<PAGE> 1
================================================================================
SECURITIES EXCHANGE COMMISSION
WASHINGTON D.C. 20549
---------
FORM 10-Q
---------
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended SEPTEMBER 30, 1997
OR
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
COMMISSION FILE NUMBER 0-21402
INTERLINQ SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 91-1187540
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11255 KIRKLAND WAY
KIRKLAND, WA 98033
(Address of principal executive offices)
(425) 827-1112
(Registrant's telephone number, including area code)
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 report), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
As of November 14, 1997, there were 5,279,187 shares of the Registrant's Common
Stock outstanding.
================================================================================
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INTERLINQ SOFTWARE CORPORATION
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1997 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 7,609,028 $ 7,793,761
Short-term investments 5,986,369 6,037,545
Accounts receivable, net 1,450,396 1,602,220
Inventory 52,867 55,246
Prepaid expenses 461,882 408,909
Deferred income taxes 267,660 267,660
----------- -----------
Total current assets 15,828,202 16,165,341
----------- -----------
Property and equipment, at cost 6,009,235 5,836,895
Less accumulated depreciation and
amortization 4,632,902 4,364,628
----------- -----------
Net property and equipment 1,376,333 1,472,267
----------- -----------
Capitalized software costs, net 3,339,357 3,358,016
Other assets 59,869 70,899
----------- -----------
$20,603,761 $21,066,523
=========== ===========
</TABLE>
2
<PAGE> 3
INTERLINQ SOFTWARE CORPORATION
BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1997 1997
------------ ------------
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 174,917 $ 235,895
Accrued compensation and benefits 339,142 555,402
Other accrued liabilities 627,976 498,276
Customer deposits 277,771 199,636
Deferred software support fees 3,202,953 3,052,822
----------- -----------
Total current liabilities 4,622,759 4,542,031
----------- -----------
NONCURRENT LIABILITIES:
Deferred rent and other lease obligations 43,148 160,443
Deferred software support fees 2,380 6,746
Deferred income taxes 306,950 306,950
----------- -----------
Total noncurrent liabilities 352,478 474,139
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock 52,792 54,165
Additional paid-in capital 9,713,417 10,343,087
Retained earnings 5,862,315 5,653,101
----------- -----------
Total shareholders' equity 15,628,524 16,050,353
----------- -----------
$20,603,761 $21,066,523
=========== ===========
</TABLE>
3
<PAGE> 4
INTERLINQ SOFTWARE CORPORATION
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
--------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
------------ -------------
<S> <C> <C>
NET REVENUES:
Software license fees $1,546,160 $1,783,158
Software support fees 1,693,586 1,494,496
Other 402,094 301,333
---------- ----------
Total net revenues 3,641,840 3,578,987
---------- ----------
COST OF REVENUES:
Software license fees 416,875 342,488
Software support fees 522,587 447,186
Other 243,570 168,884
---------- ----------
Total cost of revenues 1,183,032 958,558
---------- ----------
Gross profit 2,458,808 2,620,429
---------- ----------
OPERATING EXPENSES:
Product development 323,464 527,655
Sales and marketing 1,201,060 996,866
General and administrative 768,958 778,132
---------- ----------
Total operating expenses 2,293,482 2,302,653
---------- ----------
Operating income (loss) 165,326 317,776
Net interest and other income 191,771 191,225
---------- ----------
Income before income taxes 357,097 509,001
Income tax expense 147,883 183,240
---------- ----------
Net income $ 209,214 $ 325,761
========== ==========
Net income per common and
common equivalent share $ .04 $ .05
Weighted average number of common and
common equivalent shares outstanding 5,494,728 6,138,522
</TABLE>
4
<PAGE> 5
INTERLINQ SOFTWARE CORPORATION
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1997 1996
----------- ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 209,214 $ 325,761
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 268,273 272,348
Amortization of capitalized software costs 355,604 293,994
Change in operating assets and liabilities:
Accounts receivable 151,824 (329,624)
Inventory and prepaid expenses (50,595) 65,890
Other assets 11,029 (100,000)
Accounts payable (60,978) 101,911
Accrued compensation and benefits,
other accrued liabilities and deferred rent (203,855) 82,841
Customer deposits 78,135 (59,573)
Deferred software support fees 145,765 285,891
----------- -----------
Net cash provided by operating activities 904,416 939,439
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (172,340) (256,724)
Capitalized software costs (336,942) (433,018)
Proceeds of sales in maturities of short-term investments 51,176 622,339
----------- -----------
Net cash used in investing activities (458,106) (67,403)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 2,269 575
Repurchase of common stock (633,312) (146,000)
----------- -----------
Net cash used in financing activities (631,043) (145,425)
----------- -----------
Net increase (decrease) in cash and cash equivalents (184,733) 726,611
Cash and cash equivalents at beginning of period 7,793,761 6,511,041
----------- -----------
Cash and cash equivalents at end of period $ 7,609,028 $ 7,237,652
=========== ===========
</TABLE>
5
<PAGE> 6
INTERLINQ SOFTWARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1997
(UNAUDITED)
1. Basis of presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
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 complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three-month period ended September 30, 1997 are not
necessarily indicative of the results for the year ending June 30, 1998. The
financial statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Form 10-K for the fiscal year ended
June 30, 1997.
