FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period ended October 4, 1998
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: 1-10291
Spaghetti Warehouse, Inc.
(Exact name of registrant as specified in its charter)
Texas 75-1393176
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
402 West I-30, Garland, Texas 75043
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: 972/226-6000
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 October 4, 1998: 5,689,301 shares of common stock, par value
$.01.
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PART 1 - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SPAGHETTI WAREHOUSE, INC. AND SUBSIDIARIES
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Consolidated Balance Sheets
ASSETS 6/28/98 10/4/98
------ ------- -------
(Unaudited)
Current assets:
Cash and cash equivalents........................ $ 942,622 $ 916,237
Accounts receivable.............................. 569,349 734,478
Inventories...................................... 642,379 648,773
Prepaid expenses................................. 333,779 288,214
Deferred income taxes............................ 273,934 8,227
----------- -----------
Total current assets..................... 2,762,063 2,595,929
----------- -----------
Property and equipment, net........................ 47,923,834 48,605,676
Trademark and franchise rights, net................ 2,641,235 2,518,535
Pre-opening costs, net............................. 109,977 72,493
Deferred income taxes.............................. 3,553,571 3,837,692
Other assets....................................... 747,936 710,326
----------- -----------
$57,738,616 $58,340,651
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long-term debt................ $ 1,359,837 $ 1,813,116
Accounts payable................................. 2,451,987 2,306,962
Accrued payroll and bonuses...................... 1,683,173 1,384,558
Other accrued liabilities........................ 813,428 797,742
----------- -----------
Total current liabilities................ 6,308,425 6,302,378
----------- -----------
Long-term debt, less current portion............... 4,079,507 4,522,949
Deferred compensation.............................. 155,641 170,266
Commitments and contingencies...................... - -
Stockholders' equity:
Preferred stock of $1.00 par value;
authorized 1,000,000 shares;
no shares issued............................... - -
Common stock of $.01 par value;
authorized 20,000,000 shares;
issued 6,717,759 shares at 6/28/98
and 6,746,642 shares at 10/4/98................ 67,178 67,466
Additional paid-in capital....................... 37,508,055 37,698,555
Accumulated other comprehensive income (loss).... (829,325) (974,505)
Retained earnings................................ 17,946,524 18,050,931
----------- -----------
54,692,432 54,842,447
Less cost of 1,057,341 shares at 6/28/98
and 10/4/98 of common stock held in treasury... (7,497,389) (7,497,389)
----------- -----------
47,195,043 47,345,058
----------- -----------
$57,738,616 $58,340,651
=========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<TABLE>
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SPAGHETTI WAREHOUSE, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
13-Week Period 14-Week Period
Ended 9/28/97 Ended 10/4/98
-------------- --------------
Revenues:
Restaurant sales....................................... $ 15,584,155 $ 17,213,997
Franchise.............................................. 175,134 157,079
Other.................................................. 172,178 208,817
------------- -------------
Total revenues..................................... 15,931,467 17,579,893
------------- -------------
Costs and expenses:
Cost of sales.......................................... 4,035,882 4,840,262
Operating expenses..................................... 8,717,783 10,109,413
General and administrative............................. 1,377,812 1,454,663
Depreciation and amortization.......................... 928,708 967,345
------------- -------------
Total costs and expenses........................... 15,060,185 17,371,683
------------- -------------
Income from operations...................................... 871,282 208,210
Net interest expense........................................ 89,145 85,059
------------- -------------
Income before income tax expense............................ 782,137 123,151
Income tax expense.......................................... 275,787 18,745
------------- -------------
Net income.................................................. $ 506,350 $ 104,406
============= =============
Net income per common share:
Basic.................................................. $ .09 $ .02
============= =============
Diluted................................................ $ .09 $ .02
============= =============
Weighted average common shares outstanding:
Basic.................................................. 5,655,494 5,665,660
============= =============
Diluted................................................ 5,829,264 5,827,342
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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<TABLE>
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SPAGHETTI WAREHOUSE, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For the 14 Weeks Ended October 4, 1998
(Unaudited)
Common Stock Accumulated Treasury Stock
other Total
-------------------- Additional comprehensive Retained ---------------------- Compre- stockholders'
paid-in capital income (loss) Earnings hensive equity
--------------- ------------- -------- income -------------
(loss)
Number of Number -------
shares Amount of Shares Amount
