<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended DECEMBER 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________________ to _________________
Commission File No 0-15949
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
CALIFORNIA 94-2862863
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
1895 EAST FRANCISCO BLVD., SAN RAFAEL, CA 94901
----------------------------------------- ----------
(Address of principal executive offices) (Zip code)
(415) 257-3000
---------------------------------------------------
(Registrant's telephone number including area code)
Indicate by check mark whether 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, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO
----- -----
As of February 7, 1997, 4,991,570 shares of the Registrant's Common Stock, no
par value, were outstanding.
<PAGE> 2
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Interim Consolidated Financial Statements
Consolidated Balance Sheets at December 31, 1996 and June 30, 1996 3
Consolidated Statements of Operations for the three months and six months
ended December 31, 1996 and 1995 4
Consolidated Statements of Cash Flows for the six months ended December
31, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-10
PART II - OTHER INFORMATION
Item 1. Legal proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
2
<PAGE> 3
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996 JUNE 30, 1996
----------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 957,269 $ 387,406
Receivables, less allowances for doubtful
accounts and returns of $2,489,292 and $1,301,509 6,747,088 4,121,210
Inventories 3,674,526 2,538,093
Prepaid royalties and licenses 1,024,931 746,677
Deferred direct marketing costs 106,940 217,513
Deferred tax assets, net 791,301 791,301
Other current assets 183,143 262,?08
----------- -----------
Total current assets 13,485,198 9,064,?08
Furniture and equipment, net 1,477,290 1,101,306
Deferred tax assets, net 344,067 344,067
Capitalized software development costs, net 94,287 272,102
Other assets, net 210,536 276,595
----------- -----------
Total assets $15,611,378 $11,058,378
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Credit line payable $685,000 $ -
Short term debt and other obligations 577,956 565,419
Accounts payable and accrued expenses 6,857,750 4,395,461
Income taxes payable 1,001,563 1,001,118
----------- -----------
Total current liabilities 9,122,269 5,971,998
Long term debt and other obligations 590,967 564,571
----------- -----------
Total liabilities 9,713,236 6,536,569
Shareholders' equity:
Preferred stock, no par value; 20,000,000 shares
authorized; none issued or outstanding
Common stock, no par value; 300,000,000 authorized;
issued and outstanding 4,966,710 and 4,834,688 shares 6,253,556 5,972,850
Accumulated deficit (107,690) (1,223,797)
Cumulative translation adjustment 45,734 66,214
Notes receivable from shareholders (293,458) (293,458)
----------- -----------
Total shareholders' equity 5,898,142 4,521,809
----------- -----------
Total liabilities and shareholders' equity $15,611,378 $11,058,378
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE> 4
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31, SIX MONTHS ENDED DECEMBER 31,
------------------------------- --------------------------------
1996 1995 1996 1995
------------------- ------------------- --------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues $11,791,331 100.0% $5,787,870 100.0% $19,903,430 100.0% $10,894,948 100.0%
Product costs 5,123,797 43.5% 1,848,692 31.9% 8,120,361 40.8% 3,522,291 32.3%
--------- ------- ---------- ------ --------- ------- ----------- ------
Gross margin 6,667,534 56.5% 3,939,178 68.1% 11,783,069 59.2% 7,372,657 67.7%
Costs and expenses:
Sales and marketing 3,235,181 27.4% 2,376,641 41.1% 5,710,004 28.7% 4,284,328 39.3%
General and administrative 1,216,148 10.3% 555,853 9.6% 2,069,940 10.4% 1,276,684 11.7%
Research and development 1,121,624 9.5% 563,054 9.7% 2,167,172 10.9% 1,213,449 11.1%
--------- ------- ---------- ------ --------- ------- ----------- ------
5,572,953 47.3% 3,495,548 60.4% 9,947,116 50.0% 6,774,461 62.2%
--------- ------- ---------- ------ --------- ------- ----------- ------
Operating income 1,094,581 9.3% 443,630 7.7% 1,835,953 9.2% 598,196 5.5%
Interest and other
income (expense), net 53,674 0.5% (62,009) (1.1%) (23,684) (0.1)% (93,048) (0.9%)
--------- ------- ---------- ------ --------- ------- ----------- ------
Income before income taxes 1,148,255 9.7% 381,621 6.6% 1,812,269 9.1% 505,148 4.6%
