UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
(X) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1999
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 0-13084
WARRANTECH CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3178732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 Atlantic Street, Stamford, CT 06901
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (203) 975-1100
(Former name,former address and former fiscal year, if changed since last year)
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 ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at January 10, 2000
Common stock, par value $.007 per share 15,176,986 shares
1
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WARRANTECH CORPORATION AND SUBSIDIARIES
I N D E X
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Page No.
PART I - Financial Information:
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at June 30, 1999
(Unaudited) and March 31, 1999................................................... 3
Condensed Consolidated Statements of Operations
For the Three Months Ended June 30, 1999
and 1998 (Unaudited) ......................................................... 4
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended June 30, 1999
and 1998 (Unaudited).......................................................... 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II - Other Information..................................................................... 11
Signatures ...................................................................................... 12
</TABLE>
2
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WARRANTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
A S S E T S
(Unaudited)
<TABLE>
<S> <C> <C>
June 30, March 31,
1999 1999
---------------- -------------
Current assets:
Cash and cash equivalents $17,977,327 $15,032,473
Investments in marketable securities 3,947,482 2,961,602
Accounts receivable (net of allowances of
$1,103,068 and $1,115,285, respectively) 29,711,388 39,275,404
Other receivables, net 8,395,263 5,924,332
Income tax receivable 1,271,518 1,147,324
Deferred income taxes 1,465,375 1,419,854
Prepaid expenses and other current assets 1,493,020 1,537,633
---------------- -------------
Total current assets 64,261,373 67,298,622
---------------- -------------
Property and equipment, net 16,024,620 16,277,473
Other assets:
Excess of cost over fair value of assets acquired
(net of accumulated amortization of $5,049,222
and $4,882,009, respectively) 3,109,311 3,276,524
Deferred income taxes 10,766,000 9,603,277
Deferred direct costs 89,787,563 86,107,696
Investments in marketable securities 1,384,389 1,321,019
Restricted cash 800,000 800,000
Split dollar life insurance policies 1,450,010 1,370,010
Notes receivable 435,008 477,767
Collateral security fund 199,389 199,389
Other assets 178,493 178,493
---------------- -------------
Total other assets 108,110,163 103,334,175
---------------- -------------
Total assets $188,396,156 $186,910,270
================ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
(Unaudited)
June 30, March 31,
1999 1999
---------------- -------------
Current liabilities:
Current maturities of long-term debt and capital lease obligations $1,575,886 $1,558,447
Insurance premiums payable 36,774,102 36,585,920
Accounts and commissions payable 7,754,639 8,524,040
Legal settlements payable 100,000 100,000
Accrued expenses and other current liabilities 8,089,458 8,346,440
---------------- -------------
Total current liabilities 54,294,085 55,114,847
---------------- -------------
Deferred revenues 124,532,747 118,497,564
Long-term debt and capital lease obligations 2,325,359 2,420,967
Deferred rent payable 466,611 476,890
---------------- -------------
Total liabilities 181,618,802 176,510,268
---------------- -------------
Commitments and contingencies
Stockholders' equity:
Preferred stock - $.0007 par value authorized - 15,000,000
issued - none at June 30, 1999 and March 31, 1999
Common stock - $.007 par value: authorized - 30,000,000
Shares issued; - 16,503,161 shares at June 30, 1999
and 16,501,786 shares at March 31, 1999 115,522 115,513
Additional paid-in capital 23,733,298 23,728,881
Loans to directors and officers (9,150,076) (9,006,699)
Accumulated other comprehensive income, net of taxes (144,967) (93,534)
Retained earnings (3,327,110) 105,154
---------------- -------------
11,226,667 14,849,315
Treasury stock - at cost, 1,280,300 shares at June 30,1999
and March 31, 1999 (4,449,313) (4,449,313)
---------------- -------------
Total Stockholders' Equity 6,777,354 10,400,002
---------------- -------------
Total Liabilities and Stockholders' Equity $188,396,156 $186,910,270
================ =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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WARRANTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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For the Three Months Ended
June 30,
1999 1998
---------------- ----------------
Gross revenues $29,279,883 $30,876,772
Net increase in deferred revenues (6,025,930) (6,742,626)
---------------- ----------------
Net revenues 23,253,953 24,134,146
Costs and expenses:
Direct costs 13,789,628 12,626,122
Service, selling, and general and administrative 12,999,952 14,176,847
Depreciation and amortization 1,413,347 1,274,614
---------------- ----------------
Total costs and expenses 28,202,927 28,077,583
---------------- ----------------
(Loss) from operations (4,948,974) (3,943,437)
Other income 253,095 169,960
---------------- ----------------