--------- ------ --------- ------
Balances at
June 28, 1998........ 6,717,759 $ 67,178 $37,508,055 $ (829,325) $17,946,525 1,057,341 $(7,497,389) $47,195,044
Comprehensive income:
Net Earnings....... - - - - 104,406 - - $104,406 104,406
Other comprehensive
income (loss),
foreign currency
adjustment......... - - - (145,180) - - - (145,180) (145,180)
--------
Other comprehensive $(40,774)
income (loss)...... ========
Employee ESP plan
purchases and stock
option exercises...... 28,883 288 172,500 - - - - 172,788
Stock options issued
as compensation....... - - 18,000 - - - - 18,000
--------- ---------- ----------- ---------- ---------- --------- ----------- -----------
Balances at........... 6,746,624 $ 67,466 $37,698,555 $ (974,505) $18,050,931 1,057,341 $(7,497,389) $47,345,058
========= ========== =========== ========== =========== ========= =========== ===========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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SPAGHETTI WAREHOUSE, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
13-Week Period 14-Week Period
Ended 9/28/97 Ended 10/4/98
-------------- --------------
Cash flows from operating activities:
Net income ............................................... $ 506,350 $ 104,406
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization expense.............. 928,708 967,345
Loss on disposal of property and equipment......... 4,110 3,598
Deferred income taxes.............................. 221,747 (16,393)
Other, net......................................... (5,827) 33,113
Changes in assets and liabilities:
Accounts receivable............................ 137,295 (168,904)
Inventories.................................... 51,217 (6,394)
Prepaid expenses............................... (49,844) 45,565
Other assets................................... (10,122) (404)
Accounts payable............................... (362,152) (142,637)
Accrued payroll and bonuses.................... (403,875) (298,615)
Other accrued liabilities...................... 83,058 (15,685)
-------------- --------------
Net cash provided by operating activities.......... 1,100,665 504,995
-------------- --------------
Cash flows from investing activities:
Purchase of property and equipment.......................... (760,401) (1,580,421)
Proceeds from sales of property and equipment............... 418,105 14,750
-------------- --------------
Net cash used in investing activities.............. (342,296) (1,565,671)
-------------- --------------
Cash flows from financing activities:
Net borrowings from long-term debt.......................... -- 896,721
Proceeds from employee stock plans.......................... -- 172,788
-------------- --------------
Net cash provided by financing activities.......... -- 1,069,509
-------------- --------------
Effects of exchange rate changes on cash and cash
equivalents ............................................... 195 (35,218)
-------------- --------------
Net increase (decrease) in cash and cash equivalents............. 758,564 (26,385)
Cash and cash equivalents at beginning of period................. 1,916,983 942,622
-------------- --------------
Cash and cash equivalents at end of period....................... $ 2,675,547 $ 916,237
============== ==============
Supplemental information:
Interest paid (net of amounts capitalized).................. $ 149,677 $ 202,554
============== ==============
Income taxes paid (net of refunds collected)................ $ 54,091 $ 37,159
============== ==============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
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SPAGHETTI WAREHOUSE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
In the opinion of management, the accompanying condensed consolidated
financial statements contain all adjustments necessary for a fair
presentation of the consolidated financial position as of October 4, 1998
and the consolidated results of operations and cash flows for the 14-week
period ended October 4, 1998 and the 13-week period ended September 28,
1997. Operating results for the 14-week period ended October 4, 1998 are
not necessarily indicative of the results to be expected for the full fisca
year.
2. Accounting Policies
During the interim periods the Company follows the accounting policies set
forth in its consolidated financial statements in its Annual Report (Form
10-K) (File No. 1-10291). Reference should be made to such financial
statements for information on such accounting policies and further
financial details.
3. New Accounting Pronouncements
In March 1997, the Financial Accounting Standard Board ("FASB") issued
Statement No. 128 ("SFAS No. 128"), "Earnings per Share." This statement
establishes new standards for computing and presenting earnings per share
("EPS"). SFAS No. 128 is effective for financial statements issued for
periods ending after December 15, 1997. As a result, the Company's EPS for
fiscal 1998 was calculated under SFAS No. 128. However, the adoption of
this FASB Statement had no effect on the Company's previously
reported EPS.
In June 1997, the FASB issued Statement No. 130 ("SFAS No. 130"), "Report-
ing Comprehensive Income." SFAS No. 130 establishes new rules for the re-
porting and display of comprehensive income and its components in the
financial statements. The Company adopted SFAS No. 130 in the first
quarter of fiscal 1999.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5 ("SOP 98-5"), "Reporting of the Costs of
Start-up Activities." SOP 98-5 is effective for financial statements issued
for years beginning after December 15, 1998; therefore, the Company will be
required to implement its provisions by the first quarter of fiscal 2000.
