SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended March 31, 1999
Commission File Number 0-12516
Dynamic Healthcare Technologies, Inc.
(Exact name of registrant as specified in its charter)
Florida 59-3389871
(State of Incorporation) (IRS E.I.N.)
615 Crescent Executive Court, 5th Floor, Lake Mary, FL 32751
(Address of principal executive offices) (ZIP Code)
(407) 333-5300
(Registrant's telephone number, including area code)
Indicate by checkmark 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 April 14, 1999, there were 18,432,709 shares outstanding, par
value $.01 per share, of the issuer's only class of common stock.
This report consists of fifteen (15) pages.
The index to exhibits appears on page fourteen (14).
1
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
See attached statements following this item number.
2
<TABLE>
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
December 31, 1998 March 31, 1999
(Unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $ 1,962,42 $ 2,336,772
Accounts receivable, net 6,847,498 7,636,226
Unbilled receivables 2,578,078 3,093,387
Contracts receivable - current 1,150,754 144,170
Other current assets 1,313,364 903,662
Total current assets 13,852,120 14,114,217
Property and equipment, net 5,167,436 4,845,324
Capitalized software development costs, net 9,247,578 9,418,818
Goodwill, net 1,663,032 1,561,145
Contracts receivable - non-current 615,645 837,839
Other assets 58,469 27,093
$30,604,280 $30,804,436
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 4,231,540 $ 4,078,856
Deferred revenue 6,729,436 5,666,044
Advance billings 1,828,351 1,551,138
Line of Credit 856,000 2,000,000
Deferred lease incentives - current 190,231 190,231
Other 271,735 305,019
Total current liabilities 14,107,293 13,791,288
Deferred lease incentives - non-current 982,862 935,544
Other 888,358 927,572
Total liabilities 15,978,513 15,654,404
Shareholders' equity:
Series C redeemable convertible preferred
stock ($.01 par value;issued and
outstanding 1,000,000 shares with an
aggregate liquidation preference of
$2,000,000, as of December 31, 1998,
and March 31, 1999; $.16 per share
annual dividend). 1,811,327 1,811,327
Common stock ($.01 par value; authorized
40,000,000 shares; issued and
outstanding 18,271,251 shares as of
December 31, 1998 and 18,420,709 shares
as of March 31, 1999). 182,713 184,208
Warrants 3,000 3,000
Additional paid-in capital 44,699,416 44,784,621
Deficit (32,070,689) (31,633,124)
Total shareholders' equity 14,625,767 15,150,032
$30,604,280 $ 30,804,436
See notes to consolidated financial statements.
</TABLE>
3
<TABLE>
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
1998 1999
Operating revenues:
<S> <C> <C>
Computer system equipment sales and support $ 684,159 $ 1,505,900
Application software licenses 977,555 3,578,839
Software support 2,970,503 2,871,958
Services and other 1,401,585 1,886,729
Total operating revenues 6,033,802 9,843,426
Costs and expenses:
Cost of products sold 631,956 2,150,673
Client services expense 2,939,347 2,230,800
Software development costs 1,735,612 1,644,486
Sales and marketing 2,697,744 2,262,768
General and administrative 1,043,742 1,075,440
Total costs and expenses 9,048,401 9,364,167
Operating income (loss) (3,014,599) 479,259
Other income (expense):
Interest expense and financing costs (13,074) (67,384)
Gain (loss) on disposal of property -- (11,382)
Interest income 108,464 37,072
Total other income (expense) 95,390 (41,694)
Earnings (loss) before income taxes (2,919,209) 437,565
Income taxes -- --
Net earnings (loss) $(2,919,209) $ 437,565
Net earning (loss) available for common
shareholders $(2,919,209) $ 397,565
Earnings (loss) per common share
Basic and diluted $ (0.16) $ 0.02
Weighted average number of common shares
outstanding 18,028,823 18,375,978
Weighted average number of common and potential
common shares outstanding assuming
full dilution 18,028,823 18,520,442
See notes to condensed consolidated financial statements
</TABLE>
4
<TABLE>
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
1998 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net earnings (loss) $(2,919,209) $ 437,565
Adjustments to reconcile net earnings (loss)
to net cash provided (used) by operating
activities:
Depreciation and amortization 817,534 1,025,689
Book value of disposed property -- 51,142
Employer 401(k) contributions not requiring cash -- 77,127