(Loss) before provision for income taxes (4,695,879) (3,773,477)
Provision (benefit) for income taxes (1,263,615) (1,983,437)
---------------- ----------------
Net (loss) ($3,432,264) ($1,790,040)
================ ================
Earnings per share:
Basic ($0.23) ($0.13)
================ ================
Diluted ($0.23) ($0.13)
================ ================
Weighted average number of shares outstanding:
Basic 15,222,861 13,362,303
================ ================
Diluted 15,222,861 13,362,303
================ ================
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
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WARRANTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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For the Three Months Ended
June 30,
1999 1998
------------------ --------------------
Net cash flows from (used in ) operating activities $5,033,186 ($2,904,060)
------------------ --------------------
Cash flows from investing activities:
Property and equipment purchased (635,602) (1,065,906)
Purchase of marketable securities (1,300,000) (205,420)
Proceeds from sales of marketable securities 235,000 540,045
------------------ --------------------
Net cash (used in) investing activities (1,700,602) (731,281)
------------------ --------------------
Cash flows from financing activities:
Decrease in notes receivable 42,759 22,611
Exercise of common stock options and stock grants 4,426 205,343
Purchase treasury stock - (327,641)
Repayments, notes and capital leases (434,915) (846,149)
------------------ --------------------
Net cash (used in) financing activities (387,730) (945,836)
------------------ --------------------
Net increase (decrease) in cash and cash equivalents 2,944,854 (4,581,177)
Cash and cash equivalents at beginning of period 15,032,473 24,062,052
------------------ --------------------
Cash and cash equivalents at end of period $17,977,327 $19,480,875
================== ====================
Supplemental Cash Flow Information:
Cash payments for:
Interest $105,534 $135,574
================== ====================
Income taxes $43,324 $903,668
================== ====================
Non-Cash Investing and financing activities:
Property and equipment financed through capital leases $356,746 $156,293
Increase in loans to officers and directors (143,377) -
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
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WARRANTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1999
(Unaudited)
1. THE COMPANY
Warrantech, through its wholly owned subsidiaries, markets and administers
service contracts and extended warranties. The Company is a third party
administrator for a variety of dealer/clients in selected industries and offers
call center and technical computer services. The Company assists dealer/clients
in obtaining insurance policies from highly rated independent insurance
companies for all contracts and programs offered. The insurance company is then
responsible for the cost of repairs or replacements for the contracts
administered by Warrantech.
The Company operates under three major business segments: Automotive, Consumer
Products and International. The Automotive segment markets and administers
extended warranties on automobiles, light trucks, recreational vehicles and
automotive components. These products are sold principally by franchised and
independent automobile dealers, leasing companies, repair facilities, retail
stores and financial institutions. The Consumer Products segment markets and
administers extended warranties on household appliances, electronics and homes.
These products include home appliances, consumer electronics, televisions,
computers, home office equipment and homes. These products are sold principally
by retailers, distributors, manufacturers, utility companies and financial
institutions. Warrantech also direct markets these products to the ultimate
consumer through telemarketing and direct mail campaigns. The International
segment markets and administers outside the United States predominately the same
products and services of the other business segments. The International segment
is currently operating in the United Kingdom, Central and South America, Puerto
Rico and the Caribbean.
The predominant terms of the service contracts and extended warranties range
from twelve (12) to eighty-four (84) months. The Company acts as a third party
administrator on behalf of the dealer/clients and insurance companies. The
actual repairs and replacements required under the service contract agreements
are performed by independent third party authorized repair facilities. The cost
of these repairs is borne by the insurance companies which have the ultimate
responsibility for the claims. The insurance policy indemnifies the
dealer/clients against losses resulting from service contract claims and
protects the consumer by ensuring their claims will be paid.
The Company's service contract programs benefit consumers with expanded and/or
extended product coverage for a specified period of time (and/or mileage in the
case of automobiles and recreational vehicles), similar to that provided by
manufacturers under the terms of their product warranties. Such coverage
generally provides for the repair or replacement of the product, or a component
thereof, in the event of its failure. The Company's service contract programs
benefit the dealer/clients by providing enhanced value to the goods and services
they offer. It also provides the opportunity for increased revenue and income
while outsourcing the costs and responsibilities of operating an extended
warranty program.
2. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year ending
March 31, 2000. For further information, refer to the consolidated financial
statements and footnotes thereto included in the Company's Form 10K/A for the
year ended March 31, 1999.
Certain prior year amounts may have been reclassified to conform to current year
presentation.
6
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Revenue Recognition Policy - The Company's revenue recognition policy is
segregated into two distinct categories depending on whether the Company or the
retailer/dealer is designated as the obligor on the service contract sale. In
either case, a highly rated independent insurance company assumes all claims
liabilities of the service contracts administered by the Company.
Dealer obligor service contracts are sales in which the retailer/dealer is
designated as the obligor. For these service contract sales, using the
proportional performance method, the Company recognizes revenues in direct
proportion to the costs incurred in providing the service contract programs to
the Company's clients. Revenues in amounts sufficient to meet future
administrative costs and a reasonable gross profit thereon are deferred. Sales
of dealer obligor service contracts are reflected in gross revenues net of
premiums paid to insurance companies as well as related sales commissions
associated with the contracts.
Administrator obligor service contracts are sales in which Warrantech is
designated as the obligor. For these service contract sales, the Company
recognizes revenues in accordance with Financial Accounting Standards Board
Technical Bulletin 90-1 ("TB 90-1"), Accounting for Separately Priced Extended
Warranty and Product Maintenance Contracts, and Statement of Financial
Accounting Standards No. 60 ("SFAS 60"), Accounting and Reporting by Insurance
Enterprises. These accounting standards require the recognition of revenue over
the life of the contract on a straight-line basis, unless sufficient,
company-specific, historical evidence indicates that the costs of performing
services under these contracts are incurred on other than a straight-line basis.
The Company is recognizing revenue on administrative obligor contracts based on
company specific historical claims experience over the life of the contract.
COMPREHENSIVE INCOME
The components of comprehensive income are as follows:
<TABLE>
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For the Three Months Ended
June 30,
------------------------------------
1999 1998
------------------------------------
Net (loss) ($3,432,264) ($1,790,040)
Other Comprehensive Income, net of tax:
Foreign currency translation adjustments (42,502) (20,361)
Unrealized gain(loss) on investments (8,931) (1,133)
----------------- -----------------
Comprehensive Income/(loss) ($3,483,697) ($1,811,534)
================= =================
The components of accumulated other comprehensive income, net of related tax are as follows:
June 30, March 31,
1999 1999
----------------- -----------------
Accumulated translation adjustments ($143,488) ($100,986)
Unrealized gain/(loss) on investments (1,479) 7,452
----------------- -----------------
Accumulated other comprehensive income/(loss) ($144,967) ($93,534)
================= =================
</TABLE>
7
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4. EARNINGS PER SHARE
The computation of earnings per share was as follows:
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For the Three Months Ended
June 30,
1999 1998
----------------- ----------------
Numerator:
Net (loss) applicable to common stock ($3,432,264) ($1,790,040)
================= ================
Denominator:
Average outstanding shares used in the
computation of per share earnings:
Common Stock issued-Basic shares 15,222,861 13,362,303
Stock Options (treasury method) - -
----------------- ----------------
Diluted shares 15,222,861 13,362,303
================= ================
Earnings Per Common Share:
Basic ($0.23) ($0.13)
================= ================
Diluted ($0.23) ($0.13)
================= ================
</TABLE>
In a net loss position options are anti-dilutive.
5. SEGMENTS
The Company defines its operations into three business segments: Automotive,
Consumer Products and International operations. All Other includes general
corporate income and expenses, inter-segment sales and expenses and other
corporate assets not related to the three business segments.
<TABLE>
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Consumer Reportable
Three Months Ended Automotive Products International Segments All Other Total
June 30, 1999
Revenues $11,655,790 $15,166,654 $3,061,141 $29,883,585 ($603,702) $29,279,883
Pretax Income (Loss) 369,596 (4,488,606) (921,538) (5,040,548) 344,669 (4,695,879)
Net Interest Income 7,970 511 (1,291) 7,190 210,660 217,850
Depreciation/Amortization 181,917 353,594 216,074 751,585 661,762 1,413,347
June 30, 1998
Revenues $12,760,550 $16,632,828 $3,192,393 $32,585,771 ($1,708,999) $30,876,772
Pretax Income (Loss) (134,913) (3,430,809) (160,089) (3,725,811) (47,666) (3,773,477)
Net Interest Income 14,229 30,918 7,477 52,624 100,956 153,580
Depreciation/Amortization 180,967 385,809 114,844 681,620 592,994 1,274,614
</TABLE>
6. SIGNIFICANT CUSTOMERS
The Company had one significant customer, CompUSA, which accounted for
approximately 34%, 34% and 32%, respectively, of consolidated gross revenues for
the years ended March 31, 1999, 1998 and 1997. The Company notified CompUSA in
May 1999 of price increases resulting from premium increases imposed by CIGNA
Insurance Company. On June 28, 1999, Warrantech received formal notification of
termination from CompUSA effective July 28, 1999. The loss of CompUSA had and
will have a significant impact on current and future revenues.
