UNITED STATES
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 JUNE 30, 1999
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
__________TO __________
Commission file number 000-24389
VASCO Data Security International, Inc.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 36-4169320
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1901 South Meyers Road, Suite 210
Oakbrook Terrace, Illinois 60181
(Address of Principal Executive Offices)(Zip Code)
Registrant's telephone number, including area code: (630) 932-8844
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
As of August 13, 1999, 24,647,005 shares of the Company's Common
Stock, $.001 par value per share ("Common Stock"), were outstanding.
This report contains the following trademarks of the
Company, some of which are registered: VASCO, AccessKey, VACMan
Server and VACMan/CryptaPak, AuthentiCard and Digipass.
<PAGE>
VASCO Data Security International, Inc.
Form 10-Q
For The Three Months Ended June 30, 1999
Table of Contents
PART I. FINANCIAL INFORMATION Page No.
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets as of
December 31, 1998 and June 30, 1999 (Unaudited) ..............3
Consolidated Statements of Operations (Unaudited)
for the three and six months ended June 30, 1998 and 1999.....4
Consolidated Statements of Comprehensive Income (Unaudited)
for the three and six months ended June 30, 1998 and 1999.....5
Consolidated Statements of Cash Flows (Unaudited)
for the three and six months ended June 30, 1998 and 1999.....6
Notes to Consolidated Financial Statements ...................7
Item 2.Management's Discussion and Analysis of Financial Condition
and Results of Operations ...................................8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..........................................11
Item 4.Submission of Matters to a Vote of Securityholders..........11
Item 5.Other Information...........................................11
Item 6.Exhibits and Reports on Form 8-K............................12
SIGNATURES.........................................................13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
VASCO Data Security International, Inc.
Consolidated Balance Sheets
December 31, June 30,
1998 1999
(Unaudited)
<TABLE>
<S> <C> <C>
ASSETS
Current assets:
Cash $ 1,523,075 $ 3,658,704
Accounts receivable, net of allowance
for doubtful accounts of $55,000 and
$87,000 in 1998 and 1999, respectively 3,376,218 2,287,028
Inventories, net 1,272,327 1,337,609
Prepaid expenses 692,326 1,139,470
Deferred income taxes 83,000 83,000
Other current assets 277,322 371,992
--------- ---------
Total current assets 7,224,268 8,877,803
Property and equipment
Furniture and fixtures 580,427 611,889
Office equipment 468,975 617,583
--------- ---------
1,049,402 1,229,472
Accumulated depreciation (691,806) (764,380)
--------- ---------
357,596 465,092
Goodwill, net of accumulated amortization
of $327,000 and $392,000 in 1998 and 1999 575,211 510,755
Other assets 943,821 2,602,333
--------- ---------
Total assets $ 9,100,896 $ 12,455,983
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of long-term debt $ 6,528,867 $ 475,465
Accounts payable 1,144,506 724,740
Customer deposits 519,585 150,303
Other accrued expenses 2,117,599 1,995,550
--------- ---------
Total current liabilities 10,310,557 3,346,058
Long-term debt, including stockholder note
of $5,000,000 in 1998 and 1999 8,435,903 8,431,734
<PAGE>
Stockholders' equity (deficit):
Common stock, $.001 par value -
75,000,000 shares authorized;
20,805,697 shares issued and
outstanding in 1998; 24,647,005
shares issued and outstanding in 1999 20,806 24,647
Additional paid-in capital 9,797,068 21,410,181
Accumulated deficit (19,550,419) (20,943,313)
Accumulated other comprehensive income-
cumulative translation adjustment 86,981 186,676
--------- ---------
Total stockholders' equity (deficit) (9,645,564) 678,191
--------- ---------
Total liabilities and
stockholders' equity (deficit) $ 9,100,896 $ 12,455,983
========= ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
VASCO Data Security International, Inc.
