SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended April 30, 1997 Commission file No. 0-14880
MICROLOG CORPORATION
(Exact name of registrant as specified in its charter).
State of Incorporation: Virginia
I.R.S. Employer Identification No.: 52-0901291
20270 Goldenrod Lane
Germantown, Maryland 20876
(Address of principal executive offices).
Registrant's Telephone No., Including Area Code: 301-428-9100
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
As of June 13, 1997 4,228,683 shares of common stock were outstanding.
<PAGE>
MICROLOG CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
April 30 October 31,
1997 1996
------------ ------------
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 1,332,456 $ 1,170,603
Receivables, net 4,246,828 4,259,841
Inventories, net 1,778,890 2,218,306
Deferred tax asset 850,000 650,000
Other current assets 396,426 208,551
------------ ------------
Total current assets 8,604,600 8,507,301
Fixed assets, net 3,769,259 3,886,371
Licenses, net 352,381 409,524
Other assets 67,761 101,788
Goodwill, net 707,988 807,738
------------ ------------
Total assets $ 13,501,989 $ 13,712,722
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 54,740 $ 54,740
Borrowings under line-of-credit agreement 0 1,400,000
Accounts payable 817,775 962,715
Accrued compensation and related expenses 1,893,719 1,874,691
Other accrued expenses 1,124,482 1,070,973
------------ ------------
Total current liabilities 3,890,716 5,363,119
Long-term debt 202,860 202,860
Deferred officers' compensation 274,733 267,921
Other liabilities 54,711 112,184
------------ ------------
Total liabilities 4,423,020 5,946,084
------------ ------------
Stockholders' equity:
Serial preferred stock, $.01 par value, 1,000,000 shares
authorized, no shares issued 0 0
Common stock, $.01 par value, 10,000,000 shares authorized,
4,812,995 and 4,792,004 shares issued 48,130 47,920
Capital in excess of par value 15,932,536 15,904,753
Treasury stock, at cost, 601,870 shares (1,176,537) (1,176,537)
Accumulated deficit (5,725,160) (7,009,498)
------------ ------------
Total stockholders' equity 9,078,969 7,766,638
------------ ------------
Total liabilities and stockholders' equity $ 13,501,989 $ 13,712,722
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
MICROLOG CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For The Three Months For The Six Months
Ended April 30, Ended April 30,
1997 1996 1997 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 7,239,214 $ 6,537,208 $ 14,332,716 $ 12,452,481
------------ ------------ ------------ ------------
Costs and expenses:
Cost of sales 4,522,750 3,675,608 8,572,878 7,168,788
Selling, general and administrative 1,280,812 1,731,948 2,871,432 3,245,714
Research and development 881,353 535,038 1,727,390 946,676
------------ ------------ ------------ ------------
6,684,915 5,942,594 13,171,700 11,361,178
------------ ------------ ------------ ------------
Operating income 554,299 594,614 1,161,016 1,091,303
Net other expense 33,782 12,011 77,223 40,620
------------ ------------ ------------ ------------
Income before income taxes 520,517 582,603 1,083,793 1,050,683
Benefit (provision) for income taxes 95,000 (11,470) 200,545 (14,400)
------------ ------------ ------------ ------------
Net income 615,517 571,133 1,284,338 1,036,283
Accumulated deficit:
at beginning of period (7,009,498) (9,722,232) (7,009,498) (9,722,232)
------------ ------------ ------------ ------------
at end of period $ (6,393,981) $ (9,151,099) $ (5,725,160) $ (8,685,949)
============ ============ ============ ============
Weighted average shares outstanding 4,540,121 4,541,464 4,542,400 4,469,261
------------ ------------ ------------ ------------
Income per common share $ 0.14 $ 0.13 $ 0.28 $ 0.23
============ ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
MICROLOG CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Six Months Six Months
Ended Ended
April 30, 1997 April 30, 1996
-------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,284,338 $ 1,036,283
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation 402,845 267,897
