UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1997
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: 0-10800
INSITUFORM EAST, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 52-0905854
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3421 Pennsy Drive 20785
Landover, Maryland (Zip Code)
(Address of principal executive offices)
Registrant's telephone and fax numbers, including area code:
(301) 386-4100 (tel)
(301) 386-2444 (fax)
(301) 773-4560 (24-hour public information Fax Vault System)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
As of May 1, 1997, the following number of shares of each of the issuer's
classes of common stock were outstanding:
Common Stock 4,059,266
Class B Common Stock 297,596
----------
Total 4,356,862
<PAGE>
TABLE OF CONTENTS
Page Reference
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements 3
Condensed Consolidated Statements of Operations -
Three Months and Nine Months Ended March 31, 1997
and 1996 (Unaudited) 3
Condensed Consolidated Balance Sheets
March 31, 1997 and June 30, 1996 (Unaudited) 4
Condensed Consolidated Statements of Cash Flows
Nine Months Ended March 31, 1997 and 1996 (Unaudited) 5
Notes to Condensed Consolidated Financial Statements
(Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 9
Item 6. Exhibits and Reports on Form 8-K 10
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------------------------------------------------------
1997 1996 1997 1996
------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Sales $ 6,271,529 $6,898,327 $18,229,917 $23,739,042
----------- ---------- ----------- -----------
Costs and Expenses:
Cost of sales 5,813,443 5,343,287 15,447,279 17,003,451
Selling, general and administrative 1,293,307 1,378,037 3,832,281 4,032,387
----------- ---------- ----------- -----------
Total Costs and Expenses 7,106,750 6,721,324 19,279,560 21,035,838
----------- ---------- ----------- -----------
Earnings (Loss) from Operations (835,221) 177,003 (1,049,643) 2,703,204
Investment Income 33,734 47,266 117,444 90,890
Interest Expense (9,389) (2,072) (23,800) (10,747)
Other Income 26,174 68,987 104,269 171,786
----------- ---------- ----------- -----------
Earnings (Loss) Before Income Taxes and
Non-owned interests (784,702) 291,184 (851,730) 2,955,133
Non-owned Interests in Pretax Earnings
of MIDSOUTH Partners (36,479) ( 86,771) (113,075) (569,124)
----------- ---------- ----------- -----------
Earnings (Loss) Before Income Taxes (821,181) 204,413 (964,805) 2,386,009
Provision (Credit) for Income Taxes (321,000) 80,000 (378,000) 932,000
----------- ---------- ----------- -----------
Net Earnings (Loss) $ (500,181) $ 124,413 $ (586,805) $ 1,454,009
=========== ========== =========== -----------
Net Earnings (Loss) Per Share $ (0.11) $ 0.03 $ (0.13) 0.33
=========== ========== =========== ===========
See notes to condensed consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<CAPTION>
March 31, June 30,
1997 1996
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 2,318,248 $ 4,183,084
Accounts receivable - net of allowance
for doubtful accounts of $0 and $12,856 6,469,345 6,386,086
Inventories - raw materials 1,839,988 1,159,532
Prepaid and refundable income taxes 769,156 86,950
Prepaid expenses 383,891 258,387
-------------- --------------
Total Current Assets 11,780,628 12,074,039
Property, Plant and Equipment - at cost less accumulated
depreciation of $12,848,384 and $11,642,743 11,850,316 11,009,316
Other Assets 91,000 106,000
-------------- --------------
Total Assets $ 23,721,944 $ 23,189,355
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,045,648 $ 707,730
Accrued compensation and related expenses 2,126,027 2,019,977
Income taxes payable 14,724 340,160
Dividends payable 0 261,412
Current portion of capital lease obligations 27,155 36,159
-------------- --------------
Total Current Liabilities 4,213,554 3,365,438
Deferred Income Taxes 1,043,000 818,000
Long-Term Capital Lease Obligations 147,135 112,732
-------------- --------------
Total Liabilities 5,403,689 4,296,170
-------------- --------------
Non-owned Interests in Consolidated Subsidiary 2,366,208 2,354,333
-------------- --------------
Commitments and Contingencies
Stockholders' Equity:
Common stock - $.04 par value; 10,000,000 shares authorized;
4,387,163 shares issued; 4,059,266 shares outstanding 175,486 175,486
