UNITED STATES
SECURITIES AND EXHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number 0-10475
MEDIA SOURCE, INC.
(Exact Name of Registrant as specified in its charter)
DELAWARE 34-1297143
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6360 Rings Road, Amlin, Ohio 43002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (614) 793-8749
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO .
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of share outstanding of each of the issuer's classes of common
equity, as of the latest practical date: 328,200 common shares outstanding, each
with $0.01 par value, as of March 1, 2000.
Transitional Small Business Disclosure Format (Check one): YES X NO .
----- -----
<PAGE>
MEDIA SOURCE, INC.
FORM 10-QSB
INDEX
Part I - Financial Information
Item 1 - Financial Statements (unaudited)
Balance Sheets - March 31, 2000 and December 31, 1999
Statements of Operations - Three Months ended March 31, 2000 and 1999
Statements of Cash Flows - Three Months ended March 31, 2000 and 1999
Notes to Financial Statements
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Part II - Other information
Signatures
<PAGE>
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
MEDIA SOURCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 1999
----------- ----------
(unaudited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents ...................... $ 997,962 $ 804,605
Trading securities, at market .................. 673,615 355,907
Accounts receivable, net of allowance for doubtful
accounts of $94,000 and $94,000, respectively . 522,360 863,117
Inventory ....................................... 833,313 1,003,695
Prepaid expenses ................................ 225,667 206,214
---------- ----------
Total Current Assets .................................. 3,252,917 3,233,538
Equipment, net of accumulated depreciation
Of $154,191 and $155,406, respectively .............. 83,792 94,264
Other Assets:
Assets held for disposal (net) ................... -- 1,189,189
Cost in excess of net assets acquired, net of accumulated
amortization of $1,067,052 and $1,055,000,
respectively 1,654,851 1,666,902
Securities available for sale, at market ......... 73,900 73,900
Other ............................................ 30,204 10,042
---------- ----------
Total Other Assets ................................... 1,758,955 2,940,033
---------- ----------
Total Assets ........................................ $5,095,664 $6,267,835
========== ==========
See accompanying notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MEDIA SOURCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 1999
------------ -------------
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities:
Accounts payable .............................$ 105,164 $ 220,690
Accrued liabilities .......................... 80,935 97,294
Accrued salary and interest - officer ........ 379,404 329,917
Accrued tax liabilities ...................... 969,916 1,006,032
Deferred revenue ............................. 1,545,400 1,794,385
Current portion of long-term debt obligations 500,000 963,896
------------ ------------
Total Current Liabilities ......................... 3,580,819 4,412,214
Long-term debt ....................................... 200,000 1,082,001
------------ ------------
Total Liabilities .............................. 3,780,819 5,494,215
Commitments
Stockholders' Equity:
Preferred shares: $.01 par value; 300,000 shares authorized;
no shares issued or outstanding
Common shares: $.01 par value; 500,000 shares
authorized; . . 3,431 3,431
343,137 issued and outstanding
Capital in excess of stated value ......... 21,974,029 21,974,029
Notes receivable from stock sales ..... ... (902,373) (902,373)
Unrealized losses on securities available for sale (12,900) (12,900)
Accumulated deficit ........................ (19,506,219) (20,047,444)
Less 14,936 shares of common stock in treasury,
at cost .... (241,123) (241,123)
------------ ------------
Total Stockholders' Equity ..................... 1,314,845 773,620
------------ ------------
Total Liabilities and Stockholder's Equity ..... $ 5,095,664 $ 6,267,835
============ ============
See accompanying notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MEDIA SOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three months ended March 31,
----------------------
2000 1999
--------- ---------
(unaudited)
<S> <C> <C>
Revenues ............................................ $ 957,415 $ 886,842
Costs of goods sold ................................. 360,657 366,053
--------- ---------
Gross profit ........................................ 596,758 520,789
Operating expenses:
