<PAGE>
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
Commission file number 0-5576
BIOSPHERICS-Registered Trademark- INCORPORATED
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Delaware 52-0849320)
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(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
</TABLE>
12051 Indian Creek Court, Beltsville, Maryland 20705
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(Address of principal executive offices)
301-419-3900
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(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 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 registrant's
class of Common Stock, as of the latest practicable date.
<TABLE>
<CAPTION>
CLASS OUTSTANDING AS OF OCTOBER 31, 1997
- ------------------------------------ ----------------------------------
<S> <C>
Common Stock, $0.005 par value 8,071,690 shares
</TABLE>
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X]
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1
<PAGE>
BIOSPHERICS INCORPORATED
-----------
Form 10-QSB
For the Quarter Ended September 30, 1997
INDEX
<TABLE>
<CAPTION>
PAGE NO.
-------------
<S> <C>
Part I. Financial Information
Item 1. Financial Statements (Unaudited)
Statements of Operations for the three-month and nine-month periods ended September 30,
1997 and 1996.............................................................................. 3
Balance Sheets as of September 30, 1997 and December 31, 1996.............................. 4
Statements of Cash Flows for the nine months ended September 30, 1997 and 1996............. 5
Notes to Financial Statements.............................................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...... 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K........................................................... 9
Signatures............................................................................................ 10
</TABLE>
2
<PAGE>
BIOSPHERICS INCORPORATED
Part I. Financial Information
ITEM 1. FINANCIAL STATEMENTS
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- ----------------------------
1997 1996 1997 1996
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Revenue
Contract revenue..................................... $ 3,246,752 $ 3,300,095 $ 10,398,949 $ 10,030,548
Licensing fee revenue................................ -- 750,000 750,000 750,000
------------ ------------ ------------- -------------
Total revenue........................................ 3,246,752 4,050,095 11,148,949 10,780,548
------------ ------------ ------------- -------------
Operating expense
Direct contract and operating costs.................. 2,585,833 2,456,301 7,952,574 7,407,472
General and administrative expense................... 674,675 577,535 1,986,777 1,811,487
Research and development expense..................... 113,121 122,107 336,417 369,835
Depreciation and amortization expense................ 127,893 185,071 428,982 428,483
------------ ------------ ------------- -------------
Total operating expense.............................. 3,501,522 3,341,014 10,704,750 10,017,277
------------ ------------ ------------- -------------
Income (loss) from operations.......................... (254,770) 709,081 444,199 763,271
------------ ------------ ------------- -------------
Other income (expense)
Interest, net........................................ 32,721 (17,094) 58,210 (56,501)
Other income......................................... -- 15,310 200 114,147
------------ ------------ ------------- -------------
32,721 (1,784) 58,410 57,646
------------ ------------ ------------- -------------
Net (loss) income from continuing operations........... (222,049) 707,297 502,609 820,917
Income tax (benefit) expense........................... (77,101) 262,737 176,529 305,912
------------ ------------ ------------- -------------
Net (loss) income before discontinued operations....... (144,948) 444,560 326,080 515,005
Loss from discontinued operations, net of applicable
income tax benefit of $51,295........................ -- -- -- (64,194)
------------ ------------ ------------- -------------
Net (loss) income...................................... $ (144,948) $ 444,560 $ 326,080 $ 450,811
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
Per common share data:
(Loss) income from continued operations.............. $ (0.02) $ 0.05 $ 0.03 $ 0.06
Loss from discontinued operations.................... -- -- -- (0.01)
------------ ------------ ------------- -------------
Net (loss) income.................................... $ (0.02) $ 0.05 $ 0.03 $ 0.05
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
Weighted average shares and common stock equivalent
shares outstanding................................. 8,008,019 9,884,612 9,791,066 9,743,886
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
BIOSPHERICS INCORPORATED
--------------
BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996
(UNAUDITED) (AUDITED)
------------- ------------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents....................................................... $ 2,666,370 $ 796,113
Trade accounts receivable, net of allowance
for doubtful accounts of $30,481 and $54,808.................................. 1,912,439 2,016,124
Costs and estimated earnings in excess
of billings on contracts...................................................... 232,829 118,923
Other receivables............................................................... 176,712 194,290
Deferred income taxes........................................................... 83,247 83,247
Prepaid expenses and other assets............................................... 450,750 566,093
------------- ------------
Total current assets........................................................ 5,522,347 3,774,790
Property and equipment, net of accumulated
depreciation of $1,497,206 and $1,111,778......................................... 1,991,039 1,649,865
Patents, net of accumulated amortization of $67,971 and $59,148..................... 141,469 148,847
Restricted cash, security deposit................................................... 27,408 27,408
------------- ------------
Total assets................................................................ $ 7,682,263 $5,600,910