Class B Common stock - $.04 par value; 800,000 shares
authorized; 297,596 shares issued and outstanding 11,904 11,904
Additional paid-in capital 4,000,424 4,000,424
Retained earnings 12,953,846 13,540,651
-------------- --------------
17,141,660 17,728,465
Less cost of 327,897 shares of common stock in treasury 1,189,613 1,189,613
-------------- --------------
Total Stockholders' Equity 15,952,047 16,538,852
-------------- --------------
Total Liabilities and Stockholders' Equity $ 23,721,944 $ 23,189,355
============== ==============
See notes to condensed consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
INSITUFORM EAST, INCORPORATED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months Ended
March 31,
1997 1996
Cash Flows from Operating Activities:
<S> <C> <C>
Net earnings (loss) $ (586,805) $ 1,454,009
Adjustments for noncash items included in net earnings (loss):
Depreciation and amortization 1,319,669 1,200,174
Deferred income taxes 225,000 (145,000)
Non-owned interests in earnings of consolidated subsidiary 113,075 569,124
Changes in assets and liabilities, net of effect of
consolidation of majority-controlled Partnership:
Receivables (83,259) 248,838
Inventories (680,456) 320,664
Other current assets (807,710) (65,854)
Payables and accruals 1,118,532 (120,223)
-------------- --------------
Net cash provided by operating activities 618,046 3,461,732
-------------- --------------
Cash Flows from Investing Activities:
Capital expenditures, net (2,087,126) (1,437,903)
Cash distribution from MIDSOUTH Partners to
non-owned interests (101,200) (368,000)
Cash balance of majority-controlled Partnership prior
to consolidation 0 241,094
Increase in other assets 0 (13,000)
-------------- --------------
Net cash used in investing activities (2,188,326) (1,577,809)
-------------- --------------
Cash Flows from Financing Activities:
Dividends Paid (261,412) (261,412)
Principal payments under capital lease obligations (33,144) ( 43,404)
-------------- --------------
Net cash used in financing activities (294,556) (304,816)
-------------- --------------
Net increase (decrease) in cash and cash equivalents (1,864,836) 1,579,107
Cash and cash equivalents at beginning of period 4,183,084 2,791,758
-------------- --------------
Cash and cash equivalents at end of period $2,318,248 $4,370,865
============== ==============
Supplemental disclosure of cash flow information:
Interest paid $ 23,800 $ 10,747
Income taxes paid $ 404,642 $ 1,336,482
Supplemental schedule of noncash investing and financing activities:
Capital equipment acquired under capital lease obligations $ 58,543 $ 133,088
See notes to condensed consolidated financial statements.
</TABLE>
5
<PAGE>
INSITUFORM EAST, INCORPORATED
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. Condensed Consolidated Financial Statements
The Condensed Consolidated Balance Sheet as of March 31, 1997, the
Condensed Consolidated Statements of Operations for the three months and nine
months ended March 31, 1997 and 1996, and the Condensed Consolidated Statements
of Cash Flows for the nine months ended March 31, 1997 and 1996 have been
prepared by the Company without audit. The Condensed Consolidated Balance Sheet
as of June 30, 1996 (unaudited) has been derived from the Company's June 30,
1996 audited financial statements. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at March 31, 1997
and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's June 30, 1996 audited financial
statements. The results of operations for the periods ended March 31, 1997 are
not necessarily indicative of full year operating results.
2. Principles of Consolidation
The condensed consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, Insituform Ohio, Inc., Insitu,
Inc., TRY TEK Machine Works, Inc., and Insituform of Pennsylvania, Inc.
(collectively, "East") and the accounts of MIDSOUTH Partners, the Company's
majority- controlled subsidiary Partnership. All significant intercompany
accounts and transactions have been eliminated. The Condensed Consolidated
Statements of Operations for the three months and nine months ended March 31,
1996, and the Condensed Consolidated Statement of Cash Flows for the nine months
ended March 31, 1996 have been restated to include consolidation of the
financial activities of MIDSOUTH Partners beginning July 1, 1995.