At that time, the Company will be required to change the method currently
used to account for pre-opening costs. The application of SOP 98-5 will
result in pre-opening costs on the Company's Consolidated Balance Sheet as
of the date of adoption, net of related tax effects, being charged to
operations as the cumulative effect of a change in accounting principle.
Under the new requirements for accounting for pre-opening costs, the subse-
quent costs of start-up activities will be expensed as incurred.
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In June 1998, the FASB issued Statement No. 133 ("SFAS No. 133"), "Account-
ing for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative instruments
and hedging activities. SFAS No. 133 is effective for the Company's first
quarter financial statements in fiscal 2000. The Company is currently not
involved in derivative instruments or hedging activities and, therefore,
will measure the impact of this statement as it becomes necessary.
The Company does not expect that the adoption of the above standards will
have a significant impact on its consolidated results of operation, finan-
cial position or cash flows.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following table sets forth selected operating data as a percentage of
total revenues for the periods indicated. All information is derived from the
accompanying condensed consolidated statements of operations.
13-Week Period 14-Week Period
Ended 9/28/97 Ended 10/4/98
-------------- --------------
Revenues................................... 100.0% 100.0%
Costs and expenses:
Cost of sales......................... 25.3 27.5
Operating expenses.................... 54.7 57.5
General and administrative............ 8.7 8.3
Depreciation and amortization......... 5.8 5.5
----- -----
Total costs and expenses......... 94.5 98.8
----- -----
Income from operations..................... 5.5 1.2
Net interest expense....................... 0.6 0.5
----- -----
Income before income taxes................. 4.9 0.7
Income tax expense......................... 1.7 0.1
----- -----
Net income................................. 3.2% 0.6%
===== =====
Results of Operations
- - ---------------------
Difference in Length of Fiscal Quarters
---------------------------------------
The Company reports on a fiscal year that ends on the Sunday nearest July
1. Accordingly, the current fiscal year will end July 4, 1999. Management has
chosen to add the additional week to the first quarter, thereby making it a
14-week period ending on October 4, 1998. The first quarter last year was
comprised of the 13-week period ended September 28, 1997. The comparative
discussions below compare the current 14-week period to the prior year 13-week
period.
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Revenues
- - --------
Revenues increased $1.6 million, or 10.2%, during the quarter ended October
4, 1998 in comparison to the same quarter in the preceding year. This increase
is attributable in part to the incremental sales of the two new Spaghetti
Warehouse Italian Grill ("Italian Grill") units located in Mesquite and Irving,
Texas, as well as the incremental sales resulting from the additional week in
fiscal 1999. These increases were partially offset by a 3.0% decline in
same-store sales (stores open the full quarter in both fiscal years).
First quarter same-store sales in the Company's traditional Spaghetti
Warehouse units declined 5.5% while the Company's repositioned Italian Grill
units same-store sales declined 1.6% from the corresponding period last year.
The decline in overall same-store sales was the result of a 2.8% decline in
customer counts coupled with a 0.2% check average decrease.
Management believes that same-store customer counts were negatively
affected by the continued growth of casual dining competitors and by some
temporary store closures this year as a result of severe weather in certain
markets. The decrease in check averages is partially attributed to various
operational initiatives instituted during the first quarter of fiscal 1999 aimed
at improving long-term customer counts. These initiatives included the promotion
of low-priced spaghetti entrees in the current quarter, the implementation of
new menus focused on value and a test of reduced-price menus in selected units.
Costs and Expenses
- - ------------------
Cost of Sales
-------------
Cost of sales as a percentage of total revenues was 27.5% for the current
quarter as compared to 25.3% for the same quarter last year. The current quarter
increase is largely attributable to the conversion, over the past year, of
eleven existing units to the Italian Grill format since these units have higher
cost of sales as a percentage of revenues than traditional units. Additionally,
various initiatives to upgrade food quality instituted in the first quarter,
including changes in certain suppliers, recipes and a change in bread service
procedures, also contributed to the increase in the cost of sales as a
percentage of total revenues in the current quarter. Due to the higher food
costs associated with the Italian Grill, management anticipates that current
year percentages will continue to exceed those of prior periods due to the
increased number of Italian Grill units.