Consolidated Statements of Operations
(Unaudited)
Three months Six months
ended June 30, ended June 30,
1998 1999 1998 1999
---- ---- ---- ----
<TABLE>
<S> <C> <C> <C> <C>
Net revenues $ 3,524,762 $ 4,450,698 $ 6,137,729 $ 8,759,241
Cost of goods sold 1,655,593 1,713,563 2,877,416 3,549,421
---------- ---------- ---------- ----------
Gross profit 1,869,169 2,737,135 3,260,313 5,209,820
Operating costs:
Sales and marketing 1,046,527 1,320,518 1,929,140 2,646,237
Research and development 390,532 469,481 827,966 1,173,230
General and admin 418,153 737,745 993,942 1,596,760
---------- ---------- ---------- ----------
Total operating costs 1,855,212 2,527,744 3,751,048 5,416,227
Operating income (loss) 13,957 209,391 (490,735) (206,407)
Interest expense (670,015) (192,009) (879,585) (415,457)
Other expense, net (86,693) (349,308) (101,155) (409,986)
---------- ---------- ---------- ----------
Loss before income taxes (742,751) (331,926) (1,471,475) (1,031,850)
Provision for income taxes 121,969 56,862 131,343 361,044
---------- ---------- ---------- ----------
Net loss available to
common stockholders $ (864,720) $ (388,788) $(1,602,818) $(1,392,894)
========== ========== ========== ==========
Basic and diluted net loss
per common share $ (0.04) $ (0.02) $ (0.08) $ (0.06)
=========== ========== =========== ===========
Weighted average common
shares outstanding 20,322,151 24,049,770 20,363,002 22,538,597
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
VASCO Data Security International, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
Three months ended Six months ended
June 30, June 30,
1998 1999 1998 1999
Comprehensive income: ---- ---- ---- ----
<TABLE>
<S> <C> <C> <C> <C>
Net loss $(864,720) $(388,788) $(1,602,818) $(1,392,894)
Other comprehensive income-
cumulative translation adj 275,195 233,934 104,952 99,695
--------- --------- ----------- -----------
Comprehensive loss (589,525) (154,854) (1,497,866) (1,293,199)
========= ========= =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
VASCO Data Security International, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
For the six months ended June 30,
1998 1999
---- ----
<TABLE>
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (1,602,818) $ (1,392,894)
Adjustments to reconcile net income to
net cash provided by (used in)
operating activities:
Depreciation and amortization 494,719 519,144
Interest paid in shares of
common stock - 78,750
Gain on sale of fixed assets - (16,096)
Changes in assets and liabilities:
Accounts receivable, net 272,861 1,089,190
Inventories, net (553,237) (65,282)
Other current assets (693,246) (493,306)
Accounts payable (367,557) (419,766)
Customer deposits 2,442 (369,282)
Other accrued expenses 258,897 (122,049)
Prepayment of royalties - (1,100,000)
----------- -----------
Net cash used in operations (2,187,939) (2,291,591)
Cash flows from investing activities:
Acquisition of SecureWare/DMIC - (316,437)
Additions to property and equipment (159,765) (180,070)
----------- -----------
Net cash used in investing activities (159,765) (496,507)
----------- -----------
Cash flows from financing activities:
Proceeds from exercise of stock options - 93,625
Net proceeds from sales of common stock 115,347 10,787,978
Proceeds from issuance of debt 3,027,578 -
Repayment of debt (552,237) (6,057,571)
----------- -----------
Net cash provided by financing activities 2,590,688 4,824,032
Effect of exchange rate changes on cash 104,952 99,695
----------- -----------
Net increase in cash 347,936 2,135,629
Cash, beginning of period 1,897,666 1,523,075
----------- -----------
Cash, end of period $ 2,245,602 $ 3,658,704
=========== ===========
Supplemental disclosure of
cash flow information:
Interest paid $ 175,901 $ 489,977
Income taxes paid $ 133,014 $ 266,170
Supplemental disclosure of
investing activity:
Stock issued for acquisition $ - $ 698,300
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
VASCO Data Security International, Inc.
Notes to Consolidated Financial Statements
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements
include the accounts of VASCO Data Security International, Inc. and
its subsidiaries (collectively, the "Company") and have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission regarding interim financial reporting. Accordingly, they
do not include all of the information and notes required by generally
accepted accounting principles for complete financial statements and
should be read in conjunction with the audited consolidated financial
statements included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1998.
In the opinion of management, the accompanying unaudited
consolidated financial statements have been prepared on the same
basis as the audited consolidated financial statements, and include
all adjustments, consisting only of normal recurring adjustments,
necessary for the fair presentation of the results of the interim
periods presented. The operating results for the interim periods
presented are not necessarily indicative of the results expected for
a full year.
Note 2 - Exchange Offer
VASCO Data Security International, Inc. ("VDSI Inc.") was
organized in 1997 as a subsidiary of VASCO Corp., a Delaware
corporation ("VASCO Corp."). Pursuant to an exchange offer
("Exchange Offer") by VDSI Inc. for securities of VASCO Corp. that
was completed March 11, 1998, VDSI Inc. acquired 97.7% of the
outstanding common stock of VASCO Corp. Consequently, VASCO Corp.
became a subsidiary of VDSI Inc., with certain VASCO Corp.
shareholders holding the remaining 2.3% of the VASCO Corp. common
stock representing a minority interest. On October 28, 1998, VASCO
Corp. was merged with and into the Company and VASCO Corp. ceased to
exist.
