U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q SB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
Commission File No. 0-12993
TELS Corporation
----------------
(Exact name of small business issuer as specified in its charter)
Utah 87-0373840
- ---- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
705 East Main Street, American Fork, Utah 84003
- ----------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 756-9606
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
YES[X] NO[ ]
The Issuer had outstanding 3,891,819 shares of common stock on May 1, 1999.
<PAGE>
TELS Corporation
----------------
INDEX
-----
PART I. FINANCIAL INFORMATION Page
Consolidated Balance Sheets -- March 31, 1999 (Unaudited)
and December 31, 1998 3
Consolidated Statements of Operations -- Three Months Ended
March 31, 1999 and 1998 (Unaudited) 4
Consolidated Statements of Cash Flows -- Three Months Ended
March 31, 1999 and 1998 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6,7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 8,9,10,11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
<PAGE>
<TABLE>
<CAPTION>
TELS Corporation
----------------
Consolidated Balance Sheets
March 31, December 31,
1999 1998
Assets (Unaudited) Audited
<S> <C> <C> <C> <C> <C> <C>
Current Assets
Cash and cash equivalents .............................................. $ 45,549 $ 63,326
Trade accounts receivable, less allowance for
doubtful receivables of $ 86,887 and $ 81,586, respectively ........ 723,314 608,802
Employee and other receivables ......................................... 71,360 65,514
Inventories ............................................................ 520,934 446,416
Prepaid expenses ....................................................... 159,882 161,942
Deferred income taxes 30,667 -
------
Total current assets .......................................... 1,551,706 1,346,000
--------- ---------
Property, plant and equipment, net .............................................. 585,651 627,085
Software development costs, net ................................................. 139,150 124,922
Intangible assets, net .......................................................... 21,402 40,974
Other assets .................................................................... 205,293 208,495
------- -------
$ 2,503,202 $ 2,347,476
=========== ===========
Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities
Trade accounts payable ................................................. $ 494,800 $ 420,270
Accrued expenses ....................................................... 173,930 180,308
Accrued vacation ....................................................... 129,201 131,887
Current portion of long-term debt ...................................... 581,823 601,069
Deposits and advances .................................................. 153,626 144,273
------- -------
Total current liabilities ..................................... 1,533,380 1,477,807
--------- ---------
Long-term debt, excluding current installments .................................. 382,063 385,000
------- -------
Stockholders' equity
Common stock, $.02 par value. Authorized 50,000,000 shares;
issued and outstanding 3,891,819 shares ........................... 77,835 77,835
Additional paid-in capital ............................................. 4,226,532 4,226,532
Accumulated deficit .................................................... (3,716,608) (3,819,698)
---------- ----------
Total stockholders' equity .................................... 587,759 484,669
------- -------
$ 2,503,202 $ 2,347,476
=========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
TELS Corporation
Consolidated Statements of Operations
(Unaudited)
Three months ended
March 31,
---------
1999 1998
---- ----
<S> <C> <C> <C> <C> <C> <C>
Net sales ................................... $ 1,125,602 $ 1,441,515
Cost of goods sold .......................... 385,028 611,290
------- -------
Gross profit ....................... 740,574 830,225
Research and development expenses ........... 29,999 37,995
Selling, general and administrative expenses 612,858 741,063
------- -------
Operating income 97,717 51,167
------ ------
Other income (expenses):
Interest income .................... 3,376 5,084
Interest expense ................... (26,953) (27,574)
Other .............................. - 2,515
-----
Other expense, net ................. (23,577) (19,975)
------- -------
Income before income
tax (provision) benefit ........... 74,140 31,192
Income tax benefit, (provision) ............. 28,950 (11,589)
------ -------
Net income ......................... $ 103,090 $ 19,603
=========== ===========
Basic and diluted net income per common share $ .03 $ .01
=========== ===========
</TABLE>
See accompanying notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
TELS Corporation
----------------
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended
March 31,
---------
1999 1998
---- ----
<S> <C> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income ............................................................... $ 103,090 $ 19,603
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of plant and equipment .............................. 47,729 52,904
Amortization of intangible assets ................................ 19,572 19,511
Amortization of software development costs ....................... 18,387 37,169
Deferred income taxes ............................................ (30,667) 10,089
Deferred compensation ............................................ - 10,125
Changes in operating assets and liabilities:
Receivables ................................................. (120,358) (30,345)
Inventories ................................................. (74,518) (28,265)
Prepaid expenses ............................................ 2,060 (28,385)
