<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 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, 1998
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 No. 000-22941
EXECUSTAY CORPORATION
(Exact name of registrant as specified in its charter)
MARYLAND 52-2042280
(State of Incorporation) (I.R.S. Employer identification No.)
7595 RICKENBACKER DRIVE
GAITHERSBURG, MARYLAND 20879
(Address of principal executive offices)
(301) 948-4888
(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
----- -----
At May 6, 1998, there were outstanding 7,028,955 shares of the Company's
common stock.
<PAGE> 2
EXECUSTAY CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of March 31, 1998 (unaudited)
and December 31, 1997 3
Consolidated Statements of Operations for the
Three Months Ended March 31, 1998 and 1997 (unaudited) 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1998 and 1997 (unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risks 10
PART II. OTHER INFORMATION
Item 1. Legal proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES
EXHIBIT INDEX
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1 CONSOLIDATED FINANCIAL STATEMENTS
EXECUSTAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
--------------------------------------
DECEMBER 31, MARCH 31,
1997 1998
--------------------------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents $16,134,958 $ 8,079,389
Accounts receivable, net 5,657,600 5,276,635
Prepaid rent and other 723,350 783,745
Property on or held for lease, net 4,912,013 5,257,466
Property and equipment, net 2,383,958 2,620,522
Deferred tax-asset 241,000 151,000
Intangible and other assets 13,777,058 15,906,201
--------------------------------------
Total assets $43,829,937 $38,074,958
======================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Bank line of credit $ 5,000,000 $ -
Capital lease obligation 1,519,844 1,510,277
Accounts payable 2,632,348 2,575,218
Accrued and other liabilities 3,651,960 1,747,225
--------------------------------------
Total liabilities 12,804,152 5,832,720
Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares authorized,
none issued and outstanding - -
Common stock, $.01 par value; 45,000,000 shares authorized,
6,983,500 and 7,028,955 shares issued and outstanding 69,835 70,290
Additional paid-in capital 29,720,738 30,120,283
Retained earnings 1,235,212 2,051,665
--------------------------------------
Total stockholders' equity 31,025,785 32,242,238
--------------------------------------
Total liabilities and stockholders' equity $43,829,937 $38,074,958
======================================
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
EXECUSTAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
--------------------------------------
1997 1998
--------------------------------------
(UNAUDITED)
<S> <C> <C>
Revenue:
Interim housing revenue $ 6,910,662 $16,038,650
Furniture and housewares revenue 2,734,642 2,488,650
--------------------------------------
Total revenue 9,645,304 18,527,300
Operating costs and expenses:
Cost of revenue 6,167,083 12,998,717
Personnel and payroll costs 1,674,504 2,879,260
Occupancy costs and nonrental
depreciation and amortization 282,835 601,826
Other operating costs 505,983 773,427
--------------------------------------
Total operating costs and expenses 8,630,405 17,253,230
--------------------------------------
Earnings from operations 1,014,899 1,274,070
Interest expense (income) 80,535 (87,383)
--------------------------------------
Earnings before income taxes 934,364 1,361,453
Income tax expense - 545,000
--------------------------------------
Net income $ 934,364 $ 816,453
======================================
Pro Forma Data
Historical earnings before income taxes $ 934,364 $ 1,361,453
Provision for income taxes 374,000 545,000
--------------------------------------
Pro forma net income $ 560,364 $ 816,453
======================================
Pro forma income per share - basic $ 0.14 $ 0.12
======================================
- diluted $ 0.14 $ 0.12
======================================
Weighted average common shares outstanding - basic 4,074,000 7,028,955
======================================
- diluted 4,074,000 7,042,407
======================================
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
EXECUSTAY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
-----------------------------------------
1997 1998
-----------------------------------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 934,364 $ 816,453
Adjustments to reconcile net income to net cash provided
By operating activities
Provision for doubtful accounts and vacancy reserve 278,641 163,838
Depreciation and amortization 538,856 846,864
