<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 March 31, 1997
[ ] 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 May 12, 1997, 5,107,922 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 March 31, 1997 and June 30, 1996 3
Consolidated Statements of Operations for the three months and nine months
ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows for the nine months ended March
31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-11
PART II - OTHER INFORMATION
Item 1. Legal proceedings 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
</TABLE>
2
<PAGE> 3
INTERNATIONAL MICROCOMPUTER SOFTWARE, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, 1997 JUNE 30, 1996
-------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,133,960 $ 387,406
Receivables, less allowances for doubtful
accounts and returns of $3,112,713 and $1,301,509 7,089,617 4,121,210
Inventories 3,919,975 2,538,093
Prepaid royalties and licenses 1,100,189 746,677
Deferred direct marketing costs 115,648 217,513
Deferred tax assets, net 791,301 791,301
Other current assets 280,893 262,108
------------ ------------
Total current assets 14,431,583 9,064,308
Furniture and equipment, net 1,501,371 1,101,306
Deferred tax assets, net 344,067 344,067
Capitalized software development costs, net 102,959 272,102
Other assets, net 187,505 276,595
------------ ------------
Total assets $ 16,567,485 $ 11,058,378
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Credit line payable $ 1,745,000 $ -
Short term debt and other obligations 335,425 565,419
Accounts payable and accrued expenses 7,234,578 4,395,461
Income taxes payable 248,417 1,011,118
------------ ------------
Total current liabilities 9,563,420 5,971,998
Long term debt and other obligations 553,561 564,571
------------ ------------
Total liabilities 10,116,981 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 4,993,366 and 4,834,688 shares 6,275,480 5,972,850
Retained earnings (accumulated deficit) 513,859 (1,223,797)
Cumulative translation adjustment (53,377) 66,214
Notes receivable from shareholders (285,458) (293,458)
------------ ------------
Total shareholders' equity 6,450,504 4,521,809
------------ ------------
Total liabilities and shareholders' equity $ 16,567,485 $ 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 MARCH 31, NINE MONTHS ENDED MARCH 31,
1997 1996 1997 1996
--------------------- ---------------------- -------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenues $ 10,489,199 100.0% $ 7,528,298 100.0% $ 30,392,629 100.0% $ 18,423,246 100.0%
Product costs 4,326,072 41.2% 2,400,893 31.9% 12,446,433 41.0% 5,923,184 32.2%
------------ ----- ------------- ----- ------------ ----- ------------ -----
Gross margin 6,163,127 58.8% 5,127,405 68.1% 17,946,196 59.0% 12,500,062 67.8%
Costs and expenses:
Sales and marketing 2,960,971 28.2% 2,887,969 38.4% 8,670,974 28.5% 7,172,297 38.9%
General and administrative 997,627 9.5% 630,379 8.4% 3,067,567 10.1% 1,907,063 10.4%
Research and development 1,150,821 11.0% 945,644 12.6% 3,317,993 10.9% 2,159,093 11.7%
------------ ----- ------------- ----- ------------ ----- ------------ -----
5,109,419 48.7% 4,463,992 59.3% 15,056,534 49.5% 11,238,453 61.0%
------------ ----- ------------- ----- ------------ ----- ------------ -----
Operating income 1,053,708 10.0% 663,413 8.8% 2,889,662 9.5% 1,261,609 6.8%
Other expense 32,384 0.3% 97,014 1.3% 56,068 0.2% 190,062 1.0%
------------ ----- ------------- ----- ------------ ----- ------------ -----
Income before income taxes 1,021,324 9.7% 566,399 7.5% 2,833,594 9.3% 1,071,547 5.8%
Provision for income taxes 399,776 3.8% 215,232 2.9% 1,095,937 3.6% 407,188 2.2%
------------ ----- ------------- ----- ------------ ----- ------------ -----
Net income $ 621,548 5.9% $ 351,167 4.7% $ 1,737,657 5.7% $ 664,359 3.6%
============ ===== ============= ===== ============ ===== ============ ======
Primary and fully diluted
net income per common
and common equivalent share: $0.11 $0.07 $0.31 $0.13
============ ============= ============ ============
Average common and common
equivalent shares used to
compute earnings per share: 5,649,875 5,341,089 5,578,941 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>
NINE MONTHS ENDED MARCH 31,
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,737,657 $ 664,359
Adjustments to reconcile net income to net
