SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE 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
For the transition period from _____ to ______
Commission file number 000-23740
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INNOTRAC CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 58-1592285
--------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
6655 Sugarloaf Parkway Duluth, Georgia 30097
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (678) 584-4000
---------------
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 / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at April 30, 1999
-----------------------------
Common Stock at $.10 par value 8,999,995 Shares
<PAGE>
<PAGE>
Part I - Financial Information
- ------------------------------
Item 1 - Financial Statements
- -----------------------------
<TABLE>
<CAPTION>
INNOTRAC CORPORATION
BALANCE SHEETS
As of March 31, 1998 and December 31, 1998
(in 000's)
ASSETS March 31, 1999 December 31, 1998
-------------- -----------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents............................ $ 274 $ 3,379
Accounts receivable, net............................. 73,013 44,354
Inventories ......................................... 19,834 14,381
Deferred tax assets ................................. 2,845 2,866
Prepaid expenses and other current assets ........... 1,871 1,436
----------------- ---------------
Total current assets 97,837 66,416
----------------- ---------------
Property and equipment:
Rental equipment ..................................... 6,289 6,891
Computer, machinery and transportation equipment...... 5,547 4,949
Furniture, fixtures and leasehold improvements........ 1,614 1,390
----------------- ---------------
13,450 13,230
Less accumulated depreciation and amortization........ 6,226 5,767
----------------- ---------------
7,224 7,463
----------------- ---------------
Other assets, net 105 113
----------------- ---------------
$ 105,166 $ 73,992
================= ===============
LIABILITIES AND PARTNERS', MEMBERS',
------------------------------------
AND SHAREHOLDERS' EQUITY
------------------------
Current liabilities:
Current portion of long-term debt..................... $ 68 $ 68
Line of credit........................................ 31,619 15,736
Accounts payable...................................... 23,265 9,387
Distributions payable................................. 70 70
Accrued expenses...................................... 10,813 12,336
Other................................................. 1,622 1,966
----------------- ---------------
Total current liabilities................... 67,457 39,563
----------------- ---------------
Total noncurrent liabilities.............................. 129 135
----------------- ---------------
Total liabilities .......................... 67,586 39,698
----------------- ---------------
Partners', members' and shareholders' equity:
Common stock.......................................... 900 900
Additional paid-in capital............................ 24,838 24,838
Retained earnings..................................... 11,842 8,556
----------------- ---------------
Total partners', members and shareholders'
equity ................................... 37,580 34,294
----------------- ---------------
Total liabilities and partners', members'
and shareholders' equity.................. $ 105,166 $ 73,992
================= ===============
</TABLE>
The accompanying condensed notes to financial statements
are an integral part of these balance sheets
<PAGE>
<PAGE>
Financial Statements-Continued
INNOTRAC CORPORATION
INCOME STATEMENTS
Three Months Ended March 31, 1999 and 1998
(Unaudited)
(In 000's except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
------------- ------------
<S> <C> <C>
Revenues, net ....................................... $ 67,320 $ 22,565
Cost of revenues..................................... 58,717 16,412
------------- ------------
Gross profit.......................... 8,603 6,153
------------- ------------
Operating expenses:
Selling, general and administrative expenses.. 2,440 3,428
Depreciation and amortization................. 379 138
------------- ------------
Total operating expenses............. 2,819 3,566
------------- ------------
Operating income .................................... 5,784 2,587
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Other (income) expenses:
Interest expense, net......................... 373 315
Other ........................................ (20) 6
------------- ------------
Total other expenses................. 353 321
------------- ------------
Income before income taxes .......................... 5,431 2,266
Income tax (provision) benefit ...................... (2,145) 61
------------- ------------
Net income .......................... $ 3,286 $ 2,327
============= ============
Proforma net income $ 3,286 $ 1,371
============= ============
Proforma net income per share:
Basic $ 0.37 $ 0.21
============= ============
Diluted $ 0.36 $ 0.21
============= ============
Shares used for computing net income per share:
Basic 9,000 6,500
============= ============
Diluted 9,127 6,500
============= ============
</TABLE>
The accompanying condensed notes to financial statements
are an integral part of these statements
<PAGE>
<PAGE>
Financial Statements-Continued
<TABLE>
<CAPTION>
INNOTRAC CORPORATION
STATEMENT OF CASH FLOWS