Deferred officers' compensation 6,812 (5,953)
Amortization of goodwill and licensing agreement 156,893 92,353
Loss on disposition of fixed assets 0 1,946
Deferred tax benefit (200,000) 0
Changes in assets and liabilities:
Receivables 13,013 (721,369)
Inventories 439,416 (629,258)
Other current assets (187,875) (74,542)
Accounts payable (144,940) (728,091)
Accrued compensation and related expenses 19,028 0
Other accrued expenses (3,964) (56,810)
----------- -----------
Net cash provided by (used in) operating activities 1,785,566 (817,544)
----------- -----------
Cash flows from investing activities:
Purchases of fixed assets (285,733) (225,965)
Other assets 34,027 83,129
----------- -----------
Net cash (used in) investing activities (251,706) (142,836)
----------- -----------
Cash flows from financing activities:
Reduction in long-term debt 0 (45,455)
Net borrowings (payments) under line-of-credit agreement (1,400,000) 150,000
Exercise of common stock options 27,993 237,800
----------- -----------
Net cash (used in) provided by financing activities (1,372,007) 342,345
----------- -----------
Cash and cash equivalents:
Net increase (decrease) during period 161,853 (618,035)
Balance at beginning of period 1,170,603 922,763
----------- -----------
Balance at end of period $ 1,332,456 $ 304,728
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
MICROLOG CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
APRIL 30, 1997 (unaudited) and OCTOBER 31, 1996
General
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal recurring accruals)
necessary to present fairly the financial position of Microlog Corporation and
its subsidiaries at April 30, 1997 and October 31, 1996, and the results of
their operations and their cash flows for the six month period ended April 30,
1997. The results of operations presented are not necessarily indicative of the
results that may be expected for the fiscal year ending October 31, 1997.
The significant accounting principles and practices followed by the Company are
set forth in the Notes to Consolidated Financial Statements in Microlog
Corporation's Annual Report on Form 10-K for the year ended October 31, 1996.
<TABLE>
<CAPTION>
Note 1 - Inventories
- -------------------- (Unaudited)
April 30, October 31,
Inventories consist of the following: 1997 1996
----------- -----------
<S> <C> <C>
Components and finished goods $ 1,732,756 $ 1,951,370
Work-in-process 398,262 519,554
----------- -----------
2,131,018 2,470,924
Less: reserve for obsolescence (352,128) (252,618)
----------- -----------
$ 1,778,890 $ 2,218,306
=========== ===========
Note 2 - Fixed Assets
--------------------- (Unaudited)
Fixed assets consist of the following: April 30, October 31,
1997 1996
----------- -----------
<S> <C> <C>
Land $ 520,000 $ 520,000
Buildings and improvements 2,511,266 2,511,266
Furniture and equipment 3,404,883 3,119,150
Vehicles 23,642 23,642
Leasehold improvements 176,096 176,096
----------- -----------
6,635,887 6,350,154
Less: accumulated depreciation and amortization (2,866,628) (2,463,783)
----------- -----------
$ 3,769,259 $ 3,886,371
=========== ===========
</TABLE>
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Microlog Corporation designs, develops, markets, and supports a complete line of
UNIX and DOS-based voice processing systems and applications solutions which
allow users to store, retrieve and transmit digitized voice messages and to
access information on computer data bases. The Company's voice processing
products include the VCS INTELA, RETAIL SOLUTION (APRS(R)), VCS 3500, and
CALLSTAR(R) models, which are comprised of specially configured
microprocessor-based hardware platforms and versatile proprietary applications
software that enables the systems to perform multiple voice processing
applications.
The Company also provides performance analysis and technical and administrative
support services ("performance analysis") through its wholly-owned subsidiary,
Old Dominion Systems Inc. of Maryland, primarily to the Applied Physics
Laboratory ("APL"), a prime contractor to the U.S. Navy.