Selling, general and administrative ............ 509,781 527,900
Depreciation and amortization .................. 28,615 36,985
--------- ---------
Total operating expenses ............................ 538,396 564,885
--------- ---------
Income (loss) from operations ....................... 58,362 (44,096)
Other income (expense)
Interest, net .................................. (12,884) (45,411)
Gain on the extinguishment of debt ............. 31,787 --
Gain on the sales of assets .................... 262,229 --
Realized gain on investments ................... 158,783 --
Unrealized gain on investments ................. 27,673 --
--------- ---------
Total other income (expense) ........................ 467,588 (45,411)
--------- ---------
Income (loss) from continuing operations before taxes 525,950 (89,507)
Provision for income taxes .......................... -- --
--------- ---------
Income (loss) from continuing operations ............ 525,950 (89,507)
Gain from discontinued operations ................... 15,275 80,514
--------- ---------
Net income (loss) ................................... $ 541,225 $ (8,993)
========= =========
Earnings per common share
Income (loss) from continuing operations ....... $ 1.60 $ (0.27)
Income from discontinued operations ............ .05 0.24
--------- ---------
Net income (loss) .............................. $ 1.65 $ (0.03)
========= =========
Weighted average number of common shares outstanding 328,200 328,200
========= =========
See accompanying notes
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MEDIA SOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31,
---------------------------
2000 1999
------------ -----------
(unaudited)
Cash flow from (used) in operations:
<S> <C> <C>
Income (loss) from continuing operations ......... $ 525,950 $ (89,507)
Reconciliation to net cash flow used in continuing operations:
Depreciation and amortization ............... 28,615 36,985
Gain on the sale of fixed assets ............ (262,229) --
Gain on the extinguishment of debt .......... (31,787) --
Realized gain (loss) on investments ......... (158,783) --
Unrealized gain (loss) on investments ....... (27,673) --
Changes in working capital items of continuing operations:
Accounts receivable ......................... 340,757 (81,917)
Inventory ................................... 170,382 15,198
Prepaid expenses and other assets ........... (44,450) 61,711
Accounts payable and accrued liabilities .... (67,798) (36,076)
Deferred revenue ............................ (248,989) (109,738)
----------- -----------
Net cash provided by (used in) continuing operations 223,995 (203,344)
Net cash from (used in) discontinued operations .... (26,889) 80,514
----------- -----------
Net cash from (used in) operations ................. 197,106 (122,830)
Cash flow from (used in) investing activities:
Proceeds from the sale of property and equipment 1,448,400 --
Payments for purchase of trading securities .... (721,989) --
Proceeds from the sale of trading securities .. 590,737 --
----------- -----------
Net cash from investing activities .................. 1,317,148 --
Cash flow from (used in) financing activities:
Proceeds from settlement of note receivable .... -- 150,000
Payments on debt obligations ................... (745,897) (19,157)
Payments on subordinated debt issued ........... (575,000) --
----------- -----------
Net cash from (used in) financing activities ........ (1,320,897) 130,843
Increase in cash .................................... 193,357 8,013
Cash, beginning of period ............................. 804,605 936,196
----------- -----------
Cash, end of period .............................. $ 997,962 $ 944,209
=========== ===========
See accompanying notes
</TABLE>
<PAGE>
MEDIA SOURCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1. Basis of Presentation
The accompanying condensed consolidated financial statements have not
been audited, but reflect all adjustments, which, in the opinion of management,
are necessary for a fair presentation of financial position, results of
operations and cash flows. All adjustments are of a normal and recurring nature,
except for those related to the discontinued operations of the Company's book
fair business.
Media Source, Inc. (the "Company"), through MT Library Services, Inc.,
its wholly-owned subsidiary, operates Junior Library Guild, a subscription
service that distributes first print, award winning children's books. The
Company has its own editorial division that reviews books in the manuscript
stage and makes selections for nine reading levels. The Company markets most of
its products directly to schools and public libraries but has plans to expand
into other segments.