Operating Expenses
------------------
Operating expenses as a percentage of total revenues were 57.5% for the
current quarter as compared to 54.7% for the same quarter last year. The
increase in operating expenses as a percentage of revenues was attributable to
increases in hourly labor costs, repair and maintenance costs, direct costs and
marketing expenses. Some of the increase in labor and direct costs is
attributable to the conversion of two units to the Grill format this year
compared to one last year. Additionally, the fixed nature of certain management
labor and occupancy costs relative to the decline in same-store sales, also
contributed to the increase in operating expenses as a percentage of total
revenues. These increases were somewhat offset by reductions in unemployment
taxes and insurance costs in comparison to prior year.
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General and Administrative Expenses (G&A)
-----------------------------------------
G&A expenses as a percentage of total revenues were 8.3% for the current
quarter as compared to 8.6% for the first quarter of fiscal 1998. This decrease
is primarily attributable to a reduction in corporate employee costs. These
decreases were partially offset by increases in legal fees over the same quarter
last year and current quarter costs associated with the auction process involved
in the solicitation of bids for the Company.
Depreciation and Amortization (D&A)
-----------------------------------
D&A as a percentage of total revenues was 5.5% for the current quarter as
compared to 5.8% for the same quarter last year. Certain information system
equipment items becoming fully depreciated contributed to the decline from the
same period in the prior year. This decline was partially offset by increased
depreciation expense and pre-opening cost amortization for the two new units in
Mesquite and Irving, Texas.
Net Interest Expense
- - --------------------
Net interest expense decreased from $89,145 during the first quarter of
fiscal 1998 to $85,059 during the current quarter. This decline is attributable
to the decreased average debt outstanding under the Company's credit facilities
in comparison to the same quarter last year.
Income Taxes
- - ------------
The Company's effective tax rate in the current quarter was 15.2% as
compared to 35.3% in the same quarter last year. The decline in the current
quarter's effective tax rate is attributable to a higher proportion of
consolidated pre-tax earnings generated by the Company's Canadian operations in
fiscal 1999 as compared to fiscal 1998. These Canadian earnings are taxed at a
lower rate than the U.S. statutory rate thereby reducing the Company's overall
effective tax rate.
Liquidity and Capital Resources
- - -------------------------------
The Company's working capital deficit increased from $3.5 million at June
28, 1998 to $3.7 million on October 4, 1998. The increase is primarily
attributable to an increase in the amount of current debt outstanding in the
current year as compared to the prior year. The Company is currently operating
with a working capital deficit, which is common in the restaurant industry since
restaurant companies do not normally require significant investment in either
accounts receivable or inventory.
Net cash provided by operating activities was $0.5 million during the
current quarter as compared to $1.1 million during the same period last year.
This decrease is attributable to the decline in net income in the current year
as compared to the prior year.
Long-term debt outstanding on October 4, 1998 consisted of amounts borrowed
under the Company's existing bank credit facility including a $5.0 million fixed
rate term loan and $1.4 million borrowed against its floating rate revolving
credit facility. The Company had an additional $3.6 million available under this
revolving credit facility on October 4, 1998.
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Capital expenditures were $1.6 million for the quarter ended October 4,
1998 as compared to $0.8 million for the same period last year. Current year
expenditures relate primarily to the purchase of the Corpus Christi, Texas,
unit, the conversion of two traditional Spaghetti Warehouse restaurants to the
Italian Grill format and the normal purchase of replacement restaurant equipment
and decor.
The Company plans to complete construction of its Corpus Christi unit,
convert certain additional units to the Italian Grill format, open up to one
additional new Italian Grill unit and to continue to make necessary replacements
and upgrades to existing restaurants and information systems during the next 12
months. Total planned capital expenditures relating to all projects during the
next 12 months are approximately $3.0 million. Cash flow from operations,
current cash balances and amounts available under the Company's revolving credit
facility are expected to be sufficient to fund planned capital expenditures and
payment of required term loan maturities for the next 12 months.
Year 2000 Compliance
- - --------------------
In the past, a number of computer software programs were written using two
digits rather than four to determine the applicable year. As a result,
date-sensitive computer software may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in major system failures or
miscalculations, and is generally referred to as the "Year 2000" problem. An
extensive review of the Company's information systems has been completed and a
comprehensive program is currently in process to modify or replace those systems
that are not Year 2000 compliant. Management believes that all Company systems
are compliant, or will be compliant by June 1999. Additional validation of the
Company's systems will be conducted through testing throughout 1999.
