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 April 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 No. 0-24015
DUNN COMPUTER CORPORATION
(Exact name of Registrant as specified in its charter)
VIRGINIA
(State or other jurisdiction of incorporation or organization)
54-1424654
(I.R.S. Employer Identification No.)
1306 Squire Court, Sterling, VA. 20166
(Address of principal executive offices) (zip code)
(703) 450-0400
(Registrant's telephone number, including area code)
NO CHANGE
(Former name or former address, if changed since last report)
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 June 1, 1999 there were 9,341,493 shares of the registrant's common stock
outstanding.
This quarterly report on Form 10-Q contains 13 pages, of which this is page 1.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
DUNN COMPUTER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
--------------------------- ----------------------------
1998 1999 1998 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Revenue $ 6,352,969 $ 9,440,804 $ 16,782,138 $ 21,152,424
Costs of revenue 5,034,789 6,791,033 13,024,668 16,476,026
------------ ------------ ------------ ------------
Gross profit 1,318,180 2,649,771 3,757,470 4,676,398
Selling and marketing 476,438 617,630 1,028,318 1,368,517
General and administrative 538,815 1,786,668 1,231,576 3,433,582
Amortization of goodwill 54,329 172,218 108,658 362,547
------------ ------------ ------------ ------------
Income from operations 248,598 73,255 1,388,918 (488,248)
Other income (expense) (38,248) 39,502 (34,580) 39,502
Interest income 21,255 30,340 22,110 30,340
Interest expense (16,365) (188,683) (54,839) (399,853)
------------ ------------ ------------ ------------
Net income (loss) 215,240 (45,586) 1,321,609 (818,259)
Before income taxes
Provision for (benefit from)
Income taxes 82,867 -- 500,529 (225,000)
------------ ------------ ------------ ------------
Net income (loss) 132,373 (45,586) 821,080 (593,259)
Basic earnings per share $ 0.03 (.01) $ 0.16 (.07)
Diluted earnings per share $ 0.02 (.01) $ 0.14 (.07)
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
2
<PAGE>
DUNN COMPUTER CORPORATION
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
October 31, April 30,
1998 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents -- $ 943,822
Accounts receivable, net 16,792,889 10,684,504
Employee and Stockholder Advances 71,287 6,209
Inventory, net 10,928,736 7,807,092
Investment in sales-type lease, net current 959,243 149,852
Deferred Tax Asset 630,000 630,000
Income Tax Receivable 597,325 269,118
Prepaid Expenses and other current assets 248,143 272,729
----------- -----------
Total current assets 30,227,623 20,763,326
Property and equipment, net 1,927,148 1,666,205
Equipment on Lease, net 4,096,483 3,721,894
Investment in sales-type leases, net long term 2,140,099
Goodwill and other intangible assets, net 24,231,852 23,851,195
Investments 150,000 150,000
Other assets 191,395 184,352
----------- -----------
Total assets $62,964,600 $50,336,972
----------- -----------
----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts Payable $12,151,163 $ 2,683,076
Accrued Expenses 4,726,765 2,746,796
Line of Credit 3,256,060 5,446,674
Notes Payable, current 33,514 33,523
Notes Payable, related parties 905,960
Unearned Revenue 3,381,291 1,528,543
----------- -----------
Total Current Liabilities 24,454,753 12,438,612
Other Long Term liabiities 137,155 121,053
Stockholders' equity
Preferred Stock $.001 par value;
2,000,000 share authorized, no shares issued
and outstanding
Common Stock, $.001 par value:
20,000,000 shares authorized,
9,391,493 shares issued and outstanding; 9,392 9,392
Additional paid-in capital, less treasury stock 34,237,745 34,235,620
Retained Earnings 4,125,555 3,532,295
----------- -----------
Total Stockholders' equity 38,372,692 37,777,307
----------- -----------
Total liabilities and stockholders' equity $62,964,600 $50,336,972
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
DUNN COMPUTER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six Months Ended
April 30,
--------------------------
1998 1999
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income/(Loss) $ 821,080 $ (593,259)
Adjustments to reconcile net income/(loss)to
net cash used in operating activities:
Depreciation and amortization,
Property and equipment 202,374 1,304,003
Amortization of goodwill -- 362,547
Changes in operating assets and liabilities
Accounts Receivable 5,752,023 6,393,212
Inventory 2,486,137 3,121,643
Prepaid expenses (565,810) 90,915
Accounts Payable (8,212,382) (9,468,084)
Accrued Expenses 16,602 (1,979,970)
Income tax payable 83,790 --
Unearned Revenue 9,081 (1,852,748)
Investment in sales-type leases 2,949,490
----------- -----------
Net cash provided by operating activities 592,895 327,749