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Bank line of credit............................................................. $ 270,000 $ 235,000
Notes payable to bank........................................................... 151,249 103,830
Accounts payable and accrued expenses........................................... 1,096,018 1,079,023
Accrued salaries and benefits................................................... 580,158 545,661
Income taxes payable............................................................ 221,800 102,778
Deferred rent................................................................... 205,973 128,755
Deferred revenue................................................................ 290,990 142,889
------------- ------------
Total current liabilities................................................... 2,816,188 2,337,936
Notes payable to bank............................................................... 95,949 110,716
Deferred compensation............................................................... 50,895 47,844
Deferred income taxes............................................................... -- 939
Deferred rent....................................................................... -- 73,251
Deferred revenue.................................................................... 1,000,000 --
------------- ------------
Total liabilities........................................................... 3,963,032 2,570,686
Redeemable common stock............................................................. 167,320 167,320
Stockholders' equity
Common stock, $.005 par value, 18,000,000 shares
authorized; 8,096,090 and 7,957,468 shares issued and outstanding, of which
1,577,253 shares are classified as redeemable common stock.................... 24,383 23,690
Paid-in capital in excess of par value.......................................... 1,831,283 1,309,799
Treasury stock, 69,006 and 43,006 shares, at cost............................... (420,853) (261,603)
Retained earnings............................................................... 2,117,098 1,791,018
------------- ------------
Total stockholders' equity.................................................. 3,551,911 2,862,904
------------- ------------
Total liabilities and stockholders' equity.................................. $ 7,682,263 $5,600,910
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
BIOSPHERICS INCORPORATED
--------------
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
1997 1996
------------ ----------
<S> <C> <C>
Cash flows from operating activities:
Net income.............................................................................. $ 326,080 $ 450,811
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization....................................................... 428,982 428,483
Gain from sale of discontinued operations........................................... -- (29,313)
Loss on sale or write down of assets................................................ 126,224 1,695
Provision for uncollectible accounts receivable..................................... 27,000 3,871
Changes in assets and liabilities:
Trade accounts receivable......................................................... 76,685 (401,884)
Costs and estimated earnings in excess of billings on contracts................... (113,906) (83,766)
Other receivables................................................................. 17,578 358,569
Prepaid expenses and other assets................................................. (45,612) (148,835)
Accounts payables and accrued expenses............................................ 243,878 (99,930)
Accrued salaries and benefits..................................................... 34,497 91,280
Income taxes payable.............................................................. 119,022 169,842
Deferred rent..................................................................... 3,967 (51,329)
Deferred revenue.................................................................. 1,148,101 18,517
Deferred compensation............................................................. 3,051 --
Deferred income taxes............................................................. (939) --
Liquidation of discontinued operations' assets...................................... -- 278,698
------------ ----------
Net cash provided by operating activities............................................... 2,394,608 986,709
------------ ----------
Cash flows from investing activities:
Proceeds from sale of ELSD, net of expenses......................................... -- 433,216
Proceeds from sale of property and equipment........................................ -- 1,131
Purchases of property and equipment................................................. (726,602) (750,451)
Additions to patent costs........................................................... (1,445) (60,989)
------------ ----------
Net cash used for investing activities.................................................. (728,047) (377,093)
------------ ----------
Cash flow from financing activities:
Net change on bank line of credit................................................... 35,000 (541,927)
Net change in book overdraft........................................................ (226,883) --
Proceeds from notes payable to bank................................................. 112,724 59,228
Payment on long-term debt........................................................... (80,072) --
Proceeds from issuance of common stock.............................................. 522,177 318,921
Purchase of treasury stock.......................................................... (159,250) (105,335)
------------ ----------
Net Cash provided by (used for) financing activities.................................... 203,696 (269,113)
Net increase in cash and cash equivalents............................................... 1,870,257 340,503
Cash and cash equivalents, beginning of period.......................................... 796,113 29,861
------------ ----------
Cash and cash equivalents, end of period................................................ $ 2,666,370 $ 370,364
------------ ----------
------------ ----------
</TABLE>
See accompanying notes to finanical statements.