Deferred income tax benefit - 90,000
Net purchase of property on or held for lease (198,651) (1,058,558)
Changes in assets and liabilities
(Increase) decrease in accounts receivable (852,688) 179,881
Increase in prepaid rent and other (818,356) (47,345)
Decrease (increase) in other assets 12,260 (191,524)
Decrease accounts payable (485,081) (187,901)
Decrease in accrued and other liabilities (337,838) (276,735)
-----------------------------------------
Total adjustments (1,862,857) (481,480)
-----------------------------------------
Net cash (used in) provided by operating activities (928,493) 334,973
-----------------------------------------
Cash flows from investing activities:
Purchases of property and equipment (55,592) (134,605)
Net decrease in due from unconsolidated affiliates 15,067 65,958
Cash paid for acquisitions - (3,312,328)
-----------------------------------------
Net cash used in investing activities (40,525) (3,380,975)
-----------------------------------------
Cash flows from financing activities:
Net borrowings (payments) on line of credit 941,029 (5,000,000)
Distributions to stockholders (122,256) -
Payments on bank loans (338,027) -
Payments on capital lease obligations (8,677) (9,567)
-----------------------------------------
Net cash provided by (used in) financing activities 472,069 (5,009,567)
-----------------------------------------
Net decrease in cash (496,949) (8,055,569)
Cash at beginning of period 503,099 16,134,958
-----------------------------------------
Cash at end of period $ 6,150 $8,079,389
=========================================
Supplemental cash flows information:
Interest paid during the period $ 57,164 $ 38,955
Income taxes paid during the period - $ 601,869
Non-cash financing and investing activities:
Issuance of common stock in connection with acquisitions - $ 400,000
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
EXECUSTAY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Execustay Corporation (the "Company") is a provider of interim housing for
corporate clients and professionals. In addition to providing fully
furnished housing, the Company also rents housewares and furniture to
property management companies and apartment communities. The Company has
offices in the mid-atlantic, southeast and western regions of the United
States.
The summarized financial information included herein does not include all
disclosures required to be included in a complete set of financial
statements prepared in conformity with generally accepted accounting
principles. Such disclosures were included with the financial statements of
the Company at December 31, 1997, and for the year then ended included in
the 1997 Annual Report on Form 10-K, filed by the Company with the
Securities and Exchange Commission.
The financial information contains all adjustments (consisting of normal
recurring accruals) which, in the opinion of management, are deemed
necessary for a fair presentation of the results for the interim periods.
The results for the interim periods are not necessarily indicative of
results that may be expected for the full fiscal year.
NOTE B - PRO FORMA INFORMATION
Prior to the consummation of the initial public offering, the Company filed
its federal and state income tax returns under the provisions of Subchapter
S of the Internal Revenue Code. Accordingly, no provision was provided in
the accompanying financial statements for federal and state income taxes
for the S Corporation periods, since the income of the Company was taxable
directly to its stockholders. On August 27, 1997, the Company converted to
a C Corporation and became subject to both federal and state income taxes.
The pro forma adjustment in the consolidated statements of operations for
the quarter ended March 31, 1997 reflects a provision for income taxes
based upon pro forma pretax earnings as if the Company had been subject to
federal, state and local income taxes. The pro forma income tax provision
has been prepared in accordance with Statement of Financial Accounting
Standards ("SFAS") No. 109.
PRO FORMA EARNINGS PER SHARE
Pro forma earnings per share are based upon the weighted average number of
common and common equivalents shares outstanding during the period. The
shares outstanding for March 31, 1997 give retroactive effect to the
recapitalization and stock split of the Company that was effected in
conjunction with the Company's initial public offering, as well as 324,000
shares deemed to be sold by the Company (at the initial offering price of
$10.00 per share) to fund the S-Corporation distribution in excess of the
previous 12 months undrawn earnings totaling $3.1 million, and the $1.1
million distribution declared on June 13, 1997.