The percentage of the Company's sales generated by the Company's two business
segments has varied significantly from period to period, but the Company
anticipates that any significant growth in sales will be derived primarily from
increases in sales from voice processing operations.
The following table sets forth for the periods indicated the percentage of
revenues of certain items from the Company's consolidated statements of income
and retained earnings:
PERCENTAGE OF TOTAL REVENUES
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30, April 30,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues
Voice processing 57.1% 61.3% 59.7% 63.5%
Performance analysis and support services 42.9% 38.7% 40.3% 36.5%
------ ------- ------- -------
Total 100.0% 100.0% 100.0% 100.0%
Costs and expenses
Cost of sales 62.5% 56.2% 59.8% 57.6%
Selling, general, and administrative 17.6% 26.5% 20.0% 26.0%
Research and development 12.2% 8.2% 12.1% 7.6%
------- -------- ------- --------
Total 92.3% 90.9% 91.9% 91.2%
------- ------- ------- -------
Operating income 7.7% 9.1% 8.1% 8.8%
Net other expense 0.5% 0.2% 0.5% 0.4%
------- ------- -------- --------
Income before income taxes 7.2% 8.9% 7.6% 8.4%
Benefit (provision) for income taxes 1.3% (0.2%) 1.4% (0.1%)
------- ---------- -------- ---------
Net income 8.5% 8.7% 9.0% 8.3%
======= ======= ======= ======
</TABLE>
<PAGE>
RESULTS OF OPERATIONS
The Company had net income of $616,000 ($.14 per share) for the quarter ended
April 30, 1997 and net income of $1,284,000 ($.28 per share) for the six months
ended April 30, 1997. These results included income tax benefits for the three
and six month periods of $100,000 ($.02 per share) and $200,000 ($.04 per share)
respectively, associated with the expected future realization of the Company's
net operating loss carryforwards that management believes is more likely than
not to be realized. By comparison, the Company had net income of $571,000 ($.13
per share), and $1,036,000 ($.23 per share) for the comparable periods in fiscal
1996. Neither of the comparable periods included an income tax benefit. Without
the income tax benefit, the company would have had a small decrease in earnings
for the comparable three month periods, but would have had a small increase for
the comparable six month periods.
NET SALES
Net sales for the quarter ended April 30, 1997 were $7.2 million, which
represented an increase of 11% as compared to $6.5 million of net sales for the
quarter ended April 30, 1996. Net sales for the six months ended April 30, 1997
were $14.3 million, which represented an increase of 14% as compared to $12.5
million of net sales for the six months ended April 30, 1996. This increase was
primarily attributable to an increase in performance analysis and support
services sales.
VOICE PROCESSING NET SALES
Voice processing net sales for the quarter ended April 30, 1997 were $4.1
million, which represented an increase of 3% as compared to $4.0 million of net
sales for the quarter ended April 30, 1996. The net sales for the six months
ended April 30, 1997 were $8.5 million, which represented an increase of 8% as
compared to $7.9 million of net sales for the six months ended April 30, 1996.
The increase in sales for the comparable six month periods was primarily
attributable to an increase of 67% in sales to commercial customers and an
increase of 20% in sales to international customers, offset by a decrease of 70%
in sales to distributors. The increase in commercial sales was primarily due to
the continuation of ongoing business with a large retail pharmacy chain as part
of a large procurement. The increase in international sales was primarily due to
additional sales from a new value added reseller in France. The decrease in
sales to distributors was due to the Company's decision to focus its sales and
marketing efforts on its interactive information response products and to
de-emphasize its CALLSTAR voice messaging product line.