6
<PAGE> 7
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
Prior to the mid 1980's, mortgage loans in the United States were
originated in a manual and paper-intensive process. Then, beginning in the mid
1980's and running through the mid 1990's, the mortgage lending industry
implemented its first wave of automation with PC-based software solutions for
mortgage originations. During this period of time, the Company experienced rapid
revenue and customer growth by providing its MortgageWare Loan Management System
- - a robust, full-featured and cost-effective PC-based software solution. This
first wave of automation was accelerated and amplified from 1992 to early 1994
as mortgage interest rates reached historically low levels and mortgage
refinance volumes soared. Then, in early 1994, the Federal Reserve raised
interest rates. This event immediately caused mortgage refinance volumes to
plummet. As a result, lenders found themselves with excess labor and mortgage
processing capacity. During the remainder of 1994 and for most of 1995, the
Company believes that the industry was focused more on staff reduction, than
adding new automated loan management systems.
Mortgage lending rates available during the Company's fiscal year 1997,
and continuing into the first quarter of fiscal year 1998, have reflected a
lending environment that has experienced a high degree of volatility. In spite
of this volatility, the overall lending conditions have been considered
favorable for the borrower compared to most historical measures. With this
overall favorable lending environment, the Company believes that mortgage
lending activity has increased, driven by an increase in financing of home sales
and refinancing of existing mortgages. However, during the last half of fiscal
year 1997, the Company began to observe a shift in the mortgage origination
business. There appeared to be a trend towards sufficient production capacity
coupled with a reduced profit margin.
Historically, when mortgage origination volumes increased due to favorable
lending rates, the Company experienced increased software license fees as
lenders increased production capacity. The Company now believes that due to
reduced profit margins, its customers are shifting their purchasing decisions to
solutions that reduce unit costs and accordingly, increase profit margins,
rather than increasing production capacity. During fiscal years 1996 and 1997,
the Company focused its product development effort to provide a more diverse and
integrated "enterprise" solution for the mortgage lending industry. It is the
Company's belief that this broader "enterprise" solution will position the
Company well for this recent change in the mortgage lending industry. This
broader product offering focuses more on reducing
7
<PAGE> 8
the cost of originating, processing, and servicing a mortgage, than on solely
increasing production capacity.
NET REVENUES
<TABLE>
<CAPTION>
Three months ended September 30,
(In thousands) 1997 1996 Change
- ---------------------------------- ----------- ------------- --------------
<S> <C> <C> <C>
Software license fees $1,546 $1,783 (13%)
Software support fees 1,694 1,495 13%
Other 402 301 33%
- ---------------------------------- ----------- ------------- --------------
Total net revenues $3,642 $3,579 2%
- ---------------------------------- ----------- ------------- --------------
</TABLE>
Net revenues consist of software license fees, software support fees and
other revenues, which include training and consulting fees, custom document
fees, interest income on contracts receivable and other miscellaneous sales, net
of discounts and sales returns.
Software license fees decreased by 13% for the quarter ended September 30,
1997 compared to the quarter ended September 30, 1996. This period-to-period
decrease was primarily due to a combination of a reduction in software license
fees for the MortgageWare Loan Management System and Loan Servicing, which had
higher sales in this quarter last year because it was first released with an
initial backlog. Offsetting some of the decrease in overall software license
fees were license fees for two new products released during fiscal year 1997 -
InfoLINQ and MarketLINQ.