Provision for income taxes 442,112 3.7% 140,075 2.4% 696,161 3.5% 191,956 1.8%
--------- ------- ---------- ------ --------- ------- ----------- ------
Net income $ 706,143 6.0% $ 241,546 4.2% $ 1,116,108 5.6% $ 313,192 2.9%
=========== ==== =========== ====== =========== ====== =========== ======
Primary and fully diluted net
income per common and common
equivalent share: $0.12 $0.05 $0.20 $0.06
===== ===== ====== ======
Average common and common
equivalent shares used to
compute earnings per share: 5,693,193 5,341,089 5,599,004 5,247,092
========= ========= ========= =========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE> 5
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED DECEMBER 31,
-----------------------------
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $1,116,108 $ 313,192
Adjustments to reconcile net income to net
cash used by operating activities
Depreciation 248,943 179,173
Amortization 219,369 263,207
Deferred income taxes - (78,000)
Changes in:
Accounts receivable (2,625,878) (1,291,889)
Inventories (1,136,433) (574,571)
Prepaid royalties and licenses (278,254) (290,063)
Direct marketing costs 110,573 17,734
Other current assets 78,965 (15,856)
Accounts payable and accrued expenses 2,462,289 558,491
Income taxes payable (9,555) 218,008
Currency translation adjustment (20,480) (4,413)
---------- ----------
Net cash provided (used) by operating
activities 165,647 (704,987)
---------- ----------
Cash flows from investing activities:
Purchase of equipment (241,795) (145,009)
Capitalized software development costs 24,505 (350,815)
FloorPlan acquisition - (343,840)
---------- ----------
Net cash used by investing activities (217,290) (839,664)
Cash flows from financing activities:
Credit line borrowings 1,435,000 1,125,000
Credit line repayments (750,000) (425,000)
Borrowings through term loan and other obligations - 675,000
Repayments on capital lease and other obligations (344,200) (131,386)
Proceeds from issuance of common stock 280,706 17,831
---------- ----------
Net cash provided by financing activities 621,506 1,261,445
---------- ----------
Net increase (decrease) in cash and cash
equivalents 569,863 (283,206)
Cash and cash equivalents at beginning of
period 387,406 523,235
---------- ----------
Cash and cash equivalents at end of the period $ 957,269 $ 240,029
========== ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE> 6
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION.
The accompanying interim consolidated financial statements have been prepared
from the records of International Microcomputer Software, Inc. and
Subsidiaries (the "Company") without audit. In the opinion of management, all
adjustments, which consist only of normal recurring adjustments, necessary to
present fairly the financial position, results of operations and cash flows as
of and for the period ended December 31, 1996, and for all periods presented,
have been made. The interim consolidated financial statements should be read
in conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report on Form 10-K for the fiscal year ended
June 30, 1996.
The results of operations for the three and six month periods ended December
31, 1996 and 1995 are not necessarily indicative of the results to be expected
for the full year. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations".
2. INVENTORIES
Inventories are valued at the lower of cost or market, on a first-in, first-out
basis, and consist of:
<TABLE>
<CAPTION>
December 31, 1996 June 30, 1996
----------------- -------------
<S> <C> <C>
Raw Materials $ 1,272,437 $ 775,026
Finished Goods 2,945,632 1,959,248
------------- ------------
4,218,069 2,734,274
Reserves for Obsolescence (543,543) (196,181)
------------- ------------
$ 3,674,526 $ 2,538,093
============= ============
</TABLE>
3. ACQUISITION
In September 1995, the Company entered into an agreement with
Forte/ComputerEasy International, Inc. to acquire certain assets including the
software assets known as FloorPlan, FloorPlan 3D, and 3D Design for
approximately $687,500. The acquisition was accounted for as a purchase with
$343,750 allocated to capitalized software development costs and $343,750
allocated to intangibles (amortized over 3 years).
4. STOCK SPLIT
In December 1996, the Company's Board of Directors authorized a 3 for 2 stock
split in the form of a stock dividend. The stock split was payable to
shareholders of record on December 25, 1996 and was effective and distributed to
shareholders on January 24, 1997. All share and per share figures presented have
been restated to reflect this stock split.