For the three months ended March 31, 1999 and 1998
(Unaudited)
(In 000's)
1999 1998
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................................. $ 3,286 $ 2,327
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization ......................................... 379 138
Depreciation-rental equipment.......................................... 536 829
Loss on disposal of rental equipment................................... 220 542
Deferred income taxes ................................................. 3 33
Increase in accounts receivable ....................................... (28,659) (5,966)
Increase in inventories................................................ (5,453) (378)
(Increase) decrease in prepaid expenses and other assets............... (443) 128
Increase in accounts payable........................................... 13,878 4,362
(Decrease) Increase in accrued expenses and other...................... (1,855) 283
------------- -------------
Net cash (used in) provided by operating activities ............... (18,108) 2,299
------------- -------------
Cash flows from investing activities:
Purchase of property and equipment ......................................... (880) (1,807)
------------- -------------
Net cash used in investing activities ............................. (880) (1,807)
------------- -------------
Cash flows from financing activities:
Net borrowings under lines of credit ...................................... 15,883 370
Repayment of long-term debt ............................................... 0 (172)
Redemption of redeemable capital stock .................................... 0 (388)
Distributions to shareholders, members and partners ....................... 0 (263)
------------- -------------
Net cash provided by (used in) financing activities............... 15,883 (453)
------------- -------------
Net (decrease) increase in cash and cash equivalents........................... (3,105) 39
Cash and cash equivalents, beginning of period ................................ 3,379 554
------------- -------------
Cash and cash equivalents, end of period ...................................... $ 274 $ 593
============= =============
Supplemental cash flow disclosures:
Cash paid for interest .................................................... $ 325 $ 366
============= =============
Cash paid for income taxes, net of refunds received ....................... $ 2,486 $ 380
============= =============
Non cash transactions:
Accreted dividends on redeemable capital stock ............................ $ 0 $ 17
============= =============
</TABLE>
The accompanying condensed notes to financial statements
are an integral part of these statements
<PAGE>
<PAGE>
Financial Statements-Continued
INNOTRAC CORPORATION
CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1999 AND 1998
1. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to Article 10 of Regulation S-X of the Securities and
Exchange Commission. The accompanying unaudited condensed
financial statements reflect, in the opinion of management, all
adjustments necessary to achieve a fair statement of financial
position and results for the interim periods presented. All such
adjustments are of a normal and recurring nature. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto
included in the Company's 10-K filing and annual report.
2. The pro forma net income and earnings per share reflect the Company's
results on a fully taxed basis to reflect consolidation of the
various affiliated pass-through entities into a C corporation in
conjunction with the initial public offering.
3. Basic earnings per share is computed by dividing pro forma net income
by the weighted average number of common shares outstanding.
Diluted earnings per share includes the effect of the Company's
stock options (using the treasury stock method). The following
table shows the computation of the number of shares outstanding
(in thousands):
Three Months Ended March 31,
----------------------------
1999 1998
-------- --------
Basic Shares 9,000 6,500
Stock Options 127 0
--------- --------
Diluted Shares 9,127 6,500
========= ========
<PAGE>
<PAGE>
ITEM 2 -
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion may contain certain forward-looking
statements that are beyond the control of the Company. Actual results
may differ materially from those expressed or implied by such forward-
looking statements. Factors that could cause actual results to differ
include, but are not limited to, the reliance on a small number of
major clients; risks associated with oral contracts; risks associated
with buying, warehousing and renting products to customers; risks of
entering new lines of businesses; reliance on the telecommunications
industry; ability to continue and manage growth; the impact of the
trend toward outsourcing; dependence on labor force; risks associated
with rapidly changing technology and the Company's conversion to new
software; risks associated with competition; risks associated with
fluctuations in operating and quarterly results; dependence on key
personnel; risks associated with Year 2000 compliance; compliance with
government regulation; control by management; difficulties of
completing and integrating acquisitions and other factors discussed in
more detail under "Business" in the Company's annual report or Form
10-K for the year ended December 31, 1998.