INVESTING ACTIVITIES:
Purchase of property and equipment (28,519) (650,363)
----------- -----------
Net cash used in investing activities (28,519) (650,363)
FINANCING ACTIVITIES:
Purchase of Treasury Stock (535,000) (2,125)
Payments on notes payable (42,926) (922,052)
Payments on Line of Credit 2,190,613
----------- -----------
Net cash provided by (used in) financing activities (577,926) 1,266,436
Net increase (decrease) in cash and cash equivalents (13,550) 943,822
Cash and cash equivalents at beginning of period 341,966 --
----------- -----------
Cash and cash equivalents at end of period $ 328,416 $ 943,822
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest Paid $ 51,999 188,683
=========== ===========
Income taxes paid $ 660,033
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
<PAGE>
DUNN COMPUTER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated financial statements for the three month and six month periods
ended April 30, 1998 and 1999 are unaudited and include all adjustments which,
in the opinion of management, are necessary to present fairly the results of
operations for the periods then ended. All such adjustments are of a normal and
recurring nature. These consolidated financial statements should be read in
conjunction with the Annual Report on Form 10-K of Dunn Computer Corporation
(the "Company") which includes consolidated financial statements and notes
thereto for the years ended October 31, 1998 and 1999.
2. Acquisition-related liabilities
During fiscal year 1998, the Company recorded $1,376,000 of acquisition-related
liabilities in connection with the IDP acquisition. These liabilities were
recorded after certain actions had been identified, quantified and approved by
management of the Company having the authority to commit the Company to the
plan. Those certain actions included warehouse, sales, marketing and
administrative functions, eliminating duplicative jobs and expanding space in
the Company's office space in Virginia. The Company vacated the production and
warehouse space in the Gaithersburg facility in June 1998 and fully vacated by
May 1999. During the first and second quarters of 1999, approximately $201,000
and $212,000 were charged against the liability, respectively. The remaining
liability at April 30, 1999 is approximately $730,000.
3. Recent pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130 ("SFAS 130"), "Comprehensive Income",
which is required to be adopted in the year ended October 31, 1998 consolidated
financial statements. SFAS 130 requires that an enterprise (a) classify items of
other comprehensive income by their nature in the financial statements and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the Statement of
Stockholders' Equity. The Company will be required to restate earlier periods
provided for comparative purposes, but doesn't believe that the adoption of SFAS
130 will be material to the Company's financial statements.
In February 1997, the Financial Accounting Standards Board issued Statement of
Finanical Accounting Standards No. 131 ("SFAS 131"), "Disclosures about Segments
of an Enterprise and Related Information", which is required to be adopted in
the fiscal years beginning after December 15, 1997. SFAS 131 changes the way
public companies report segment information in annual financial statements and
also requires those companies to report selected segment information in interim
financial reports to stockholders. SFAS 131 supersedes Statement of Financial
Accounting Standards No. 14, "Financial Reporting for Segments of Business
Enterprise." The Company adopted SFAS 131 on November 1, 1998. The adoption did
not have a material impact on the disclosure for segment information on the
financial statements.
5
<PAGE>
In February 1998, the Finanical Accounting Standards Board issued Statement of
Financial Accounting Standards No. 132 ("SFAS 132"), "Employers' Disclosures
about Pensions and Other Postretirement Benefits", which is required to be
adopted for companies with fiscal years beginning after December 15, 1997. SFAS
132 amends Statements of Financial Accounting Standards No. 87 "Employers'
Accounting for Pensions," No. 88 " Employers' Accounting for Settlements and
Curtailments of Defined Benefits" and No. 106 "Employers' Accounting for
Postretirement Benefits Other than Pensions, by revising employers' disclosures
about pension and to the postretirement benefit plans SFAS 132 doesn't change
the measurement or recognition of those plans. The disclosure requirements of
SFAS 132 will not have a material impact on the Company's consolidated financial
position or results of operations.
In March 1998, AcSEC issued Statement of Position 98-1 ("SOP 98-1), Accounting
for the Costs of Computer Software Developed For or Obtained for Internal Use".