6
<PAGE> 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SUMMARY
The following information should be read in conjunction with the consolidated
financial statements and the notes thereto and in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Company's Annual Report (Form 10-Q) for the year ended June 30, 1996. This
Quarterly report on Form 10-K, and in particular Management's Discussion and
Analysis of Financial Condition and Results of Operations, may contain forward
looking statements regarding future events or the future performance of the
Company that involve certain risks and uncertainties including those discussed
in the Company's 1996 Annual Report on Form 10-K, as filed with the Securities
and Exchange Commission ("S.E.C."). Actual events or the actual future results
of the Company may differ materially from any forward looking statements due to
such risks and uncertainties. The Company assumes no obligation to update these
forward looking statements to reflect actual results or changes in factors or
assumptions affecting such forward looking assumptions. This analysis is
not intended to serve as a basis for projections of future events.
The Company's 1997 fiscal second quarter net revenues of $11,791,331 increased
104% from second quarter net revenues of $5,787,870 in the prior fiscal year.
Operating income for the three months and six months ended December 31, 1996
rose to $1,094,581 or 9.3% of net revenues and $1,835,953 or 9.2% of net
revenues, compared to $443,630 or 7.7% of net revenues and $598,196 or 5.5% of
net revenues for the comparable periods of the previous year. Net income of
$706,143 increased 192% over second quarter's net income of $241,546 in the
prior fiscal year. The increase in net income was primarily a result of higher
sales. In the second quarter fiscal 1997 the Company released MasterClips(R)
101,000 Premium Image Collection, Master Photos(R) 25,000 Premium Photo
Collection and Master Publisher(R) Premium Publishing Suite.
RESULTS OF OPERATIONS
NET REVENUES
Net revenues for the three and six months ended December 31, 1996 were
$11,791,331 and $19,903,430, respectively compared to $5,787,870 and
$10,894,948 for the same periods in the previous year. Increased net revenues
were attributable to an increase in retail channel sales partially offset by a
decrease in sales directly to end users for the same periods. The increase in
net revenues from channel sales and the decrease in direct sales is consistent
with the Company's strategy to transition towards an operating model focused
increasingly upon channel sales.
Net revenues from channel sales accounted for $10,457,481 or 89% and
$17,173,148 or 86% of net revenues for the three and six months ended December
31, 1996 and for $3,984,968 or 69% and $7,613,031 or 70% of net revenues for
the comparable periods in fiscal year 1996. Channel sales increased $6,472,513
or 162% and $9,560,117 or 126% for the three and six months ended December
31,1996 compared to the same periods last year.
Net revenues from direct mail sales accounted for approximately $1,333,850 or
11% and $2,730,282 or 14% of net revenues for the three and six months ended
December 31, 1996 compared to approximately $1,802,902 or 31% and $3,281,917 or
30% of net revenues for the three and six months ended December 31, 1995. Net
direct mail revenues decreased approximately $469,052 or 26% and $551,635 or
17% for the three and six months ended December 31, 1996 compared to the same
periods last year.
International net revenues accounted for approximately $4,580,911 or 39% and
$7,111,657 or 36% of total net revenues for the three and six months ended
December 31, 1996 compared to $1,441,594 or 25% and $2,930,994 or 27% of total
net revenues for the same periods in the previous fiscal year. The increase in
international net revenues of $3,139,317 or 218% and $4,180,663 or 143% of
total net revenues for the three and six months ended December 31, 1996 over
the same periods in the previous fiscal year was primarily the result of
increased sales through the retail channel.
7
<PAGE> 8
PRODUCT COSTS
Product costs include direct costs of production (manuals, diskettes, compact
disks, duplication, packaging materials and assembly), shipping, royalties,
inventory spoilage, reserves for obsolete inventory, and amortization of
capitalized software development costs. Product costs were $5,123,797 and
$8,120,361 for the three and six months ended December 31, 1996 compared to
$1,848,692 and $3,522,291 or the comparable periods in the previous fiscal
year. Product cost as a percentage of revenues were 43.5% and 40.8% for the
three and the six months ended December 31, 1996 compared to 31.9% and 32.3%
for the same periods ended December 31, 1995. The increase was primarily due to
changes in the Company's product mix and distribution strategy.
Amortization of capitalized software development costs and acquired software
costs included in product costs were $102,606 and $219,369 and for the three
and six months ended December 31, 1996 compared to $148,133 and $263,207 for
the same periods in the previous fiscal year.
