Securities and Exchange Commission
Washington D.C. 20549
FORM 10-QSB
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended August 31, 1998
---------------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
------------------ -----------------
Commission File Number 0-15304
----------------------
AVESIS INCORPORATED
---------------------------------------
(Exact name of small business issuer as
specified in its charter)
Delaware 86-0349350
- ------------------------------- ---------------------------------
(State or other jurisdiction of
incorporation or organization) (IRS Employer Identification No.)
3724 N. Third St., Suite 300, Phoenix, AZ 85012
-----------------------------------------------
(Address of principal executive offices)
(602) 241 - 3400
-----------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the 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 number of outstanding shares of the registrant's Common Stock on October
13, 1998 was 7,394,297.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT
(Check One) [ ] Yes [X] No
1 of 13
<PAGE>
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
AVESIS INCORPORATED
BALANCE SHEET
AS OF AUGUST 31, 1998
ASSETS
------
Current assets:
Cash and cash equivalents $ 1,931,247
Receivables, net 340,746
Prepaid expenses and other 128,852
------------
Total current assets 2,400,845
Property and equipment, net 432,667
Deposits and other assets 242,787
------------
Total Assets $ 3,076,299
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 1,265,229
Current installments of obligations under
capital lease 10,288
Accrued expenses:
Compensation 29,732
Other 47,583
Deferred income 21,347
------------
Total current liabilities 1,374,179
Accrued rent 50,135
Obligations under capital lease, excluding current installments 28,556
------------
Total liabilities 1,452,870
------------
Stockholders' equity:
Preferred stock $.01 par value, authorized 12,000,000 shares:
$3.75 Class A, senior nonvoting cumulative
convertible preferred stock, Series A, $.01 par
value; authorized 1,000,000 shares; 315,260
issued and outstanding (liquidation preference
of $3.75 per share) 3,153
$10 Class A, nonvoting cumulative convertible
preferred stock, Series 2, $.01 par value;
authorized 1,000,000 shares; 6,500 shares issued
and outstanding (liquidation preference of $10 per
share) and $33,638 of dividends in arrears at
$5.175 per share; dividends accrue at $.225 per
share per calendar quarter 65
Common stock of $.01 par value, authorized
20,000,000 shares; 7,411,297 shares issued and
outstanding 74,113
Additional paid-in capital 10,527,166
Accumulated deficit (8,981,068)
------------
Net stockholders' equity 1,623,429
------------
$ 3,076,299
============
The accompanying notes are an integral part of these statements.
-2-
<PAGE>
AVESIS INCORPORATED
STATEMENTS OF OPERATIONS
FOR THE QUARTERS ENDED AUGUST 31, 1998 AND 1997
(Unaudited)
Quarters Ended
August 31 August 31
--------------------------
1998 1997
---- ----
Service revenues:
Administration fees $ 1,994,944 $ 1,364,712
Buying group sales 405,713 418,530
Provider fees 37,053 26,466
Other 1,588 1,504
----------- -----------
Total service revenues 2,439,298 1,811,212
Cost of services 1,832,672 1,382,649
----------- -----------
Income from services 606,626 428,563
General and administrative expenses 237,884 227,139
Selling and marketing expenses 249,423 143,260
----------- -----------
Income from operations 119,319 58,164
Non-operating income (expense):
Other income 1,319 1,710
Interest income 10,128 8,753
Interest expense (1,104) (7,385)
----------- -----------
Net non-operating income (expense) 10,343 3,078
----------- -----------
Net income $ 129,662 $ 61,242
=========== ===========
Preferred stock dividends (28,053) (87,342)
----------- -----------
Net income/(loss) available to common
stockholders $ 101,599 $ (26,100)
=========== ===========
Earnings per share - basic $ 0.02 $ (.00)
=========== ===========
Earnings per share - diluted $ 0.02 $ (.00)
=========== ===========
Weighted average common and equivalent shares
outstanding - basic 5,059,711 4,100,420
=========== ===========
Weighted average common and equivalent shares
outstanding - diluted 8,327,918 4,138,220
=========== ===========
The accompanying notes are an integral part of these statements.