cash used by operating activities
Depreciation 378,003 281,573
Amortization 324,031 390,671
Deferred income taxes - (306,000)
Changes in:
Accounts receivable (2,976,407) (1,786,126)
Inventories (1,381,882) (703,033)
Prepaid royalties and licenses (353,512) (324,656)
Direct marketing costs 101,865 17,985
Other current assets (18,785) (13,975)
Accounts payable and accrued expenses 2,839,117 1,269,843
Income taxes payable (762,701) 569,211
Currency translation adjustment (119,591) 12,653
----------- -----------
Net cash provided (used) by operating activities (232,205) 72,505
----------- -----------
Cash flows from investing activities:
Purchase of equipment (778,068) (138,677)
Capitalized software development costs (57,799) (396,843)
FloorPlan acquisition - (343,840)
----------- -----------
Net cash used by investing activities (835,867) (879,360)
Cash flows from financing activities:
Credit line borrowings 4,180,000 1,425,000
Credit line repayments (2,435,000) (925,000)
Capital lease and other obligations additions 671,982 675,000
Capital lease and other obligations repayment (904,986) (237,811)
Proceeds from issuance of common stock 302,630 50,063
----------- -----------
Net cash provided by financing activities 1,814,626 987,252
----------- -----------
Net increase (decrease) in cash and cash
equivalents 746,554 180,397
Cash and cash equivalents at beginning of
period 387,406 523,235
----------- -----------
Cash and cash equivalents at end of the period $ 1,133,960 $ 703,632
=========== ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
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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 March 31, 1997, 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 nine months ended March 31, 1997 and
1996 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>
March 31, 1997 June 30, 1996
-------------- -------------
<S> <C> <C>
Raw Materials $ 1,548,580 $ 775,026
Finished Goods 2,883,582 1,959,248
----------- -----------
4,432,162 2,734,274
Reserves for Obsolescence (512,187) (196,181)
----------- -----------
$ 3,919,975 $ 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.
6
<PAGE> 7
5. RECENTLY ISSUED ACCOUNTING STANDARD
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128 "Earnings per Share" (SFAS 128). The
Company is required to adopt SFAS 128 in the December 31, 1997 quarter and will
restate at that time earnings per share (EPS) data for prior periods to conform
with SFAS 128. Earlier application is not permitted.
SFAS 128 replaces current EPS reporting requirements and requires a dual
presentation of basic and diluted EPS. Basic EPS excludes dilution and is
computed by dividing net income by the weighted average of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock.
If SFAS 128 had been in effect during the current and prior year periods, basic
EPS would have been $0.13 and $0.11 for the quarters ended March 31, 1997 and
1996, respectively, and $0.36 and $0.21 for the nine months ended March 31, 1997
and 1996, respectively. Diluted EPS under SFAS 128 would not have been
significantly different than fully diluted EPS currently reported for the
periods.
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-K) for the year ended June 30, 1996. This
Quarterly report on Form 10-Q, 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 ("SEC"). 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 statements. This analysis is not
intended to serve as a basis for projections of future events.
The Company's 1997 fiscal third quarter net revenues of $10,489,199 increased
39.3% from third quarter net revenues of $7,528,298 in the prior fiscal year.
Operating income for the three months and nine months ended March 31, 1997 rose
to $1,053,708 or 10.0% and $2,889,662 or 9.5% of net revenues, compared to
$663,413 or 8.8% and $1,261,609 or 6.8% of net revenues for the comparable
periods in fiscal 1996. Net income of $621,548 increased 77.0% over third
quarter's net income of $351,167 in the prior fiscal year. The key contribution
to the Company's third quarter performance was the continued success of our
Master(R) line of desktop publishing and electronic art products. These
include the January release of MasterClips(R) 150,000 Premium Image Collection,
and a Macintosh version of MasterClips(R) 101,000 Premium Image Collection.