Software support fees increased by 13% for the quarter ended September 30,
1997 compared to the quarter ended September 30, 1996. This period-to-period
increase was primarily due to a combination of an increase in the total
installed software value for the Company's customer base upon which software
support fees are calculated, as well as a low rate of attrition in the customer
base. Due in part to changes, from time to time, in government regulations
applicable to documentation required for residential mortgage lending, the vast
majority of the Company's customers purchase annual software support agreements.
However, because software support fees are recognized ratably over the term of
the annual support agreement, whereas software license fees are recognized on
product shipment, the percentage increase in software support fees compared to
software license fees is not directly proportional. The Company believes
software support fees are likely to continue to increase at a modest rate for
the rest of fiscal year 1998.
Training and consulting fees, custom document fees and other miscellaneous
sales increased by 33% for the quarter ended September 30, 1997 compared to the
quarter ended September 30, 1996. This period-to-period increase resulted from
an increase in training and consultation fees. The increase in these fees was
due to a combination of increased demand for on-site training and the Company's
recognition of demand for its consulting services to assist customers in
effectively implementing and integrating its product suite to reduce the cost of
originating and processing a mortgage loan, as well as providing timely and
relevant information for its customers' decision-makers. The Company expects its
training and consulting fees to increase during fiscal year 1998 compared to
fiscal year 1997, due to a combination of increased demand driven by sales to
new customers and, sales of new products to existing customers to provide an
integrated product suite, or "enterprise", generating consulting fees.
8
<PAGE> 9
Looking forward, the Company anticipates an increasing contribution to
software license fees, and related increases to software support fees and other
revenues, from its newer products MortgageWare Loan Servicing, MortgageWare
InfoLINQ, and MortgageWare MarketLINQ. As discussed above, the Company believes
the overall lending environment to be favorable as of September 30, 1997 despite
experiencing a high degree of volatility. Nonetheless, there can be no assurance
that mortgage lending rates will not increase or continue to experience a high
amount of volatility. Such increases or continued volatility could have a
material adverse effect on the Company's revenues, profitability, and financial
condition. Even if lending rates stabilize, if such rates are perceived as being
too high, homeowners and potential homeowners may delay decisions that would
otherwise result in mortgage lending transactions. Such delays may have an
adverse effect upon the Company's customers, and upon the Company and its
operations.
COST OF REVENUES
<TABLE>
<CAPTION>
Three months ended September 30,
(In thousands) 1997 1996 Change
- ---------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
Software license fees $417 $343 22%
Percentage of software
license fees 27% 19%
- ---------------------------------------- ----------- ----------- -------------
Software support fees 523 447 17%
Percentage of software
support fees 31% 30%
- ---------------------------------------- ----------- ----------- -------------
Other 243 169 44%
Percentage of other 61% 56%
- ---------------------------------------- ----------- ----------- -------------
Total cost of revenues $1,183 $959 23%
Percentage of net revenues 32% 27%
- ---------------------------------------- ----------- ----------- -------------
</TABLE>
Cost of software license fees includes the purchase and duplication of disks,
product documentation, and amortization of capitalized software development
costs. As a percentage of software license fees, cost of software license fees
increased from 19% to 27% for the quarter ended September 30, 1997 compared to
the quarter ended September 30, 1996. This increase was primarily due to the
cost of software license fees increasing more than software license fees. The
cost of software license fees increased due to an increase in amortization of
capitalized software development costs. Amortization of capitalized software
development costs increased to $356,000 in the quarter ended September 30, 1997
compared to $294,000 for the same quarter in the previous year. The Company
expects the dollar amount of its amortization of capitalized software
development costs to increase for the remainder of fiscal year 1998.
Cost of software support fees includes salaries and other costs related to
providing telephone support, and the purchase, duplication and shipping of disks
associated with software updates. As a percentage of software support fees, cost
of software support fees increased from 30% to 31% for the quarter ended
September 30, 1997 compared to the quarter ended September 30, 1996. This
increase was primarily due to increased payroll costs for the customer support
group - mainly for staffing for support of the Company's newer products. Looking
forward, because the level of staffing and customer service expenses are related
to the size of the Company's customer base and the number of different products
offered and updated, the Company expects the dollar cost of software support
fees to increase in accordance with its customer base and expanded product
offering,
9
<PAGE> 10
and to remain flat or increase slightly as a percentage of software support
fees.