6
<PAGE> 7
EXECUSTAY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
NOTE C - RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1997, SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information," was issued. The statement must be adopted by the
Company on December 31, 1998. Under provisions of this statement, the
Company will be required to modify or expand the financial statement
disclosures for operating segments, products and services, and geographic
areas. Implementation of this disclosure standard will not affect the
Company's financial position or results of operations.
In December 1997, SFAS No. 132, "Employers' Disclosures about Pensions and
Other Postretirement Benefits," was issued and is effective for the
Company's 1998 fiscal year. The statement revises current disclosure
requirements for employers' pension and other retiree benefits.
Implementation of this disclosure standard will not affect the company's
financial position or results of operations.
NOTE D - ACQUISITIONS
On January 1, 1998, the Company purchased 100% of the outstanding stock of
Corporate Accommodations, Inc., an interim housing company in Connecticut,
for approximately $1,450,000, consisting of $1,050,000 in cash and 45,455 of
the Company's unregistered shares of common stock valued at $400,000 at the
time of the purchase. The total purchase price is subject to a post-closing
adjustment based upon the seller's December 31, 1997 tangible net book
value. The purchase price included seller non-compete agreements and
employment agreements with certain employees of seller. The Company has
accounted for the transaction in 1998 using purchase accounting and recorded
intangible assets including $ 25,000 relating to a non-compete agreement and
goodwill of approximately $1.1 million.
On February 1, 1998 the Company purchased the net assets of F.L. Taylor
Corporation, an interim housing company located in Arizona, for
approximately $837,000. The total purchase price is subject to a post
closing adjustment based upon the seller's increase in gross profit over
gross profit for 1997. The purchase price also included a seller non-compete
agreement. The Company has accounted for the transaction in 1998 using
purchase accounting and recorded tangible assets of $30,000 and intangible
assets including $25,000 relating to a non-compete agreement and goodwill of
approximately $782,000.
On April 1, 1998 the Company purchased the net assets of Southern California
Relocations, Inc., an interim housing company located in California, for
approximately $4,621,000 consisting of $3,365,750 in cash and 94,693 of the
Company's unregistered shares of common stock valued at $1,155,250 at the
time of the purchase. The purchase price also included a seller non-compete
agreement. The Company has accounted for the transaction in 1998 using
purchase accounting and recorded tangible assets of $36,100 and intangible
assets including $75,0000 relating to a non-compete agreement and goodwill
of approximately $4,510,000.
On April 29, 1998 the Company announced plans to merge with Accommodations
America, an interim housing company located in Atlanta. The Company will pay
approximately $25.5 million, consisting of $12.75 million in cash and
1,104,494 of the Company's unregistered shares of common stock valued at
$12.75 million. The closing of this transaction is expected to be completed
by June 1, 1998. The Company expects to account for this transaction in 1998
using purchase accounting and record tangible assets of approximately $2.5
million and goodwill of approximately $23.0 million.
7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULTS OF OPERATIONS
OVERVIEW
ExecuStay Corporation ("ExecuStay" or the "Company") is a leading provider
of interim housing for corporate clients and professionals. ExecuStay provides
fully furnished high-quality apartments for stays of 30 days or more. In
addition to providing fully furnished interim housing to ExecuStay residents,
the Company also rents housewares and furniture to customers other than
ExecuStay residents such as owners and managers of apartment communities who
wish to offer fully furnished accommodations directly to their tenants. While
housewares rental services are provided by the Company in most locations where
it has sales offices, the Company provides furniture rental services to its
residents located within approximately 200 miles of its warehouse in
Gaithersburg, Maryland.
In recent years, the Company has experienced significant increases in
revenue from its interim housing operations. Since the costs associated with
interim housing revenue are greater as a percentage of revenue than the costs of
furniture and housewares revenue, the Company's earnings from operations as a
percentage of total revenue has declined as the revenue mix has shifted heavily
toward interim housing revenue. As interim housing revenue continues to increase
as a percentage of the company's total revenue, earnings as a percentage of
revenue may continue to decline slightly.