OVERVIEW
Since its formation in 1984, the Company has expanded its business and
facilities to offer distribution and management services and inbound
teleservices. These services are offered in response to the needs of
clients in a variety of industries and to capitalize on market
opportunities. In 1987, the Company began providing marketing support
services to BellSouth. In 1991, the Company initiated a fulfillment
program to sell, either outright or in four to six month installments,
or rent to BellSouth customers Caller ID hardware, phone sets and
other equipment. In 1993, the Company began billing the equipment
charges on customers' telephone bills. As part of this program,
Innotrac acquires the Caller ID and other telecommunications equipment
from third party manufacturers and in the past obtained payment from
BellSouth's customers. The Company thereby assumed inventory and
credit risk. In November 1998, the Company entered into a new
contract with BellSouth. Under the new contract, the Company
continues to provide Caller ID hardware and other equipment to
BellSouth customers but bills BellSouth, rather than BellSouth
customers, for the items. As a result, the Company's bad debt
exposure is reduced. Upon receipt of an order, the Company ships the
product, tracks inventory levels and sales and marketing data and
maintains teleservicing operations to handle customer service and
technical support. From time to time, rather than acquiring units and
selling or leasing them to BellSouth customers, the Company
distributes, for a fee, Caller ID hardware that BellSouth has
purchased from various third-party manufacturers. Services provided
to BellSouth and its customers accounted for 35% and 70%,
respectively, of the Company's net revenues for the three months ended
March 31, 1999 and 1998.
To leverage its experience and infrastructure investment related to
the BellSouth marketing support program, the Company seeks other
telecommunications companies for whom it can provide similar marketing
support services. The Company entered into an agreement with Pacific
Bell in 1996 to sell Pacific Bell's Caller ID equipment. The Company
also provides marketing support services to US West. In June 1998, the
Company entered into an agreement with a vendor to Southwestern Bell
to fulfill Caller ID related telecommunications equipment. In
addition, the Company exchanged its exclusive arrangement with Pacific
Bell in California to become a fulfillment vendor for Southwestern
Bell, Pacific Bell and Nevada Bell. Under the Company's programs with
these companies, like its new contract with BellSouth, the Company
bills the respective company directly for the telecommunications units
that are sold to end users. Southwestern Bell, Pacific Bell or Nevada
Bell is then responsible for billing and collecting from the consumer.
As a result, the Company's unit prices and gross margin are lower than
historical levels. This decline is offset by lower bad debt expenses,
which are included in selling, general and administrative expenses.
Management believes that growth in revenues from Caller ID marketing
support services will remain constant for the next several years as
market penetration increases and new Caller ID services that require
enhanced equipment are introduced. Sales are expected to level off as
the market matures. According to industry sources, market penetration
of Caller ID services in the U.S. as of December 31, 1998 was
approximately 29% and is expected to peak at approximately 75% by
2007. Management intends to offset the eventual maturity of its
Caller ID business by diversifying its client base and expanding the
scope of marketing support services it renders to its clients by
cross-selling its other services to existing clients. Additionally,
the Company contacts previous purchasers of Caller ID products to
promote newer enhanced Caller ID products.
Revenues are recognized on the accrual basis as services are provided
to customers or as units are shipped (including installment sales) or
rentals are provided. Revenues are reduced for an estimate of product
returns and allowances. This provision is calculated based on the
Company's historical experience applied to current sales.
The largest component of the Company's expenses is its cost of
revenues. This expense item includes the product costs of
telecommunications equipment, depreciation on Caller ID rental
equipment, the costs of labor associated with marketing support
services for a particular client, telecommunications services costs,
information technology support, materials and freight charges, and
directly allocable facilities costs. Most of these costs are variable
in nature. A second component of the Company's expenses includes
selling, general and administrative ("SG&A") expenses. This expense
item is comprised of labor and other costs associated with marketing,
financial, human resources and administrative functions that are not
allocable to specific client services, as well as bad debt expense.
Bad debt expense represents a provision for installments and rentals
that will be deemed uncollectible based on the Company's historical
experience, as well as billing adjustments from telecommunications
providers. SG&A expenses tend to be fixed in nature, with the
exception of bad debt, which is related to revenues.
