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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
JUNE 30, 1997
Commission File Number
0-17187
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LOGIC DEVICES INCORPORATED
(Exact name of registrant as specified in its charter)
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CALIFORNIA 94-2893789
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1320 ORLEANS DRIVE, SUNNYVALE, CALIFORNIA 94089
(Address of principal executive offices) (Zip Code)
(408) 542-5400
(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 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 the issuer's classes of
common stock, as of the latest practicable date. On August 11, 1997,
6,121,750 shares of Common Stock, without par value, were outstanding.
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1 of 19 pages
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LOGIC DEVICES INCORPORATED
INDEX
PAGE NUMBER
Part I. Financial Information
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 30, 1997 3
and December 31, 1996
Consolidated Statements of Income for the three 4
months ended June 30, 1997 and 1996
Consolidated Statements of Income for the six 5
months ended June 30, 1997 and 1996
Consolidated Statements of Cash Flows for the 6
six months ended June 30, 1997 and 1996
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 9
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Part II. Other Information
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS 14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 15
Signatures 16
Exhibit 11 17
Exhibit 27 19
2 of 19 pages
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements.
LOGIC DEVICES INCORPORATED
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
1997 1996
ASSETS (unaudited)
Current assets:
Cash and cash equivalents $ 434,200 $ 670,900
Accounts receivable, net of allowance 4,320,000 4,368,300
Inventories 13,610,600 13,928,900
Prepaid expenses 1,045,800 922,600
Income taxes receivable 703,000 789,800
Deferred income taxes 920,900 920,900
Total current assets 21,034,500 21,601,400
Equipment and leasehold improvements, net 4,721,000 4,204,300
Other assets 503,500 694,300
$25,259,000 $26,500,000
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Bank borrowings 2,950,000 2,000,000
Current portion of long-term obligations 561,900 561,900
Accounts payable 490,800 1,074,600
Accrued expenses 361,200 531,800
Total current liabilities 4,363,900 4,168,300
Long-term obligations 759,100 786,600
Deferred income taxes 419,500 419,500
Total liabilities 5,542,500 5,374,400
Shareholders' equity:
Common stock 17,341,900 17,341,900
Common stock subscribed (307,500) (307,500)
Retained earnings 3,682,100 4,091,200
Total shareholders' equity 20,716,500 21,125,600
$25,259,000 $26,500,000
3 of 19 pages
<PAGE>
LOGIC DEVICES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Three months ended June 30, 1997 and 1996
(unaudited)
1997 1996
Net revenues $ 3,021,500 $ 3,495,800
Cost of sales 2,033,600 1,799,300
Gross margin 987,900 1,696,500
Operating expenses:
Research and development 364,400 400,700
Selling, general and administrative 865,400 1,109,900
Operating expenses 1,229,800 1,510,600
Income from operations (241,900) 185,900
Other income (expense), net (86,000) 27,900
Income before taxes (327,900) 213,800
Income taxes (130,000) 80,000
Net income $ (197,900) $ 133,800
Net income per common share $ (0.03) $ 0.02
Weighted average common share equivalents 6,121,750 6,221,750
outstanding
4 of 19 pages
<PAGE>
LOGIC DEVICES INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Six Months ended June 30, 1997 and 1996
(unaudited)
1997 1996
Net revenues $ 5,824,500 $ 7,105,000
Cost of sales 3,794,600 3,774,700
Gross margin 2,029,900 3,330,300
Operating expenses:
Research and development 756,400 794,800
Selling, general and administrative 1,822,800 2,021,100
Operating expenses 2,579,200 2,815,900
Income from operations (549,300) 514,400
Other income (expense), net (127,800) 68,600
Income before taxes (677,100) 583,000
Income taxes (268,000) 228,500
Net income $ (409,100) $ 354,500
Net income per common share $ (0.07) $ 0.06
Weighted average common share equivalents 6,121,750 6,221,750
outstanding
5 of 19 pages
<PAGE>
