U. S. 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, 1995
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to __________
Commission File Number: 1-9293
______________________________________________________________
PRE-PAID LEGAL SERVICES, INC.
(Exact name of small business issuer as specified in its charter)
Oklahoma 73-1016728
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
321 E. Main
Ada, Oklahoma
74820
(Address of principal executive offices)
(405) 436-1234
(Issuer's telephone number)
______________________________________________________________
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ____
State the number of shares outstanding of each of the issuer's classes of
common equity as of November 3, 1995:
Common Stock $.01 par value 20,745,542
Transitional Small Business Disclosure Format (Check One): Yes No X
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<PAGE>
PRE-PAID LEGAL SERVICES, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in 000's, except par values)
<TABLE>
ASSETS
<CAPTION>
September 30, December 31,
1995 1994
<S> <C> <C>
(Unaudited)
Current assets:
Cash............................................. $ 11,493 $ 2,972
Held-to-maturity short-term investments.......... - 6,540
Total cash and unpledged cash equivalents...... 11,493 9,512
Held-to-maturity investments..................... 3,484 -
Accrued contract income.......................... 846 563
Associates' balances - current portion........... 5,291 2,329
Total current assets......................... 21,114 12,404
Held-to-maturity investments....................... 499 410
Investments pledged................................ 2,774 1,772
Associates' balances............................... 3,794 204
Property and equipment, net........................ 2,158 2,071
Other.............................................. 1,912 1,293
Total assets................................. $ 32,251 $ 18,154
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Contract benefits................................ $ 1,492 $ 1,409
Accounts payable and accrued expenses............ 474 496
Contingency reserves on trust preparation services 206 442
Total current liabilities....................... 2,172 2,347
Deferred income taxes............................... 2,654 -
Total liabilities............................. 4,826 2,347
Stockholders' equity:
Preferred stock, $1 par value; authorized 400 shares;
issued and outstanding as follows:
$2.40 Cumulative Convertible Preferred Stock,
authorized 391 shares; 0 and 299 shares outstanding
at September 30, 1995 and December 31, 1994;
respectively, liquidation value of $7,188 at
December 31, 1994 - 299
$3.00 Cumulative Convertible Preferred Stock,
authorized 5 shares; 5 shares outstanding;
liquidation value of $84 ................... 5 5
Special preferred stock, $1 par value; authorized
500 shares, issued and outstanding in one series
designated as follows:
$1.00 Non-Cumulative Special Preferred Stock,
46 and 60 shares authorized, issued and outstanding
at September 30, 1995 and December 31, 1994,
respectively; liquidation value of $615 and
$803 at September 30, 1995 and December 31, 1994,
respectively............................... 46 60
Common stock, $.01 par value; 100,000 shares authorized;
21,471 and 14,216 issued at September 30, 1995 and
December 31, 1994, respectively 215 142
Capital in excess of par value................... 37,596 30,770
Retained earnings (deficit)...................... (8,260) (13,292)
Less: Treasury Stock at cost ................... (2,177) (2,177)
Total stockholders' equity..................... 27,425 15,807
Total liabilities and stockholders' equity... $ 32,251 $ 18,154
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
PRE-PAID LEGAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in 000's, except per share amounts)
(Unaudited)
Nine Months Ended September 30,
1995 1994
Revenues:
Contract premiums............................. $ 21,953 $ 16,848
Associate services............................ 2,166 628
Interest income............................... 1,028 314
Other......................................... 1,269 652
26,416 18,442
Costs and expenses:
Contract benefits............................. 7,446 5,794
Commissions................................... 5,458 4,979
General and administrative.................... 3,474 3,141
Direct marketing expenses..................... 707 469
Costs of associate services................... 761 324
Interest...................................... 9 277
Depreciation.................................. 353 308
Premium taxes................................. 171 168
Other......................................... 230 229
18,609 15,689
Income before income taxes...................... 7,807 2,753
Provision for income taxes...................... 2,654 31
Net income...................................... 5,153 2,722
Less dividends on preferred shares.............. 121 254
Net income applicable to common shares.......... $ 5,032 $ 2,468
Earnings per common and common equivalent share $ .25 $ .20
Earnings per common share - assuming full dilution $ .24 $ .18
The accompanying notes are an integral part of these financial statements.