Additionally, the Company shipped two new products in its Easy Language(TM)
7
<PAGE> 8
multi-language learning line, Easy Language 17 Language Edition and Language
Conversational Skills.
RESULTS OF OPERATIONS
- ---------------------
NET REVENUES
Net revenues for the three and nine months ended March 31, 1997 were $10,489,199
and $30,392,629, respectively compared to $7,528,298 and $18,423,246 for the
comparable periods in fiscal 1996. Increased net revenues were attributable to
an increase in retail channel sales partially offset by a decrease in direct
marketing sales for the same periods. This inverse relationship is consistent
with the Company's strategy of shifting away from direct marketing sales and
towards a more profitable focus on channel sales.
Net revenues from channel sales accounted for $9,763,143 or 93.1% and
$26,936,291 or 88.6% of total net revenues for the three and nine months ended
March 31, 1997, compared to $4,532,655 or 60.2% and $12,145,686 or 65.9% of
total net revenues for the comparable periods in fiscal year 1996. Channel sales
increased 115.4% and 121.8% respectively for the three and nine months ended
March 31, 1997, over the comparable periods in fiscal 1996.
Net revenues from direct mail sales accounted for approximately $726,056 or 6.9%
and $3,456,338 or 11.4% of total net revenues for the three and nine months
ended March 31, 1997, compared to $2,995,643 or 39.8% and $6,277,560 or 34.1% of
total net revenues for the comparable periods in fiscal 1996. Net direct mail
revenues decreased by 75.8% and 44.9% respectively for the three and nine
months ended March 31, 1997, over the comparable periods in fiscal 1996
Net revenues from international sales accounted for approximately $3,886,706 or
37.1% and $12,427,935 or 40.9% of total net revenues for the three and nine
months ended March 31, 1997, compared to $2,522,887 or 33.5% and $6,137,312 or
33.3% of total net revenues for the comparable periods in fiscal 1996.
International revenues increased by 54.1% and 102.5% respectively for the three
and nine months ended March 31, 1997 over the comparable periods in fiscal 1996.
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 $4,326,072 or 41.2%
and $12,446,433 or 41.0% for the three and nine months ended March 31, 1997
compared to $2,400,893 or 31.9% and $5,923,184 or 32.2% for the comparable
periods in fiscal 1996.
Amortization of capitalized software development costs and acquired software
costs included in product costs were $104,662 and $324,031 and for the three and
nine months ended March 31, 1997 compared to $127,464 and $390,671 for the
comparable periods in fiscal 1996.
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).
8
<PAGE> 9
Sales and marketing expenses increased to $2,960,971 or 28.2% and $8,670,974 or
28.5% in the three and nine months ended March 31, 1997, compared to $2,887,969
or 38.4% and $7,172,297 or 38.9% for the comparable periods in fiscal 1996. As a
percentage of revenues, sales and marketing expenses decrease as a result of
lower direct mail promotional activities.
GENERAL AND ADMINISTRATIVE
General and administrative expenses were comprised primarily of the costs of the
Company's administrative, finance and human resources functions. General and
administrative expenses increased to $997,627 and $3,067,567 in the three and
nine months ended March 31, 1997 from $630,379 and $1,907,063 for the comparable
periods in fiscal 1996. As a percentage of revenues, general and administrative
expenses increased to 9.5% from 8.4% for the three months ended March 31, 1997
and 1996 due to increased allowance for doubtful accounts associated with
increased sales. For the nine months ended March 31, 1997 and 1996 general and
administrative expenses decreased to 10.1% from 10.4% of net revenues primarily
as a result of increased revenue.