Other assets ................................................ 3,201 (16,380)
Trade accounts payable and accrued expenses ................. 65,467 109,218
Deposits and advances ....................................... 9,353 7,199
----- -----
Net cash provided by operating activities ................ 43,316 162,443
------ -------
Cash flows from investing activities:
Capital expenditures ..................................................... (6,295) (12,884)
Software development costs ............................................... (32,615) (25,575)
Cash investments ......................................................... - (33,309)
-------
Net cash used in investing activities ..................... (38,910) (71,768)
------- -------
Cash flows from financing activities:
Net payments under line of credit agreement .............................. (20,306) (36,078)
Principal payments on long-term debt ..................................... (1,877) (15,521)
------ -------
Net cash used in financing activities ..................... (22,183) (51,599)
------- -------
Net (decrease) increase in cash and cash equivalents ........................... (17,777) 39,076
Cash and cash equivalents at beginning of quarter .............................. 63,326 13,845
------ ------
Cash and cash equivalents at end of quarter .................................... $ 45,549 $ 52,921
========= =========
Supplemental disclosures of cash flow information:
Cash paid during the quarter for interest ................................ $ 26,953 $ 27,574
========= =========
</TABLE>
See accompanying notes to financial statements
<PAGE>
TELS Corporation
----------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Interim Financial Statements
The financial statements for the three months ended March 31, 1999 and
1998, are unaudited. However, the Company, in its opinion, has made all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the financial position, results of operations and cash flows for the
periods presented. The financial statements and notes thereto should be read in
conjunction with the financial statements and notes for the years ended December
31, 1998 and 1997 included in the Company's 1998 Annual Report to the Securities
and Exchange Commission on Form 10-KSB. The results for the three months ended
March 31, 1999, are not necessarily indicative of the results for the year
ending December 31, 1999.
2. Earnings Per Share
Basic earnings per share excludes dilution and is computed by dividing net
earnings available to common stockholders by the weighted average number of
common shares outstanding for the period. Diluted earnings per share reflects
the potential dilution that could occur if options or warrants to issue common
stock were exercised into common stock. Stock options for 547,247 shares and
585,510 shares for 1999 and 1998, respectively, are not included in the
calculations because they are anti-dilutive. The weighted average number of
outstanding common and common equivalent shares used in this computation were
3,891,819 for the three months ended March 31, 1999 and 1998.
3. Inventories
Inventories at March 31, 1999 and December 31, 1998 consisted of the
following:
1999 1998
---- ----
Finished goods $ 69,836 $ 64,962
Work-in-process 142,336 69,045
Raw material and supplies 584,724 573,369
Reserve for obsolete inventory (275,961) (260,960)
-------- --------
$ 520,935 $ 446,416
========== ==========
4. Impact of Recently Issued Accounting Standards
The Accounting Standards Executive Committee (AcSEC) issued Statement of
Position No. 98-1 (SOP 98-1), Accounting for the Cost of Computer Software
Development or Obtained for Internal Use. The SOP was issued to address
diversity in practice regarding whether and under what conditions the costs of
internal-use software should be capitalized. SOP 98-1 is effective for financial
statements for years beginning after December 15, 1998. The Company is currently
accounting for its internally developed software according to SOP 98-1on its
financial statements.
<PAGE>
TELS Corporation
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5. Activity of Business Segments
In 1998 the Company adopted Statement of Financial Accounting Standards No.
131, Disclosures About Segments of an Enterprise and Related Information, (SFAS
No. 131), which governs disclosures relating to a business enterprises'
operating statements. The accounting policies of the Company's segments are the
same as those described in the "Summary of Significant Accounting Policies." The
Company's reportable segments are strategic business units that offer different
products and services. They are managed separately because each business
requires different technology and marketing strategies. Substantially all of the
Company's continuing operations are in telecommunications and contract
manufacturing and assembly. Total revenue by industry segment includes both
sales to unaffiliated customers, as reported in the Company's consolidated
statements of operations, and intersegment sales, which are accounted for based
on the estimated fair market value of the products. Intersegment sales are not
material.
Operating income (loss) is total revenue less operating expenses. In
computing operating income (loss), the effects of general corporate expenses,
interest expense and income taxes are not included.
Identifiable assets by segment are those that are used in the Company's
operations in each business segment. One customer, in the contract manufacturing
and assembly segment accounted for approximately 3% of the Company's sales in
the first quarter of 1999. The same customer accounted for 26% of the sales for
the same period of 1998. Identifiable assets are principally accounts
receivable, inventory, property and equipment, capitalized software development
costs and other assets.