As of April 30, 1997, the Company had a backlog of existing orders for voice
processing systems totaling $2.0 million. The backlog, as of April 30, 1996, was
$3.6 million. The Company has experienced fluctuations in its backlog at various
times during the past two fiscal years attributable primarily to the seasonality
of government purchases. In addition, the Company has observed a lengthening of
the period between the date of booking an order and the date of shipment, with
the shipment depending on customer delivery schedules and the level of
customization required for Intela applications. The Company anticipates that all
of the outstanding orders at April 30, 1997 will be shipped and the sales
recognized during fiscal 1997. Although the Company believes that its entire
backlog of orders consists of firm orders, because of the possibility of
customer changes in delivery schedules and delays inherent in the government
contracting process, the Company's backlog as of any particular date may not be
indicative of actual sales for any future period.
PERFORMANCE ANALYSIS AND SUPPORT SERVICES NET SALES
Performance analysis and support services net sales for the quarter ended April
30, 1997 were $3.1 million, which represented an increase of 24% as compared to
$2.5 million of net sales for the quarter ended April 30, 1996. The net sales
for the six months ended April 30, 1997 were $5.8 million, which represented an
increase of 29% as compared to $4.5 million of net sales for the six months
ended April 30, 1996. Based upon these recent increases in sales and the growth
in backlog, the Company expects to sustain a higher level of performance
analysis and support services net sales for the remainder of fiscal 1997. This
increase was attributable to the addition of new contracts as well as increases
in the level of work authorized under existing contracts from the John Hopkins
University Applied Physics Laboratory (APL), the Company's principal customer
for these services.
<PAGE>
The Company believes that its performance analysis contracts are likely to
continue to provide a stable source of sales for the Company. The Company does
not anticipate that any changes in defense priorities or spending will result in
any material adverse effect over the next fiscal year on its net sales from
performance analysis and support services nor alter the manner in which it
procures contracts for such services. However, there is no assurance that
changes in defense priorities or continuing budget reductions will not cause
such an effect during the fiscal year or thereafter.
As of April 30, 1997, the Company had a backlog of funding on existing contracts
for performance analysis and support services totaling $10.2 million. By
comparison, the backlog as of April 30, 1996 was $7.4 million. The increase in
backlog was primarily attributable to the renewal of a large multi-year contract
in the second quarter of fiscal 1997. Of the $10.2 million of backlog at April
30, 1997, approximately $4.2 million will be recognized as sales beyond fiscal
1997. Because of the delays inherent in the government contracting process or
possible changes in defense priorities or spending, the Company's backlog as of
any particular date may not be indicative of actual sales for any future period.
Although the Company believes that its backlog of funding on existing contracts
is firm, the possibility exists that funding for some contracts on which the
Company is continuing to work, in the expectation of renewal, may not be
authorized (and the Government has the right to cancel contracts at any time),
although to date this has not occurred.
COSTS AND EXPENSES
Cost of sales was $4.5 million or 62.5% of net sales for the quarter ended April
30, 1997 as compared to $3.7 million or 56.2% of net sales for the quarter ended
April 30, 1996. Cost of sales was $8.6 million or 59.8% of net sales for the six
months ended April 30, 1997 as compared to $7.2 million or 57.6% of net sales
for the six months ended April 30, 1996. The increase in cost of sales as a
percentage of net sales was primarily attributable to the higher percentage of
net sales of performance analysis and support services as compared to voice
processing net sales. Performance analysis and support services has a
significantly higher cost of sales as compared to voice processing. Also, there
was a higher percentage of products sales of voice processing products as
compared to services sales. Products sales have a significantly higher cost of
sales than services sales.
Selling, general and administrative expenses were $1.3 million or 17.6% of net
sales for the quarter ended April 30, 1997 as compared to $1.7 million or 26.5%
of net sales for the quarter ended April 30, 1996. Selling, general and
administrative expenses were $2.9 million or 20.0% of net sales for the six
months ended April 30, 1997 as compared to $3.2 million or 26.0% of net sales
for the six months ended April 30, 1996. The decrease in selling, general, and
administrative expenses, both in amount and as a percentage of revenue, was
primarily attributable to decreases in sales, marketing, and general and
administrative expenses, and an increase in net sales.