8
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WARRANTECH CORPORATION AND SUBSIDIARIES
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Except for the historical information contained herein, the matters discussed
below or elsewhere in this quarterly report are forward looking statements that
involve risks and uncertainties. The Company makes such forward looking
statements under the provisions of the "safe harbor" section of the Private
Securities Litigation Reform Act of 1995. Forward looking statements are based
on management's beliefs and assumptions, as well as information currently
available to management. Such beliefs and assumptions are based on, among other
things, the Company's operating and financial performance over recent years and
its expectations about its business for the current fiscal year. Although the
Company believes that the expectations reflected in such forward looking
statements are reasonable, it can give no assurance that such expectations will
prove to be correct. Such statements are subject to certain risks, uncertainties
and assumptions, including (a) prevailing economic conditions may significantly
deteriorate, thereby reducing the demand for the Company's products and
services, (b) unavailability of technical support personnel or increases in the
rate of turnover of such personnel, reflecting increased demand for such
qualified personnel, (c) changes in the terms or availability of insurance
coverage for the Company's programs or (d) regulatory or legal changes affecting
the Company's business, although none of these risks are anticipated at the
present time. Should one or more of these or any other risks or uncertainties
materialize, or should the underlying assumptions prove incorrect, actual
results may vary materially from those anticipated, estimated or expected.
Results of Operations
Gross revenues for the three months ended June 30, 1999 were $29,279,883, a
decrease of $1,596,889 as compared with $30,876,772 for the three months ended
June 30, 1998. This decrease is directly attributable to decreased revenue in
the Automotive and Consumer Products business segments. In the Automotive
segment, the decrease in revenue was primarily the result of a sales mix change
created by an increase in dealer obligor business. In the Consumer Products
segment, the decrease in revenue occurred from decreased sales in computer
related extended warranties as a result of the termination of the Company's
relationship with its most significant customer, CompUSA. This decrease was
partially offset by an increase in sales of home warranty service contracts.
During the fiscal year March 31, 1999, CompUSA accounted for approximately 34%
of consolidated gross revenues.
The net increase in deferred revenues for the three months ended June 30, 1999
was $6,025,930 as compared to a net increase of $6,742,626 for the same period
last year. These increases are directly attributable to the sales of service
contracts in the current period with a service duration over one year being
greater than the amortization of revenues from previous periods being recognized
in the current year. The year to year change is also the result of the increase
in deferred revenue for dealer obligor service contracts necessary to meet
future administrative costs to service these contracts. Lastly, the net change
in deferred revenue is significantly impacted by the decreased revenues
resulting from the termination of the Company's agreement with CompUSA.
Direct costs, which consist primarily of insurance premiums and commissions, are
those costs directly related to the production and acquisition of service
contracts where Warrantech is named as the obligor. Direct costs for the three
months ended June 30, 1999 were $13,789,628 as compared with $12,626,122 for the
comparable period last year. The increase in direct costs are primarily the
result of prior period amortization costs being greater than the current period
costs being deferred to future periods offset by the reduced revenues due to the
termination of the Company's administrative agreement with CompUSA.
Service, selling and general and administrative expenses (SG&A) for the three
months ended June 30, 1999 were $12,999,952 as compared with $14,176,847 for the
same period last year. The decrease in SG&A expenses reflects the Company's
operational efficiency initiatives which include the reengineering of its call
center process and consolidation of certain operating and administrative
functions. These initiatives resulted in lower payroll and payroll related
expenses which were offset slightly by higher telephone costs.
9
<PAGE>
Depreciation and amortization was $1,413,347 for the three months ended June 30,
1999 compared to $1,274,614 for the same period last year. The increase was due
primarily to capital additions related to the Company's ongoing upgrade of its
computer systems.
The provision (benefit) for income taxes is based on the Company's projection of
its estimated effective tax rate for the fiscal year.