Financial information by segments is as follows:
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C> <C> <C> <C> <C>
Net sales:
Telecommunications ................................... $ 778,778 $ 616,486
Contract manufacturing and assembly .................. 346,824 821,789
Corporate and other .................................. - 3,240
-----
$ 1,125,602 $ 1,441,515
=========== ===========
Operating income (loss):
Telecommunications ................................... $ 153,615 $ 15,798
Contract manufacturing and assembly (21,678) 20,227
Corporate and other .................................. (34,220) 15,142
------- ------
$ 97,717 $ 51,167
=========== ===========
Identifiable assets:
Telecommunications ................................... $ 1,048,818 $ 1,036,439
Contract manufacturing and assembly .................. 636,002 1,101,893
Corporate and other .................................. 818,382 1,916,449
------- ---------
$ 2,503,202 $ 4,054,781
=========== ===========
Depreciation and amortization expense:
Telecommunications ................................... $ 27,144 $ 55,532
Contract manufacturing and assembly .................. 38,171 44,557
Corporate and other .................................. 20,373 9,495
------ -----
$ 85,688 $ 109,584
=========== ===========
Interest expense:
Telecommunications ................................... $ 11,820 $ 12,575
Contract manufacturing and assembly .................. 6,700 12,228
Corporate and other .................................. 8,433 2,771
----- -----
$ 26,953 $ 27,574
=========== ===========
</TABLE>
<PAGE>
TELS Corporation
----------------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following Management Discussion and Analysis contains certain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, including, among others: (i) results of
operations (including expected changes in the Company's gross profit margin and
selling, general and administrative expenses); (ii) the Company's business
strategy for increasing sales; (iii) the Company's strategy to increase its size
and customer base; (iv) the Company's ability to successfully increase its size
through acquisition/merger activity; and (v) the Company's ability to
distinguish itself from its current and future competitors.
These forward-looking statements are based largely on the Company's current
expectations and are subject to a number of risks and uncertainties. Actual
results could differ materially from these forward-looking statements. Important
factors to consider in evaluating such forward-looking statements include (i)
delays in the release of new products or new versions of existing products; (ii)
the shortage of reliable market data regarding the telephone call management and
contract manufacturing industries market; (iii) changes in external competitive
market factors or in the Company's internal budgeting process which might impact
trends in the Company's results of operations; (iv) anticipated working capital
or other cash requirements; (v) changes in the Company's business strategy or an
inability to execute its strategy due to unanticipated changes in the market;
and (vi) various competitive factors that may prevent the Company from competing
successfully in the marketplace. In light of these risks and uncertainties,
there can be no assurance that the events contemplated by the forward-looking
statements contained herein will in fact occur.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1999
COMPARED TO MARCH 31, 1998
Consolidated net sales for the first quarter of 1999 decreased $315,913, or
22%, to $1,125,602 when compared to $1,441,515 of net sales for the first
quarter 1998. The decrease in sales is mostly due to reductions in sales in the
manufacturing division where sales decreased $462,015 or 56% when compared to
the first quarter of 1998. This decrease was partly offset by sales of telephone
call accounting products where sales increased $162,292 or 26% when compared to
the first quarter of 1998. This increase in sales of telephone call accounting
products was mostly due to larger orders from dealers and national accounts in
the hospitality industry where sales increased 27%, and an increase in sales in
the business call accounting division where sales increased 32%. The decrease in
sales in the manufacturing division is mainly the result of the loss of revenue
from one main customer who accounted for 3% of sales in 1999 compared to 26% of
sales for the same period of 1998. No individual customer accounted for 10% or
more of sales in 1999.
Gross profit decreased to $740,574, a decrease of $89,651, or 11%, when
compared to gross profit for the first quarter of 1998 of $830,225. The gross
profit margin as a percentage of sales increased to 65% for the first quarter of
1999, compared to 58% for the first quarter of 1998. The increase in the gross
profit margin as a percent of sales is due primarily to the change in the sales
mix where higher sales levels in the telecommunication sector represented 70% of
total sales in 1999, compared to 43% of total sales in 1998. The gross profit
margin from telecommunication products is traditionally higher than the margin
from contract manufacturing products.
For the first quarter of 1999, total research and development costs
including amortization of previously capitalized research and development
expenses, were $29,999 compared to $37,995 for the same period in 1998.
Management of the Company believes that it will be necessary to increase its
level of research and development in 1999 to keep its current product lines up
to date and to take advantage of technology changes which the Company expects to
develop.