RESULTS OF OPERATIONS
The following table sets forth unaudited summary operating data,
expressed as a percentage of revenues, for the three months ended
March 31, 1999 and 1998, respectively. The data has been prepared on
the same basis as the annual financial statements. In the opinion of
the Company's management, it reflects all adjustments, consisting only
of normal and recurring adjustments, necessary for a fair presentation
of the information for the periods presented. Operating results for
any period are not necessarily indicative of results for any future
period.
The financial information provided below has been rounded in order to
simplify its presentation. However, the percentages below are
calculated using the detailed information contained in the financial
statements.
<PAGE>
Three Months
Ended March 31,
--------------------
1999 1998
------ ------
Revenues, net ....................................... 100.0% 100.0%
Cost of revenues..................................... 87.2 72.7
Gross profit......................................... 12.8 27.3
Selling, general and administrative expenses......... 3.6 15.2
Operating income .................................... 8.6 11.5
Interest expense .................................... 0.6 1.4
Income before income taxes........................... 8.1% 10.0%
THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998
REVENUES. The Company's net revenues increased 198.3% to $67.3
million for the three months ended March 31, 1999 from $22.6 million
for the three months ended March 31, 1998. Revenues increased
primarily due to (1) a 171.4% increase in Caller ID units sold and
fulfilled to 2.2 million units, and (2) an increase in the percentage
of units sold to 46.9% of total unit volume versus 33.8% for the three
months ended March 31, 1998. This was partially offset by a decrease
in average per unit prices of Caller ID units. The Company's reserve
for returns and allowances increased slightly in terms of dollars, but
decreased as a percentage of revenues. The reserve was $2.0 million
(8.7% of net revenues) for the three months ended March 31, 1998
compared to $2.1 million (3.2% of net revenues) for the three months
ended March 31, 1999.
COST OF REVENUES. The Company's cost of revenues increased 257.8% to
$58.7 million for the three months ended March 31, 1999 compared to
$16.4 million for the three months ended March 31, 1998. Cost of
revenues increased primarily due to an increase in cost of equipment
associated with the increase in units sold by the Company.
GROSS PROFIT. For the three months ended March 31, 1999, the
Company's gross profit increased 39.8% to $8.6 million as compared to
$6.2 million for the three months ended March 31, 1998. The increase
in gross profit was due primarily to the increase in revenue. Gross
margins decreased to 12.8% of revenues from 27.3% of revenues,
respectively. Gross margins declined for several reasons. First, for
strategic reasons, the Company conducted a promotional program that
resulted in $11.0 million in revenues and $11.0 million in cost of
sales. The Company chose to conduct the program in order to
strengthen its relationship with the client. In addition, gross
margins were impacted by the increased percentage of business derived
from Southwestern Bell, Pacific Bell and BellSouth where the Company
does not assume the bad debt risk, as described under "-Overview."
Therefore it is able to charge lower unit prices and as a result,
experiences lower gross margins. This decline is offset by lower bad
debt expenses, which are included in selling, general and
administrative expenses.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. SG&A expenses for the
three months ended March 31, 1999 decreased 28.8% to $2.4 million or
3.6% of revenues compared to $3.4 million or 15.2% of revenues for the
three months ended March 31, 1998. The Company's bad debt expense was
$417,000 (0.6% of net revenues) for the three months ended March 31,
1999 as compared to $1.7 million (7.6% of net revenues) for the three
months ended March 31, 1998. The decrease in bad debt expense as a
percentage of revenue is due primarily to the increasing percentage of
business derived from Southwestern Bell, Pacific Bell and BellSouth,
which generally pay the Company directly for telecommunications
equipment sold to end-users. The increase in other SG&A expenses is
due to increased sales and marketing efforts and increased
administrative costs to support the Company's growth.
INCOME TAXES. The Company's effective tax rates for the three months
ended March 31, 1999 and 1998 were 39.5% and (2.6)%, respectively.
The effective tax rates are lower than statutory rates for the three
months ended March 31, 1998 due to the amount of income attributable
to the pass-through entities involved in the combination of the
Company and related pass-through entities (the "Consolidation") at the
same time as consummation of the initial public offering. The Company
expects its effective tax rate in future periods to approximate the
rate for the March 31, 1999 period.