The interim consolidated condensed financial statements and notes
thereto are presented as permitted by the Securities and Exchange Commission and
do not contain certain information included in the Company's annual financial
statements and notes thereto. The results of operations for the interim periods
are not necessarily indicative of the results to be expected for the full year.
These financial statements should be read in conjunction with the Company's
audited financial statements and notes thereto for the fiscal year ended
December 31, 1999.
Note 2. Debt Obligations
At quarter ended March 31, 2000, the Company had a $200,000
subordinated note payable bearing interest at the lender's prime rate plus 1%,
due July 31, 2001, and $500,000 in subordinated note payables bearing interest
of 12% quarterly, due August 1, 2000.
During the first quarter of 2000, the Company retired, at 90 percent of
face value, a $250,000 subordinated note that was due December 31, 2005 and
$350,000 in subordinated notes that were due on August 1, 2000.
Subsequent to quarter ending March 31, 2000, on option to purchase
stock was granted on May 10, 2000 to the Company Chairman, S. Robert Davis,
holder of a $500,000 subordinated convertible note payable due August 1, 2000.
In exchange for granting this option, S. Robert Davis agrees to extend the due
date of his note, cancel the conversion feature associated with the note, and
allow the Company to repay the debt over 20 quarterly installments of $25,000
starting in April 2000. The stock option entitles S. Robert Davis to purchase
from the Company 100,000 shares at 1/8th over the closing bid price on the day
of grant. The closing bid price on May 10, 2000 was $2.125 and therefore the
exercise price is $2.25 per share. The option is only exercisable after May 10,
2003, three years from the date of the grant and expires on May 10, 2006, six
years from the date of grant.
Note 3. Supplemental Cash Flow Information
Cash payments during the three months ended March 31, 2000 and 1999,
included interest of $81,000 and $19,000, respectively, and income taxes of $0
and $0, respectively.
<PAGE>
Note 4. Income Taxes
There was no income tax provision for the three months ended March 31,
2000, due to the Company's net operating loss position and the full valuation of
any resulting deferred tax benefit. Estimated income tax rates based on
annualized income were taken into consideration.
Note 5. Earnings Per Share
The following table represents the computation of basic and diluted
earnings per share.
<TABLE>
<CAPTION>
Three months ended March 31,
---------------------
2000 1999
--------- ---------
<S> <C> <C>
(unaudited)
Basic and Diluted Earnings Per Share:
Weighted average number of common shares outstanding 328,200 328,200
========= =========
Income (loss) from continuing operations ........... $ 525,950 $ (89,507)
Gain (loss) from discontinued operations ........... 15,275 80,514
--------- ---------
Net income (loss) available to common stockholders . $ 541,225 $ (8,993)
========= =========
Income (loss) per common share:
Income (loss) from continuing operations ........... $ 1.60 $ (0.27)
Gain (loss) from discontinued operations ........... 0.05 0.24
--------- ---------
Net income (loss) per share ........................ $ 1.65 $ (0.03)
========= =========
</TABLE>
At March 31, 2000 options and warrants were outstanding during the
periods but were not included in the computation of dilutive EPS because the
potential common stock was not "in-the-money". At March 31, 1999 options and
warrants were outstanding during the periods but were not included in the
computation of dilutive EPS because the potential common stock was not
"in-the-money" and would have been antidillutive.
