionally, there can be no assurance that the Year 2000 issues of other
entities will not have a material adverse impact on the Company's systems or
results of operations.
The Company has begun, but not yet completed, an analysis of the
operational problems and costs (including loss of revenue) that would be
reasonably likely to result from the failure by the Company and certain third
parties to complete efforts to achieve Year 2000 compliance on a timely basis. A
contingency plan has not been developed for dealing with the most reasonably
likely worst case scenario, and such scenario has not yet been clearly
identified. The Company currently plans to complete such analysis and
contingency planning by September 30, 1999.
<PAGE>
The costs of the Company's Year 2000 identification, assessment,
remediation, and testing efforts and the dates on which the Company believes it
will complete such efforts are based upon management's good-faith estimates,
which were derived using numerous assumptions regarding future events, including
the continued availability of certain resources, possible third-party
remediation plans, and other factors. There can be no assurance that these
estimates will prove to be accurate, and actual results could differ materially
from those currently anticipated. Specific factors that could cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in Year 2000 issues, the ability to identify, assess,
remediate, and test all relevant computer codes and imbedded technology, and
similar uncertainties. In addition, variability of definitions of "Year 2000
Compliant" and the myriad of different products and services, and combinations
thereof, sold by the Company may lead to claims whose impact on the Company is
not currently estimateable. No assurance can be given that the aggregate cost of
defending and resolving such claims, if any, will not materially adversely
affect the Company's results of operations. Although some of the Company's
agreements with manufacturers and others from whom it purchases products for
resale contain provisions requiring such parties to indemnify the Company under
such circumstances, there can be no assurance that such indemnification
arrangements will cover all of the Company's liabilities and costs related to
claims by third parties related to Year 2000 issues.
Forward-Looking Statements
Certain information contained in this Quarterly Report on Form 10-Q,
including, without limitation, information appearing under Part I, Item 2,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," are forward-looking statements (within the meaning of Section 27A
of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934). Factors set forth in the Company's Prospectus filed June 17, 1997, or in
the Company's other Securities and Exchange Commission filings, could affect the
Company's actual results and could cause the Company's actual results to differ
materially from those expressed in any forward-looking statements made by, or on
behalf of, the Company in this Quarterly Report on Form 10-Q.
<PAGE>
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
(a) On January 28, 1999, the Company held its Annual Meeting of
Stockholders (the "Meeting").
(b) At the Meeting, the Stockholders of the Company elected Norman M.
Gaffney, John C. Spielberger and Lawrence S. Brochin as Class II directors.
(c) At the Meeting, the Stockholders approved the selection of
Albrecht, Viggiano, Zureck & Company, P.C. as the Company's independent auditors
for the fiscal year ended September 30, 1999.
(d) In addition to electing directors and approving the independent
auditors at the Meeting, the Stockholders of the Company approved the adoption
of the Company's 1999 Stock Purchase Plan.
(e) The following sets forth results of voting on each matter voted upon at the
Meeting:
1. Election of Directors
For Against
Norman M. Gaffney 4,388,815 17,500
John C. Spielberger 4,381,088 25,227
Lawrence S. Brochin 4,388,815 17,500
2. Adoption of the Company's 1999 Stock Purchase Plan
For Against
4,333,515 58,700
3. Selection of Albrecht, Viggiano, Zureck & Company, P.C. as the
Company's independent auditors for the fiscal year ended
September 30, 1999
For Against
4,398,415 6,200
Item 5. Other Information
Effective March 15, 1999, the listing of the Company's securities was
transferred from the NASDAQ National Market to the NASDAQ SmallCap Market. This
transfer was the result of the Company's failure to maintain a market value of
public float greater than or equal to $5,000,000 in accordance with Marketplace
Rule 4450(a)(2) under Maintenance Standard 1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
*3.1 Amended and Restated Certificate of Incorporation
*3.2 Amended and Restated By-Laws
*4.1 Form of Common Stock Certificate
*4.2 Form of Representative Warrant
11 Statement Re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
________________________________________________________________________
*Incorporated by reference from the Registrant's Registration Statement on
Form S-1, Registration No. 333-25593
<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.
SYSCOMM INTERNATIONAL CORPORATION
(Registrant)
/s/ John H. Spielberger
---------------------------------
John H. Spielberger
President and Chief Executive Officer
/s/ Dennis R. Wilson
---------------------------------
Dennis R. Wilson
Vice President, Chief Financial Officer
And Secretary
Exhibit 11
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
Six Months Ended March 31
1999 1998
Weighted average shares outstanding
Common stock 4,759,914 4,555,540
Common stock equivalents - 0 - . 431,911
--------- ---------
Weighted average common shares and
equivalents 4,759,914 4,987,451
========= =========
Net income 682,496 $ 120,628
========= =========
Net income per share:
Basic $ 0.14 $ 0.03
Diluted $ 0.14 $ 0.02
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET, CONSOLIDATED STATEMENT OF OPERATIONS AND
CONSOLIDATED STATEMENT OF CASH FLOWS INCLUDED IN THE COMPANY'S FORM 10-Q FOR THE
PERIOD ENDING MARCH 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
<ARTICLE> 5
<CIK> 0001037417
<NAME> SYSCOMM INTERNATIONAL CORPORATION
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 1,941,765
<SECURITIES> 0
<RECEIVABLES> 3,095,729
<ALLOWANCES> 147,393
<INVENTORY> 681,853
<CURRENT-ASSETS> 6,159,813
<PP&E> 4,374,084
<DEPRECIATION> 990,513
<TOTAL-ASSETS> 19,907,076
<CURRENT-LIABILITIES> 6,056,782
<BONDS> 0
0
0
<COMMON> 55,152
<OTHER-SE> 12,136,040
<TOTAL-LIABILITY-AND-EQUITY> 19,907,076
<SALES> 41,683,897
<TOTAL-REVENUES> 41,683,897
<CGS> 36,923,683
<TOTAL-COSTS> 36,923,683
<OTHER-EXPENSES> 3,437,503
<LOSS-PROVISION> 39,000
<INTEREST-EXPENSE> 181,215
<INCOME-PRETAX> 1,141,496
<INCOME-TAX> 459,000
<INCOME-CONTINUING> 682,496
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 682,496
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