-3-
<PAGE>
AVESIS INCORPORATED
STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED AUGUST 31, 1998 AND 1997
(Unaudited)
Quarters Ended
1998 1997
---- ----
Cash flows from operating activities:
Net income $ 129,662 $ 61,242
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 27,892 25,609
Changes in assets and liabilities:
Decrease in receivables 139,162 51,557
(Increase) Decrease in prepaid expenses (13,401) 10,317
Decrease (Increase) in other assets 722 (48,775)
Increase in accounts payable 159,064 128,917
(Decrease) in accrued expenses (31,165) (50,298)
Increase (Decrease) in deferred income 4,399 (8,114)
(Decrease) in accrued rent (5,875) (5,091)
---------- --------
Total adjustments 280,798 104,122
---------- --------
Net cash provided by operating activities 410,460 165,364
---------- --------
Cash flows from investing activities:
Purchases of property and equipment (52,702) (58,617)
Proceeds from dispositions of property and equipment 1,370 -0-
---------- --------
Net cash used in investing activities (51,332) (58,617)
---------- --------
Cash flows from financing activities:
Principal payments under capital lease obligations (2,579) -0-
Exercise of stock options and warrants 1,228,656 -0-
Payments for repurchase of common and preferred stock (647,568) -0-
---------- --------
Net cash provided by financing activities 578,509 -0-
---------- --------
Net increase in cash and cash equivalents 937,637 106,747
Cash and cash equivalents at beginning of period 993,610 817,535
---------- --------
Cash and cash equivalents at end of period $1,931,247 $924,282
========== ========
The accompanying notes are an integral part of these statements.
-4-
<PAGE>
AVESIS INCORPORATED
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AUGUST 31, 1998 AND 1997
(Unaudited)
Note 1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements of
Avesis Incorporated (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for a complete financial statement
presentation. In the opinion of Management, such unaudited interim information
reflects all adjustments, consisting only of a normal recurring nature,
necessary to present the Company's financial position and the results of
operations and cash flows for the periods presented. The results of operations
for interim periods are not necessarily indicative of the results to be expected
for a full fiscal year. It is suggested that these condensed consolidated
financial statements be read in conjunction with the Company's audited
consolidated financial statements included in the Company's Annual Report on
Form 10-KSB, for the year ended May 31, 1998.
Note 2. Earnings (Loss) per Share
A summary of the reconciliation from basic earnings (loss) per share to
diluted earnings (loss) per share for the three month periods ended August 31,
1998 and 1997 follows:
<TABLE>
<CAPTION>
Period ended Period ended
August 31, 1998 August 31, 1997
--------------- ---------------
<S> <C> <C>
Net earnings $ 129,662 $ 61,242
Less: preferred stock dividends 28,063 87,342
============ ============
Income (loss) available to common stockholders 101,599 (26,100)
============ ============
Basic EPS - weighted average shares outstanding 5,059,711 4,100,420
============ ============
Basic earnings (loss) per share $ 0.02 $ (0.00)
============ ============
Basic EPS - weighted average shares outstanding 5,059,711 4,100,420
Effect of dilutive securities:
Convertible debentures -- 37,800
Convertible preferred stock 3,268,207 --
------------ ------------
Dilutive EPS - weighted average shares outstanding 8,327,918 4,138,220
Net earnings $ 129,662 $ (26,100)
Interest expense on non-CSE debt -- 4,489
------------ ------------
129,662 (21,611)
Diluted earnings (loss) per share $ 0.02 $ (0.00)
============ ============
Convertible debentures not included in diluted EPS
since antidilutive -- --
============ ============
Convertible Preferred Stock not included in diluted
EPS since antidilutive -- 970,450
============ ============
</TABLE>
-5-
<PAGE>
Note 3. Use of Estimates
Management of the Company has made certain estimates and assumptions
relating to the reporting of assets, liabilities, revenues and expenses to
prepare the financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates.