LOGIC DEVICES INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 1997 and 1996
(unaudited)
1997 1996
Cash flows from operating activities:
Net income $ (409,100) $ 354,400
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 655,300 506,900
Change in operating assets and liabilities:
Accounts receivable, net 48,300 (12,000)
Inventories 318,300 (1,407,100)
Prepaid expenses (123,200) 41,900
Accounts payable (583,800) (107,300)
Accrued expenses (170,600) 6,600
Income taxes payable 86,800 (757,800)
Net cash (used in) provided by operating (178,000) (1,374,400)
activities
Cash flows from investing activities:
Capital expenditures (1,019,600) (725,200)
Net increase in other assets 38,400 (46,500)
Net cash (used in) investing activities (981,200) (771,700)
Cash flows from financing activities:
Bank borrowing, net 950,000 -
Repayment of notes payable and long-term debt (27,500) (54,500)
Proceeds from exercise of warrants - 258,900
Proceeds from exercise of employee stock options - 8,100
Net cash provided by 922,500 212,500
financing activities
Net (decrease) increase in cash and cash equivalents(236,700) (1,933,600)
Cash and cash equivalents at beginning of
period $ 670,900 $4,378,500
Cash and cash equivalents at end of period $ 434,200 $2,444,900
6 of 19 pages
<PAGE>
LOGIC DEVICES INCORPORATED
Notes to Consolidated Financial Statements
June 30, 1997 and December 31, 1996
(unaudited)
(A) BASIS OF PRESENTATION
The accompanying unaudited interim financial statements reflect all
adjustments which are, in the opinion of management, necessary to
present fairly the financial position, results of operations and cash
flows for the periods indicated.
The accompanying unaudited interim financial statements have been
prepared in accordance with the instructions for Form 10-Q and therefore
do not include all information and footnotes necessary for a complete
presentation of the financial position, results of operations, and cash
flows, in conformity with generally accepted accounting principles. The
Company has filed audited financial statements which include all
information and footnotes necessary for such a presentation of the
financial position, results of operations, and cash flows for the years
ended December 31, 1996 and 1995, with the Securities and Exchange
Commission. It is suggested that the accompanying unaudited interim
financial statements be read in conjunction with the aforementioned
audited financial statements. The unaudited interim financial
statements contain all normal and recurring entries. The results of
operations for the interim period ended June 30, 1997 are not
necessarily indicative of the results to be expected for the full year.
(B) INVENTORIES
A summary of inventories follows:
June 30, December 31,
1997 1996
Raw materials $ 2,720,400 $ 3,165,400
Work-in-process 6,892,400 6,744,900
Finished goods 3,997,300 4,018,600
$ 13,610,100 $ 13,928,900
Based on forecasted 1996 sales levels, the Company has on hand
inventories aggregating approximately twelve months of sales.
7 of 19 pages
<PAGE>
LOGIC DEVICES INCORPORATED
Notes to Consolidated Financial Statements
June 30, 1997 and December 31, 1996
(unaudited)
(C) DEBT FINANCING
On June 16, 1997, the Company renewed its $6,000,000 revolving line
of credit with Sanwa Bank extending the maturity to May 31, 1998. The
line of credit bears interest at the bank's reference rate (8.50% at
June 30, 1997). The line of credit is secured by the assets of the
Company and requires the Company to maintain a minimum tangible net
worth of $19,000,000, a maximum ratio of debt to tangible net worth of
not more than 0.50 to 1.00, a minimum current ratio of not less than
2.00 to 1.00, a minimum quick ratio of not less than 1.00 to 1.00
increasing to 1.35 to 1.00 at September 30, 1997 and increasing again to
1.50 to 1.00 at December 31, 1997 and thereafter, and profitability of
at least $1.00 for each fiscal quarter. As of June 30, 1997 the Company
was not in compliance with the quarterly profitability covenant. The
Company has obtained a waiver from the Bank for the quarterly
profitability covenant. The Company expects to be in compliance with
the Bank covenants for the periods ending September 30, 1997 and
December 31, 1997. As of June 30, 1997, the Company had $3,050,000
available under the revolving line of credit.