5
<PAGE>
BIOSPHERICS INCORPORATED
---------------
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying interim financial statements of Biospherics Incorporated
(the "Company") do not include all of the information and disclosures
generally required for annual financial statements and are unaudited. In the
opinion of management, the accompanying unaudited financial statements
contain all material adjustments (consisting of normal recurring accruals)
necessary to present fairly the Company's financial position, the results of
its operations and its cash flows as of and for the three-month and
nine-month periods ended September 30, 1997. This report should be read in
conjunction with the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1996.
2. Net Income (Loss) Per Share
Net income (loss) per share is computed using the weighted average number
of common shares outstanding during the respective periods. In the
three-month and nine-month periods ended September 30, 1997 and 1996,
outstanding common stock equivalents consisted of stock options. Primary
earning per share for the three months ended September 30, 1997, does not
include common stock equivalents because the effect of such inclusion would
be to increase earnings per share. The effect of fully dilutive earnings per
share is equivalent to the primary earnings per share and therefore is not
presented in the statements of operations.
3. DEFERRED REVENUE
Deferred revenue includes a $1,000,000 non-refundable advance against
future royalties from the D-tagatose licensing agreement with MD Foods
Ingredients amba of Denmark. The advance will be recoverable at 50% of such
annual royalties. As commercialization of D-tagatose is not anticipated prior
to the summer of 1999, the deferred revenue has accordingly been classified
as non-current.
4. ESTABLISHMENT OF INFORMATION SERVICES DIVISION (ISD) AS A WHOLLY OWNED
SUBSIDIARY
On May 15, 1997, at the Company's Annual Meeting, the Shareholders of the
Company approved a plan to convert the Information Services Division (ISD)
into a subsidiary. The new subsidiary will focus on the expansion of its
healthcare business into nurse triage/demand management. The subsidiary will
evaluate methods of increasing its capitalization, including a possible IPO,
in order to accelerate growth. Under the reorganization, ISD, which to date
has funded all of the Company's nonfattening sugar (D-tagatose) development
activities, will be free to concentrate on opportunities in its primary
field, the healthcare market. With the recent worldwide licensing of
D-tagatose to MD Foods, the Company has received funds that, together with
anticipated future royalties, should allow it to continue to develop other
proprietary products. The Company is in the process of organizing the
subsidiary. These organization efforts include raising sufficient funds to
expand ISD's existing healthcare business into nurse triage/ demand
management.
5. NEW ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
(FAS 128), which is effective for years ending after December 15, 1997. FAS
128 simplifies the existing earnings per share (EPS) computations under
Accounting Principles Board Opinion No. 15. FAS 128 revises the disclosure
requirements and increases the comparability of EPS data on an international
basis. In simplifying the EPS computations, the presentation of primary EPS
is replaced with basic EPS, with the principal difference being that common
stock equivalents are not considered in computing basic EPS. In addition, FAS
128 requires dual presentation of basic and diluted EPS. If the new
pronouncement were applied, the basic earnings per share would have been
$0.04 and the diluted earnings per share would have been $0.03 for the nine
months ended September 30, 1997.
6
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BIOSPHERICS INCORPORATED
------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations for the Quarter and Nine Months Ended September 30,
1997 and 1996
Certain statements in this Quarterly Report on Form 10-QSB may contain
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
and are identified by the use of forward-looking words or phrases such as,
"believes," "expects," is or are "expected," "anticipates," "anticipated,"
"should" and words of similar impact. These forward-looking statements are
based on the Company's current expectations. Because forward-looking
statements involve risk and uncertainties, the Company's actual results could
differ materially.
The Company reported a net loss of $144,948 ($0.02 per share) on sales of
$3.2 million for the third quarter of 1997 compared with net income of
$444,560 ($0.05 per share) on sales of $4.1 million in the same period of
1996. Results for 1996 included a $750,000 payment from MD Foods Ingredients
amba of Denmark (MD Foods) under the terms of the September 1996 Licensing
Agreement. Net income totaled $326,080 ($0.03 per share) on sales of $11.1
million for the nine months ended September 30, 1997, compared with net
income of $450,811 ($0.05 per share) on sales of $10.8 million during the
nine months ended September 30, 1996. Results for the nine-month period ended
September 30, 1996, included an after-tax loss of $64,194 ($0.01 per share)
from the sale of assets of the Company's Environmental and Laboratory
Services Division (ELSD) in the first quarter of last year.