3. Computation of Net Earnings (Loss) Per Share
Net earnings (loss) per share was computed by dividing net earnings
(loss) by the weighted average number of common shares outstanding during the
period including common stock equivalents from dilutive stock options. Weighted
average number of shares of 4,356,862 and 4,415,283 were used in computing net
earnings (loss) per share for the three months ended March 31, 1997 and 1996,
respectively; 4,356,862 and 4,423,696 shares were used in computing net earnings
(loss) per share for the nine months ended March 31, 1997 and 1996,
respectively.
4. New Accounting Pronouncement
Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings
Per Share " was issued February 1997 by the Financial Accounting Standards
Board. SFAS No. 128 is effective for periods ending after December 15, 1997 and
early adoption is not permitted. SFAS No. 128 will require the Company to
compute and present basic and diluted earnings per share. Had the Company
computed net earnings (loss) per share in accordance with SFAS No. 128, net
earnings (loss) per share would have been presented as follows:
6
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
------------------------------------------------------------------------
1997 1996 1997 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Basic Earnings (Loss) Per Share $ (0.11) $ 0.03 $ (0.13) $ 0.33
Diluted Earnings (Loss) Per Share $ (0.11) $ 0.03 $ (0.13) $ 0.33
</TABLE>
5. MIDSOUTH Partners
MIDSOUTH Partners was organized as Insituform MIDSOUTH, a Tennessee
general partnership, in December 1985 with the Company as a general partner.
MIDSOUTH Partners is the exclusive licensee for the Insituform process and
NuPipe process in Tennessee, Kentucky (excluding Boone, Kenton and Campbell
counties) and northern Mississippi. The Partnership's general partners at March
31, 1997 are Insitu, Inc., a wholly-owned subsidiary of the Company; E-Midsouth,
Inc., an affiliate of Insituform Technologies, Inc. ("ITI"); and Insituform
California, Inc., also an affiliate of ITI.
Management and conduct of the business of MIDSOUTH Partners is vested
in a Management Committee. Since June 12, 1996, the seven-member Partnership
Management Committee has consisted of four Insitu, Inc. representatives, two
E-Midsouth, Inc. representatives and one Insituform California, Inc.
representative. Partnership profits and losses are allocated to the partners as
follows:
Insitu, Inc. 42.5%
E-Midsouth, Inc. 42.5%
Insituform California, Inc. 15.0%
Summarized results of operations for MIDSOUTH Partners, the Company's
majority-controlled subsidiary Partnership, are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------------------------------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 1,777,061 $ 1,834,760 $ 5,065,432 $ 6,530,305
----------- ----------- ----------- -----------
Gross Profit $ 285,908 $ 342,021 $ 855,685 $ 1,739,393
----------- ----------- ----------- -----------
Partnership Earnings $ 63,441 $ 150,905 $ 196,651 $ 989,780
----------- ----------- ----------- -----------
</TABLE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Overview and Outlook
The Company reported a consolidated net loss of -$500,181 (-$0.11 per
share) from $6.3 million in sales for its third quarter ended March 31, 1997,
producing a net loss of -$586,805 (-$0.13 per share) from $18.2 million in sales
for the first nine months of fiscal 1997. The Company attributed its negative
nine month operating results to a significant 23% decrease ($5.5 million) in
comparable period sales, third quarter delays in the start-up and execution of
several significant projects and reduced margins on competitively bid projects
performed during the three months ended March 31, 1997. For comparability,
previous year financial results have been restated to reflect consolidation of
the Company's now majority-controlled subsidiary, MIDSOUTH Partners.
With respect to forward-looking information, while there can be no
assurance regarding the Company's future performance, the Company believes that
anticipated increases in released work over the balance of the fiscal year
should produce positive fourth quarter operating results. However, presently
projected positive fourth
7
<PAGE>
quarter operating results are not expected to fully offset the Company's
cumulative loss at nine months. Accordingly, negative operating results are
presently anticipated for the fiscal year ending June 30, 1997.
The Company's total backlog value of all uncompleted and multi-year
contract awards was approximately $19.3 million at March 31, 1997, as compared
to $6.6 million at March 31, 1996. The twelve-month backlog at March 31, 1997,
was approximately $17.9 million as compared to $6.4 million at March 31, 1996.
Consolidated Company backlog figures include MIDSOUTH Partners backlog of
approximately $2.5 million and $1.5 million at March 31, 1997 and 1996,
respectively. The total backlog value of all uncompleted and multi-year
contracts at March 31, 1997 and 1996 includes work not estimated to be released
and installed within twelve months, as well as potential work included in term
contract awards which may or may not be fully ordered by contract expiration.