Changes in assets and liabilities:
Accounts receivable 1,106,656 (788,728)
Unbilled receivables (127,270) (515,309)
Contracts receivable (962,67) 784,391
Other (110,719) 440,576
Accounts payable and accrued expenses 101,036 (152,684)
Deferred revenue (1,141,937) (1,063,392)
Advance billings (189,950) (277,213)
Net cash provided (used) by operating
activities (1,501,192) 19,164
CASH FLOWS FROM INVESTING ACTIVITIES:
Capitalized software development costs (941,023) (643,602)
Purchases of property and equipment (538,968) (74,578)
Net cash used in investing activities (1,194,851) (718,180)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (repayments) under line of credit, net -- 1,144,000
Borrowings (repayments) under notes payable -- (50,629)
Proceeds from issuance of common stock 53,338 49,572
Payment of preferred stock dividends -- (40,000)
Borrowings (repayments) on long-term debt and
capital lease obligations (61,215) (36,603)
Other (7,022) 7,022
Net cash provided (used) by financing activities (14,899) 1,073,362
Net increase (decrease) in cash and cash equivalents(2,996,082) 374,346
Cash and cash equivalents, beginning of period 6,465,685 1,962,426
Cash and cash equivalents, end of period $ 3,469,603 $2,336,772
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid $ 13,04 $ 36,683
See notes to condensed consolidated financial statements.
</TABLE>
5
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTH PERIODS ENDED MARCH 31, 1998 AND 1999
(A) Unaudited Financial Statements:
The accompanying consolidated financial statements have been prepared by
management in conformity with generally accepted accounting principles for
interim financial statements and with instructions to Form 10-Q and Regulation
S-X. Accordingly, they do not include all the disclosures required by generally
accepted accounting principles for complete financial statements. All
adjustments and accruals considered necessary for fair presentation of financial
information have been included in the opinion of management, and are of a normal
recurring nature. Quarterly results of operations are not necessarily
indicative of annual results. These statements should be read in conjunction
with the consolidated financial statements and the notes thereto included in the
Dynamic Healthcare Technologies, Inc. 1998 Annual Report on Form 10-K for the
fiscal year ended December 31, 1998.
(B) Line of Credit:
The Company's borrowing capacity under the Revolving Line of Credit Agreement
with Silicon Valley Bank, a commercial bank ("Bank"), has been expanded and the
effective interest rate of the Line of Credit has been reduced. As a result of
the Company's compliance with a minimum quick ratio (as defined) of 1.25 to 1,
and maintaining profitable quarterly operations in excess of any increase in
the carrying value of capitalized software development costs during 1999, the
Company's borrowing capacity was increased to the lesser of $5,000,000 or 70%
of qualified receivables, and the interest rate was decreased to the Bank's
prime rate plus one percent (9.0% on March 31, 1999). As of March 31, 1999,
borrowings against this Line of Credit were $2,000,000, and borrowings available
under the Line of Credit were $4,069,000. Future borrowing capacity is
contingent on the Company's continued compliance with profitable quarterly
operations and the quick ratio requirement. The Line of Credit is secured by
all existing Company assets and matures on July 23, 1999.
6
Item 2. Management's discussion and analysis of financial condition and results
of operations.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
Dynamic Healthcare Technologies, Inc. ("Dynamic" or the "Company") develops,
markets and supports a broad product line of information system solutions for
radiology, anatomic pathology, clinical laboratory and electronic health record
applications. Dynamic's products are designed to enhance productivity, reduce
costs and improve the quality of patient care by providing electronic storage
and on-line access to patient information previously maintained on a variety of
media. The Company provides a full range of professional consulting services
including
project management, implementation, planning and support, custom software and
interface development and modifications, and system integration. Dynamic
provides support services including 24-hour telephone support, and software
maintenance and enhancements.