SOP 98-1 is effective for fiscal years beginning after December 15, 1998. SOP
98-1 will require the capitalization of certain costs incurred after the date of
adoption in connection with developing software for internal use. The Company
currently expenses such costs incurred. The Company has not yet assessed what
the impact of SOP 98-1 will be on the Company's future earnings or financial
position.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS RESULTS OF OPERATIONS
Net revenues for the quarter ended April 30, 1999 were $9,440,804 as compared to
$6,352,969 for the quarter ended April 30, 1998, an increase of 48.6%. In the
quarter ended April 30, 1999, revenues from consulting products and services
increased by $1.1 million. Lease revenue increased by $837,000 and the balance
of the increase was a result of sales to the US Air Force.
Net revenues for the six months ended April 30, 1998 were $21,152,424 compared
to $16,782,138 for the six months ended April 30, 1997. The 26.0% increase was a
result of the increase in revenue from the sales of consulting products and
services, increased lease revenue, and sales to the US Air Force.
Gross margin increased from 20.7% for the quarter ended April 30, 1998 to 28.1%
for the quarter ended April 30, 1999. The increase can be attributed to the
increase in consulting revenue and lease revenue. Gross margins commonly
fluctuate from quarter to quarter. For the six months ended April 30, gross
margin was 22.4% in fiscal 1998, as compared to 22.1% in fiscal 1999.
For the quarter ended April 30, 1999 selling and marketing expenses increased
from $476,438 in fiscal 1998 to $617,630 in fiscal 1999. The increase is
attributable to increases in the Company's personnel, advertising costs, and the
acquisition of International Data Products, Inc. ("IDP"). For the six months
ended April 30, selling and marketing increased from $1,028,318 in fiscal 1997
to $1,368,517 in fiscal 1998. As a percentage of revenue, selling and marketing
expense increased from 6.1% for the six months ended April 30, 1998 to 6.5% for
the six months ended April 30, 1999. The increase was a result of the Company's
expansion of its marketing and sales personel and additional expenditures in
advertising.
General and administrative expense increased from $593,144 for the quarter ended
April 30, 1998 to $1,786,668 for the quarter ended April 30, 1999. The increase
can be attributed to increases in personnel, stockholders' relations,
amortization of goodwill and the acquisition of International Data Products. For
the six months ended April 30, 1999 general and administrative expense increased
from $1,340,234 (7.9% of revenue) in fiscal 1998 to $3,433,582 (11.5% of
revenue) in fiscal 1999 because of the increases to personel, stockholders'
relations, and amortization of goodwill and other operating expenses associated
with the acquisition of IDP. The management believes certain G&A cost associated
with the acqusition of IDP will not reoccur in future periods.
7
<PAGE>
Other expenses increased from ($38,248) in the quarter ended April 30, 1998 to
$118,841 for the quarter ended April 30, 1999. For the six months ended April
30, other expense increased from $34,580 in fiscal 1998 to $330,011 in fiscal
1999. For the quarter ended April 30, 1998 and for the six months ended April
30, 1998 the effective tax rate was 38.5% and 37.9%, respectively, of taxable
income. Net income decreased from an income $132,373 in the second quarter of
1998 compared to a net loss of $45,586 in the second quarter of 1999. Net income
for the first six months decreased from an income of $821,080 in fiscal 1998 to
a loss of $593,260 in fiscal 1999 as a result of the above factors.
LIQUIDITY AND CAPITAL RESOURCES
For the fiscal quarter ended April 30, 1999 Dunn Computer
Corporation ("Dunn") generated $327,749 in its operations. Dunn
generated cash $6,393,212 and $3,121,643 respectively from the
collection of accounts receivable and sale of inventory. The operating
loss of $45,586 the payment of accounts payable of $9,468,084, and the
reduction of $1,979,470 of accrued expenses were the principal use of
funds.
Other significant financing activities were provided by
Dunn's bank line of credit with First Union Bank (formerly Signet
Bank). The line of credit expires on June 1, 2002 and currently bears
interest at LIBOR plus 2.25%. As of April 30, 1999, Dunn had no
outstanding balance on the line of credit.