<PAGE>
Selling, general and administrative ("SG&A") expenses decreased $128,205 or
17% to $612,858 for the first quarter of 1999, when compared to $741,063 for the
first quarter of 1998. As a percentage of net sales, SG&A expenses were 54% for
the first quarter of 1999, compared to 51% for the first quarter of 1998.
The Company reported consolidated net income for the first quarter of 1999
of $103,090, or $.03 per share. This is a marked improvement when compared to
the first quarter net income of $19,603 or ($.01) per share for the same period
in 1998 and the losses reported for the latter part of 1998. Management of the
Company believes that profitability will continue in the second quarter of 1999
as it focuses on reducing expenses, increasing sales from telecommunication
products, and improving gross profit margins. However, the telecommunications
industry is experiencing drastic changes which could limit the Company's ability
to meet sales projections in this industry and there can be no assurance that
the Company will be able to continue to generate a profitable level of sales.
The contract manufacturing industry has seen an increase in orders in the first
part of 1999 when compared to 1998, however, the industry is subject to rapid
change which can limit the company's plans for growth in this industry.
Liquidity and Capital Resources
As of March 31, 1999, the Company reported current assets of $1,551,706 and
current liabilities of $1,533,380, resulting in net working capital of $28,326.
This is an increase of $160,133 when compared to a net working capital deficit
of $131,807 at December 31, 1998. During the first quarter of 1999, the Company
generated $43,316 in cash from operating activities and used $38,910 and $22,183
of cash in its investing and financing activities, respectively.
The primary sources of cash from operating activities included net income
of $103,090 and an increase in payables and accrued expenses of $65,467, while
primary uses of cash from operating activities included an increase in accounts
receivables of $120,358 and an increase in inventories of $74,518. The increase
in inventories was mostly due to increases in work in process inventory which
increased $73,291 due to increased orders in the contract manufacturing sector.
The Company's investing activities in the first quarter of 1999, included
capital expenditures of $6,295 for equipment and software development costs of
$32, 615. The Company's use of cash for financing activities was mainly due to
net payments on a line of credit of $20,306.
At December 31, 1998, the Company was in violation of certain requirements
of its line of credit financing agreement relating to minimum cash flow levels
as determined on a quarterly basis. Due to the positive earnings for the first
quarter of 1999, the Company believes that it is now in compliance with these
cash flow requirements at March 31, 1999. Nevertheless, the lender has put the
Company on notice that its $750,000 line of credit which had an outstanding
balance of $487,742 at March 31, 1999, will not be renewed in July, 1999, when
the current loan matures. If the Company is not able to find replacement
financing, the Company may not be able to repay the line of credit. The Company
continues to have difficulty with timely payments to its trade creditors,
particularly in the contract manufacturing division where certain vendors have
placed the Company on COD basis. This could affect the ability of the Company to
meets its customers needs on future orders, however, as of May 13, 1999, the
Company has been able to make its deliveries on time and no orders have been
canceled. The Company is currently seeking alternative sources of working
capital financing sufficient to fund payment of delinquent balances and meet
ongoing trade obligations and also to fund operations, and further development
of new products under consideration. If additional funding cannot be obtained ,
the Company believes it can mortgage assets and/or factor receivables to obtain
funding necessary to pay its ordinary business obligations.
<PAGE>
TELS Corporation
----------------
Outlook: Issues and Uncertainties
The Company's sales of telephone call accounting systems have improved in
the first four months of 1999, increasing approximately 26% over the same period
of 1998. The manufacturing division has increased its orders by over $100,000
when compared to the backlog existing at December 31, 1998. With the expense
reductions implemented in the latter part of 1998 and continuing into the first
quarter of 1999, the Company expects the earnings to remain positive in the
second quarter of 1999. At December 31, 1998, the Company's Certifying
Accountants stated that due to uncertainties surrounding the replacement of the
line of credit and the loss of revenue in the manufacturing division, there was
substantial doubt about the Company's ability to continue as a going concern.
Management intends to continue its efforts to address these issues in 1999.
Failure to accomplish management's plans in 1999, and to continue to generate
positive operating cash flow could result in further erosion of the Company's
financial condition and failure to meet its financial obligations.
Year 2000 (Y2K) Computer Systems Compliance
Many older computer software programs refer to years in terms of their
final two digits only. Such programs may interpret the year 2000 to mean the
year 1900 instead. If not corrected, those programs could cause date-related
transaction failures. The Company is continuing its efforts to address this
concern. A project team is performing assessments of all internal computer
systems and developing and implementing plans to correct the problems. We expect
these projects to be successfully completed during the second and third quarters
of 1999. External and internal costs specifically associated with modifying
internal use software for Year 2000 compliance are expensed as incurred. To
date, we have spent approximately $25,000 on this project. Remaining costs to be
incurred in 1999 to fix Year 2000 problems are estimated at approximately
$40,000. We do not expect the costs relating to Year 2000 remediation to have a
material effect on our results of operations or financial condition. The Company
has evaluated its existing accounting software for compliance with the year 2000
and has determined that an upgrade to the existing accounting system will be
required. This upgrade has been purchased and is expected to be installed in the
second quarter of 1999.