Cost of other revenue includes the purchase and duplication of disks
associated with custom documents, the salaries and reimbursable expenses for the
customer service department employees who provide training and consulting
services and, the net cost of the Company's annual MortgageWare software users'
group meeting. As a percentage of other revenue, cost of other revenue increased
from 56% to 61% for the quarter ended September 30, 1997 compared to the same
period the previous year. This increase was primarily due to a consulting
engagement during the quarter ended September 30, 1997 that experienced a
slightly lower gross margin.
OPERATING EXPENSES
<TABLE>
<CAPTION>
Three months ended September 30,
(In thousands) 1997 1996 Change
- ----------------------------------------- ----------- ----------- -------------
<S> <C> <C> <C>
Product development $323 $528 (39%)
Percentage of net revenues 9% 15%
- ----------------------------------------- ----------- ----------- -------------
Sales & marketing 1,201 997 20%
Percentage of net revenues 33% 28%
- ----------------------------------------- ----------- ----------- -------------
General & administrative 769 778 (1%)
Percentage of net revenues 21% 22%
- ----------------------------------------- ----------- ----------- -------------
</TABLE>
Product development expenses include salaries for software developers and
analysts, facilities costs and expenses associated with computer equipment used
in software development. Product development expenses decreased by 39%, from
$528,000 to $323,000, for the quarter ended September 30, 1997 compared to the
quarter ended September 30, 1996. Product development expenses as a percentage
of net revenues, decreased from 15% to 9% for the quarter ended September 30,
1997 compared to the same period in 1996. The dollar and as a percentage of
revenues decrease, was primarily due to increased capitalization of software
development costs associated with enhancements of newer products released during
fiscal year 1997. The Company capitalized $337,000 and $200,000 of development
expenditures for the quarters ended September 30, 1997 and 1996 respectively.
The Company released two new products, MortgageWare Loan Servicing and
BuilderBLOCK$ during the quarter ended September 30, 1996. Additionally, the
Company released MortgageWare InfoLINQ during the quarter ended March 31, 1997
and released MortgageWare MarketLINQ during the quarter ended June 30, 1997.
Accordingly, the Company anticipates a higher sustained level of capitalized
development expenditures similar to the quarter ended September 30, 1997 for the
remainder of fiscal year 1998.
Sales and marketing expenses include salaries, sales commissions, as well
as travel and facility costs for the Company's sales and marketing personnel.
Sales and marketing expenses also include advertising and trade shows. As a
percentage of net revenues, sales and marketing expenses increased from 28% to
33% for the quarter ended September 30, 1997 compared to the same period in the
previous year. This increase is primarily due to increased promotional and
salary expense intended to increase the sales and market penetration of the
Company's newer products.
General and administrative expenses include costs related to finance,
purchasing, order fulfillment, administration and facilities costs. As a
percentage of net revenues, general and
10
<PAGE> 11
administrative expenses decreased slightly from 22% to 21% for the quarter ended
September 30, 1997 compared to the same period the previous year. This decrease
is primarily due to net revenue increasing while general and administrative
expenses decreased slightly. As a percentage of net revenues, the Company
expects general and administrative expenses to hold steady or decrease slightly
for the remainder of fiscal year 1998.
NET INTEREST AND OTHER INCOME
<TABLE>
<CAPTION>
Three months ended September 30,
(In thousands) 1997 1996 Change
- ---------------------------------------- ---------- --------- -----------
<S> <C> <C> <C>
Net interest and other
income (expense) $192 $191 0%
Percentage of net revenues 5% 5%
- ---------------------------------------- ---------- --------- -----------
</TABLE>
Interest income was $198,000 and $198,000 for the quarters ended September 30,
1997 and 1996 respectively. Although interest income was unchanged, the
investment portfolio balance was slightly lower in the quarter ended September
30, 1997, but earned a slightly higher rate of return than the same quarter in
the previous year.
As of September 30, 1997, the Company had no interest-bearing debt
outstanding, and anticipates no new debt financing in the foreseeable future.
Accordingly, the Company expects net interest and other income for the
foreseeable future to reflect net interest income.