Research and development expenses were $881,000 or 12.2% of net sales for the
quarter ended April 30, 1997 as compared to $535,000 or 8.2% of net sales for
the quarter ended April 30, 1996. Research and development expenses were $1.7
million or 12.1% of net sales for the six months ended April 30, 1997 as
compared to $947,000 or 7.6% of net sales for the six months ended April 30,
1996. The increase was primarily due to the hiring of additional personnel as
the Company continues to develop new products and enhance its existing products.
Research and development expenses reflect costs associated with the development
of applicable software and product enhancements for the Company's voice
processing systems. The Company believes that the process of establishing
technological feasibility with its new products is completed approximately upon
release of the products to its customers. Hence, the Company does not anticipate
capitalizing engineering development costs.
NET OTHER EXPENSE
Net other expense was $34,000 and $77,000 for the quarter and six months ended
April 30, 1997 as compared to $12,000 and $41,000 for the comparable periods in
fiscal 1996. Net other expense consisted primarily of interest expense on short
term borrowings.
PROVISION FOR INCOME TAXES
For the quarter ended April 30, 1997, the Company increased its deferred tax
asset to $850,000 by recording a tax benefit of $100,000 reflecting the benefit
of approximately $1.9 million in loss carryforwards. Although realization is not
assured, management believes that it is more likely than not that all of the
deferred tax asset will be realized.
<PAGE>
The Company has exhausted its ability to carry losses back for income tax
refunds. Net operating loss and tax credit carry forwards for income tax
reporting purposes of approximately $9.7 million and $156,000, respectively,
will be available to offset taxes generated from future taxable income through
2008 and 2007. Management believes that the future tax benefits associated with
$7.8 million of its net operating loss carryforwards is not more likely than not
assured. Accordingly, no such benefit has been reflected in the Financial
Statements.
FACTORS THAT MAY EFFECT FUTURE RESULTS OF OPERATIONS
Various paragraphs of this Item 2 (Management's Discussion and Analysis of
Financial Condition and Results of Operations) contain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Actual results could differ materially from those projected in the
forward-looking statements as a result of the factors set forth below and
elsewhere in this document.
The Company believes that in the future its results of operations could be
affected by factors such as the introduction by the Company of new and enhanced
products and services, market acceptance of new voice processing products and
enhancements of existing products, growth in the voice processing market in
general, competition, commitments to automation by potential large purchasers of
the Company's Retail Solutions products, fluctuations in the buying cycles of
governmental customers, changes in general economic conditions, and changes in
the U.S. defense industry and their impact on the prime contractor for which the
Company provides performance analysis and support services.
The Company believes that its ability to meet revenue targets will primarily
determine the Company's profitability for each fiscal quarter. The Company's
backlog on a quarterly basis generally will not be large enough to assure that
the Company will meet its revenue targets for a particular quarter, and delivery
of backlog depends upon a number of factors, as discussed above. Further, a
large percentage of any quarter's shipments have traditionally been booked in
the last month of the quarter. Consequently, quarterly revenues and operating
results will depend on the volume and timing of new orders received during a
quarter, which is difficult to predict.
LIQUIDITY AND CAPITAL RESOURCES
Working capital as of April 30, 1997 was $4.7 million as compared to $3.1 as of
October 31, 1996. The increase in working capital was primarily attributable to
the net income in the first six months of the year. Cash and cash equivalents,
as of April 30, 1997 were $1.3 million as compared to $1.2 million as of October
31, 1996, but the outstanding debt against the Company's line of credit was
reduced by $1.4 million during that period. Accounts receivable as of April 30,
1997 were $4.2 million as compared to $4.3 million as of October 31, 1996.
Goodwill as of April 30, 1997 was $708,000 as compared to $808,000 at October
31, 1996. Net fixed assets as of April 30, 1997 were $3.8 million as compared to
$3.9 million as of October 31, 1996.