Net loss for the three months ended June 30, 1999 was $3,432,264 or $0.23 per
diluted share compared to a net loss of $1,790,040 or $0.13 per diluted share
for the comparable period last year. This change is the result of the
termination of the Company's relationship with its most significant customer
during the period and the other factors listed above.
Liquidity and Financial Resources
The Company has ongoing relationships with equipment financing companies and
intends to continue financing certain future equipment needs through leasing
transactions. The total amount financed through leasing transactions during the
three month period ended June 30, 1999 was $356,746. In addition, the Company
had a revolving credit agreement with a bank which originally provided for
maximum aggregate borrowings up to $10,000,000 with interest at the bank's
prevailing prime rate or LIBOR plus 2%. Subsequent to March 31, 1999, the line
of credit was adjusted to $1,500,000 and expired on December 31, 1999. The
Company is presently in negotiations to replace this line of credit. Although it
is anticipated that this will be completed by February 2000, no assurances can
be given this will be accomplished. During the fiscal years ended March 31, 1998
and 1999 the Company did not have any borrowings under this line of credit.
The Company believes that internally generated funds will be sufficient to
finance its current operations for at least the next twelve months. Cash
provided by operations during the three months ended June 30, 1999 was
$5,033,186, which is principally attributable to a reduction in the amount of
accounts receivable outstanding.
On July 6, 1998, Joel San Antonio, Warrantech's Chairman and Chief Executive
Officer, and William Tweed and Jeff J. White, members of the Warrantech's Board
of Directors, exercised 3,000,000 of their vested options to purchase Warrantech
common stock. Promissory notes totaling $8,062,500 were signed with interest
payable over three years at an annual interest rate of 6%. The promissory notes,
which are with recourse and secured by the stock certificates issued, mature
July 5, 2001. An additional promissory note was signed by Joel San Antonio for
$595,634 on March 22, 1999 which represents the amounts funded by the Company
with respect to his payroll taxes for the exercise of these options. The
exercise of these stock options and the anticipated tax benefit from this
transaction total approximately $10 million. These amounts have been recorded as
a contra-equity account, which is a reduction of stockholders' equity. The
Company is currently in discussions with the Messrs. San Antonio, Tweed and
White to renegotiate the payment terms of the notes. The payment of interest,
which was due July 6, 1999, has been deferred pending finalization of such
discussions.
The effect of inflation has not been significant to the Company since its
formation.
Year 2000
The Company has addressed the business, financial, technical, legal and other
implications that related to the various Year 2000 date issues. A comprehensive
Year 2000 program was put into place during fiscal 1998 and executed through
December 31, 1999. The primary goal of the Year 2000 program was to implement
the changes needed to answer functionality in the Year 2000, as cost effectively
and expeditiously as possible. As of January 10, 2000, the Company experienced
no significant interruptions from any computer hardware, software or other
business operations.
10
<PAGE>
PART II. Other Information
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6 (a) Exhibits
(27) Financial Data Schedule
Item 6 (b) Reports on 8-K
Not applicable
11
<PAGE>
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.
WARRANTECH CORPORATION
By: /s/ Joel San Antonio
------------------------------------
Joel San Antonio - Chairman of the
Board and Chief Executive Officer
Date: January 14, 2000
By: /s/ Richard F. Gavino
------------------------------------
Richard F. Gavino - Executive Vice
President and Chief Financial Officer
Date: January 14, 2000
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-END> JUN-30-1999
<CASH> 17,977,327
<SECURITIES> 3,947,482
<RECEIVABLES> 29,711,388
<ALLOWANCES> 3,021,324
<INVENTORY> 0
<CURRENT-ASSETS> 64,261,373
<PP&E> 29,752,963
<DEPRECIATION> 13,728,343
<TOTAL-ASSETS> 188,396,156
<CURRENT-LIABILITIES> 54,294,085
<BONDS> 0
<COMMON> 115,522
0
0
<OTHER-SE> 6,661,832
<TOTAL-LIABILITY-AND-EQUITY> 188,396,156
<SALES> 0
<TOTAL-REVENUES> 23,253,953
<CGS> 0
<TOTAL-COSTS> 28,202,927
<OTHER-EXPENSES> (358,629)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 105,534
<INCOME-PRETAX> (4,695,879)
<INCOME-TAX> (1,263,615)
<INCOME-CONTINUING> (3,432,264)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,432,264)
<EPS-BASIC> (.23)
<EPS-DILUTED> (.23)
</TABLE>