<PAGE>
PRE-PAID LEGAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in 000's, except per share amounts)
(Unaudited)
Three Months Ended September 30,
1995 1994
Revenues:
Contract premiums............................ $ 8,086 $ 5,786
Associate services........................... 957 230
Interest income.............................. 348 113
Other........................................ 426 276
9,817 6,405
Costs and expenses:
Contract benefits............................. 2,836 2,080
Commissions................................... 1,872 1,779
General and administrative.................... 1,325 1,080
Direct marketing expenses..................... 259 81
Costs of associate services................... 317 129
Interest...................................... 3 75
Depreciation.................................. 122 96
Premium taxes................................. 62 54
Other......................................... 77 82
6,873 5,456
Income before income taxes...................... 2,944 949
Provision for income taxes...................... 1,001 5
Net income...................................... 1,943 944
Less dividends on preferred shares.............. 3 217
Net income applicable to common shares.......... $ 1,940 $ 727
Earnings per common and common equivalent share $ .09 $ .06
Earnings per common share - assuming full dilution $ .09 $ .05
The accompanying notes are an integral part of these financial statements.
<PAGE>
PRE-PAID LEGAL SERVICES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in 000's)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income .....................................................................$ 5,153 $ 2,722
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for deferred income taxes .......................................... 2,654 --
Depreciation and amortization ................................................ 353 308
Increase (decrease) in contract benefits ..................................... 83 (15)
Increase in associates' balances ............................................. (6,552) (593)
(Increase) decrease in other assets .......................................... (619) 165
Increase in accrued contract income .......................................... (283) (552)
Decrease in accounts payable and accrued expenses and contingency reserves ... (258) (72)
Net cash provided by operating activities ................................ 531 1,963
Cash flows from investing activities:
Additions to property and equipment .......................................... (440) (161)
Increase (decrease) in held-to-maturity investments and investments pledged .. (4,575) 833
Cash (used in) provided by investing activities .......................... (5,015) 672
Cash flows from financing activities:
Reduction in notes payable ................................................... - (1,918)
Payment of debentures ........................................................ - (552)
Proceeds from issuance of promissory notes ................................... - 75
Proceeds from sale of common and preferred stock ............................. 6,586 7,135
Dividends paid on preferred stock ............................................ (121) (254)
Net cash provided by financing activities ................................ 6,465 4,486
Net increase in cash and unpledged cash equivalents ............................ 1,981 7,121
Cash and cash equivalents at beginning of period ............................... 9,512 2,525
Cash and cash equivalents at end of period .....................................$ 11,493 $ 9,646
Supplemental disclosure of cash flow information:
Cash paid for interest .......................................................$ 9 $ 290
Cash paid for taxes ..........................................................$ 18 $ 30
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
PRE-PAID LEGAL SERVICES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The consolidated balance sheet as of September 30, 1995, the related
statements of operations for the three- month and nine-month periods ended
September 30, 1995 and 1994 and the statements of cash flows for the nine-month
periods ended September 30, 1995 and 1994 are unaudited; in the opinion of
management, all adjustments necessary for a fair presentation of such financial
statements have been included.
These financial statements and notes are presented as permitted by Form
10-QSB and should be read in conjunction with the Company's financial statements
and notes included in the annual report on Form 10-KSB for the year ended
December 31, 1994.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
RESULTS OF OPERATION
FIRST NINE MONTHS OF 1995 COMPARED TO FIRST NINE MONTHS OF 1994
The Company reported net income of $5.2 million and net income applicable
to common shares of $5.0 million, or $.25 per common share, for the nine months
ended September 30, 1995 compared to net income of $2.7 million and net income
applicable to common shares of $2.5 million, or $.20 per common share, for the
comparable period of 1994. The increase in the net income for the 1995 period is
attributable to increases in every revenue category during the first nine months
of 1995 as compared to the same period of 1994.
