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 June 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 July 31, 1995:
Common Stock $.01 par value 20,612,595
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>
June 30, December 31,
1995 1994
<S> <C> <C>
(Unaudited)
Current assets:
Cash.............................................................................. $ 8,060 $ 2,972
Held-to-maturity short-term investments........................................... 8,028 6,540
Total cash and unpledged cash equivalents....................................... 16,088 9,512
Accrued contract income........................................................... 692 563
Associates' balances.............................................................. 2,943 2,329
Total current assets.......................................................... 19,723 12,404
Held-to-maturity investments........................................................ 499 410
Investments pledged................................................................. 2,122 1,772
Associates' balances - noncurrent................................................... 2,837 204
Property and equipment, net......................................................... 2,079 2,071
Other............................................................................... 1,891 1,293
Total assets.................................................................. $ 29,151 $ 18,154
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Contract benefits................................................................. $ 1,421 $ 1,409
Accounts payable and accrued expenses............................................. 491 496
Contingency reserves on trust preparation services ............................... 259 442
Total current liabilities....................................................... 2,171 2,347
Deferred income taxes............................................................... 1,653 -
Total liabilities............................................................. 3,824 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 June 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, 50 and 60 shares authorized,
issued and outstanding at June 30, 1995 and December 31, 1994, respectively;
liquidation value of $663 and $803 at June 30, 1995 and December 31, 1994,
respectively................................................................ 50 60
Common stock, $.01 par value; 100,000 shares authorized; 21,359 and 14,216
issued at June 30, 1995 and December 31, 1994, respectively 214 142
Capital in excess of par value.................................................... 37,435 30,770
Retained earnings (deficit)....................................................... (10,200) (13,292)
Less: Treasury stock at cost; 747 shares.......................................... (2,177) (2,177)
Total stockholders' equity...................................................... 25,327 15,807
Total liabilities and stockholders' equity.................................... $ 29,151 $ 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)
Six Months Ended June 30,
1995 1994
Revenues:
Contract premiums .................................... $13,867 $11,062
Associate services ................................... 1,209 398
Interest income ...................................... 680 201
Other ................................................ 843 376
16,599 12,037
Costs and expenses:
Contract benefits .................................... 4,610 3,714
Commissions .......................................... 3,586 3,200
General and administrative ........................... 2,149 2,061
Direct marketing expenses ............................ 448 388
Costs of associate services .......................... 444 195
Interest ............................................. 6 202
Depreciation ......................................... 231 212
Premium taxes ........................................ 109 114
Other ................................................ 153 147
11,736 10,233
Income before income taxes ............................. 4,863 1,804
Provision for income taxes ............................. 1,653 26
Net income ............................................. 3,210 1,778
Less dividends on preferred shares ..................... 118 37
Net income applicable to common shares ................. $ 3,092 $ 1,741
Earnings per common and common equivalent share ........ $ .16 $ .14
Earnings per common share - assuming full dilution ..... $ .15 $ .13
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 June 30,
1995 1994
Revenues:
Contract premiums ...................................... $7,328 $5,656
Associate services ..................................... 712 222
Interest income ........................................ 462 156
Other .................................................. 471 200
8,973 6,234
Costs and expenses:
Contract benefits ...................................... 2,504 1,855
Commissions ............................................ 1,717 1,729
General and administrative ............................. 1,204 1,095
Direct marketing expenses .............................. 274 197
Costs of associate services ............................ 263 110
Interest ............................................... 3 89
Depreciation ........................................... 120 98
Premium taxes .......................................... 53 59
Other .................................................. 75 71
6,213 5,303
Income before income taxes ............................... 2,760 931
Provision for income taxes ............................... 938 26