Under the terms of its line of credit facility, the Company is
precluded from paying any cash dividends without the consent of the
lender even if the Company is in compliance with all of the financial
covenants but is allowed to pay stock dividends whether or not there was
any other covenant violation. Regardless of any such restrictions in
its bank loan agreements, the Company does not intend to pay cash
dividends in the near future and anticipates reinvesting its cash flow
back into operations.
8 of 19 pages
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
LOGIC DEVICES INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
REVENUES
Net revenues decreased by 14%, from $3,495,800 for the three months
ended June 30, 1996 to $3,021,500 for the three months ended June 30,
1997. The decrease in revenues for the period was the result of lower
sales volumes for the Company's products. Shipments of the Company's
DSP products were down from the 1996 period as a result a significant
military order which shipped in the 1996 period. Shipments of the
Company's SRAM products increased slightly during the 1997 period.
Net revenues decreased by 18%, from $7,105,000 for the six month
period ended June 30, 1996 to $5,824,500 for the six months ended June
30, 1997. The decrease in revenues for the six month period was the
result of lower sales volume for the Company's DSP products. The 1996
period included a large military order which completed in second quarter
of 1996. Revenues from the Company's SRAM products increased slightly
for the 1997 period. The lower sales volume for the 1997 period has
been the result of a lower backlog of orders for the period due to a
very weak order rate experienced since the last half of 1996.
EXPENSES
Cost of sales increased 13% from $1,799,300 or 52% of net revenues
for the three months ended June 30, 1996 to $2,033,600 or 67% of net
revenues for the same period in 1997. Gross profit decreased 42%, from
$1,696,500 in the former period to $987,900 in the latter period. The
decrease in gross profit is the result of lower revenues for the period
combined with higher inventory costs which included increases in
inventory reserves. As a percentage of net revenues, gross profit
decreased from 48% for the three months ended June 30, 1996 to 33% for
the three months ended June 30, 1997.
Cost of sales increased 1% from $3,774,700 or 53% of net revenues
for the six months ended June 30, 1996 to $3,794,600 or 65% of net
revenues for the same period in 1997. Gross profit decreased 39% from
$3,330,300 in the former period to $2,029,900 in the latter period.
This was the result of the lower sales volume for the period combined
with a lower profit margins experienced on the Company's SRAM products,
and higher inventory costs which included increases in inventory
reserves.
9 of 19 pages
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Research and development ("R & D") expenses for the three months
ended June 30, 1997, were $364,400, a decrease from $400,700 for the
same period in 1996. For the six month period, research and development
expenses were $756,400 for 1997, decreasing from $794,800 for 1996. As
a percentage of net revenues, R & D expenses were 12% for the three
months ended June 30, 1997, compared to 11% for 1996. For the six
months ended June 30, 1997, R & D expenses as a percentage of net sales
were 13% compared to 11% for 1996. In both the 1996 and 1997 periods
the Company dramatically increased its product development efforts. In
1996, the Company invested heavily in new design tools, development
software, and additional personnel to increase and accelerate new
product development for 1997. The Company also invested new product
tooling at foundry sources to increase the Company's product offerings
and diversify foundry sources. Even though the Company had slightly
more R&D costs in the first half 1996 than 1997, the Company has
increased its new product output in 1997. The Company intends to
continue to make substantial investments in product R & D.