Backlog figures at specific dates, however, are not necessarily indicative of
sales and earnings for future periods due to the irregular timing and receipt of
larger annual term contract renewals and other large project awards.
The Company believes the trenchless pipeline reconstruction marketplace
is continuing to expand, thereby enticing, however, the entry of ever more
imitations and substitute products hoping that cheap price alone may permit them
to succeed in a market otherwise dominated by Insituform. In those limited
markets where the lowest priced product may be deemed technically "good enough",
Insituform is at a disadvantage. Market share participation in this segment
strategically undertaken by the Company from time to time to preserve
competitive presence, typically at levels materially below normal margins,
necessarily dilutes the overall margin performance of the Company. However, a
majority of the Company's customers already use or are implementing improved
procurement specifications and contract award evaluation criteria emphasizing
technical value instead of simply low price. In a "best value" and quality based
market, Insituform remains at a distinct advantage. As customers and consulting
engineers increasingly rely on quality based purchasing criteria to help ensure
long term solutions to their infrastructure needs, they help clearly
differentiate proven products such as Insituform from cheaply priced trenchless
substitutes with technical, performance and installation risks not equally
tested by time or independent third parties.
Results of Operations
Three Months Ended March 31, 1997 Compared with Three Months Ended March 31,
1996
The Company recognized a net loss of -$500,181 (-$0.11 per share) for
the third quarter of fiscal 1997 ended March 31, 1997, as compared to net
earnings of $124,413 ($0.03 per share) for the third quarter of fiscal 1996
ended March 31, 1996. The Company attributed its negative third quarter fiscal
1997 operating results to delays in the start-up and execution of several
significant projects and reduced margins on competitively bid projects. Third
quarter fiscal 1996 operating results were negatively impacted by unusually
severe winter weather conditions.
Sales decreased $0.6 million (9%) from $6.9 million for the three
months ended March 31, 1996 to $6.3 million for the three months ended March 31,
1997. This decrease was due primarily to delays in the start-up and execution of
several significant East projects during the quarter. Both East and MIDSOUTH
Partners sales for the third quarter of fiscal 1996 were significantly impeded
by unusually severe winter weather conditions.
Cost of sales increased 9% in the third quarter of fiscal 1997 as
compared to the third quarter of fiscal 1996. As a result, gross profit as a
percentage of sales decreased from 23% of sales for the third quarter of fiscal
1996 to 9% of sales for the third quarter of fiscal 1997. The decrease in gross
profit as a percentage of sales is due primarily to the mix of work associated
with East projects. Third quarter East production included increased low margin
subcontracted services and reduced margin installation services on competitively
bid projects.
Selling, general and administrative expenses decreased $84,730 (6%) for
the third quarter of fiscal 1997 as compared to the third quarter of fiscal
1996, primarily as a result of lower costs to support reduced production
activities.
8
<PAGE>
Nine Months Ended March 31, 1997 Compared with Nine Months Ended March 31, 1996
The Company recognized a net loss of -$586,805 (-$0.13 per share) for
the first nine months of fiscal 1997 ended March 31, 1997, as compared to net
earnings of $1,454,009 ($0.33 per share) for the first nine months of fiscal
1996 ended March 31, 1996. The Company attributed its negative nine month
operating results to a significant decrease in comparable period sales, delays
in start-up and execution of several significant projects during the third
quarter of fiscal 1997, and reduced margins on competitively bid projects
performed during the third quarter.
Sales decreased $5.5 million (23%) from $23.7 million for the nine
months ended March 31, 1996 to $18.2 million for the nine months ended March 31,
1997. This decrease was due primarily to lower workable backlog levels
experienced throughout the period and third quarter delays in the start-up and
execution of several significant East projects. MIDSOUTH Partners sales
decreased $1.5 million (22%); East sales decreased $4.0 million (23%).
Cost of sales decreased 9% in the first nine months of fiscal 1997 as
compared to the first nine months of fiscal 1996. As a result, gross profit as a
percentage of sales decreased from 28% of sales for the nine months ended March
31, 1996 to 15% of sales for the nine months ended March 31, 1997. The decrease
in gross profit margin as a percentage of sales is due primarily to absorption
of semi-fixed costs over lower sales volume, reduced margins on third quarter
East contracts and reduced comparable period margins on installation contracts
performed by MIDSOUTH Partners.