Note 4. Preferred Stock
On July 27, 1998 the Company's Board of Directors adopted resolutions
canceling the Certificate of Designation of the Company's $100 Class A,
Nonvoting Cumulative Convertible Preferred Stock, Series 1 and the Company's
Class A, Convertible Preferred Stock, Series 3. No shares of Series 1 Preferred
and Series 3 Preferred are outstanding. The 1,000,000 authorized shares of
Series 1 Preferred and the 100,000 authorized shares of Series 3 Preferred have
been returned to the status of unissued preferred stock.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
FOR THE QUARTERS ENDED AUGUST 31, 1998 AND 1997
The statements contained in this discussion and analysis regarding
management's anticipation of adequacy of cash reserves for operations, adequacy
of reserves for claims, anticipated level of operating expenses related to new
cardholders, adequacy of capital allocation for dividends, viability of the
Company, cash flows and marketability of the Company constitute
"forward-looking" statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements involve risks and uncertainties,
which could cause actual results to differ materially from the forward-looking
statements. Management's anticipation is based upon assumptions regarding the
market in which the Company operates, the level of competition, the level of
demand for services, the stability of costs, the retention of Sponsors and
cardholders enrolled in the Company's benefit programs, the relevance of the
Company's historical performance, and the stability of the regulatory
environment. Any of these assumptions could prove inaccurate, and therefore
there can be no assurance that the forward-looking information will prove to be
accurate.
Avesis Incorporated, a Delaware corporation (together with its subsidiary,
the "Company"), incorporated in June 1978, markets and administers vision,
hearing, dental and chiropractic managed care and discount programs ("Programs")
nationally. The Programs are designed to enable participants ("Members" or
"Cardholders"), who are enrolled through various Sponsoring organizations such
as insurance carriers, HMOs, Blue Cross and Blue Shield organizations,
corporations, unions and various associations ("Sponsors"), to realize savings
on purchases of services and products through networks of providers such as
ophthalmologists, optometrists, opticians, hearing specialists, dentists and
chiropractors ("Providers").
-6-
<PAGE>
The Company derives its administration fee revenue from plan Sponsors who
customarily pay a set fee per Member per month. Administration fee revenue is
recognized on the accrual basis during the month that the Member is entitled to
use the benefit. There are arrangements with certain Sponsors to pay for
services rendered by the Company on a fee for service basis. Based upon the type
of program (e.g., managed care, discount, third party administration) the
Provider's claim for service provided to Members is paid either by the Company,
Sponsor, Member or combination thereof. Buying Group revenues are recorded at
the total amount billed to participating Providers and recognized in the month
the merchandise is shipped. Vision Provider fee revenue is based upon a
percentage of materials sold by certain participating providers under certain
plans.
RESULTS OF OPERATIONS:
The Company's total service revenues totaled $2,439,298 for the quarter
ended August 31, 1998, compared to $1,811,212 for the same period in fiscal
1997, representing an increase of $628,086 (35%). The increase is principally
due to a vision plan Sponsor who has increased the level of benefit of the
Cardholders, and the resulting fees, over the prior year, and a second vision
plan Sponsor who added approximately 33,000 Cardholders during May 1998.
Past and future revenues in all lines of business are directly related to
the number of Cardholders enrolled in the Company's benefit programs. However,
there may be significant pricing differences to Sponsors depending on whether
the benefit is funded in part or whole by the plan Sponsor. A substantial
portion of the Company's Cardholder base is derived from a limited number of
Sponsors. The Company's four largest Sponsors accounted for approximately 80%
and 77% of the total administration fee revenue for the quarters ended August
31, 1998 and 1997, respectively.