Revenues rose 43% to $26.4 million from $18.4 million for the prior year's
comparable period. Income before income taxes for the first nine months of 1995
increased 183% to $7.8 million from $2.8 million for the comparable period of
1994. The relatively higher percentage increase in income before income taxes
compared to revenues resulted primarily from decreases in commissions, general
and administrative expenses, and contract benefits as a percentage of revenues.
Contract premiums totaled $22.0 million during the first nine months of
1995 compared to $16.8 million for the same period of 1994, an increase of 30%.
The increase in contract premiums was primarily the result of increased new
contract sales resulting in a higher number of active contracts in force. New
contract sales during the first nine months of 1995 were 75,469 compared to
33,541 during the 1994 period, an increase of 125%. At September 30, 1995, there
were 186,669 active contracts in force compared to 141,372 at September 30,
1994, an increase of 32%.
Associate services revenue increased from $628,000 for the first nine
months of 1994 to $2.2 million during the same period of 1995 as a result of
higher new associate enrollments. New associates enrolled during the first nine
months of 1995 were 33,916 compared to 10,181 for the same period of 1994, an
increase of 233%. Future revenues from associate services will depend primarily
on the number of new associates enrolled, but the Company expects that such
revenues will continue to be partially offset by the direct and indirect cost to
the Company of providing associate services.
Interest income increased as a result of increases in the average
investments outstanding. At September 30, 1995 the Company reported $18.2
million in cash and investments compared to $11.7 million at September 30, 1994.
Contract benefits totaled $7.4 million for the first nine months of 1995
compared to $5.8 million for the same period of 1994, an increase of 29%.
However, the loss ratio for both periods remained constant at 34% of Contract
premiums.
Commissions were $5.5 million for the first nine months of 1995 compared to
$5.0 million for the same period of 1994, but decreased, as a percentage of
contract premiums, from 30% to 25%. Commission expense, as a percentage of
contract premiums reflects changes in the commission structure for contracts
sold after March 1, 1995.
General and administrative expenses during the 1995 and 1994 nine month
periods were $3.5 million and $3.1 million, respectively, and represented 16%
and 19% of contract premiums for such periods. If contract premiums continue to
increase, these expenses are expected to continue to decrease when expressed as
a percentage of contract premiums as a result of certain economies of scale
pertaining to the Company's operations.
Direct marketing costs increased to $707,000 for the first nine months of
1995 from $469,000 for the same period of 1994 but were fairly consistent as a
percent of contract premiums (3%) and include those costs other than
commissions, which are directly associated with new contract sales. As a result
of retirement of outstanding debt, interest expense decreased substantially
during the first nine months of 1995 to $9,000 compared to $277,000 for the same
period of 1994.
The Company's expense ratio for the first nine months of 1995 was 46%
compared to 54% for the comparable period of 1994. The loss ratio for both
periods remained constant at 34% of Contract premiums resulting in a combined
loss and expense ratio of 80% for the nine months ended September 30, 1995
compared to 88% for the same period of 1994.
The Company has recorded a provision for income taxes of $2.7 million (34%
of pretax income, all of which is deferred) for the first nine months of 1995
compared to $31,000 for the same period of 1994. The 1995 provision is
attributable to significant anticipated growth and reflects the Company's
expectation that it is more likely than not that it will not be able to realize
the future tax benefit of its net operating loss carryforwards.
Dividends paid on outstanding preferred stock during the first nine months
of 1995 was $121,000 compared to $254,000 during the same period of 1994. This
decrease is attributable to dividends paid on outstanding shares of $2.40
Cumulative Convertible Preferred Stock issued during June and July, 1994 in
conjunction with a public unit offering which automatically converted to common
stock pursuant to its terms on February 27, 1995, as described below.
THIRD QUARTER OF 1995 COMPARED TO THE THIRD QUARTER OF 1994
The results of operations in the third quarter of 1995, compared to the
third quarter of 1994, reflect increases in revenues and expenses primarily as a
result of the same factors discussed in the comparison of the first nine months
of 1995 compared to the first nine months of 1994.