Growth in revenue is derived primarily from increases in the number of
leases signed with ExecuStay residents. As the Company has opened sales offices
and acquired other interim housing businesses, the number of apartments under
lease has increased each year at each office.
RESULTS OF OPERATIONS
In the discussions below, the following terms have the meanings described
hereinafter.
Interim housing revenue consists of the total charges to ExecuStay residents
for their housing accommodations, including charges for furniture, housewares,
accessories and utilities.
Furniture and houseware revenue includes all income from customers other
than ExecuStay residents and also includes revenue from the sale of new and used
inventory.
Cost of revenue includes costs related to apartment units rented to
ExecuStay residents, such as property rent, furniture and houseware rental
costs, utilities, telephone and cable television expenses. Also included is
depreciation on furniture and housewares inventory on rental or held in
inventory and the cost of inventory sold.
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1998 TO THE THREE MONTHS ENDED
MARCH 31, 1997
Revenue increased 92% to $18.5 million for the three months ended March 31,
1998 from $9.6 million for the three months ended March 31, 1997. This increase
was primarily due to a $9.1 million increase (132%) in interim housing revenue,
reflecting the Company's continued focus on expanding its interim housing
business. Acquisitions and new offices accounted for $8.3 million of the
increase in interim housing revenue. These acquisitions and new offices
accounted for 1,247 leased units out of 2,602 units as of March 31, 1998.
Aggregate interim housing revenue from the seven offices that were operating
during both periods increased 21.3%, which reflects the continued development
and market penetration of these offices. Revenue from rental and sale of
furniture and housewares decreased $246,000 (9.0%) for the first quarter of 1998
as compared to the first quarter of 1997. This decrease included a furniture
sale of approximately $480,000 to one customer in 1997.
Cost of revenue increased 111% for the three months ended March 31, 1998 to
$13.0 million from $6.2 million for the same period in 1997. This increase was
driven by the Company's continued growth in the volume of interim housing units
leased and rented to customers. The Company's gross margin (revenue less cost of
revenue) decreased from 36% to 30% primarily because of the Company's changing
revenue mix as discussed above.
8
<PAGE> 9
Compared to the three months ended March 31, 1997, personnel and payroll
cost during the three months ended March 31, 1998 increased by $1.2 million
(72%), and occupancy and nonrental depreciation and amortization increased by
$319,000 (113%). These increases were due to recent acquisitions and
management's continued emphasis on strengthening the current infrastructure to
support the Company's growth. Other operating costs increased 53% to $773,000
from $506,000 during the same period, primarily as a result of new acquisitions
and increased national advertising and promotional expenses.
Interest expense, net decreased by $168,000 in the three months ended March
31, 1998 due primarily to the fact that the Company used proceeds from the
initial public offering to repay the debt incurred in connection with
acquisitions made earlier in 1997. Interest earned on the remaining offering
proceeds has been offset against interest expense incurred during the quarter.
Pro forma net income increased from $560,000 ($.14 per share) for the three
months ended March 31, 1997 to $816,000 ($.12 per share) for the three months
ended March 31, 1998. A significant reason for the decrease in quarterly pro
forma net income per share is that the weighted average number of common shares
outstanding increased from 4,074,000 during the three months ended March 31,
1997 to 7,028,955 during the three months ended March 31, 1998. Additionally,
net income per share was impacted positively by an exceptional furniture sale to
a commercial customer, which increased net income per share by approximately
$.04 for the quarter ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
During the three months ended March 31, 1998 the Company's cash and cash
equivalents decreased by $8.0 million, from $16.1 to $8.1 million. The $335,000
in net cash provided by operating activities was the result of $816,000 in net
income for the three months ended March 31, 1998, plus $164,000 in provision for
doubtful accounts and vacancy reserve, $847,000 in depreciation and amortization
and $90,000 in deferred income tax benefit. These amounts were offset by $1.1
million from the net purchase of property on or held for lease and $524,000 in
changes in assets and liabilities. The Company's cash resources were
satisfactory to meet its obligations for the three months ended March 31, 1998.