Note 6. Assets Held For Disposal
Assets held for disposition at December 31, 1999 consisted of a
warehouse, office facility and real estate in Worthington, Ohio that were being
used by the Junior Library Guild on a temporary basis. These assets were sold on
January 25, 2000 for $1.4 million and the Company realized a gain on the sale
$254,000. The Junior Library Guild entered into a lease to rent the warehouse
and office facility through September 2000. At the expiration of the lease, the
Junior Library Guild will move and lease a new warehouse and office facility
located in Union County, Ohio.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Special Note Regarding Forward-Looking Statements
Certain statements contained in this Form 10-QSB under "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
regarding matters that are not historical facts are "forward looking statements"
(as such term is defined in the Private Securities Litigation Reform Act of
1995) and because such statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Those statements include remarks regarding the
intent, belief, or current expectations of the Company, its directors, or its
officers with respect to, among other things: (i) the capability of the
Company's existing subscription sales organization to absorb additional volume;
(ii) the expectation of the Company with respect to the amount of the possible
judgement in the sales tax litigation described under "Item 3, Legal
Proceedings"; (iii) the Company's opportunity to increase sales of its products
and its market share; and (iv) trends affecting the Company's financial
condition or results of operations; (v) the Company's cash on hand and cash from
operations should provide sufficient funds available for the Company's normal
business operations in the year 2000. Prospective investors are cautioned that
any such forward-looking statements are not guarantees of future performance and
involve risks and uncertainties, and that actual results may differ materially
from those projected, anticipated or expected in the forward-looking statements
as a result of various factors, many of which, such as the Company's ability to
raise additional capital, are beyond the control of the Company. The
accompanying information contained in this Form 10-QSB, including, without
limitation, the information set forth under the heading "Management's Discussion
and Analysis of Financial Condition and Results of Operations", identifies
important factors that could cause such differences.
First Quarter 2000 Compared with First Quarter 1999
Revenues for the three months ended March 31, 2000, approximated
$957,000 compared to approximately $887,000 for the three months ended March 31,
1999, an increase of 8% or approximately $70,000. The increase in revenues is
principally attributable to an increase in the number of monthly subscriptions,
a change in pricing strategies, and a continued emphasis on selling additional
backlist book titles.
Cost of goods sold was approximately $361,000 for the three months
ended March 31, 2000, compared to approximately $366,000 for the three months
ended March 31, 1999, an decrease of 1% or approximately $5,000. The decrease in
cost of goods sold is a result of a change in purchasing strategies that
resulted in improvements in the buying of the product. As a percentage of
revenues, cost of goods sold was 38% during the first quarter of 2000, compared
to 41% for the same period in 1999. The decrease in cost of sold as a percentage
of revenues relates to a combination of new pricing strategies and improved
purchasing strategies during the first quarter of 2000 compared to 1999.
Selling, general, and administrative expense were approximately
$510,000 for the three months ended March 31, 2000, compared to approximately
$528,000 for the three months ended March 31, 1999, an decrease of 3% or
approximately $18,000. The decrease in selling, general, and administrative
expenses in 2000 is principally attributable to the reduction of operating
expenses as of the result of the sale of assets which were previously held for
disposal at December 31, 1999 and a net reduction in certain expenses that
relate to corporate overhead.
<PAGE>
Depreciation and amortization expense was approximately $29,000 for the
three months ended March 31, 2000, compared to $37,000 for the three months
ended March 31, 1999, a decrease of 22% or approximately $8,000. The decrease in
depreciation and amortization expense is due to a reduction in depreciable
assets as a result of the selling of assets which were previously held for
disposal at December 31, 1999
Net interest expense was approximately $13,000 for the three months
ended March 31, 2000, compared to $45,000 for the three months ended March 31,
1999, an decrease of 71% or $32,000. The decrease in net interest expense is
primarily attributable to the retirement of $1.3 million in debt obligation
during the first quarter of 2000. The average outstanding debt for the three
months ended March 31, 2000, approximated $1.4 million compared to $2.1 million
for the three months ended March 31, 1999. Additionally, the average interest
rate for the three months ended March 31, 2000, approximated 10.2% compared to
approximately 10.2% for the three months ended March 31, 1999.
There was no income tax provision for the three months ended March 31,
2000, due to the Company's net operating loss position and the full valuation of
any resulting deferred tax benefit. Estimated income tax rates based on
annualized income were taken into consideration.
The first quarter ended March 31, 2000, resulted in operating income of
$526,000 compared to an operating loss of $90,000 in the first quarter ended
March 31, 1999. The increased over 1999 was attributable to increase revenues,
decreased expenses, and gains on the extinguishment of debt, sale of assets and
on investments that totaled $480,000.