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- ----------------------------
Information Services 1997 1996 1997 1996
- ------------------------------------------------------ ------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Revenue................................................ $ 3,201,000 $ 3,297,000 $ 10,262,000 $ 10,023,000
Operating expense...................................... 3,386,000 3,210,000 10,352,000 9,620,000
------------ ------------ ------------- -------------
(Loss) income from operations........................ $ (185,000) $ 87,000 $ (90,000) $ 403,000
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
BioTech Programs
- -------------------------------------------------------
Revenue................................................ $ 45,000 $ 753,000 $ 887,000 $ 757,000
Operating expense...................................... 115,000 131,000 353,000 397,000
------------ ------------ ------------- -------------
(Loss) income from operations........................ $ (70,000) $ 622,000 $ 534,000 $ 360,000
------------ ------------ ------------- -------------
------------ ------------ ------------- -------------
</TABLE>
The increase in Information Services revenue for the nine months ended
September 30, 1997, over the corresponding prior year period was primarily
the result of increased activity from government contracts during the first
quarter of 1997. The third quarter decrease in revenue was primarily the
result of the expiration of two commercial contracts. The decrease in income
from operations was a result of an increase in programming, consulting and
equipment costs related to the upgrade of technology, nurse triage/demand
management program development, and activities associated with establishing
the Information Services Division as a subsidiary.
Revenue from BioTech Programs for the nine months ended September 30,
1997 and 1996 consisted primarily of two $750,000 payments received in the
third quarter of 1996 and the first quarter of 1997. The two payments
resulted from the licensing agreement with MD Foods. In addition, the Company
is providing technical support to MD Foods to effect the commercialization of
D-tagatose. The Company will receive approximately $200,000 per year for
technical support services, of which approximately $45,000 was recognized in
the third quarter of 1997. The Company also received an additional payment
aggregating $1,000,000 in the first quarter of 1997 under the MD Foods
agreement representing a non-refundable advance against future royalties.
This payment is classified as deferred revenue in the balance sheet.
Other income, net of other expenses, increased $34,505 in the current
quarter and remained constant for the nine months ended September 30, 1997,
when compared with the same prior year periods. The increase between the
third quarters of 1997 and 1996 was the result of interest income generated
from $2.5 million of license payments received from MD Foods in late 1996 and
early 1997.
7
<PAGE>
BIOSPHERICS INCORPORATED
-----------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
Due to the seasonal nature of certain reservation and tourism contracts,
the Company expects to report lower sales and a loss for the fourth quarter
of 1997, but will likely report sales and profitability for the year as a
whole, consistent with the prior year period.
LIQUIDITY AND CAPITAL RESOURCES
In May 1997, the Company renewed its Loan Agreement with NationsBank N.A.
(the "Bank"). The Agreement, which expires on May 31, 1998, provides for
borrowing up to $2 million, subject to advance rates as defined in the
Agreement. Outstanding borrowing under the Agreement aggregated $270,000 at
September 30, 1997, and is collateralized by the Company's accounts
receivable. The interest rate is the Bank's prime rate plus .75% per annum.
In the first quarter of 1997, the Company signed a commitment letter with
the Bank to assist in financing equipment purchases related to potential new
contracts. This arrangement will consist of a series of loans for the
acquisition of computer systems and related telecommunication equipment not
to exceed a maximum aggregate of $1 million. Additional terms include
repayment of each loan in thirty-six (36) equal monthly installments at a
fixed interest rate equal to the Treasury Index plus 275 basis points.
Outstanding borrowing under the Agreement aggregated $112,724 at September
30, 1997, and is collateralized by the equipment purchased.
Cash flow from operating activities for the nine-month period ended
September 30, 1997, reflects a net cash inflow of $1.9 million. This increase
resulted primarily from a $1,750,000 payment under the licensing agreement
with MD Foods. Investment in new equipment aggregated $726,602, which was
financed in part through the equipment line of credit with the Bank discussed
above, and the issuance of common stock (primarily through the exercise of
employees' stock options).