In February 1997, the Company renewed its line of credit facility with its bank
which allows the Company to borrow up to 70% of its eligible receivables to a
maximum of $2,000,000. The line of credit bears interest at the bank's prime
rate plus 1.25% (9.75% at April 30, 1997), and contains a 1/2 of 1% commitment
fee on the average unused portion of the line. The line expires on February 28,
1998 and subjects the Company to a number of restrictive covenants, including a
requirement to maintain a minimum consolidated tangible net worth, a maximum
ratio of total liabilities to tangible net worth, and a minimum current ratio.
There are restrictions on mergers or acquisitions, payment of dividends, and
certain restrictions on additional borrowings. The line is secured by all of the
Company's tangible assets. At April 30, 1997, there was no outstanding debt
against this line of credit.
In February 1997, the Company also renewed its $1,000,000 loan facility. The
line of credit bears interest at the bank's prime rate plus 0.5% (9.00% at April
30, 1997), and contains a 0.5% fee on the average unused portion of the loan.
The line expires on February 28, 1999, and contains the same restrictive
covenants as the $2,000,000 line of credit, and the agreements for the line of
credit and loan facility contain cross default provisions. The loan agreement
allows the Company, at its option, to make monthly interest-only payments on the
outstanding principal balance, but all outstanding amounts are due in full on
February 28, 1999. The line is secured by the Company's principal headquarters
building. At April 30, 1997, there was no outstanding debt against this line of
credit.
<PAGE>
The Company believes that it will not need additional financial resources beyond
those presently expected to be available during fiscal 1997.
On June 30, 1996, the Company entered into a contract to purchase a new
management information system including a five year maintenance plan. The
purchase, including maintenance, is being financed by the vendor over a five
year term at an annual interest rate of 8%. The financing terms require five
annual payments of $140,000 each, including interest, beginning on June 30,
1996. The final payment is due on June 30, 2000.
ITEM 1 Legal Proceedings
None
ITEM 2 Changes in Securities None.
ITEM 3 Submission of Matters to a Vote of Security Holders
The Company held its annual meeting of stockholders on March 25, 1997.
At the meeting, Robert E. Gray, Jr. was appointed to serve for a three
year term as director by a vote of, FOR 3,912,321 with 23,981 shares
withholding authority. The appointment by the Board of Directors of the
firm Price Waterhouse LLP as independent accountants of the Company for
the fiscal year ending October 31, 1997 was ratified by a vote of
3,918,622 in favor, with 14,780 shares voting AGAINST such
ratification, and 2,900 shares abstaining.
ITEM 4 Other Information
None.
ITEM 5 Exhibits and Reports on Form 8-K None.
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.
MICROLOG CORPORATION
BY /s/ Richard A. Thompson
Richard A. Thompson
President and Chief Executive Officer
BY /s/ Steven R. Delmar
Steven R. Delmar
Executive Vice President and Chief
Financial Officer
June 13, 1997
- --------------------------
DATE
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,332,456
<SECURITIES> 0
<RECEIVABLES> 4,658,102
<ALLOWANCES> 411,274
<INVENTORY> 1,778,890
<CURRENT-ASSETS> 8,604,600
<PP&E> 6,635,887
<DEPRECIATION> 2,866,628
<TOTAL-ASSETS> 13,501,989
<CURRENT-LIABILITIES> 6,526,857
<BONDS> 0
48,130
0
<COMMON> 0
<OTHER-SE> 9,030,839
<TOTAL-LIABILITY-AND-EQUITY> 13,501,989
<SALES> 7,239,214
<TOTAL-REVENUES> 7,239,214
<CGS> 4,522,750
<TOTAL-COSTS> 6,684,915
<OTHER-EXPENSES> 33,782
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,098
<INCOME-PRETAX> 520,517
<INCOME-TAX> (95,000)
<INCOME-CONTINUING> 615,517
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 615,517
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