Cash used in investing activities for the three months ended March 31, 1998
was $3.4 million, of which $1.7 million, net of cash acquired, was used to fund
acquisitions of interim housing companies located in Connecticut and Arizona.
The aggregate purchase price was $2,287,000, comprised of $1,887,000 in cash and
45,455 unregistered shares of the Company's common stock valued at $400,000 at
the time of the purchase. In addition, approximately $1.6 million was used to
pay the post closing adjustment for an acquisition completed in November 1997.
On April 1, 1998 the Company purchased the net assets of Southern
California Relocations, Inc., an interim housing company located in California,
for approximately $4,621,000 consisting of $3,365,750 in cash and 94,693
unregistered shares of the Company's common stock valued at $1,155,250 at the
time of the purchase.
Cash flows used in financing activities for the three months ended March
31, 1998 totaled $5.0 million. On January 2, 1998 the Company repaid the $5.0
million bridge loan secured on December 31, 1997.
In addition to the $8.1 million in cash available to the Company as of
March 31, 1998, the Company also has available revolving lines of credit in the
amount of $25 million available for future acquisitions and working capital
needs.
OTHER MATTERS
The Company is currently assessing and working to resolve the potential
impact of the year 2000 on the processing of date-sensitive information by the
Company's computerized information systems. The year 2000 problem is the result
of computer programs being written using two digits (rather than four) to define
the applicable year. Any of the Company's programs that have time-sensitive
software may recognize a date using "00" as the year 1900 rather than the year
2000, which could result in miscalculations or systems failures. The Company has
and will continue to make certain investments in its software systems and
applications to ensure the Company is Year 2000 compliant. The financial impact
of becoming Year 2000 compliant has not been and is not expected by the Company
to be material to the Company's financial position or results of operations in a
given year. However, there is no guarantee that the systems of other companies
on which the Company's systems and operations rely will be converted on a timely
basis and will not have a material effect on the Company.
9
<PAGE> 10
CAUTIONARY NOTE
This Quarterly Report on Form 10-Q contains forward-looking statements
reflecting management's knowledge and judgment about factors which could
materially affect Company performance in the future. Terms indicating future
expectation and optimism about future potential and anticipated growth in
revenue and earnings of the Company's business lines and like expressions
typically identify such statements. Actual results and events may differ
significantly from those discussed in forward-looking statements.
All forward-looking statements are subject to the risks and uncertainties
inherent with predictions and forecasts. They are necessarily speculative
statements, and unforeseen factors, such as a significant downturn in the
economy, increased competitive pressures, failure to absorb newly acquired
businesses or to successfully develop newly opened offices, could cause results
to differ materially from any that may be projected.
Forward-looking statements are made in the context of information available
as of the date stated. The Company undertakes no obligation to update or revise
such statements to reflect new circumstances or unanticipated events as they
occur.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
Not applicable.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
a. Changes in Securities.
None.
b. On January 1, 1998, the Company issued 45,455 shares of Company
common stock, valued at the time at approximately $400,000, to the
shareholder of Corporate Accommodations, Inc. The issuance of the
shares was part of the consideration paid by the Company in exchange
of all outstanding stock of Corporate Accommodations, Inc. The
placement, which did not involve a public offering of the shares, was
exempt from registration under Section 4(2) of the Securities Act of
1933, as amended.
c. Use of Proceeds.