Our Proprietary Call Accounting Products (INN-FORMXL, INN-FORMPlus,
INN-FORMExpress and TEL-SENSE) are Year 2000 compliant. The hardware, operating
system and software are all unconcerned with the year portion of the date in
that they do not store the year nor perform any computations based on year. Our
PC-based products (TEL-SENSEPCS, WIN-SENSE and INN-SURE) are also Year 2000
complaint for the same reasons as given above: they do not base computations on
the year. However, the PC that they may be running on may or may not be
compliant. PCs are composed of various components (CPU, real time clock, BIOS,
etc.) some of which may use dates as part of their basic functioning and may be
vulnerable to the Y2K problem.
Year 2000 problems could affect research and development, production,
distribution, financial, administrative and communication operations. Systems
critical to our business which have been identified as non-Year 2000 compliant
are either being replaced or corrected through programming modifications. In
addition to our in-house efforts, we intend to continue asking vendors, major
customers, service suppliers, communications providers and banks whose systems
failures potentially could have a significant impact on our operations to verify
their Year 2000 readiness and test such systems where appropriate and possible.
As part of our contingency plan, we are developing plans for those areas
that are critical to TELS' business such as scheduling and/or purchase of
critical inventory parts, developing relationships with multiple vendor sources,
implementing additional backup procedures and printing and storing critical
documentation. Based on our current plans and efforts to date, we anticipate
that our contingency plan will be completed in the third quarter of 1999 and
that the Year 2000 problems will not have a material effect on our results of
operations or financial condition.
<PAGE>
TELS Corporation
----------------
The above expectations are subject to uncertainties. For example, if we are
unsuccessful in identifying or fixing all Year 2000 problems in our critical
operations, or if we are affected by the inability of suppliers or major
customers to continue operations due to such a problem, our results of
operations or financial condition could be materially impacted.
The total costs that we incur in connection with the Year 2000 problems
will be influenced by our ability to successfully identify Year 2000 systems'
flaws, the nature and amount of programming required to fix the affected
problems, the related labor and/or consulting costs for such remediation, and
the ability of third parties with whom we have business relationships to
successfully address their own Year 2000 concerns. These and other unforeseen
factors could have a material adverse effect on our results of operations or
financial condition.
<PAGE>
TELS Corporation
----------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Article 5 Financial Data Schedule for the quarter ending
March 31, 1999.
(b) Reports on Form 8-K:
No reports on form 8-K were filed in the first quarter of 1999.
(THIS SPACE INTENTIONALLY LEFT BLANK)
<PAGE>
TELS Corporation
----------------
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
TELS Corporation
Dated: May 14, 1999 By: /s/ John L. Gunter
------------ ------------------
John L. Gunter
Chairman and CEO
Dated: May 14, 1999 By: /s/ Stephen M. Nelson
------------ ---------------------
Stephen M. Nelson
President, Treasurer
and Acting Secretary
Dated: May 14, 1999 By: /s/ Ronald A. Haller
------------ --------------------
Ronald A. Haller
Controller
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000756767
<NAME> TELS Corporation
<MULTIPLIER> 1
<CURRENCY> U.S.Currency
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1.000
<CASH> 45,549
<SECURITIES> 0
<RECEIVABLES> 810,201
<ALLOWANCES> 86,887
<INVENTORY> 520,934
<CURRENT-ASSETS> 1,551,706
<PP&E> 2,390,003
<DEPRECIATION> 1,804,351
<TOTAL-ASSETS> 2,503,202
<CURRENT-LIABILITIES> 1,533,380
<BONDS> 476,144
0
0
<COMMON> 77,835
<OTHER-SE> 509,924
<TOTAL-LIABILITY-AND-EQUITY> 2,503,202
<SALES> 1,125,602
<TOTAL-REVENUES> 1,125,602
<CGS> 385,028
<TOTAL-COSTS> 1,027,885
<OTHER-EXPENSES> 5,301
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 26,953
<INCOME-PRETAX> 74,140
<INCOME-TAX> 28,950
<INCOME-CONTINUING> 103,090
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 103,090
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