Total revenues increased 53% or approximately $3.4 million to $9.8 million
in the third quarter of 1995 compared to $6.4 million in the third quarter of
1994, primarily as a result of increase in contract premiums. The contract
premium increase of approximately 40% primarily resulted from an increase in the
number of average active contracts during the third quarter of 1995 compared to
the similar period of 1994.
Contract benefits totaled $2.8 million in the 1995 third quarter compared
to $2.1 million in the 1994 third quarter and resulted in a loss ratio of 35%
and 36%, respectively. The Company's expense ratio for the third quarter of 1995
was 45% compared to 53% for the 1994 third quarter resulting in a combined loss
and expense ratio of 80% for the third quarter of 1995 compared to 89% for the
same period of 1994.
The above factors resulted in 1995 third quarter net income and net income
applicable to common shares of $1.9 million, or $.09 per common share, for the
three months ended September 30, 1995 compared to net income of $944,000 and net
income applicable to common shares of $727,000, or $.06 per common share, for
the comparable period of 1994.
Liquidity and Capital Resources
During the second quarter of 1994 the Company completed the sale of 346,500
units consisting of a total of 346,500 shares of $2.40 Cumulative Convertible
Preferred Stock and 2,425,500 common stock purchase warrants in a public
offering. Each unit, sold at a price of $24.00 per unit, consisted of one share
of preferred stock and seven warrants. Total proceeds of the offering were $8.3
million of which the Company received approximately $6.8 million after deducting
expenses of the offering. These proceeds have been invested in short term
obligations of the U.S. Treasury and other government agencies and will be used
primarily for the payment of commission advances upon the sale of new contracts.
Each share of preferred stock had a cumulative dividend of $2.40 per year,
a liquidation preference of $24.00 per share and was convertible at any time at
the option of the holder into 14 shares of common stock. Each share of preferred
stock was also automatically convertible into common stock if the closing price
of the preferred stock exceeded $33.60 for ten consecutive trading days. The
closing price of preferred stock exceeded such price level for the 10
consecutive trading days ending February 24, 1995, and, as a result, the then
outstanding 277,700 shares of preferred stock were converted into common stock.
The remaining shares of preferred stock had been previously voluntarily
converted. The automatic conversion of the preferred stock together with earlier
voluntary conversions will result in savings of $831,600 per year in dividends.
Each warrant entitled the holder to purchase one share of common stock at
an exercise price of $2.50 per share at any time until September 8, 1999. The
warrants were redeemable at the option of the Company at a price of $.25 per
warrant following the date upon which the last reported sale price of the common
stock of the Company exceeds $3.75 per share (150% of the warrant exercise
price) for five consecutive trading days. The closing price of the common stock
exceeded that price level for the five consecutive trading days ended April 20,
1995.
The Company exercised its right to call the warrants for redemption and all
of the 2.4 million warrants with an exercise price of $2.50 per warrant were
exercised and resulted in net cash proceeds to the Company of more than
$6 million. As a result of the exercise, the number of outstanding shares of the
Company's common stock increased to 20,545,661 shares from 18,120,171. The
proceeds from the exercise of the warrants have been invested in short term
obligations of the U.S. Treasury and other government agencies and will be used
primarily for the payment of commission advances upon the sale of new contracts.
Consolidated net cash provided by operating activities was $531,000 for the
first nine months of 1995 compared to $2.0 million for the 1994 period. The
decrease of $1.4 million in cash provided by operations during the first nine
months of 1995 compared to the same period of 1994 resulted primarily from an
increase in net income of $2.4 million, an increase in deferred income taxes of
$2.6 million and a net decrease in contract benefits of $98,000 but was more
than offset by the net decreases in accounts payable and accrued expenses and
contingency reserves of $186,000, net decrease in accrued contract income of
$269,000, net increases in other assets of $784,000 and net increases in
associate balances of $6.0 million.
The Company had consolidated working capital of $18.9 million at September
30, 1995, an increase of $8.9 million compared to consolidated working capital
of $10.0 million at December 31, 1994 and an increase of $9.9 million compared
to September 30, 1994 working capital of $9.0 million. The significant increase
in working capital from September 30, 1994 to September 30, 1995 was primarily
the result of increased cash and short-term investments of $5.3 million and
increased associates' balances of $2.9 million together with the complete
retirement of $1.4 million in outstanding short-term debt.