The Company will have increasing capital needs over the next three years,
which will need to be funded externally. In order to effectively compete for
new contracts and maintain and expand existing programs, the Company must
continuously upgrade its information and telecommunication systems. The
equipment will not only expand capacity and capabilities to better service
the customer, but it will also increase efficiency in the Company's call
center operations. The Company will continue to seek additional intermediate
and long-term financing alternatives to underwrite the capital expenditures
needed to keep pace with its long-range business plan.
BALANCE SHEET REVIEW
Working capital as of September 30, 1997 was $2.7 million, which
represents a $1.3 million (93%) increase from working capital of $1.4 million
at December 31, 1996. This increase was the result of a $1,750,000 payment
received in connection with the MD Foods licensing agreement for the
Company's proprietary nonfattening sugar, D-tagatose.
FORMATION OF SUBSIDIARY
On May 15, 1997, at the Company's Annual Meeting, the Shareholders
approved a plan to convert the Information Services Division (ISD) into a
subsidiary. The new subsidiary will focus on the expansion of its healthcare
business into nurse triage/demand management. The subsidiary will evaluate
methods of increasing its capitalization, including a possible IPO in order
to accelerate growth. Under the reorganization, ISD, which to date has funded
all of the Company's nonfattening sugar (D-tagatose) development costs, will
be free to concentrate on opportunities in its primary field, the healthcare
market. With the recent worldwide licensing of D-tagatose to MD Foods
Ingredients amba of Denmark, the Company has received funds that, together
with anticipated continuing royalties, should allow it to continue to develop
other proprietary products. The Company is in the process of organizing the
subsidiary. These organization efforts include raising sufficient funds to
expand ISD's existing healthcare business into nurse triage/ demand
management. It is currently anticipated that the subsidiary will be organized
by the end of the first quarter of 1998.
8
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BIOSPHERICS INCORPORATED
----------
PART II. Other Information
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Reports on Form 8-K
There are no reports on Form 8-K filed by the Registrant during the
three months ended September 30, 1997.
b. Exhibit 11. Computation of Earnings per Share
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- ----------------------
1997 1996 1997 1996
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net (loss) income............................................. $ (144,948) $ 444,560 $ 326,080 $ 450,811
----------- ---------- ---------- ----------
Weighted average shares outstanding........................... 8,008,019 7,903,309 7,980,542 7,873,222
Dilutive common stock equivalents for primary earnings per
share....................................................... -- 1,981,303 1,810,524 1,870,664
----------- ---------- ---------- ----------
Weighted average shares and common stock equivalent shares
outstanding for primary earnings per share.................. 8,008,019 9,884,612 9,791,066 9,743,886
Additional equivalent shares assuming full dilution........... -- -- 94,964 54,255
----------- ---------- ---------- ----------
Weighted average shares and common equivalent shares for fully
diluted earnings per share.................................. 8,008,019 9,884,612 9,886,030 9,798,141
----------- ---------- ---------- ----------
Earnings per share:
Primary..................................................... $ (0.02) $ 0.05 $ 0.03 $ 0.05
----------- ---------- ---------- ----------
Fully diluted................................................. $ (0.02) $ 0.05 $ 0.03 $ 0.05
----------- ---------- ---------- ----------
</TABLE>
9
<PAGE>
Biospherics Incorporated
---------
Signatures
Pursuant to the requirements of the Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Biospherics Incorporated
(Registrant)
Date: November 14, 1997 By: /s/ Richard Levin
-------------------------- ---------------------------
Richard C. Levin
Vice President
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,666,370
<SECURITIES> 0
<RECEIVABLES> 2,352,461
<ALLOWANCES> 30,481
<INVENTORY> 0
<CURRENT-ASSETS> 5,522,347
<PP&E> 3,488,245
<DEPRECIATION> 1,497,206
<TOTAL-ASSETS> 7,682,263
<CURRENT-LIABILITIES> 2,816,188
<BONDS> 0
0
0
<COMMON> 24,383
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7,682,263
<SALES> 10,398,949
<TOTAL-REVENUES> 11,148,949
<CGS> 7,952,574
<TOTAL-COSTS> 10,704,750
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 502,609
<INCOME-TAX> 176,529
<INCOME-CONTINUING> 326,080
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 326,080
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