8
<PAGE>
Dunn's subsidiary, IDP has borrowing agreements with Deutsche
Financial Services for an aggregate available credit of $25.0 million,
of which $15.0 million is secured by IDP's inventory and $10.0 million
is secured by IDP's accounts receivable. Each of these facilities bears
an annual interest rate of prime. Under the inventory financing
facility, IDP normally receives 30 days free of interest when purchases
are made from distributors, and 45 days free of interest when purchases
are made from manufacturers. Under the accounts receivable financing
facility, IDP can borrow against up to 85% of eligible receivables and
is subject to various financial covenants. There is no formal
expiration date on these facilities, although it is subject to annual
re-evaluation. As of April 30, 1999 IDP had $5.4 million outstanding on
this line of credit. Dunn is a guarantor of this credit facility. As of
December 31, 1999, IDP had notes payable to related parties of $1.1
million bearing annual interest at rates ranging from 8.0% to 11.0% and
are payable upon demand. The Company paid off these notes as part of
the settlement with George and Oscar Fuster.
On April 30, 1999, Dunn had working capital of $8.3 million.
The Company believes the bank facilities, together with cash on hand
and the cash generated from operations, will provide sufficient
financial resources to finance the current operations of the Company
through fiscal 1999.
Recently, national attention has focused on the potential
problems and costs resulting from computer programs being written using
two digits rather than four to define the applicable year. Any computer
programs that have date-sensitive software may recognize a date using
"00" as the year
9
<PAGE>
1900 rather than the year 2000. This could result in a system failure
or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send
invoices, or engage in similar normal business activities. While the
Company believes that its internal software applications and the
software in the systems it sells are Year 2000 compliant, there can be
no assurance until the year 2000 that all systems will function
adequately. Further, if the software applications of others on whose
services the Company depends are not Year 2000 compliant, such
noncompliance could have a material adverse effect on the Company. The
Year 2000 problem can be corrected either through software programming
or by posting the application to a client/server network. The Company
believes with its technical services and its client/server hardware
product line, it provides Year 2000 solutions.
In response to the Year 2000 problem and the associated
risks, the Company has developed a comprehensive compliance program to
evaluate, address and remedy the date related problems with respect to
the Company's internal systems, third party relationships, and Company
products and services. The compliance program is managed by the
Company's Director of Engineering, and is tailored after the guidance
promulgated by the General Accounting Office (GAO) in their
publication, Year 2000 Computing Crisis: An Assessment Guide and by the
Department of the Navy Year 2000 Action Plan.
The Company has adopted the following five-phase approach that
was endorsed by the GAO and recognized by the U.S. Congress:
10
<PAGE>
AWARENESS PHASE. The Company's management is familiarized with
the scope of the Year 2000 impact, the problem is defined, compliance
standards are established and an overall strategy is developed. A Year
2000 program team is formed to organize and implement the Company's
Year 2000 compliance program.
ASSESSMENT PHASE. The Year 2000 team determines the impact on
the Company's systems, tools, products and contracts. The team creates
an inventory and evaluation of systems that support the core business
sectors. Third party service providers are contacted concerning their
compliance with the Year 2000 problem with regard to the products and
services they provide. The team then prioritizes the conversion or
replacement of existing systems that are confirmed to be Year 2000
non-compliant.
RENOVATION PHASE. The Year 2000 program team rectifies the
problems discovered in the assessment phase by modifying or replacing
systems that are Year 2000 non-compliant.
VALIDATION PHASE. The renovated or replaced systems,
applications and databases are tested and certified as Year 2000
compliant.
IMPLEMENTATION PHASE. The renovated or replaced systems are
fully implemented and extensive testing is performed to insure
coordination with other systems and databases. Backup and recovery
plans are put in place.
The Company anticipates that it will have all internal Year
2000 solutions in place by July 1, 1999. Internal solutions include
information technology systems such as local and wide area network
systems and non-IT
11
<PAGE>
systems such as embedded micro-controllers within facility, security,
telephone and others systems. The Company is assessing the status of
third parties with which it has a material relationship. Third parties
include vendors and suppliers of essential hardware, software and
services and Company customers who may fund Year 2000 compliance
efforts in lieu of contracting services to the Company. The Company is
assessing the status of its products and Year 2000-related services.
The Company has tested all products sold via the GSA schedule and,
based on such tests, we believe to be Year 2000 compliant. Other
products developed and sold by the Company are being tested for Year
2000 compliance. The Company also performs Year 2000-related services
for both government and industry and is assessing the potential risk to
the Company of performing these services and is taking action to
mitigate these risks as they are identified.