Administration fees from the Company's vision and hearing programs
accounted for $1,691,887 (69%) and $1,057,207 (58%) of total service revenues
during the quarters ended August 31, 1998 and 1997, respectively. There were
approximately 794,000 vision and 6,000 hearing Cardholders as of August 31,
1998, compared to approximately 579,000 vision and 7,000 hearing Cardholders as
of August 31, 1997. The increase in vision and hearing revenue during the
current quarter was largely the result of the two vision plan Sponsors mentioned
above. The other changes in the number of vision and hearing Cardholders were
due to Sponsors' employee or Member fluctuations.
Vision provider fee revenue increased by $10,587 (40%) during the quarter
ended August 31, 1998, as compared to the same period in fiscal 1997. The
increase in vision provider fee revenue resulted from an increase in Members
participating in a Plan under which the Providers are required to pay the fee.
-7-
<PAGE>
Administration fees from the Company's dental program accounted for
$296,785 (12%) and $297,389 (16%) of total service revenues during the quarters
ended August 31, 1998 and 1997, respectively. There were approximately 162,000
and 124,000 dental cardholders as of August 31, 1998 and 1997, respectively. The
Company's dental program revenue has remained relatively the same while the
number of dental Cardholders has increased due to pricing differences among the
different plan benefits, as discussed above. The changes in the number of dental
cardholders were due to the addition of a discount plan Sponsor with
approximately 91,000 cardholders and existing Sponsors' Member and employee
fluctuations.
The Company makes available to its Providers a buying group program that
enables the Provider to purchase eyeglass frames from the manufacturers at
discounts from wholesale costs. These discounted prices are generally lower than
a Provider could negotiate individually, due to the large volume of purchases of
the buying group. Buying group revenues were $405,713 (17%) and $418,530 (23%)
for the quarters ended August 31, 1998 and 1997, respectively.
Cost of services were $1,832,672 (75%) and $1,382,649 (76%) for the
quarters ended August 31, 1998 and 1997, respectively. These costs primarily
relate to servicing Members, provider network development, and Sponsors under
the Company's vision, hearing, dental and chiropractic benefit programs as well
as the cost of frames that are sold through the Company's buying group program
as discussed above. The Company expects the cost of services to remain
relatively constant as a percentage of total service revenues for the
foreseeable future, based upon the anticipation that the current mix of managed
care and discount programs will continue.
General and administrative expenses were $237,884 (10%) and $227,139 (13%)
for the quarters ended August 31, 1998 and 1997, respectively. The decrease in
general and administrative expenses, as a percentage of total service revenues,
in the quarter ended August 31, 1998, as compared to the same period in fiscal
1997 is due to the Company's ability to maintain approximately level
expenditures while total service revenues increased.
Selling and marketing expenses were $249,423 (10%) and $143,260 (8%) for
the quarters ended August 31, 1998 and 1997, respectively. Selling and marketing
expenses include marketing fees, broker commissions, inside sales and marketing
salaries and related expenses, travel related to the Company's sales activities
and an allocation of other overhead expenses relating to the Company's sales and
marketing functions. The increase in expenses during the current period was
primarily due to the addition of personnel involved in the Company's sales and
marketing activities and the increase of commissions directly related to the
Company's increased administrative fee revenues. A significant amount of the
Company's marketing activities has been outsourced to management consultants,
National Health Enterprises.
-8-
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company had cash and cash equivalents of $1,931,247 as of August 31,
1998, compared to $993,610 as of May 31, 1998. The increase of $937,637 was due
primarily to the Company's ability to reduce expenses, increase timely
collections of accounts receivable, advantageously time payments to vendors
during the quarter and the exercise of stock options and warrants during August
1998. The Company is maintaining its policy of paying vendors on a net 45 day
basis and continues to be current on all of its trade accounts payable. Current
cash on hand and cash provided from operations is expected to allow the Company
to sustain operations for the foreseeable future.