Net income ............................................... 1,822 905
Less dividends on preferred shares ....................... 4 33
Net income applicable to common shares ................... $1,818 $ 872
Earnings per common and common equivalent share .......... $ .09 $ .07
Earnings per common share - assuming full dilution ....... $ .09 $ .07
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>
Six Months Ended June 30,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income .................................................................. $ 3,210 $ 1,778
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for deferred income taxes ....................................... 1,653 --
Depreciation and amortization ............................................. 231 212
Increase (decrease) in contract benefits .................................. 12 (495)
Increase in associates' balances .......................................... (3,247) (428)
(Increase) decrease in other assets ....................................... (598) 53
(Decrease) increase in accrued contract income ............................ (129) 26
Decrease in accounts payable and accrued expenses and contingency reserves (188) (32)
Net cash provided by operating activities ............................. 944 1,114
Cash flows from investing activities:
Additions to property and equipment ....................................... (239) (114)
Increase (decrease) in held-to-maturity investments and investments pledged (439) 383
Cash used in investing activities ..................................... (678) 269
Cash flows from financing activities:
Reduction in notes payable ................................................ -- (956)
Payment of debentures ..................................................... -- (511)
Proceeds from issuance of promissory notes ................................ -- 75
Proceeds from sale of common and preferred stock .......................... 6,428 6,615
Dividends paid on preferred stock ......................................... (118) (8)
Net cash provided by (used in) financing activities ................... 6,310 5,215
Net increase in cash and unpledged cash equivalents ......................... 6,576 6,598
Cash and cash equivalents at beginning of period ............................ 9,512 2,525
Cash and cash equivalents at end of period .................................. $ 16,088 $ 9,123
Supplemental disclosure of cash flow information:
Cash paid for interest .................................................... $ 6 $ 210
Cash paid for taxes ....................................................... $ 15 -
</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 June 30, 1995, the related statement
of operations for the three-month and six-month periods ended June 30, 1995 and
1994 and the statement of cash flows for the six-month periods ended June 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.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
RESULTS OF OPERATION
FIRST SIX MONTHS OF 1995 COMPARED TO FIRST SIX MONTHS OF 1994
The Company reported net income of $3.2 million and net income applicable
to common shares of $3.1 million, or $.16 per common share, for the six months
ended June 30, 1995 compared to net income of $1.8 million, or $.14 per common
share, for the comparable period of 1994. Weighted average common and common
equivalent shares outstanding increased 51.3% from 12.7 million in the first six
months of 1994 to 19.2 million in the first six months of 1995. The increase in
the net income for the 1995 period is attributable to increases in every revenue
category during the first six months of 1995 as compared to the same period of
1994.
Revenues for the first six months of 1995 rose 38% to $16.6 million from
$12.0 million for the prior year's comparable period. Income before income taxes
for the first half of 1995 increased 170% to $4,863,000 from $1,804,000 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 $13.9 million during the first half of 1995
compared to $11.0 million for the same period of 1994, an increase of 25%. 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 six months of 1995 were 43,450 compared to 22,070 during
the 1994 period, an increase of 97%. At June 30, 1995, there were 167,272 active
Contracts in force compared to 138,271 at June 30, 1994, an increase of 21%.
Associate services revenue increased from $398,000 for the first half of
1994 to $1,209,000 during the same period of 1995 as a result of higher new
associate enrollments. New associates enrolled during the first six months of
1995 were 18,498 compared to 6,472 for the same period of 1994, an increase of
186%. 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 largely 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 and higher interest rates on investments. At June 30,
1995 the Company reported $18.7 million in cash and investments compared to
$11.7 million at June 30, 1994.
Contract benefits totaled $4.6 million for the first half of 1995 compared
to $3.7 million for the same period of 1994, an increase of 24%. However, the
loss ratio for both periods remained constant at 33% of Contract premiums.
Commissions were $3.6 million for the first half of 1995 compared to $3.2
million for the same period of 1994, but decreased, as a percentage of Contract
premiums, from 29% to 26%. Commission expense, as a percentage of Contract
premiums, should approach 25% or less of Contract premiums in future years as a
result of changes in the commission structure for contracts sold after March 1,
1995.