The Company has an unsecured revolving credit agreement with Bank One,
Texas under which the Company may borrow up to $5 million, as determined by the
borrowing base defined by the agreement, through July, 1996. The borrowing base
is determined by a formula based on 80% of the net cash flow from certain of the
Company's contracts that have been in existence for 18 months or more. At
September 30, 1995, the borrowing base was approximately $4.7 million. Under the
agreement, the interest rate, at the option of the Company, is at the bank's
base lending rate or an adjusted London interbank rate and is determined at the
time of borrowing. Interest is to be paid monthly and any outstanding principal,
unless converted to an 18 month term loan upon the occurrence of certain events,
comes due in its entirety on July 1, 1996. The agreement contains restrictions
which, among other things, require maintenance of certain financial ratios,
restrict encumbrance of assets and creation of indebtedness, and limit the
payment of dividends. To date, the Company has not borrowed under the bank
credit agreement.
The Company believes that it has significant ability to finance expected
future growth in contract sales based on its existing amount of cash and
short-term investments at September 30, 1995 ($15.0 million) and the unused
revolving credit agreement availability of $4.7 million.
Although the Company is the operating entity in many jurisdictions, the
Company's subsidiaries serve as operating companies in various states which
regulate contracts as insurance or specialized legal expense products. The most
significant of these wholly-owned subsidiaries are Pre-Paid Legal Casualty, Inc.
("PPLCI") and Pre-Paid Legal Services, Inc. of Florida ("PPLSIF"). The ability
of PPLCI and PPLSIF to provide funds to the Company is subject to a number of
restrictions under various insurance laws in the jurisdictions in which PPLCI
and PPLSIF conduct business, including limitations on the amount of dividends
and management fees that may be paid and requirements to maintain specified
levels of capital and reserves. In addition PPLCI will be required to maintain
its stockholders' equity at levels sufficient to satisfy various state
regulatory requirements, the most restrictive of which is currently $3 million.
Additional capital requirements of either PPLCI or PPLSIF will be funded by the
Company in the form of capital contributions or surplus debentures.
<PAGE>
PART II - OTHER INFORMATION
ITEM. 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits are filed as part of this Form 10-QSB:
No. Description
11.1 Statement Regarding Computation of Per Share Earnings
27.1 Financial Data Schedule
(b) Reports on Form 8-K: There were no reports on Form 8-K filed by the Company
during the quarter ended September 30, 1995.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
PRE-PAID LEGAL SERVICES, INC.
Date: November 3, 1995 /S/ HARLAND C. STONECIPHER
Harland C. Stonecipher, Chairman
Date: November 3, 1995 /S/ RANDY HARP
Randy Harp, Chief Financial Officer
(Principal Financial Officer)
Date: November 3, 1995 /S/ KATHY PINSON
Kathy Pinson, Controller
(Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
No. Description
- ------------ -------------------------------------------------------------
11.1 Statement Regarding Computation of Per Share Earnings
27.1 Financial Data Schedule
EXHIBIT 11.1
PRE-PAID LEGAL SERVICES, INC.
Statement re Computation of Per Share Earnings
(In 000's except per share amounts)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1995 1994
PRIMARY EARNINGS PER SHARE:
<S> <C> <C>
Computation for Statement of Income
Earnings:
Income applicable to common shares (a) .........................................$ 5,032 $ 2,468
Shares:
Weighted average shares outstanding, (net of 747 shares of treasury stock)
disregarding exercise of options or conversion of preferred stock ............ 18,340 11,426
Assumed dilutive conversion of preferred stock ................................. 188 215
Assumed exercise of options and warrants based on the modified treasury stock
method using average market price ............................................ 1,721 712
Weighted average number of shares, as adjusted ................................. 20,249 12,353
Earnings per share (a) .........................................................$ .25 $ .20
FULLY DILUTED EARNINGS PER SHARE:
Computation for Statement of Income
Earnings:
Income applicable to common shares (a) .........................................$ 5,032 $ 2,468
Add: Dividends on assumed conversion of preferred stock........................ 121 243
Interest on assumed conversion of subordinated debentures,
net of tax (b) ......................................................... - 38
Net income, as adjusted ........................................................$ 5,153 $ 2,749
Shares:
Weighted average shares outstanding, (net of 747 shares of treasury stock)
disregarding exercise of options or conversion of preferred stock or
subordinated debentures ...................................................... 18,340 11,426
Assumed dilutive conversion of preferred stock ................................. 1,052 2,057
Assumed dilutive conversion of subordinated debentures ......................... - 529
Assumed exercise of options and warrants based on the modified treasury stock
method using closing market price if higher than average market price ........ 2,107 1,107
Weighted average number of shares, as adjusted ................................. 21,499 15,119
Earnings per share (a) .........................................................$ .24 $ .18
</TABLE>
(a) These amounts agree with the related amounts in the statements of income.