As of August 31, 1998, the Company had $1,265,229 of Accounts Payable,
compared to $1,106,165 as of May 31, 1998. The increase is predominately due to
claims reserves of $973,077 as of August 31, 1998, compared to $786,052 as of
May 31, 1998, included in Accounts Payable. The reserves are for incurred but
not reported claim reimbursements to Providers who participate in certain
managed care programs. As previously mentioned, the Company has seen significant
growth of managed vision care revenues and the associated claims. The Company
believes this reserve is adequate.
During fiscal 1998 the Company retired the final $189,000 of Convertible
Subordinated Debentures, due December 1, 1997, and all $160,000 of subordinated
notes payable to certain affiliates due March 18, 1998, with funds provided by
operations. Accordingly, there were no amounts listed as interest for Debentures
or Notes payable to stockholders during the current quarter on the Statements of
Cash Flows.
The Company expects to pay dividends of approximately $51,715 on the Series
A Preferred on December 1, 1998.
YEAR 2000 COMPLIANCE
The Year 2000 issue is the result of computer systems that were written
using two digits rather than four to define the applicable year. This
programming decision may prevent such systems from accurately processing dates
occurring in the year 2000 and thereafter. This could result in system failures
or in miscalculations causing a disruption of operations, including, but not
limited to, a temporary inability to process Member eligibility information, to
process claims payments, or to engage in routine business activities and
operations.
The Company has reviewed all internally used software and believes that the
new systems that have recently been developed and are currently under testing
and all other critical applications are Year 2000 compliant. Based upon its
current computer operations and systems development, the Company believes that
its risks related to Year 2000 compliance are minimal. The Company does not
presently anticipate that any additional costs to address the Year 2000 issue
will have a material adverse effect on the Company's financial condition,
results of operations or liquidity.
-9-
<PAGE>
The Company is in the process of contacting all vendors and clients who
forward data electronically to determine the extent of their compliance and to
plan accordingly. The Company believes that all significant vendors and clients
have Year 2000 remediation efforts underway. To the extent that the Company's
vendors and clients data is not Year 2000 compliant, the Company's new systems
have been written with the flexibility to translate the data accordingly into a
Year 2000 compliant format. Therefore, the Company believes that its risks
related to Year 2000 compliance by vendors and clients are minimal.
RECENTLY ISSUED FINANCIAL ACCOUNTING STANDARDS
Statement of Financial Accounting Standards No. 130, "Reporting of
Comprehensive Income" establishes standards for reporting and display of
comprehensive income (all changes in equity during a period except those
resulting from investments by and distributions to owners) and its components in
financial statements. The adoption of this statement contains no change in
disclosure requirements for the Company.
Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" establishes standards for
reporting information about operating segments in annual financial statements,
selected information about operating segments in interim financial reports and
disclosures about products and services, geographic area and major customers.
This pronouncement will be required to be implemented in the year ended May 31,
1999 and may result in presenting more detailed information in the notes to the
Company's consolidated financial statements.
PART II OTHER INFORMATION
Item 3. Defaults Upon Senior Securities
(b) The Certificate of Designation for the Company's Class A, Senior Nonvoting
Cumulative Convertible Preferred Stock, Series A, places restrictions upon
the payment of dividends on the Company's Series 2 Preferred Stock and
Common Stock. Accordingly, the Company may not pay the quarterly dividend
otherwise scheduled for payment during October 1998, on shares of its
Series 2 Preferred Stock. Such dividend is cumulative and the total
dividend arrearage is $32,400, or $5.40 per share, as of September 30,
1998.