Note 3 - Acquisition
On May 3, 1999, the Company announced that it has acquired the
global assets of SecureWare, a prominent French security software
firm. SecureWare's focus is on developing security solutions for
every leading operating system _ including Windows NT, UNIX, IBM's
S/390 and AS/400, Tandem, Digital, Stratus, Hewlett-Packard, and Sun
Solaris, among others. The purchase price of $1.5 million was paid in
a combination of cash and common stock.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
VDSI Inc. designs, develops, markets and supports open
standards-based hardware and software security systems which manage
and secure access to data.
The following discussion is based upon VDSI Inc.'s consolidated
results of operations for the three and six months ended June 30,
1999 as compared to VASCO Corp.'s consolidated results of operations
for the three and six months ended June 30, 1998. See "Note 2 -
Exchange Offer." References to the "Company" or "VDSI Inc."
represent the consolidated entity. References to "VASCO NA"
represent the North American operations, including VDSI, Inc., VASCO
Corp., and VDS. References to "VASCO Europe" mean the operations of
Lintel Security, VASCO Data Security nv/sa and VASCO Data Security
Europe.
Cautionary Statement for Purposes of the "Safe Harbor" Provisions of
the Private Securities Litigation Reform Act of 1995
This Quarterly Report on Form 10-Q, including the "Management's
Discussion and Analysis of Financial Condition and Results of
Operations," contains "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 concerning,
among other things, the prospects, developments and business
strategies for the Company and its operations, including the
development and marketing of certain new products and the anticipated
future growth in certain markets in which the Company currently
markets and sells its products or anticipates selling and marketing
its products in the future. These forward-looking statements (i) are
identified by their use of such terms and phrases as "expected,"
"expects," "believe," "believes," "will," "anticipated," "emerging,"
"intends," "plans," "could," "may," "estimates," "should,"
"objective," and "goals" and (ii) are subject to risks and
uncertainties and represent the Company's present expectations or
beliefs concerning future events. The Company cautions that the
forward-looking statements are qualified by important factors that
could cause actual results to differ materially from those in the
forward-looking statements, including (a) risks of general market
conditions, including demand for the Company's products and services,
competition and price levels and the Company's historical dependence
on relatively few products, certain suppliers and certain key
customers, and (b) risks inherent to the computer and network
security industry, including rapidly changing technology, evolving
industry standards, increasing numbers of patent infringement claims,
changes in customer requirements, price competitive bidding, changing
government regulations and potential competition from more
established firms and others. Therefore, results actually achieved
may differ materially from expected results included in, or implied
by these statements.
<PAGE>
Comparison of Three and Six Months Ended June 30, 1998 and June 30,
1999
The following discussion and analysis should be read in
conjunction with the Company's Consolidated Financial Statements for
the three and six months ended June 30, 1998 and 1999.
Revenues
Revenues for the three months ended June 30, 1999 were
$4,451,000, an increase of $926,000, or 26%, as compared to the three
months ended June 30, 1998. This increase can be attributed to new
customers and add-on orders for the Company's flagship products,
Digipass 300 and Digipass 500, as well as the newly introduced
Digipass 100, 600 and 700.
For the six months ended June 30, 1999, revenues increased 43%
to 8,759,000 from $6,138,000 in 1998. Again, the Company continues
to enter new markets and applications for its products, as well as
enjoys a loyalty from its current customers in the form of additional
orders.
Cost of Goods Sold
Cost of goods sold for the three months ended June 30, 1999 was
$1,714,000, an increase of $58,000, or 4%, as compared to the three
months ended June 30, 1998. This increase is consistent with the
increase in revenues for the same period, but is further accentuated
by the savings being realized through efficiencies in the
manufacturing process and redesign of the products.
For the six months ended June 30, 1999, cost of goods sold
increased 23% to $3,549,000 from $2,877,000 in 1998. This increase
is consistent with the increase in revenues for the same period.
Gross Profit
The Company's gross profit for the three months ended June 30,
1999 was $2,737,000, an increase of $868,000, or 46%, as compared to
the three months ended June 30, 1998. This represents a gross margin
of 61%, as compared to 53% for the same period of 1998. This
increase can be attributed to efficiencies in the design of the
products, which resulted in reduced third-party manufacturing costs.
For the six months ended June 30, 1999, gross profit was
$5,210,000, an increase of $1,950,000, or 60%, as compared to 1998.
This represents a gross margin of 59% as compared to 53% for the same
period in 1998.