RESEARCH AND DEVELOPMENT
Research and development expenses are comprised primarily of personnel costs and
third party software development costs. Research and development expense
increased to $1,150,821 and $3,317,993 in the three and nine months ended March
31, 1997 from $945,644 and $2,159,093 for the comparable periods in fiscal 1996.
As a percentage of revenues, research and development expenses decreased to
11.0% from 12.6% for the three months ended March 31, 1997 and 1996, and
decreased to 10.9% from 11.7%, for the nine months ended March 31, 1997 and
1996. The increase in absolute dollars can be attributed to increased domestic
headcount, the utilization of additional software development personnel in
Russia and other third party development costs resulting from an aggressive
fiscal 1997 product release schedule. The decrease in percentage can be
attributed to increased sales associated with the development and expansion of
the Company's product offerings.
INTEREST AND OTHER INCOME (EXPENSE), NET
Other expense was $32,384 and $56,068 respectively for the three and nine months
ended March 31, 1997 compared to $97,014 and $190,062 for the comparable periods
in fiscal 1996. The decrease in other expense for the nine months ended March
31, 1997 can be attributed to the effect of foreign currency translation gains.
PROVISION FOR INCOME TAXES
The Company's provision for income tax was $399,776 and $1,095,937 respectively
for the three and nine months ended March 31, 1997, compared to $215,232 and
$407,188 for the comparable periods in fiscal 1996. The Company's estimated
annual effective income tax rate is approximately 38% for fiscal 1997 and
remained level compared to the rate at March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company has financed its business primarily from cash flows from operations,
short-term and long-term bank borrowings, capital leases and proceeds from the
sale of stock. Working capital increased to $4,868,163 at March 31, 1997 from
$3,092,310 at June 30, 1996. The change was primarily the result of
9
<PAGE> 10
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. Net cash
used by operating activities was $(232,205) for the nine months ended March 31,
1997 compared to net cash provided by operating activities of $72,505 for the
nine months ended March 31, 1996. The decrease of cash provided by operating
activities in fiscal 1997 was primarily attributable to increased accounts
receivable and inventory. The Company's investing activities totaled ($835,867)
and ($879,360) for the nine months ended March 31, 1997 and 1996, respectively.
The fiscal 1997 investing activities were primarily for the acquisition of
equipment, while the fiscal 1996 activities were primarily for software
development. The Company's financing activities totaled $1,814,626 and $987,252
for the nine months ended March 31, 1997 and 1996, respectively. The cash
provided from financing is used for new and existing product development and
acquisitions.
As of March 31, 1997, 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 expires 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 March 31, 1997 the
Company had $1,745,000 outstanding under this line of credit.
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 seasonally of the European,
Asia/Pacific, and other international markets could impact the Company's results
of operations and financial position in a particular quarter. Rapid
technological change and the Company's ability to develop, manufacture, and
market products
10
<PAGE> 11
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.
11
<PAGE> 12
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 March 31, 1997.
12
<PAGE> 13
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: May 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)
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,133,960
<SECURITIES> 0
<RECEIVABLES> 7,089,617
<ALLOWANCES> 3,112,713
<INVENTORY> 1,100,189
<CURRENT-ASSETS> 14,431,583
<PP&E> 2,864,648
<DEPRECIATION> 1,363,277
<TOTAL-ASSETS> 16,567,485
<CURRENT-LIABILITIES> 9,563,420
<BONDS> 0
0
0
<COMMON> 6,275,480
<OTHER-SE> 513,859
<TOTAL-LIABILITY-AND-EQUITY> 16,567,485
<SALES> 30,392,629
<TOTAL-REVENUES> 30,392,629
<CGS> 8,670,974
<TOTAL-COSTS> 8,670,974
<OTHER-EXPENSES> 15,056,534
<LOSS-PROVISION> 973,332
<INTEREST-EXPENSE> 56,068
<INCOME-PRETAX> 2,833,594
<INCOME-TAX> 1,095,937
<INCOME-CONTINUING> 1,737,657
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,737,657
<EPS-PRIMARY> .31
<EPS-DILUTED> .31
</TABLE>