General and administrative expenses during both the 1995 and 1994 six month
periods were $2.1 million and represented 15% and 19%, respectively, of Contract
premiums for such periods. 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 which include those costs other than commissions,
which are directly associated with new contract sales, increased to $448,000 for
the first half of 1995 from $388,000 for the same period of 1994 but were fairly
consistent as a percent of Contract premiums (3% and 4%, respectively). As a
result of retirement of outstanding debt, interest expense decreased
substantially during the first six months of 1995 to $6,000 compared to $202,000
for the same period of 1994.
Two principal operating measures monitored by the Company are the loss
ratio and the expense ratio. The loss ratio represents Contract benefit costs as
a percentage of Contract premiums. The expense ratio represents the total of
commissions, direct marketing expenses, general and administrative expenses,
premium taxes, interest and certain other normal operating expenses as a
percentage of Contract premiums. The Company strives to maintain a combined loss
and expense ratio as low as possible. The combined ratio does not measure total
profitability because it does not take into account all revenues and expenses.
The loss ratio was 33% for both the first six months of 1995 and the first six
months of 1994 while the expense ratio for the first six months of 1995
decreased to 45% from 54% for the same period of 1994 resulting in a combined
ratio for the first six months of 1995 of 78% compared to 87% for the same
period of 1994.
The Company has recorded a provision for income taxes of $1,653,000 (34% of
pretax income, all of which is deferred) for the first half of 1995 compared to
$26,000 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 six months
of 1995 increased to $118,000 from $37,000 during the same period of 1994. This
increase 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. This series of preferred stock
automatically converted to common stock pursuant to its terms on February 27,
1995, as described below.
SECOND QUARTER OF 1995 COMPARED TO THE SECOND QUARTER OF 1994
The results of operations in the second quarter of 1995, compared to the
second quarter of 1994, reflect increases in revenues and expenses primarily as
a result of the same factors discussed in the comparison of the first six months
of 1995 compared to the first six months of 1994.
Total revenues increased 44% or approximately $2.7 million to $9.0 million
in the second quarter of 1995 compared to $6.2 million in the second quarter of
1994, primarily as a result of increase in Contract premiums. The Contract
premium increase of approximately 30% primarily resulted from an increase in the
number of average active Contracts during the second quarter of 1995 compared to
the similar period in 1994.
Contract benefits totaled $2.5 million in the 1995 second quarter compared
to $1.9 million in the 1994 second quarter and resulted in a loss ratio of 34%
and 33%, respectively. The Company's expense ratio for the second quarter of
1995 was 44% compared to 56% for the 1994 second quarter resulting in a combined
loss and expense ratio of 78% for the second quarter of 1995 compared to 89% for
the same period of 1994.
The above factors resulted in a 1995 second quarter net income of $1.8
million compared to $905,000 for the second quarter 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 $944,000 for the
first six months of 1995 compared to $1,114,000 for the 1994 period. The
decrease of $170,000 in cash provided by operations during the first half of
1995 compared to the same period of 1994 resulted primarily from an increase in
net income of $1.4 million, increase in accrued Contract benefits of $507,000
and an increase in deferred income taxes of $1.7 million but was more than
offset by the net decreases in accounts payable and accrued expenses and
contingency reserves of $156,000, net decrease in accrued Contract income of
$155,000, net increases in other assets of $651,000 and net increases in
associate balances of $2.8 million.
The Company had consolidated working capital of $17.5 million at June 30,
1995, an increase of $7.5 million compared to consolidated working capital of
$10.0 million at December 31, 1994 and an increase of $10.0 million compared to
June 30, 1994 working capital of $7.5 million. The significant increase in
working capital from June 30, 1994 to June 30, 1995 was primarily the result of
increased cash and short-term investments of $7 million together with the
complete retirement of $2.4 million in outstanding 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 June
30, 1995, the borrowing base was approximately $4.5 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 cash
equivalents at June 30, 1995 ($16.0 million) and the unused revolving credit
agreement availability of $4.5 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.
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 June 30, 1995.