Dynamic currently serves approximately 600 customers, most of which are located
in the United States. Key customers include the UCLA Medical Center, Methodist
Hospital of Memphis, Orlando Regional Health Systems, Ohio State University
Hospital, University of Pittsburgh, Temple University Hospital, University of
Illinois at Chicago Medical Center, Memorial Sloan-Kettering Cancer Center,
Advocate Health Care, Borgess Health Alliance, The Mayo Clinic and UniHealth.
During 1997, the Company introduced new technology product releases in virtually
every market segment in which the Company competes. Well-publicized healthcare
information technology industry research indicates that sales cycles for these
products typically range from 6-18 months in duration. The disruption of in-
process sales cycles by the new products introduction in 1997 significantly
impacted the Company's new system revenue for 1998. During 1998, operations
focused on perfecting the initial installations of the products introduced in
1997, which further impacted revenue recognition in 1998. However, during the
fourth quarter of 1998, the Company realized record new system sales bookings of
$7.5 million and began 1999 with the highest new systems backlog in the
Company's history of more than $13.8 million. This together with more than
$14.2 million in annualized customer support revenue under contract positioned
Dynamic to enter 1999 with a total revenue backlog of $28 million, also the
highest in the Company's history.
In addition, during 1998 the Company reengineered its internal process of
development, customer support and product installations. This reengineering
resulted in the consolidation of three facilities into the Lake Mary
headquarters, a common structure to the Company's product line which permits a
higher level of cross utilization of technical professionals for development,
support and installation services, and is expected to provide significant
anticipated future cost efficiencies. Base quarterly operating expenses,
defined as total operating expenses less the cost of products sold, sales
commissions and customer billable expenses, has been reduced to a budgeted
amount of approximately $6.4 million for the first quarter of 1999 compared to
$8.1 million in the first quarter of 1998.
The Company's revenues are derived from the licensing and sale of systems
comprised of internally developed software and third party software and
hardware, professional services, maintenance and support services. The
Company's services include implementation and training, product management and
customer software development. Revenues from professional services and
maintenance and support services typically increase as the number of installed
systems increases. Computer system equipment sales revenues are generally
recognized when hardware is shipped. Computer system equipment sales and
support revenues include hardware support contracts for a specific period from
which revenue is recognized ratably over the corresponding contract period.
Application software license revenues are recognized when application software
is delivered to the customer. Installation and training service revenues,
included with application software licenses, are recognized as the services
are performed. Software support revenues principally include contracts for
remote dial-up problem diagnosis, maintenance and corrective support services,
each of which covers a specified period for which revenue is recognized ratably
over the corresponding contract period. Services and other revenues include
custom programming services, post-contract support obligations and other
services, which are provided under separate contract and are recognized
as services are performed.
Cost of products sold includes the cost of hardware sold, costs of third party
software licenses and hardware support subcontracts. Client service expense
includes the direct and indirect costs associated with implementation and
support personnel. Software development costs include the direct and indirect
salaries and wages of software research and development personnel, direct
research and development expenses, and software amortization expense, reduced by
capitalized software development costs. Software development is expensed until
such time as technological feasibility is established and then is capitalized in
compliance with Statement of Financial Accounting Standards No. 86 "Accounting
for Costs of Computer Software to be Sold, Leased or Otherwise Marketed." Sales
and marketing costs include direct and indirect salaries, commissions, joint
marketing costs, advertising, trade show costs, user group costs and travel and
entertainment expenses related to the sale and marketing of the Company's
products and services. General and administrative expenses include salaries and
expenses for corporate administration, financial, legal and human resources.
The sales cycle for the Company's systems is typically six to eighteen months
from initial contact to contract signing. The product delivery cycle is
variable. When application software licenses are provided by modem, product
delivery is immediate. In other instances, product delivery is over two or more
years, particularly with enterprise-wide electronic healthcare record solutions
involving significant and continuing customer service requirements.