Selling, general and administrative ("S,G & A") expenses were
$865,400 for the three months ended June 30, 1997, a decrease from
$1,109,900 for the same period in 1996. For the six months ended June
30, 1997, S, G & A expenses were $1,822,800, decreasing from $2,021,100
for the same period in 1996. As a percentage of net sales, selling,
general and administrative expenses were 29% for the three months ended
June 30, 1997 compared to 32% in 1996. As a percentage of net sales,
selling, general and administrative expenses were 31% for the first six
months of 1997 compared to 28% in 1996. S,G & A expenses have decreased
as a result of lower sales commission expense due to the lower sales
volume and consolidated sales network. The Company, however has
increased its sales and marketing efforts substantially. Since the
1996 period, the Company has added a sales office in Southern California
to service the south and midwest sales regions, a sales office in Great
Britain to service the European market, consolidated its east-coast
regional sales offices to one office in Florida, and increased the
marketing and technical sales staff at the headquarters office. The
Company has also increased its marketing promotional effort with ad
placements and applications articles in industry trade publications as
well as additional promotional materials and a newsletter for the
Company's distributor and sales representatives. The Company intends to
continue to expand these efforts in the future.
Net operating income decreased to a loss of $241,900 for the three
months ended June 30, 1997 versus income of $185,900 for the same period
in 1996. For the six month period ended June 30, 1997 net operating
income decreased to a loss of $549,300 from income of $514,400 for the
same period in 1996.
For the three month period in 1996, the Company earned $27,900 in
Other Income from interest on cash invested versus Other Expense of
$86,000 in 1997 which consisted of interest expense on outstanding debt.
For the six month period in 1996, the Company earned $68,600 in Other
Income from interest on cash invested versus Other Expense of $127,800
in 1997 which consisted largely of interest expense on outstanding debt.
10 of 19 pages
<PAGE>
As a result of the foregoing, there was a net loss for the three
months ended June 30, 1997 of $197,900 compared to net income of
$133,800 for the same period in 1996. For the six months ended June
30, 1997, there was a net loss of $409,100 compared to net income of
$354,400 for the same period in 1996.
LIQUIDITY AND CAPITAL RESOURCES
CASH FLOWS
For the six months ended June 30, 1997, the Company had after-tax
cash earnings of $246,200 and $861,300 for the 1996 period. Although
the Company has historically relied on after-tax earnings as the
Company's primary source of financing for working capital needs and for
capital expenditures, the Company used bank borrowing during the 1997
period.
During the 1997 period, after-tax earnings of $246,200 and increases
in bank borrowings of $950,000 and decreases in inventories of $318,300,
funded decreases in accounts payable of $583,800 and accrued and prepaid
expenses of $293,800 which resulted in net cash used by operations of
$178,000 versus net cash used of $1,374,400 in 1996. The Company
invested $981,200 in capital expenditures and other assets during the
period. The Company received an income tax refund of $350,000 in the
second quarter of 1997 and expects approximately $500,000 in the third
quarter of 1997.
During the 1996 period, after-tax earnings of $861,300 partially
funded increases in inventory of $1,407,100 and payment of income taxes
due of $757,800 which therefore resulted in net cash used in operations
of $1,374,400 for the first six months of 1996. The Company also
invested $771,700 in capital expenditures and other assets for 1996.
The Company received proceeds of $267,000 from the exercise of certain
warrants and employee stock options. The result was a net use of cash
for the first six months of 1996 of $1,933,600.
WORKING CAPITAL
The Company's investment in inventories and accounts receivable has
been significant and will continue to be significant in the future.
Over prior periods, the Company, as a nature of its business, has
maintained these levels of inventories and accounts receivable.
The Company relies on third party suppliers for raw materials and as
a result maintains substantial inventory levels to protect against
disruption in supplies. The Company has historically maintained
inventory turn over of approximately 225 days to 360 days, since 1990.
The low point in inventory levels came in 1992 and 1993 when the Company
had supply disruptions from one of its major suppliers.