(b) Adjustments to income have been shown net of tax effects calculated at the
Company's effective tax rate.
<PAGE>
EXHIBIT 11.1
(continued)
PRE-PAID LEGAL SERVICES, INC.
Statement re Computation of Per Share Earnings
(In 000's except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1995 1994
PRIMARY EARNINGS PER SHARE:
<S> <C> <C>
Computation for Statement of Income
Earnings:
Income applicable to common shares (a) .........................................$ 1,940 $ 727
Add: Interest on assumed debt reduction, net of tax (b)........................ - 70
Interest on assumed investments, net of tax (b) .......................... - 6
Net income, as adjusted ........................................................$ 1,940 $ 803
Shares:
Weighted average shares outstanding, (net of 747 shares of treasury stock)
disregarding exercise of options or conversion of preferred stock ............ 20,653 11,523
Assumed dilutive conversion of preferred stock ................................. 169 214
Assumed exercise of options and warrants based on the modified treasury stock
method using average market price ............................................ 1,061 1,808
Weighted average number of shares, as adjusted ................................. 21,883 13,545
Earnings per share (a) .........................................................$ .09 $ .06
FULLY DILUTED EARNINGS PER SHARE:
Computation for Statement of Income
Earnings:
Income applicable to common shares (a) .........................................$ 1,940 $ 727
Add: Dividends on assumed conversation of preferred Stock...................... 3 214
Interest on assumed debt reduction, net of tax (b)....................... - 58
Interest on assumed conversion of subordinated debentures,
net of tax (b) ........................................................... - 14
Net income, as adjusted ........................................................$ 1,943 $ 1,013
Shares:
Weighted average shares outstanding, (net of 747 shares of treasury stock)
disregarding exercise of options or conversion of preferred stock or
subordinated debentures .......................................................20,653 11,523
Assumed dilutive conversion of preferred stock ................................. 169 4,966
Assumed dilutive conversion of subordinated debentures ......................... - 529
Assumed exercise of options and warrants based on the modified treasury stock
method using closing market price if higher than average market price ........ 1,094 1,808
Weighted average number of shares, as adjusted ................................. 21,916 18,826
Earnings per share (a) .........................................................$ .09 $ .05
</TABLE>
(a) These amounts agree with the related amounts in the statements of income.
(b) Adjustments to income have been shown net of tax effects calculated at the
Company's effective tax rate.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted
from the September 30, 1995 financial statements contained in Form 10-QSB
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. Dollars
<EXCHANGE-RATE> 1
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 11,493
<SECURITIES> 3,484
<RECEIVABLES> 6,137
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 21,114
<PP&E> 2,158
<DEPRECIATION> 0
<TOTAL-ASSETS> 32,251
<CURRENT-LIABILITIES> 2,172
<BONDS> 0
<COMMON> 215
0
51
<OTHER-SE> 27,159
<TOTAL-LIABILITY-AND-EQUITY> 32,251
<SALES> 21,953
<TOTAL-REVENUES> 26,416
<CGS> 0
<TOTAL-COSTS> 18,609
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9
<INCOME-PRETAX> 7,807
<INCOME-TAX> 2,654
<INCOME-CONTINUING> 5,153
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,153
<EPS-PRIMARY> .25
<EPS-DILUTED> .24
</TABLE>