Accordingly, the product delivery cycle depends upon the combination of products
purchased and the implementation plan defined by the customer in the master
sales agreement. Each customer contract is separately negotiated. The
installation schedule for a clinical information systems, or departmental
electronic healthcare record implementations, typically require six to twelve
months. Under its standard master sales agreement, the Company generally
receives a partial payment upon execution of the agreement, a hardware
installment payment upon delivery of hardware, installation progress payments
upon the completion of defined milestones and final payment upon system
acceptance.
The following table sets forth, for the three month periods ended
March 31, 1998 and 1999, certain items in the Company's statements of operations
as a percentage of total operating revenues:
<TABLE>
Three Months Ended March 31,
1998 1999
Operating revenues:
<S> <C> <C>
Computer system equipment sales and support 11.4 % 15.3 %
Application software licenses 16.2 % 36.4 %
Software support 49.2 % 29.2 %
Services and other 23.2 % 19.1 %
Total revenues 100.0 % 100.0 %
Operating expenses:
Cost of products sold 10.5 % 21.8 %
Client services expense 48.7 % 22.7 %
Software development costs 28.8 % 16.7 %
Sales and marketing 44.7 % 23.0 %
General and administrative 17.3 % 10.9 %
Total operating expenses 150.0 % 95.1 %
Operating income (loss) (50.0)% 4.9 %
Other income (expense) 1.6 % (0.4)%
Net earnings (loss) (48.4)% 4.5 %
</TABLE>
9
Results of Operations
(Three months ended March 31, 1999 compared to three months ended March 31,
1998)
Revenues. During the quarter ended March 31, 1999 the Company reported revenues
of $9,843,000 an increase of $3,809,000 from revenues for the same period 1998.
This revenue increase includes an increase in virtually every product line of
the Company. The Company's radiology revenues increased by $2,179,000 from
$1,002,000 recognized during the first quarter of 1998 to $3,181,000 recognized
during the first quarter of 1999. Pathology revenues for the first quarter of
1999 increased $1,114,000 to $3,531,000 from $2,417,000 during the same period
of 1998. The RecordsPlus product line, and laboratory information system and
other revenues for the first quarter of 1999 also increased by $164,000 and
$353,000, respectively, as compared to similar revenues for the first quarter of
1998. As previously mentioned, during 1997 the Company introduced new
technology product releases in virtually every market segment in which the
Company competes. Lengthy initial sales cycles significantly impacted 1998
performance, while record fourth quarter 1998 sales bookings, and the resulting
record high new systems backlog as of December 31, 1998, resulted in increased
system implementations during the first quarter of 1999.
Computer system equipment sales and support revenues increased by $822,000 to
15.3% of total revenues for the first quarter of 1999, compared to 11.4% for the
first quarter of 1998. Management attributes the increase to the increased
implementation of new system sales and does expect a higher involvement in the
delivery of computer hardware to customers in connection with the Company's
increasing emphasis of offering a sole source solution to customers.
Application software license revenue during the first quarter of 1999, increased
by $2,601,000 over the same period a year ago, from $978,000 to $3,579,000, and
similarly service and other revenues increased by $485,000 to $1,887,000 from
$1,402,000. These increases principally result from the increased
implementation of new system sales reported during the fourth quarter of 1998.
Software support revenues decreased by $99,000 to $2,872,000 for the first
quarter of 1999, compared to $2,971,000 for the same period one year ago. As of
March 31, 1999, the recurring annualized billable support base was $12.0
million. An additional $2.5 million of annualized software support revenue is
anticipated to be generated from delivery of the Company's existing new systems
backlog.
Cost of Products Sold. Cost of products sold as a percent of total revenues for
the first quarter of 1999 increased to 21.8% from 10.5 % for the same period
1998. Hardware and application software license revenues during the first
quarter 1999 similarly increased to 51.7% from 27.6% of total revenues for the
first quarter 1998, due to the significant increase in new system
implementations.