The first quarter ended March 31, 2000, resulted in net income of
$541,000 versus a net loss of $9,000 in the first quarter ended March 31, 1999.
Included in the net income for 2000 is a gain from discontinued operations of
$15,000 compared to a gain from discontinued operations of $80,000 in 1999.
Current quarter basic and diluted income per share for the first quarter ended
March 31, 2000 was $1.65 versus a loss per share of $.03 in the comparable
quarter last year. The weighted average common and common equivalent shares for
the first quarters 2000 and 1999 were 328,200.
Liquidity and Capital Resources
The Company had a net increase in cash for the three months ended March
31, 2000, of $193,000, compared to a net increase for the comparable period in
the prior year of $8,000. Cash on hand was $998,000 and $944,000 at March 31,
2000 and 1999, respectively.
For the three months ended March 31, 2000, continuing operations
provided $224,000 in cash as compared to $203,000 used during the three months
ended March 31, 1999. Primary increases in cash flow from operations in 2000
were from a $341,000 decrease in accounts receivable and a $170,000 decrease in
inventory. Primary decreases in cash flow from operations were a $44,000
increase in prepaid expenses and other assets, a $68,000 decrease in accounts
payable and accrued liabilities, and a $249,000 decrease in deferred revenue.
Primary increases in cash flow from operations in 1999 were from a $15,000
decrease in inventory and a $60,000 decrease in prepaid expenses and other
assets. Primary decreases in cash flow from operations were an $82,000 increase
in accounts receivable, a $36,000 decrease in accounts payable and accrued
liabilities, and a $110,000 decrease in deferred revenue.
Cash from investing activities was $1.3 million for the three months
ended March 31, 2000. Proceeds from the sale of property and equipment were $1.4
million and the proceeds from the sale of trading securities were $591,000. Cash
used in investing activities was $722,000 for the purchase of trading
securities. The Company had no asset expenditures in the first quarter of 2000
and does not anticipate any material expenditures for property and equipment
during the next twelve months.
<PAGE>
For the three months ended March 31,2000, cash used in financing
activities was $1.3 million for the payment of debt obligations. This compares
to cash provided by financing activities of $130,000 for the three months ended
March 31, 1999. Financing activities in 1999 included $150,000 in proceeds from
the settlement of notes receivable
Subsequent to quarter ending March 31, 2000, a $500,000 subordinated
convertible note payable was refinanced by the granting of an option to purchase
stock to the Company Chairman, S. Robert Davis. The granting of this option
extends the due date of his note, cancels the conversion feature associated with
the note, and allows the Company to repay the debt over 20 quarterly
installments of $25,000 starting in April 2000. The stock option entitles S.
Robert Davis to purchase from the Company 100,000 shares at 1/8th over the
closing bid price on the day of grant. The closing bid price on May 10, 2000 was
$2.125 and therefore the exercise price is $2.25 per share. The option is only
exercisable after May 10, 2003, three years from the date of the grant and
expires on May 10, 2006, six years from the date of the grant.
At March 31, 2000, the Company had negative net working capital of
approximately $328,000 compared to negative working capital of approximately
$1.2 million at December 31, 1999, an improvement of $872,000 during the first
quarter of 2000. The negative working capital is primarily attributed to the
current portion of long-term debts and $909,000 in liabilities that relate to
the Company's discontinued operations. Cash provided by continuing operations at
March 31, 2000 was $224,000. The Company believes that through a combination of
cash on hand and available from operations, there should be sufficient funds
available for the Company's normal business operations in the year 2000.
S. Robert Davis continues to deferred his salary of $185,000. Had Mr.
Davis not deferred his salary during the first quarter of 2000, the $224,000
positive cash flow from continuing operations would have been reduced to
$179,000. Mr. Davis intends to defer his salary for an additional 24 month. The
Board of Directors has the right to pay Mr. Davis' deferred compensation in
stock or cash, should the Company deem one more preferential than the other. It
continues to be the Company's intention to pay the deferred compensation in
cash. The re-location of operations and reduction of interest should provide
additional funding to meet the future obligations.