In addition to the assessment of in-house systems, the Company is currently
assessing the readiness of its vendors for the Year 2000 issue. To determine the
status of third parties, letters inquiring as to their readiness have been sent
to substantially all of the Company's vendors. The Company is currently
assessing the vendors' responses and prioritizing them in order of significance
to the business of the Company. Contingency plans will be developed in the event
that business-critical vendors d not provide the Company with satisfactory
evidence of their readiness to handle Year 2000 issues. The Company intends to
make every reasonable effort to assess the Year 2000 readiness of these critical
partners and to create action plans to address the identified risks.
The Company anticipates that it will have substantially completed an
assessment of the Year 2000 compliance status of all information technology and
non-information technology by December 31, 1998, and will then address the Year
2000 compliance of such equipment.
All maintenance and modification costs will be expensed as incurred, while
the cost of new software, if material, is being capitalized and depreciated over
its expected useful life. The Company expects to incur total costs of
approximately $275,000 related to the replacement and remediation of the
Company's systems. Of these costs, approximately $216,000 was incurred through
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October 4, 1998, with the remaining $59,000 to be incurred during the remainder
of fiscal 1999 and in fiscal 2000. All estimated costs have been budgeted and
are expected to be funded by cash flows from operations.
The Company does not believe the costs related to the Year 2000 compliance
project will be material to its financial position or results of operations.
However, the cost of the project and the date on which the Company plans to
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events including the
continued availability of certain resources, third party modification plan, and
other factors. Unanticipated failures by critical vendors as well as the failure
by the Company to execute its own remediation efforts could have a material
adverse effect on the cost of the project and its completion date. As a result,
there can be no assurance that these forward-looking estimates will be achieved
and the actual cost and vendor compliance could differ materially from those
plans, resulting in material financial risk.
Forward-Looking Information
- - ---------------------------
Statements contained in this Form 10-Q that are not historical facts,
including, but not limited to, statements found in this Item 2, Management's
Discussion and Analysis of Financial Condition and Results of Operations, are
forward-looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 that involve a number of risks
and uncertainties. The actual results of the future events described in such
forward-looking statements in this Form 10-Q could differ materially from those
stated in such forward-looking statements. The following factors, among others,
could cause actual results to differ materially: adverse retail industry
conditions, industry competition and other competitive factors, government
regulation and possible future litigation, seasonality of business, as well as
the risks and uncertainties discussed in this Form 10-Q.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on October 27, 1998. At
such meeting the shareholders elected directors of the Company as follows:
Name of Nominee For Against Withheld
- - --------------- --- ------- --------
Robert R. Hawk 4,826,786 338,636 0
C. Cleave Buchanan, Jr. 4,845,633 319,789 0
Frank Cuellar, Jr. 4,854,833 310,589 0
John T. Ellis 4,853,241 312,181 0
Peter Hnatiw 4,855,233 310,189 0
James F. Moore 4,852,541 312,881 0
Cynthia I. Pharr 4,855,733 309,689 0
William B. Rea, Jr. 4,830,875 334,547 0
ITEM 6. EXHIBITS
Exhibit
Number Document Description
------- --------------------
27.1 Financial Data Schedule
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Spaghetti Warehouse, Inc.
Dated: November 17, 1998 By: /s/Robert R. Hawk
----------------- -----------------
Robert R. Hawk
Chairman and
Chief Executive Officer
Dated: November 17, 1998 By: /s/Robert E. Bodnar
----------------- -------------------
Robert E. Bodnar
Chief Financial Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Financial Data Schedule for Spaghetti Warehouse, Inc. - This schedule
contains summary financial information extracted from the accompanying
condensed consolidated financial statements and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000775298
<NAME> Spaghetti Warehouse, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-4-1999
<PERIOD-START> JUN-29-1998
<PERIOD-END> OCT-4-1998
<EXCHANGE-RATE> 1
<CASH> 916,237
<SECURITIES> 0
<RECEIVABLES> 734,478
<ALLOWANCES> 0
<INVENTORY> 648,773
<CURRENT-ASSETS> 2,587,702
<PP&E> 78,873,683
<DEPRECIATION> 30,268,007
<TOTAL-ASSETS> 58,527,635
<CURRENT-LIABILITIES> 6,489,362
<BONDS> 4,522,949
0
0
<COMMON> 67,466
<OTHER-SE> 47,277,592
<TOTAL-LIABILITY-AND-EQUITY> 58,527,635
<SALES> 17,213,997
<TOTAL-REVENUES> 17,579,893
<CGS> 4,840,262
<TOTAL-COSTS> 14,949,675
<OTHER-EXPENSES> 2,422,008
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,059
<INCOME-PRETAX> 123,151
<INCOME-TAX> 18,745
<INCOME-CONTINUING> 104,406
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 104,406
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