Client Services Expense. Client services expense for the first quarter 1999
decreased $708,000 to $2,231,000 from $2,939,000 for the first quarter 1998,
decreasing as a percentage of sales from 48.7% to 22.7%. The Company previously
reported decreased staffing in connection with the re-engineering and cost
reduction plan completed in 1998. Product installation, delivery and support
services were standardized along all product lines as the Company centralized
these functions.
Software Development Costs. Software development costs for the first quarter
1999 decreased to 16.7% of total operating revenues from 28.8% incurred during
the first quarter 1998. The $91,000 decrease in software development expense
10
reported for the first quarter of 1999 of $1,645,000, compared to $1,736,000
reported for the first quarter of 1998, was despite a $297,000 reduction in
capitalized software development costs. In addition, software amortization
increased during the first quarter of 1999 to $472,000 from $415,000 amortized
during the first quarter of 1998. These changes combined for a real reduction
in total software departmental costs incurred during the first quarter of 1999
of $445,000, as compared to the departmental costs incurred during the first
quarter of 1998. Although development efforts continue as part of the Company's
overall growth strategy, including enhancements to existing product lines and
toward completion of the Company's SurgiPlus product, this reduction in the
level of investment in new product development reflects the relatively recent
wholesale product line introductions made by the Company.
Sales and Marketing. Sales and marketing costs for the first quarter 1999 as a
percentage of total revenues, decreased to 23.0% from 44.7% for the same period
of 1998. This decrease of $435,000 from $2,698,000 to $2,263,000 in sales and
marketing expenses is despite an increase in sales commissions incurred for the
first quarter of 1999 of $394,000, from $223,000 incurred during the first
quarter of 1998 to $617,000 incurred during the first quarter of 1999, resulting
from increased sales closings. This translates to a base sales and marketing
cost reduction of approximately $829,000, attributed to the sales realignment
program undertaken in 1998, in connection with the Company's cost reduction
plan.
General and Administrative Expenses. General and administrative expenses for
the first quarter of 1999 increased by $32,000, but decreased to 10.9% of total
revenues from 17.3% incurred during the first quarter of 1998. The increased
expenses include $180,000 in amounts accrued under the Company's Management
Incentive Compensation Plan ("MIC Plan"). The Company did not pay any MIC Plan
compensation for 1998.
Other Income (Expense). The Company incurred $42,000 of net other expense for
the first quarter of 1999 compared to $95,000 of net other income reported for
the first quarter of 1998. Net interest income and expense declined by $125,000
principally due to the cash used by operating and investing activities during
1998.
Liquidity and Capital Resources
As of March 31, 1999 the Company had cash equivalents of $2,337,000, line of
credit draws of $2,000,000, working capital of $323,000, and a working capital
ratio of 1.02 to 1.
Accounts receivable as of March 31, 1999 increased by $789,000 and unbilled
receivables increased by $515,000 from similar account balances on December 31,
1998, principally as a result of the increased new system installations in
progress.
Contracts receivable as of March 31, 1999 decreased by $784,000 to $982,000 as
compared to the balance of $1,766,000 on December 31, 1998. The Company
collected the final $1,000,000 installment due under the Sunquest Agreement
during the first quarter of 1999. The remaining change in contracts receivable
results from scheduled collections on monthly installment receivables from
radiology information system customers.
During the first quarter 1999 the Company capitalized $644,000 of software
development costs and purchased $75,000 of additional property and equipment.
Development efforts during the first quarter of 1999 included enhancements to
the Company's existing product line and advancement of SurgiPlus.
11
Property purchases were made primarily for property and equipment at similar
levels during 1999.
Accounts payable and accrued expenses decreased $153,000 to $4,079,000 as of
March 31, 1999 from $4,232,000 as of December 31, 1998. In connection with
completing the Company's cost reduction plan in 1998, accrued severance and
termination costs were incurred at December 31, 1998.