<PAGE>
Sales and Marketing Expenses
Sales and marketing expenses for the three months ended June 30,
1999 were $1,321,000, an increase of $274,000, or 26%, over the three
months ended June 30, 1998. Selling and marketing expenses also
increased 37% in the first six months of 1999 to $2,646,000 from
$1,929,000 in the first six months of 1998. The increase is
attributed to increased sales efforts including, in part, increased
travel costs and an increase in marketing activities, including the
development of a company-wide marketing program and other efforts.
Additionally, the Company continues to invest in its Customer Support
infrastructure, which becomes more and more important as our client
base continues to expand.
Research and Development
Research and development costs for the three months ended June
30, 1999 were $469,000, an increase of $79,000, or 20%, as compared
to the three months ended June 30, 1998. Research and development
costs increased 42% in the first six months of 1999 to $1,173,000
from $828,000 in the first six months of 1998. The increase is due
to the addition of R&D personnel, in both the U.S. and Europe.
General and Administrative Expenses
General and administrative expenses for the three months ended
June 30, 1999 were $738,000, an increase of $320,000, or 77%,
compared to the three months ended June 30, 1998. General and
administrative expenses increased 61% in the first six months of 1999
to $1,597,000 from $994,000 in the first six months of 1998. This
increase is due to the addition of administrative support staff and
legal fees associated with a lawsuit that was settled earlier in
1999.
Interest Expense
Interest expense for the three months ended June 30, 1999 was
$192,000, compared to $670,000, a decrease of 71% over the same
period of 1998. Interest expense decreased 53% in the first six
months of 1999 to $415,000 from $880,000 in the first six months of
1998. This decrease is due to a reduction in the debt base,
facilitated by the Private Placement that occurred in April 1999.
Operating Loss
The Company's operating income for the three months ended June
30, 1999 was $209,000, compared to $14,000 for the three months ended
June 30, 1998. The Company had an operating loss of $206,000 for the
first six months of 1999, as compared to $491,000 for the first six
months of 1998, a decrease of 58%.
<PAGE>
Income Taxes
Income tax expense for the three months ended June 30, 1999 was
$57,000, compared to $122,000 for the three months ended June 30,
1998. For the six months ended June 30, 1999, income tax expense
totaled $361,000, compared to expense of $131,000 for the same period
in 1998. All of these taxes are attributable to the Company's
European operations.
Liquidity and Capital Resources
Since inception, the Company has financed its operations through
a combination of the issuance and sale of equity securities, private
borrowings, short-term commercial borrowings, cash flow from
operations, and loans from Mr. T. Kendall Hunt, its Chairman of the
Board, and one of the stockholders of the Company's original
corporate predecessor.
The Company's cash and cash equivalents were $3,659,000 at June
30, 1999, which is an increase of approximately $2,136,000 from
$1,523,000 at December 31, 1998. As of June 30, 1999, the Company
had working capital of $5,532,000. During the second quarter of
1999, the Company used the cash provided by operations principally
for working capital needs.
Capital expenditures during the first six months of 1999 were
$180,000 and consisted primarily of computer equipment and office
furniture and fixtures. The Company acquired a French company,
SecureWare in May 1999 for $1,500,000. Payment was made in both
stock and cash, with payments being spread over 12 months.
In April 1999, the Company completed a private placement on
Common Stock in the amount of $11.5 million. The transaction
represented a sale of the Company's Common Stock to European
institutional investors at a price of $3.50 per share. A total of
3,285,714 shares of Common Stock were issued as a part of this
transaction. The Company believes that its current cash balances and
anticipated cash generated from operations will be sufficient to meet
its anticipated cash needs through June 2000. Continuance of the
Company's operations beyond June 2000, however, will depend on the
Company's ability to generate positive cash flow from operations and
obtain adequate financing. The Company has entered into engagement
letters with Artesia Bank and Bank DeGroof for a possible future
public offering.
<PAGE>
Year 2000 Considerations
Many existing computer systems and software products are coded
to accept only two digit entries in the date code field with respect
to year. With the year 2000 less than one year away, the date code
field in these systems and products must be adjusted to allow for a
four digit year of otherwise modified so that they recognize "00" to
indicate the year 2000 rather that the year 1900. Based upon its
current assessments, which are based in part on certain
representations of third party service and product providers, the
Company does not expect that is will experience a significant
disruption of its operations as a result of the Year 2000.