The Company looks at its inventories in relationship to its sales
which have ranged from 140 days to 325 days within the periods between
1996 and 1990. This inventory to sales ratio is a more stable measure
of inventory levels, versus the traditional inventory turnover measure
because, at the times when the Company is experiencing supply
disruptions, and therefore lower inventory levels, the Company is also
experiencing increased costs of goods due to inefficiencies in its
operations stemming from sporadic deliveries which skews the numerator
and denominator in different directions for inventory turns
calculations. The lowest days on hand of inventory to sales has been
experienced when the Company has had supply disruptions as in 1992 and
1993.
11 of 19 pages
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The Company provides reserves for any product material that is over
one year old with no back-log or sales activity, and reserves for future
obsolescence. The Company also takes physical inventory write-downs for
obsolescence.
The Company's accounts receivable level has been consistently
correlated to the Company's previous quarter revenue level. Because of
the Company's customer scheduled backlog requirements, up to 80% of the
quarterly revenues are shipped in the last month of the quarter. This
has the effect of placing a large portion of the quarterly shipments
reflected in accounts receivable still not yet due per the Company's net
30 day terms. This, combined with the fact that the Company's
distributor customers (which make up 52 to 55% of the Company revenues)
generally pay 90 days and beyond, results in the accounts receivable
balance at the end of the quarterly period being at its highest point
for the period. This has been consistent over prior periods.
Although current levels of inventory and accounts receivable impact
the Company's liquidity, the Company believes that it is a cost of doing
business given the Company's fabless operation. The Company is in the
process of diversifying its supplier base to reduce the risk of supply
disruption. However, this will require a significant investment in
product development to tooling with new suppliers. The Company believes
that as it expands its customer base it will be able to even out the
flow of its shipments within its quarterly reporting periods.
FINANCING
On June 16, 1997, the Company renewed its $6,000,000 revolving line
of credit with Sanwa Bank extending the maturity to May 31, 1998. The
line of credit bears interest at the bank's reference rate (8.50% at
June 30, 1997). The line of credit is secured by the assets of the
Company and requires the Company to maintain a minimum tangible net
worth of $19,000,000, a maximum ratio of debt to tangible net worth of
not more than 0.50 to 1.00, a minimum current ratio of not less than
2.00 to 1.00, a minimum quick ratio of not less than 1.00 to 1.00
increasing to 1.35 to 1.00 at September 30, 1997 and increasing again to
1.50 to 1.00 at December 31, 1997 and thereafter, and profitability of
at least $1.00 for each fiscal quarter. As of June 30, 1997 the Company
was not in compliance with the quarterly profitability covenant. The
Company obtained a waiver from the Bank for the quarterly profitability
covenant July 23, 1997. The Company expects to be in compliance with
the Bank covenants for the periods ending September 30, 1997 and
December 31, 1997. As of June 30, 1997, the Company had $3,050,000
available under the revolving line of credit.
12 of 18 pages
<PAGE>
Under the terms of its line of credit facility, the Company is
precluded from paying any cash dividends without the consent of the
lender even if the Company is in compliance with all of the financial
covenants but is allowed to pay stock dividends whether or not there was
any other covenant violation. Regardless of any such restrictions in
its bank loan agreements, the Company does not intend to pay cash
dividends in the near future and anticipates reinvesting its cash flow
back into operations.
While the Company will continue to evaluate debt and equity
financing opportunities, it believes its financing arrangements and cash
flow generated from operations provide a sufficient base of liquidity
for funding operations and capital needs to support the Company's
operations.
13 of 19 pages
<PAGE>
PART II - OTHER INFORMATION
LOGIC DEVICES INCORPORATED
Item 4. Submission of Matters to a Vote of Security Holders.
The Annual Shareholders' meeting was held on June 19, 1997 at 10:30 a.m.
in the Company's new headquarters located at 1320 Orleans Drive,
Sunnyvale, CA. There were two items to be voted on at the meeting:
first, was the election of the Board of Directors and, second was the
approval of the Employee Stock Incentive Plan. There were 5,227,656
shares present or represented by proxy at the meeting representing a
quorum.