Deferred revenue as of March 31, 1999 decreased by $1,063,000 to $5,666,000 from
$6,729,000 reported as of December 31, 1998. The Company has a concentration of
calendar year annual customer support contracts with January 1 and July 1 start
dates, which typically results in quarterly volatility to the deferred revenue
balance.
Advanced billings as of March 31, 1999 declined by $277,000 to $1,551,000 from
the 1998 year end balance of $1,828,000. During the fourth quarter, during
which the Company reported its highest ever sales bookings quarter, significant
customer deposits were received.
As a result of the Company's return to profitability, the existing line of
credit with Silicon Valley Bank now increases the availability to the lessor of
$5,000,000 or 70% of qualified accounts receivable, as defined ($4,069,000 as of
March 31, 1999). The Company is currently pursuing and expects to receive an
extension of the termination date of the line of credit to one year from the
date of approval.
During the first quarter of 1999 the Company received $50,000 in proceeds from
the exercise of director and employee options.
The Company intends to continue to enhance its product and service offerings and
to seek market expansion opportunities beyond the recent product releases. The
Company's ability to meet its future working capital requirements is dependent
on the Company's ability to maintain profitable operations or to obtain suitable
additional financing.
12
Inflation and Changing Prices
The Company believes inflation has not had a material effect on the Company's
operations or its financial condition. Changing prices within the marketplace
could have a material effect upon the cost of materials sold and the related
price of software and hardware sales.
Forward-Looking Statements
This report contains certain forward-looking statements, which are qualified by
the risks and uncertainties described from time to time in the Company's reports
filed with the Securities and Exchange Commission, including the Annual Report
on Form 10-K for the fiscal year ended December 31, 1998.
13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Securities Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 11: Statement regarding computation of per share
earnings.
(b) Reports on Form 8-K:
None
14
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 hereunto duly authorized.
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
(Registrant)
Date: April 28, 1999 /S/MITCHEL J. LASKEY
Mitchel J. Laskey
President, CEO and Treasurer
Date: April 28, 1999 /S/PAUL S. GLOVER
Paul S. Glover
Vice President of Finance,
CFO and Secretary
15
FORM 10-Q
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Index to Exhibits
Description of Exhibit Page Number
Exhibit 11: Statement regarding computation of
per share earnings 15
16
<TABLE>
FORM 10-Q
DYNAMIC HEALTHCARE TECHNOLOGIES, INC.
Exhibit 11
Computation of Weighted Average Number of Shares Outstanding and
Earnings Per Share
Three Months Ended March 31,
(Unaudited)
1997 1998
Earnings (loss) available for common shareholders:
<S> <C> <C>
Net earnings (loss) $(2,919,209) $ 437,565
Common and common equivalent shares outstanding
Basic:
Weighted average number of common shares outstanding 18,028,823 18,375,978
Diluted:
Weighted average number of common shares outstanding 18,028,823 18,375,978
Dilutive effect of options and warrants average market
price -- 144,464
Weighted average number of common and common
equivalent shares
Outstanding assuming full dilution 18,028,823 18,520,44
Earnings (loss) per share basic and diluted $ (0.16) $ 0.02
</TABLE>
10q399.doc
17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 2,336,772
<SECURITIES> 0
<RECEIVABLES> 7,996,226
<ALLOWANCES> 360,000
<INVENTORY> 0
<CURRENT-ASSETS> 14,114,217
<PP&E> 9,617,580
<DEPRECIATION> 4,772,256
<TOTAL-ASSETS> 30,804,436
<CURRENT-LIABILITIES> 13,791,288
<BONDS> 480,432
0
1,811,327
<COMMON> 184,208
<OTHER-SE> 13,154,497
<TOTAL-LIABILITY-AND-EQUITY> 30,804,436
<SALES> 1,505,900
<TOTAL-REVENUES> 9,843,426
<CGS> 2,150,673
<TOTAL-COSTS> 9,364,167
<OTHER-EXPENSES> 11,382
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 67,384
<INCOME-PRETAX> 437,565
<INCOME-TAX> 0
<INCOME-CONTINUING> 437,565
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 437,565
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