The net offering proceeds to the Company of $27,754,158 from its
initial Registration Statement on Form S-1 (file No. 333-0049) were
used for the following purposes:
<TABLE>
<S> <C>
Construction of plant, building and facilities $ -
Purchase and installation of machinery and equipment: -
Purchase of real estate: -
Repayment of indebtedness: 6,307,941
Acquisition of other businesses: 9,929,043
Working capital: -
Temporary investments:
Short term bonds 5,142,605
Interest bearing money market accounts 763,200
Other purposes:
Undistributed S corporation earnings 4,531,433
Payment of previously declared distributions 1,079,936
</TABLE>
The use of proceeds contained herein does not represent a material
change in the use of proceeds described in the prospectus.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
11
<PAGE> 12
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
27.1 Financial Data Schedule
b. Reports on Form 8-K
On January 13, 1998, the Company filed an amendment to a Form 8-K
filed on November 1, 1997 to report the acquisition of Boland Corporate
Housing, Inc. ("Boland"). The amendment to the Form 8-K contained the
following financial reports (dated as of December 19, 1997): audited
balance sheets of Boland as of December 31, 1996 and September 30, 1997
and the related statements of operations, changes in stockholder's
equity, and cash flows for the year ended December 31, 1996, and the
nine months ended September 30, 1997; unaudited pro forma condensed
consolidated balance sheet of ExecuStay Corporation and subsidiaries as
if the Boland acquisition had occurred on September 30, 1997; and
unaudited pro forma condensed consolidated statement of operations of
ExecuStay Corporation and the subsidiaries for the year ended December
31, 1996 and the nine months ended September 30, 1997 as if the Boland
acquisition had been completed at the beginning of the respective
periods.
12
<PAGE> 13
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.
Date: May 13, 1998
ExecuStay Corporation
By: /s/ Marc B. Kaplan
------------------
Marc B. Kaplan
(Principal Financial Officer and Authorized Officer)
13
<PAGE> 14
EXHIBIT INDEX
EXHIBIT NO. PAGE
--------------------------------- ----
27.1 Financial Data Schedule
14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 8,079,389
<SECURITIES> 0
<RECEIVABLES> 5,572,310
<ALLOWANCES> (295,675)
<INVENTORY> 5,257,466
<CURRENT-ASSETS> 0
<PP&E> 4,237,606
<DEPRECIATION> 1,617,084
<TOTAL-ASSETS> 38,074,958
<CURRENT-LIABILITIES> 0
<BONDS> 1,510,277
0
0
<COMMON> 70,290
<OTHER-SE> 30,120,283
<TOTAL-LIABILITY-AND-EQUITY> 38,074,958
<SALES> 0
<TOTAL-REVENUES> 18,527,300
<CGS> 0
<TOTAL-COSTS> 12,998,717
<OTHER-EXPENSES> 4,254,513
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (87,383)
<INCOME-PRETAX> 1,361,453
<INCOME-TAX> 545,000
<INCOME-CONTINUING> 816,453
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 816,453
<EPS-PRIMARY> .12
<EPS-DILUTED> .12
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,150
<SECURITIES> 0
<RECEIVABLES> 3,188,789
<ALLOWANCES> (362,250)
<INVENTORY> 3,846,182
<CURRENT-ASSETS> 0
<PP&E> 3,125,817
<DEPRECIATION> (1,081,388)
<TOTAL-ASSETS> 10,263,031
<CURRENT-LIABILITIES> 0
<BONDS> 3,284,529
0
0
<COMMON> 37,500
<OTHER-SE> 3,757,411
<TOTAL-LIABILITY-AND-EQUITY> 10,263,031
<SALES> 0
<TOTAL-REVENUES> 9,645,304
<CGS> 0
<TOTAL-COSTS> 6,167,083
<OTHER-EXPENSES> 2,463,322
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 80,535
<INCOME-PRETAX> 934,364
<INCOME-TAX> 0
<INCOME-CONTINUING> 934,364
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 934,364
<EPS-PRIMARY> .14
<EPS-DILUTED> .14
</TABLE>