SALES AND MARKETING
Sales and marketing expenses include salaries and benefits for retail channel,
direct mail and marketing personnel, commissions, advertising, trade show,
design, and direct mail promotional costs (design, postage, printing,
fulfillment and list rentals).
Sales and marketing expenses increased to $3,235,181 and $5,710,004 in the
three and six months ended December 31, 1996 from $2,376,641 and $4,284,328 for
the same periods in the previous fiscal year. As a percentage of revenues,
sales and marketing costs decreased to 27.4% and 28.7%, respectively in the
three and six months ended December 31, 1996 from 41.1% and 39.3%, for the same
periods in the previous fiscal year. This decrease was primarily caused by
lower direct mail promotional activities. Direct mail sales and marketing
expenses comprised 25% and 29% of total sales and marketing expense for the
three and six months ended December 31, 1996, compared to 48% and 47% for the
same periods in the previous fiscal year.
GENERAL AND ADMINISTRATIVE
General and administrative expenses are comprised primarily of the costs of the
Company's administrative, finance and human resources functions. General and
administrative expenses increased to $1,216,148 and $2,069,940 in the three and
six months ended December 31, 1996 from $555,853 and $1,276,684 for the same
periods in the previous fiscal year. As a percentage of revenues, general and
administrative expenses increased to 10.3% from 9.6% for the three months ended
December 31, 1996 and 1995 due to increased allowance for doubtful accounts
associated with increased sales. For the six months ended December 31, 1996 and
1995 general and administrative expenses decreased to 10.4% from 11.7% of net
revenues primarily as a result of increased sales.
RESEARCH AND DEVELOPMENT
Research and development expenses are comprised primarily of personnel costs,
costs required to conduct the Company's development effort and third-party
software development costs. Research and development expense increased to
$1,121,624 and $2,167,172 in the three and six months ended December 31, 1996
from $563,054 and $1,213,449 in the same periods for the previous fiscal year.
As a percentage of revenues, research and development expenses decreased to
9.5% and 10.9%, respectively
8
<PAGE> 9
for the three and six months ended December 31, 1996, compared to 9.7% and
11.1%, respectively for the same periods last year. The decrease in percentage
can be attributed to increased sales as overall expenditures increased due to
the utilization of additional software development personnel and other third
party development costs relating to the development and expansion of the
Company's product offerings.
INTEREST AND OTHER INCOME (EXPENSE), NET
Interest and other income (expense), net was $53,674 and ($23,684),
respectively for the three and six months ended December 31, 1996 compared to
($62,009) and ($93,048) for the same periods in the previous fiscal year. The
decrease in other expense in both the three and six months ended December 31,
1996 can be attributed the effect of foreign currency transaction gains.
PROVISION FOR INCOME TAXES
The Company's provision for income tax was $442,112 and $696,161, respectively
for the three and six months ended December 31, 1996, compared to $140,075 and
$191,956 for the same periods in the previous fiscal year. The Company's
estimated annual effective income tax rate of 38% for fiscal 1997 remained
level compared to the rate at December 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its business primarily from cash flow from operations,
short-term and long-term bank borrowings, capital leases and proceeds from the
sale of stock. Working capital increased to $4,362,929 at December 31, 1996
from $3,092,310 at June 30, 1996 primarily due to the increased investment in
receivables, inventories and prepaid royalties, partially offset by increased
short-term and long-term borrowings and higher accounts payable and accrued
expenses.
The Company has used cash generated from operations and short-term borrowings to
fund its working capital requirements and to acquire capital equipment. The
Company's operations provided net cash of $569,863. Net cash provided by
operating activities was $165,647 in the six months ended December 31, 1996
compared to net cash used of $704,987 in the six months ended December 31, 1995.
The increase of cash provided by operating activities in fiscal 1997 was
attributable to increased net income. The Company's investing activities totaled
$217,290 and $839,664 in the six months ended December 31, 1996 and 1995,
respectively. The fiscal 1997 investing activities were primarily for the
acquisition of equipment. The decrease in fiscal 1997 from fiscal 1996 was
primarily attributable to the Company's purchase of the FloorPlan software
product line in September 1995, for approximately $700,000. Borrowings on the
line of credit provided cash of $1,435,000 and repayments used cash of $750,000
in the six months ended December 31, 1996, compared to borrowings of $1,125,000
and repayments of $425,000 in the six months ended December 31, 1995. In
addition, the Company obtained a term loan in September 1995 which provided cash
of $675,000. During the six months ended December 31, 1996, principal payments
on this term loan totaled $112,500, reducing the balance to $393,750.