-10-
<PAGE>
Item 5. Other Information
(a) Retirement of Stock Information
As previously disclosed in the Company's Form 10-KSB for the year ended May
31, 1998, filed on August 26, 1998, the Company made the following stock
repurchases and retirements:
Series A Series 2 Total Purchase Price including
-------- -------- ------------------------------
Date Common Shares Shares Shares Commissions
---- ------------- ------ ------ -----------
June 15, 1998 46,500 $10,950
June 24, 1998 123,441 2,620 $45,000
July 22, 1998 60,000 $180,000
July 28, 1998 1,000 $3,000
August 20, 1998 2,800 $8,400
Subsequent to the filing the Company's Form 10-KSB for the year ended May
31, 1998, the Company made the following stock repurchases and retirements:
Series A Series 2 Total Purchase Price including
-------- -------- ------------------------------
Date Common Shares Shares Shares Commissions
---- ------------- ------ ------ -----------
August 28, 1998 931,888 $400,712
September 3, 1998 500 $1,500
September 8, 1998 17,000 $3,928
September 24, 1998 2,000 $5,268
October 8, 1998 6,800 $25,925
(b) Exercise of Stock Options and Warrants
As previously disclosed in the Company's Form 10-KSB for the year ended May
31, 1998, filed on August 26, 1998, the following individuals exercised
their stock options or warrants as of August 24, 1998, in the following
amounts at the following exercise prices per option or warrant:
<TABLE>
<CAPTION>
Option/Warrant Holder Number of Options Number of Warrants Modified Exercise Price
- --------------------- ----------------- ------------------ -----------------------
<S> <C> <C> <C>
Alan S. Cohn 1,054,750 $0.31
Alan S. Cohn 700,000 $0.26
Kenneth L. Blum, Jr. 1,064,750 $0.31
Kenneth L. Blum, Jr. 700,000 $0.26
William L. Richter 50,000 $0.31
William L. Richter 109,091 $0.31
William L. Richter 50,909 $0.26
Richter & Co., Inc. 72,500 $0.31
Richter & Co., Inc. 163,636 $0.31
Richter & Co., Inc. 76,364 $0.26
William R. Cohen 100,000 $0.26
</TABLE>
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<PAGE>
On August 28, 1998 the following individual exercised his stock options, in
the following amount at the following exercise price per option:
<TABLE>
<CAPTION>
Option/Warrant Holder Number of Options Number of Warrants Modified Exercise Price
- --------------------- ----------------- ------------------ -----------------------
<S> <C> <C> <C>
Gerald L. Cohen 100,000 $0.26
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
(a) See Exhibit Index following the Signatures page, which is incorporated
herein by reference.
(b) No reports on Form 8-K were filed during the quarter ended August 31, 1998.
-12-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
AVESIS INCORPORATED
- - - - - - - - - - - - - - - -
(Registrant)
Date: October 13, 1998 /s/ Neal A. Kempler
-------------------- -------------------------------------------
Neal A. Kempler, Vice President
and Secretary
Date: October 13, 1998 /s/ Joel H. Alperstein
-------------------- -------------------------------------------
Joel H. Alperstein, Director of Finance
and Treasurer (Principal Financial Officer)
-13-
<PAGE>
Avesis Incorporated
Exhibit Index
Form 10-QSB for the Quarter Ended August 31, 1998
Exhibit No. Description Incorporated by Reference from the:
- ----------- ----------- -----------------------------------
11 Statement re: Computation Earnings (Loss) per Share Computation,
of per Share Earnings see Note 2 to the Notes to Condensed
Consolidated Financial Statements.
27 Financial Data Schedule Filed herewith
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's Form 10-QSB for the quarter ended August 31, 1998 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> AUG-31-1998
<EXCHANGE-RATE> 1
<CASH> 1,931,247
<SECURITIES> 0
<RECEIVABLES> 370,495
<ALLOWANCES> (29,749)
<INVENTORY> 0
<CURRENT-ASSETS> 2,400,845
<PP&E> 1,391,842
<DEPRECIATION> (959,175)
<TOTAL-ASSETS> 3,076,299
<CURRENT-LIABILITIES> 1,374,179
<BONDS> 0
0
3,218
<COMMON> 74,113
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,076,299
<SALES> 0
<TOTAL-REVENUES> 2,439,298
<CGS> 1,832,672
<TOTAL-COSTS> 487,307
<OTHER-EXPENSES> 11,447
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,104)
<INCOME-PRETAX> 129,662
<INCOME-TAX> 0
<INCOME-CONTINUING> 129,662
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 129,662
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0.02
</TABLE>