Shareholders are permitted to vote cumulatively in the election of
directors which allows each shareholder to cast a number of votes equal
to the number of directors to be elected by the number of shares owned
and to distribute such votes among the candidates in such proportion as
such shareholder may determine. In order to vote cumulatively, a
shareholder must give notice of this intention by proxy or at the
meeting. Thereafter, all shareholders will be entitled to cumulate
votes. The votes for each nominee are as set forth in the following
table:
Votes Votes
NOMINEE IN FAVOR AGAINST ABSTENTION
Howard L. Farkas 7,860,918 778 146,641
Burton W. Kanter 4,565,118 278 146,641
Albert Morrison,Jr. 4,565,118 278 146,641
William J. Volz 4,564,568 278 146,641
Bruce B. Lusignan 4,566,508 0 146,641
Shareholders were permitted and asked to vote on the approval of the
Employee Stock Incentive Plan. Of the 5,227,656 shares represented at
the meeting, there were 2,700,931 broker non-votes and 2,526,725 shares
were voted on the plan as follows:
FOR AGAINST WITHHELD
2,384,144 142,581 1,350
Having received the affirmative vote of a majority of the shares
represented and voting on the proposal (which shares voting
affirmatively also constituted at least a majority of the required
quorum), the proposal was approved.
14 of 19 pages
<PAGE>
Item 6. Exhibits and Reports on Form 8-K.
(a) (1) Exhibit 11 - Computation of Earnings Per Common Share.
(2) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K have been filed during the quarter for which
this report is filed.
15 of 19 pages
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Logic Devices Incorporated
(Registrant)
Date: AUGUST 13, 1997 By /S/ WILLIAM J. VOLZ
William J. Volz
President and Principal
Executive Officer
Date: AUGUST 13, 1997 By /S/ TODD J. ASHFORD
Todd J. Ashford
Chief Financial Officer and
Principal Financial and
Accounting Officer
16 of 19 pages
<PAGE>
EXHIBIT 11
LOGIC DEVICES INCORPORATED
Computation of Earnings per Common Share
(unaudited)
Three months ended June 30, 1997 and 1996
1997 1996
Weighted average shares of common stock 6,121,750 6,001,750
outstanding
Dilutive effect of common stock options
and stock warrants - 220,000
Weighted average common and 6,121,750 6,221,750
common share equivalents
Net (loss) income $ (197,800) $ 133,800
Net (loss) income per common $ (.03) $ .02
share equivalent
17 of 19 pages
<PAGE>
EXHIBIT 11
LOGIC DEVICES INCORPORATED
Computation of Earnings per Common Share
(unaudited)
Six months ended June 30, 1997 and 1996
1997 1996
Weighted average shares of common stock 6,121,750 6,001,750
outstanding
Dilutive effect of common stock options
and stock warrants - 220,000
Weighted average common and 6,121,750 6,221,750
common share equivalents
Net (loss) income $ (401,900) $ 354,500
Net (loss) income per common $ (0.06) $ .06
share equivalent
18 of 19 pages
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 434,200
<SECURITIES> 0
<RECEIVABLES> 4,320,000
<ALLOWANCES> 0
<INVENTORY> 13,610,600
<CURRENT-ASSETS> 21,034,500
<PP&E> 10,799,700
<DEPRECIATION> 8,019,200
<TOTAL-ASSETS> 26,259,000
<CURRENT-LIABILITIES> 4,363,500
<BONDS> 0
<COMMON> 17,341,900
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 26,259,000
<SALES> 5,824,500
<TOTAL-REVENUES> 5,824,500
<CGS> 3,794,600
<TOTAL-COSTS> 6,373,800
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (677,100)
<INCOME-TAX> (268,000)
<INCOME-CONTINUING> (409,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (409,100)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