INCOME TAXES
<TABLE>
<CAPTION>
Three months ended September 30,
(In thousands) 1997 1996 Change
- ---------------------------------------- ---------- --------- -----------
<S> <C> <C> <C>
Income taxes $148 $183 (19%)
Effective tax rate 41% 36%
- ---------------------------------------- ---------- --------- -----------
</TABLE>
The provision for income taxes includes federal and state income taxes currently
payable or receivable, and deferred taxes arising from temporary differences
between the financial statement carrying amounts of existing assets and
liabilities and their respective tax basis.
LIQUIDITY AND CAPITAL RESOURCES
Working capital, which consists principally of cash, cash equivalents and
short-term investments was $11,205,000 as of September 30, 1997, compared to
$11,623,000 at June 30, 1997. Cash and cash equivalents decreased by $185,000
for the three months ended September 30, 1997. Additions to cash and cash
equivalents included $904,000 provided by operating activities. Principal uses
of cash and cash equivalents included $633,000 for the repurchase of common
stock, $337,000 of capitalized software costs, and the purchase of $172,000 of
property and equipment.
Although the Company at September 30, 1997 has no material commitment for
additional capital expenditures, it expects to spend approximately $500,000 for
the fiscal year ending June 30, 1998, primarily for computer software and
equipment.
Long-term cash requirements, other than normal operating expenses, are
anticipated for development of new software products and enhancement of existing
products; financing anticipated growth; and the possible acquisition of other
software products, technologies and businesses and, the possible repurchase of
the Company's common stock. The Company believes that its existing cash, cash
equivalents, short-term investments, and cash generated by operations will be
sufficient to satisfy its currently
11
<PAGE> 12
anticipated cash requirements for fiscal year 1998.
FORWARD-LOOKING STATEMENTS
When used in this discussion, the words "believes," "anticipates," and
similar expressions are intended to identify forward-looking statements. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those projected. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements that may
be made to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.
NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standard No. 128, Earnings Per Share (Statement 128).
This statement establishes standards for the computation, presentation, and
disclosure of earnings per share (EPS), replacing the presentation of currently
required Primary EPS with a presentation of Basic EPS. It also requires dual
presentation of Basic EPS and Diluted EPS on the face of the income statement
for entities with complex capital structures. Basic EPS, unlike Primary EPS,
excludes all dilution while Diluted EPS, like the current Fully diluted EPS,
reflects the potential dilution that could occur from the exercise or conversion
of securities into common stock or from other contracts to issue common stock.
Statement 128 is effective for financial statements for period ending after
December 31, 1997, including interim periods, and earlier application is not
permitted. When adopted, the Company will be required to restate its EPS data
for all prior periods presented. The Company does not expect the impact of the
adoption of this statement to be material to previously reported EPS amounts.
In October 1997, the Accounting Standards Executive Committee of the
American Institute of Certified Public Accountants issued Statement of Position
(SOP) 97-2, Software Revenue Recognition which supersedes SOP 91-1. This SOP
provides guidance on applying generally accepted accounting principles in
recognizing revenue on software transactions and is effective for transactions
entered into in fiscal years beginning after December 15, 1997. The Company does
not expect the impact of adoption of SOP 97-2 to be material.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Financial Data Schedule
13
<PAGE> 14
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.
DATED: November 14, 1997
INTERLINQ SOFTWARE CORPORATION
(Registrant)
/s/ STEPHEN A. YOUNT
---------------------------------------------------
Stephen A. Yount
Vice President, Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
14
<PAGE> 15
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27 FINANCIAL DATA SCHEDULE
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,609
<SECURITIES> 5,986
<RECEIVABLES> 1,450
<ALLOWANCES> 0
<INVENTORY> 53
<CURRENT-ASSETS> 15,828
<PP&E> 6,009
<DEPRECIATION> 4,633
<TOTAL-ASSETS> 20,604
<CURRENT-LIABILITIES> 4,623
<BONDS> 0
0
0
<COMMON> 53
<OTHER-SE> 15,576
<TOTAL-LIABILITY-AND-EQUITY> 20,604
<SALES> 1,546
<TOTAL-REVENUES> 3,642
<CGS> 417
<TOTAL-COSTS> 1,183
<OTHER-EXPENSES> 2,293
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 357
<INCOME-TAX> 148
<INCOME-CONTINUING> 209
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 209
<EPS-PRIMARY> .04
<EPS-DILUTED> .04
</TABLE>