The Company plans to continue to identify, assess and to resolve
all material Year 2000 issues by the end of 1999. The Company is
developing contingency plans to address significant internal and
external Year 2000 issues as they are identified. These contingency
plans are expected to be complete by the end of 1999. Even with the
effort to address the Year 2000 issue made by the Company to date,
there can be no assurance that the systems of other entities on which
the Company relies, including the Company's internal systems and
proprietary software, will be remediated in a timely fashion, or that
a failure to remediate by another entity and/or the Company, would
not have a material effect on the Company's results of operations.
The Company has incurred approximately $150,000 to date in
addressing Year 2000 issues, and believes that no additional material
expenses will be incurred related to the Year 2000 issue. The
Company has completed its assessment of products and mission critical
systems for Year 2000 readiness and believes no material expenses
will be incurred in the future.
Additionally, the Company believes that the purchasing patterns
of customers and potential customers may be affected by the Year 2000
issues as companies expend significant resources to upgrade their
current software systems for Year 2000 compliance. This, in turn,
could result in reduced funds available to be spent on other
technology applications, such as those offered by the Company, which
could have a material adverse effect on the Company's business and
results of operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On April 6, 1999, Security Dynamics Technologies, Inc., RSA Data
Security, Inc., the Company and VASCO Data Security, Inc. announced
settlement on confidential terms of the claims that each of the
companies had raised in litigation filed last year.
<PAGE>
Item 4. Submission of Matters to a Vote of Securityholders.
The following matters were submitted to a vote of
Securityholders at the annual meeting held on June 15, 1999 (total
shares eligible to vote - 24,640,379; total shares voted -
21,213,979):
1) Election of Directors (June 1999 - June 2000)
<TABLE>
<S> <C> <C> <C>
Name For Against Abstain
----------------- ------------- ---------------- --------------
Michael Cullinane 21,172,166 - 41,813
Christian Dumolin 21,171,666 - 42,313
Pol Hauspie 21,172,666 - 41,313
Mario Houthooft 21,171,666 - 42,313
T. Kendall Hunt 21,171,666 - 42,313
F. David Laidley 21,172,666 - 41,313
Michael Mulshine 21,171,666 - 42,313
</TABLE>
2) Appointment of KPMG LLP as the Company's independent
accountants for 1999:
<TABLE>
<S> <C> <C>
For Against Abstain
----------------- ------------- ----------------
21,205,279 8,600 100
</TABLE>
3) Approval of the Amended and Restated 1997 Stock
Compensation Plan:
<TABLE>
<S> <C> <C> <C>
For Against Abstain Delivered-not
voted
----------------- ------------- ---------------- --------------
16,329,404 203,738 135,813 4,545,024
</TABLE>
Item 5. Other Information.
On June 16, 1999, the Company announced that Mario Houthooft was
appointed to the position of President and CEO of the parent company,
VASCO Data Security International, Inc., and its U.S. subsidiary,
VASCO Data Security, Inc. Mr. Houthooft also retains the position of
Managing Director of the company's Belgian subsidiary, VASCO Data
Security nv/sa (VASCO Europe).
Item 6. Exhibits and Reports on Form 8-K
a) The following exhibits are filed with this Form 10-Q or
incorporated by reference as set forth below:
<PAGE>
Exhibit Description
Number
27 Financial Data Schedule.
___________________________
b) Reports on Form 8-K
No reports on Form 8-K have been filed by the Registrant
during the quarter ended June 30, 1999.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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, on August 13, 1999.
VASCO Data Security International, Inc.
/s/ Mario R. Houthooft
Mario R. Houthooft
Chief Executive Officer and President
/s/ Gregory T. Apple
Gregory T. Apple
Vice President and Treasurer
(Principal Financial Officer and
Principal Accounting Officer)
EXHIBIT INDEX
Exhibit Description
Number
27 Financial Data Schedule.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 3,658,704
<SECURITIES> 0
<RECEIVABLES> 2,374,028
<ALLOWANCES> 87,000
<INVENTORY> 1,337,609
<CURRENT-ASSETS> 8,877,803
<PP&E> 1,229,472
<DEPRECIATION> 764,380
<TOTAL-ASSETS> 12,455,983
<CURRENT-LIABILITIES> 3,346,058
<BONDS> 0
0
0
<COMMON> 24,647
<OTHER-SE> 653,544
<TOTAL-LIABILITY-AND-EQUITY> 12,455,983
<SALES> 8,759,241
<TOTAL-REVENUES> 8,759,241
<CGS> 3,549,421
<TOTAL-COSTS> 5,416,227
<OTHER-EXPENSES> 409,986
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 415,457
<INCOME-PRETAX> (1,031,850)
<INCOME-TAX> 361,044
<INCOME-CONTINUING> (1,392,894)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,392,894)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