Selling, general, and administrative expenses decreased $200,106 (5%)
during the first nine months of fiscal 1997 as compared to the first nine months
of fiscal 1996, primarily as a result of lower costs to support reduced
production activities.
Financial Condition
During the nine months ended March 31, 1997, $618,046 in cash was
provided by the Company's operating activities, due in part to a $1,118,532
increase in Accounts Payable and Accrued Expenses and $1,319,669 in depreciation
and amortization expenses that more than offset the Company's nine month net
loss of -$586,805 and increase in Inventories and Other Current Assets totaling
$1,488,166.
During the first nine months of fiscal 1997, the Company expended
$2,087,126 for equipment purchases and other capital improvements and paid
$261,412 in dividends to shareholders. Although the Company experienced a
$1,864,836 decrease in cash during the nine months ended March 31, 1997, the
Company's financial liquidity remained strong with working capital of $7.5
million and a current ratio of 2.8 at March 31, 1997.
The Company anticipates that expanding production capabilities and
improving operational performance in the future will require additional capital
expenditures. Management believes that cash flow from future operations,
existing working capital, the available line of credit and the unencumbered real
and personal property owned by the Company provide adequate resources to finance
cash requirements for future capital expenditures.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As previously reported, on October 23, 1996, Inliner U.S.A. and CAT
Contracting, Inc. (collectively, "Plaintiffs") filed an antitrust suit against
Insituform Technologies, Inc. ("ITI") and Insituform East, Inc. (collectively,
"Defendants") in United States District Court for the Southern District of
Texas, Houston Division, alleging violations by ITI (including all of its
subsidiary licensees) and the Company of Sections 1 and 2 of the Sherman Act,
Section 43(a) of the Lanham Act, Section 15.05 of the Texas Business and
Commerce Code, tortious interference with contracts and business disparagement.
Plaintiffs are seeking from the Defendants an unspecified amount of compensatory
damages, treble damages and attorneys' fees, as well as punitive damages of at
least $50 million. The Company believes it has strong defenses to, and is
vigorously contesting, the suit.
9
<PAGE>
The Company has filed two motions to dismiss the action which are currently
pending. Although the ultimate outcome and consequences of the suit cannot be
ascertained at this time and the results of legal proceedings cannot be
predicted with certainty, it is the opinion of the management of the Company
that the suit is meritless and will not have a material adverse effect on the
financial condition or the results of operations of the Company.
The Company is a party, both as plaintiff and defendant, to other
claims arising out of the ordinary course of business. While it is not possible
at this time to establish the ultimate amount of liability, if any, associated
with pending claims, management of the Company is of the opinion that the
aggregate amount of any such liability will not have a material adverse effect
of the financial position of the Company.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27. Financial Data Schedule
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INSITUFORM EAST, INCORPORATED
(Registrant)
Date May 15, 1997 /s/ Robert W. Erikson
------------ ----------------------
Robert W. Erikson
President
Date May 15, 1997 /s/ Raymond T. Verrey
------------ ----------------------
Raymond T. Verrey
Chief Financial Officer
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S
UNAUDITED BALANCE SHEET AS OF MARCH 31, 1997, AND THE COMPANY'S UNAUDITED
STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 2,318,248
<SECURITIES> 0
<RECEIVABLES> 6,469,345
<ALLOWANCES> 0
<INVENTORY> 1,839,988
<CURRENT-ASSETS> 11,780,628
<PP&E> 24,698,700
<DEPRECIATION> 12,848,384
<TOTAL-ASSETS> 23,721,944
<CURRENT-LIABILITIES> 4,213,554
<BONDS> 0
<COMMON> 187,390
0
0
<OTHER-SE> 15,764,657
<TOTAL-LIABILITY-AND-EQUITY> 23,721,944
<SALES> 18,229,917
<TOTAL-REVENUES> 18,229,917
<CGS> 15,447,279
<TOTAL-COSTS> 15,447,279
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,800
<INCOME-PRETAX> (964,805)
<INCOME-TAX> (378,000)
<INCOME-CONTINUING> (586,805)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (586,805)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