Seasonality
Although the children's literature business correlates closely to the
school year, the majority of the sales force remains intact throughout the year.
However, the entire sales force is reduced around the Christmas season. As a
subscription service, however, revenue is not seasonal and shipments of
inventory continue throughout the year. Cash receipts declines during the summer
months but do not cease, as public libraries remain, open.
Quantitative and Qualitative Disclosures about Market Risks
The Company is exposed to the impact of interest rate changes on its
debt obligations and investment risk. The Company is not exposed to foreign
currency exchange rate risk.
Interest Rate Risk. The Company is not exposed to market rate risk for
changes in interest rates due to all remaining debt obligations of the Company
having fixed interest rates.
<PAGE>
Investment Rate Risk. At March 31, 2000, the Company had trading
securities with a fair market value of $673,615 and a cost of $675,657. The
Company is subject to investment rate risk. The Company could benefit from
increases in market rates or could be adversely affected by decreases in market
rates. The current 2000 positive return on investments could be increased,
reduced or offset by any future gains or losses.
The Company has 29,560 shares of stock held for long-term investment at
cost of $86,800. These available for sale securities have a fair market value
based on new shares sold at $2.50 per share, and thus are reported at March 31,
2000 with a fair market value of $73,900. The Company would experience a loss of
$12,900 if the shares were sold as of March 31, 2000.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
The Company was subject to litigation by expert witnesses used in its
1996 suit against its former auditors, Arthur Anderson & Co. LLP. The Company
settled the case through mediation and paid $61,000 on February 16,2000.
The Illinois Department of Revenue issued two assessments,
NTLSF980498870200 on April 17, 1998 and NTLSF9804988702001 on March 24, 1998
against the Company seeking approximately $478,000, plus interest, in sales tax
from 1993 through 1996. A hearing has held before the State of Illinois,
Department of Revenue [Reg. #2225-1251, docket no, 98-ST-0132] on April 27, 2000
and the Company is currently waiting the decision. The taxing authority is
claiming that there has been an agency relationship between the Company and the
schools. The Company denies that such a relationship existed and plans to
vigorously defend this matter seeking full discharge of the assessments. The
Company anticipates legal cost to be in the $25,000 to $40,000 range and has
recorded a liability of approximately $650,000.
ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3: DEFAULT UPON SENIOR SECURITIES
None.
ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5: OTHER INFORMATION
None.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit
Number Description of Document
27 Financial Data Schedule
(filed only electronically with the SEC)
(b) Reports on Form 8-K filed during the quarter ended March 31, 2000:
None.
SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Media Source, Inc.
------------------
(Registrant)
Dated: May 12, 2000 By: /s/Donald R. Hollenack
------------ ----------------------
Donald R. Hollenack
Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-2000
<PERIOD-START> Jan-01-2000
<PERIOD-END> Mar-31-2000
<CASH> 997,962
<SECURITIES> 673,615
<RECEIVABLES> 616,360
<ALLOWANCES> 94,000
<INVENTORY> 833,313
<CURRENT-ASSETS> 3,252,917
<PP&E> 237,983
<DEPRECIATION> 154,191
<TOTAL-ASSETS> 5,095,664
<CURRENT-LIABILITIES> 3,580,819
<BONDS> 200,000
0
0
<COMMON> 3,431
<OTHER-SE> 1,311,414
<TOTAL-LIABILITY-AND-EQUITY> 5,095,664
<SALES> 957,415
<TOTAL-REVENUES> 957,415
<CGS> 360,657
<TOTAL-COSTS> 360,657
<OTHER-EXPENSES> 538,396
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,884
<INCOME-PRETAX> 525,950
<INCOME-TAX> 0
<INCOME-CONTINUING> 525,950
<DISCONTINUED> 15,275
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 541,225
<EPS-BASIC> 1.65
<EPS-DILUTED> 1.65
</TABLE>