CONTINGENCY PLANS The Company currently is developing
contingency plans. The Company anticipates that its internal systems
will be Year 2000 compliant by July 1,1999. The status of third parties
with which the Company has a material relationship and the Companies
products and services are being assessed. The Company will continue to
develop contingency plans as required to mitigate the effects of
delays, if any, in internal systems compliance, third party business
interruption, non-compliant Company products and risks associated with
providing Year 2000-related services.
12
<PAGE>
ITEM 3. QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On December 18, 1998, the Office of the United States Attorney for the District
of Maryland, Northern Division (the "U.S. Attorney"), informed the Company that
it was of the view that a civil False Claims Act violation was assessable
against certain parties, including IDP, Georger and Oscar Fuster (the former
principal owners of IDP) and the Company involving allegations of fraudulent
misrepresentations by the Fusters in IDP's 1994 application for participation in
the Section 8(a) program administered by the SBA. On February 26, 1999, the
Company and the other parties entered into a settlement agreement with respect
to this matter with the U.S. Attorney pursuant to which the matter was settled
without determination of liability against or monetary payment by the Company.
By letter dated April 15, 1998, a competitor of the Company asserted that IDP is
bound by a settlement agreement entered into in connection with the litigation,
calling for payments to the competitor of 1.8% of the first 250 million of IDP's
gross sales under the Desktop V contract. IDP and the Company dispute this
claim. On June 1, 1998, the Company filed a Complaint for Declaratory Judgment
in the U.S. District Court of the Eastern District of Virginia seeking a
declaration that DDI is not entitled to receive payments under the settlement
agreement. The defendant counter-claimed against the Company claiming it did not
breach the settlement agreement and was entitled to the payments in this case.
In a jury trial, the jury awarded DDI $1,500.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11.1: Statement of computation of earnings per share.
Exhibit 27: Financial Data Schedule.
(b) Reports on Form 8-K
None
13
<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.
Dunn Computer Corporation
(Registrant)
Date June 15, 1999 By: /s/ John D. Vazzana
- --------------------- -------------------------------------------
John D. Vazzana,
Executive Vice-President,
Chief Financial Officer
(Principal Accounting Officer and
Duly Authorized Officer)
14
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
----------------------- -------------------------
1998 1999 1998 1999
---------- ---------- ---------- ------------
<S> <C> <C> <C> <C>
NUMERATOR:
Net Income (loss) $ 132,373 (45,586) $ 821,080 (593,259)
Denominator:
Demonimator for basic earnings
Per share-weighted-average shares 5,100,000 8,941,493 5,100,000 8,941,493
Effect of diluted securities:
Employee stock options 693,811 693,811
Warrants 57,143 57,143
---------- ---------- ---------- ------------
Dilutive potental common shares 750,954 750,954
Denominator for diluted earnings
Per share-adjusted,
Weighted-average shares and
Assumed conversions 5,850,954 8,941,493 5,850,954 8,941,493
---------- ---------- ---------- ------------
Basic earnings per share $ 0.03 (.01) $ 0.16 (.07)
---------- ---------- ---------- ------------
Diluted earnings per share $ 0.02 (.01) $ 0.14 (.07)
---------- ---------- ---------- ------------
---------- ---------- ---------- ------------
</TABLE>
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
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 APRIL 30, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Oct-31-1999
<PERIOD-START> Nov-01-1998
<PERIOD-END> Apr-30-1999
<CASH> 943,822
<SECURITIES> 150,000
<RECEIVABLES> 10,959,831
<ALLOWANCES> 86,000
<INVENTORY> 7,807,092
<CURRENT-ASSETS> 20,763,325
<PP&E> 6,023,631
<DEPRECIATION> 1,304,003
<TOTAL-ASSETS> 50,336,972
<CURRENT-LIABILITIES> 12,438,613
<BONDS> 0
0
0
<COMMON> 9,392
<OTHER-SE> 37,767,915
<TOTAL-LIABILITY-AND-EQUITY> 50,336,972
<SALES> 21,152,424
<TOTAL-REVENUES> 21,152,424
<CGS> 16,476,026
<TOTAL-COSTS> 16,476,026
<OTHER-EXPENSES> 39,502
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 399,853
<INCOME-PRETAX> 818,259
<INCOME-TAX> 225,000
<INCOME-CONTINUING> 593,259
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 593,259
<EPS-BASIC> 0.07
<EPS-DILUTED> 0.07
</TABLE>