As of December 31, 1996, the Company had a credit agreement with a bank under
which it can borrow the lesser of $2,500,000 or 25% of eligible inventory up to
a cap of $500,000 and 80% of eligible accounts receivable, at the bank''s index
rate. This credit agreement will expire on October 31, 1997. Under terms of
the agreement, all assets not subject to liens of other financial institutions
have been pledged as collateral against the line of credit. As of December 31,
1996 the Company had $685,000 outstanding under this line of credit.
9
<PAGE> 10
The Company believes that cash flow from operations, together with existing
sources of liquidity, will satisfy the Company's working capital, income tax,
and capital expenditure requirements for at least the next twelve months. The
Company's long-term goal, however, is to grow substantially. Expansion of the
Company's current business may involve significant financial risk and require
significant capital investment. Significant expansion of the Company's
operations, future acquisitions of products or companies, unexpected increases
in expenses or other factors might lead the Company to seek additional debt or
equity financing. While the Company believes it will be able to raise any
necessary funds, there can be no assurances that the Company will be able to do
so, and failure to obtain sufficient capital could have a material adverse
effect on the Company or adversely affect the Company's ability to continue to
grow. In order to finance future growth or for other reasons, the Company may
consider an offering of its equity securities within the next year or
thereafter. The decision to undertake such an offering, and the size of such an
offering, would depend upon many factors, such as the market price of the Common
Stock, the working capital and capital expenditure needs of the Company, the
availability of alternative sources of capital, and general market conditions.
QUARTERLY TRENDS
The Company's consolidated results of operations to date have not been
materially affected by seasonal trends. However, the Company believes that in
the future its results may be impacted by such factors as order deferrals in
anticipation of new product releases, delays in shipments of new products, a
slower growth rate in the software markets in which the Company operates, or
adverse general economic and industry conditions in any of the countries in
which the Company does business. In addition, with significant portions of net
revenues contributed by international operations, fluctuations of the U.S.
dollar against foreign currencies and the seasonality of the European,
Asia/Pacific, and other international markets could impact the Company's
results of operations and financial position for a particular quarter. Rapid
technological change and the Company's ability to develop, manufacture, and
market products that successfully adapt to the change may also impact results
of operations. Further, increased market competition from competitors either
known or unknown to the Company could also negatively impact the Company's
results of operations. Due to these factors, the Company's future earnings
and stock price may be subject to significant volatility, particularly on a
quarterly basis. Any shortfall in revenues or earnings from anticipated levels
could have an immediate and adverse effect on the trading price of the
Company's common stock.
10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended December 31,
1996.
11
<PAGE> 12
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.
DATE: February 12, 1997 INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
By: /s/ MARTIN SACKS
---------------------------------------
Martin Sacks
President & Chief Executive Officer
(Principal Executive Officer)
By: /s/ KENNETH R. FINEMAN
---------------------------------------
Kenneth R. Fineman
V.P. Finance & Chief Financial Officer
(Principal Financial Officer)
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 957,269
<SECURITIES> 0
<RECEIVABLES> 9,236,380
<ALLOWANCES> 2,489,292
<INVENTORY> 3,647,526
<CURRENT-ASSETS> 13,485,198
<PP&E> 2,711,510
<DEPRECIATION> 1,234,220
<TOTAL-ASSETS> 15,611,378
<CURRENT-LIABILITIES> 9,122,269
<BONDS> 0
0
0
<COMMON> 6,253,556
<OTHER-SE> (107,690)
<TOTAL-LIABILITY-AND-EQUITY> 15,611,378
<SALES> 19,903,430
<TOTAL-REVENUES> 19,903,430
<CGS> 8,120,361
<TOTAL-COSTS> 8,120,361
<OTHER-EXPENSES> 9,947,116
<LOSS-PROVISION> 774,523
<INTEREST-EXPENSE> 23,684
<INCOME-PRETAX> 1,812,269
<INCOME-TAX> 696,161
<INCOME-CONTINUING> 1,116,108
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,116,108
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