LIQUIDITY AND CAPITAL RESOURCES
The Company funds its operations and capital expenditures primarily
through cash flow from operations and borrowings under a credit
facility with a bank. The Company had cash and cash equivalents of
approximately $274,000 at March 31, 1999. The Company maintains a
$35.0 million revolving line of credit with a bank, maturing in May
2000, which was increased from $25.0 million in December 1998. The
Company has received a commitment to increase the revolving line of
credit to $40.0 million. The Company expects the increase in the line
of credit to close during the second quarter of 1999. Borrowings
under the line of credit bear interest at the Company's option at the
bank's prime rate, as adjusted from time to time, or LIBOR plus up to
225 basis points. At March 31, 1999, the interest rate on the line of
credit was 5.94%, and the weighted average interest rate for the three
months ended March 31, 1999 was 5.72%. At March 31, 1999, $31.6
million was outstanding under the line of credit.
During the three months ended March 31, 1999, the Company used $18.1
million in cash flow from operating activities compared to the
generation of $2.3 million in cash flow from operating activities in
the same period in 1998. The decrease in cash flow from operating
activities in 1998 was due to higher working capital requirements
resulting from increases in accounts receivable (principally
installment receivables and receivables from Pacific Bell,
Southwestern Bell and BellSouth) due to the increased sales volume and
similar increases in inventory, offset by increased payables during
the first three months of 1999 as compared to the same period in 1998.
During the three months ended March 31, 1999, net cash used in
investing activities was $880,000 in 1999 as compared to $1.8 million
in 1998. This decrease was primarily due to a decrease in the number
of purchases of Caller ID units for rent plus reductions in the level
of expenditures associated with the Company's computer and software
additions to handle growth in business.
During the three months ended March 31, 1999, the net cash provided by
financing activities was $15.9 million compared to $453,000 used in
financing activities in the same period in 1998. This increase was
primarily due to increased borrowings on its line of credit. The
increased borrowings supported working capital requirements resulting
from increases in accounts receivable due to the increased sales
volume during the first three months of 1999 as compared to the same
period in 1998.
The Company estimates that its cash and financing needs through 1999
will be met by cash flows from operations and its line of credit
facility. However, any increase in the Company's growth rate,
shortfalls in anticipated revenues, increases in anticipated expenses,
or significant acquisitions could have a material adverse effect on
the Company's liquidity and capital resources. Any of these might
require the Company to raise additional capital from public or private
equity or debt sources in order to finance operating losses,
anticipated growth and contemplated capital expenditures. If such
sources of financing are insufficient or unavailable, the Company will
be required to modify its growth and operating plans in accordance
with the extent of available funding. The Company may need to raise
additional funds in order to take advantage of unanticipated
opportunities. These opportunities could include acquisitions of
complementary businesses or the development of new products, or
otherwise respond to unanticipated competitive pressures. There can
be no assurance that the Company will be able to raise any such
capital on terms acceptable to the Company or at all.
YEAR 2000 COMPLIANCE
The efficient operation of the Company's business is dependent in part
on its computer software programs and operating systems. These
programs and systems are used in inventory management, pricing, sales,
shipping and financial reporting, as well as in various administrative
functions. Management believes that the Company's information
technology ("IT") systems, including the existing systems and programs
that will be replaced as a part of an upgrade of the Company's system
architecture, and other non-IT systems are either Year 2000 compliant
or will be compliant by June 30, 1999 after applying vendor supplied
patches, or upgrades to these systems. The cost of the upgrades is
expected to be approximately $ 120,000, approximately $70,000 of which
has been incurred through April 1999. The Company does not anticipate
additional material expenditures for Year 2000 compliance issues.
The Company's Year 2000 compliance efforts for both IT and non-IT
systems include three major phases: (1) inventory all systems, assess
whether there are any Year 2000 issues, and develop a compliance plan
for all systems; (2) remediate any Year 2000 problems; (3) test
systems subsequent to remediation. The chart below shows the
estimated completion status of each of these phases expressed as a
percentage of completion as of December 31, 1998:
Phase: I II III
------------------------------------
IT Systems 97% 75% 50%
Non-IT Systems 100% 95% 95%
The Company anticipates that the assessment and remediation phases
will be complete as of June 30, 1999 and testing will continue
into the third quarter of 1999.