<PAGE>
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: July 31, 1995 /S/ HARLAND C. STONECIPHER
Harland C. Stonecipher, Chairman
Date: July 31, 1995 /S/ RANDY HARP
Randy Harp, Chief Financial Officer
(Principal Financial Officer)
Date: July 31, 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>
Six Months Ended June 30,
1995 1994
PRIMARY EARNINGS PER SHARE:
<S> <C> <C>
Computation for Statement of Income
Earnings:
Income applicable to common shares (a) ............................................ $ 3,092 $ 1,741
Shares:
Weighted average shares outstanding, (net of 747 shares of treasury stock)
disregarding exercise of options or conversion of preferred stock ............... 17,165 11,377
Assumed dilutive conversion of preferred stock .................................... 198 215
Assumed exercise of options and warrants based on the modified treasury stock
method using average market price ............................................... 1,792 1,072
Weighted average number of shares, as adjusted .................................... 19,155 12,664
Earnings per share (a) ............................................................ $ .16 $ .14
FULLY DILUTED EARNINGS PER SHARE:
Computation for Statement of Income
Earnings:
Income applicable to common shares (a) ............................................ $ 3,092 $ 1,741
Add: Dividends on assumed conversion of preferred stock ........................... 110 29
Interest on assumed conversion of subordinated debentures,
net of tax (b) ............................................................... -- 24
Net income, as adjusted ........................................................... $ 3,202 $ 1,794
Shares:
Weighted average shares outstanding, (net of 747 shares of treasury stock)
disregarding exercise of options or conversion of preferred stock or subordinated
debentures ...................................................................... 17,165 11,377
Assumed dilutive conversion of preferred stock .................................... 1,500 577
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 ........... 2,373 1,072
Weighted average number of shares, as adjusted .................................... 21,038 13,555
Earnings per share (a) ............................................................ $ .15 $ .13
</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 June 30,
1995 1994
PRIMARY EARNINGS PER SHARE:
<S> <C> <C>
Computation for Statement of Income
Earnings:
Income applicable to common shares (a) ............................................ $ 1,818 $ 872
Shares:
Weighted average shares outstanding, (net of 747 shares of treasury stock)
disregarding exercise of options or conversion of preferred stock ............... 19,247 11,499
Assumed dilutive conversion of preferred stock .................................... 191 214
Assumed exercise of options and warrants based on the modified treasury stock
method using average market price ............................................... 1,846 956
Weighted average number of shares, as adjusted .................................... 21,284 12,669
Earnings per share (a) ............................................................ $ .09 $ .07
FULLY DILUTED EARNINGS PER SHARE:
Computation for Statement of Income
Earnings:
Income applicable to common shares (a) ............................................ $ 1,818 $ 872
Add: Dividends on assumed conversion of preferred stock ........................ - 29
Interest on assumed conversion of subordinated debentures,
net of tax (b) ............................................................ - 16
Net income, as adjusted ........................................................... $ 1,818 $ 917
Shares:
Weighted average shares outstanding, (net of 747 shares of treasury stock)
disregarding exercise of options or conversion of preferred stock or subordinated
debentures ...................................................................... 19,247 11,499
Assumed dilutive conversion of preferred stock .................................... 191 935
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 ........... 1,928 956
Weighted average number of shares, as adjusted .................................... 21,366 13,919
Earnings per share (a) ............................................................ $ .09 $ .07
</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 June 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> 6-mos
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 8,060
<SECURITIES> 8,028
<RECEIVABLES> 3,635
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 19,723
<PP&E> 2,079
<DEPRECIATION> 0
<TOTAL-ASSETS> 29,151
<CURRENT-LIABILITIES> 2,171
<BONDS> 0
<COMMON> 214
0
55
<OTHER-SE> 25,058
<TOTAL-LIABILITY-AND-EQUITY> 29,151
<SALES> 13,867
<TOTAL-REVENUES> 16,599
<CGS> 0
<TOTAL-COSTS> 11,736
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6
<INCOME-PRETAX> 4,863
<INCOME-TAX> 1,653
<INCOME-CONTINUING> 3,210
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,210
<EPS-PRIMARY> .16
<EPS-DILUTED> .15
</TABLE>