The Company is in the process of obtaining documentation from its
suppliers, clients, financial institutions and others as to the status
of their Year 2000 compliance programs and the possibility of any
interface difficulties relating to Year 2000 compliance that may
affect the Company. To date, no significant concerns have been
identified. However, the Company cannot assure that Year 2000-related
operating problems or expenses that will not arise with the Company's
computer systems and software. The Company also cannot assure that
Year 2000 problems in connection with the Company's interface with the
computer systems and software of its suppliers, clients, financial
institutions and others will not arise. Because such third-party
systems or software may not be Year 2000 compliant, the Company is in
the process of developing contingency plans to address Year 2000
failures of those entities with which the Company interfaces. The
Company's contingency plans are being developed to address such issues
as: (1) the inability of the Company to receive customer order
information electronically from its major clients; and (2) the
inability of one or more of the manufacturers of Caller ID products to
produce due to that company's Year 2000 failure. If the first
scenario were to happen, the Company would be required to receive and
enter this information manually into its order processing system,
which could increase the Company's labor costs. If the second
scenario were to occur, the Company would be required to find
alternate vendors and potentially incur additional costs to do so.
The Company could be required to incur unanticipated expenses to
remedy any problems, which could have a material adverse effect on the
Company's business, results of operations and financial conditions
RECENT ACCOUNTING PRONOUNCEMENTS
The FASB has issued Statement No. 133, Accounting for Derivative
Instruments and Hedging Activities, which must be adopted by the year
2000. This statement establishes accounting and reporting standards
for derivative instruments - including certain derivative instruments
embedded in other contracts - and for hedging activities. Adoption of
this statement is not expected to have a material impact on the
Company's financial statements.
In March 1998, the American Institute of Certified Public Accountants
(AICPA) issued a new Statement of Position, Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use. This
statement requires capitalization of certain costs of internal-use
software. The Company adopted this statement in January 1999 and it
did not have a material impact on its financial statements.
ITEM 3- QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company believes its exposure to market rate fluctuations on its
investments are immaterial due to the short-term nature of those
investments. To the extent that the Company has borrowings
outstanding under its credit facility, it has market risk relating to
such amounts because interest rates under the credit facility are
variable. Such exposure is immaterial due to the short-term nature of
such borrowings. Currently, the Company has no plans to enter into
any hedging arrangements with respect to such borrowings.
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
(a) 27. Financial Data Schedule
(b) Reports on Form 8-K - There were no Form 8-K filings.
<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.
INNOTRAC CORPORATION
(Registrant)
Date: May 3, 1999 By: /s/ Scott D. Dorfman
Scott D. Dorfman
President and Chief Executive Officer
and Chairman of the Board
Date: May 3, 1999 By: /s/ John H. Nichols III
John H. Nichols III
Vice President and Chief Financial
Officer and Secretary (Principal Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001051114
<NAME> INNOTRAC CORP
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 274,000
<SECURITIES> 0
<RECEIVABLES> 74,883,000
<ALLOWANCES> 1,870,000
<INVENTORY> 19,834,000
<CURRENT-ASSETS> 97,834,000
<PP&E> 13,450,000
<DEPRECIATION> 6,226,000
<TOTAL-ASSETS> 105,166,000
<CURRENT-LIABILITIES> 67,457,000
<BONDS> 0
0
0
<COMMON> 25,738,000
<OTHER-SE> 11,842,000
<TOTAL-LIABILITY-AND-EQUITY> 105,166,000
<SALES> 67,320,000
<TOTAL-REVENUES> 67,320,000
<CGS> 0
<TOTAL-COSTS> 58,717,000
<OTHER-EXPENSES> 2,819,000
<LOSS-PROVISION> 685,000
<INTEREST-EXPENSE> 373,000
<INCOME-PRETAX> 5,430,000
<INCOME-TAX> 2,145,000
<INCOME-CONTINUING> 3,286,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,286,000
<EPS-PRIMARY> 0.37
<EPS-DILUTED> 0.36
</TABLE>
