<PAGE> 1
SECURITIES AND 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 quarterly period ended MARCH 31, 1995
----------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission file number 0-16752
CYTOCARE, INC.
---------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 66-0439440
- -----------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
100 COLUMBIA, SUITE 100, ALISO VIEJO, CALIFORNIA 92656
- -----------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (714) 448-7700
--------------------------
NOT APPLICABLE
- -----------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed,
since last report)
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
----- -----
The number of shares of the Common Stock of the registrant outstanding as of
April 28, 1995 was 5,184,805.
<PAGE> 2
CYTOCARE, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
March 31, 1995 (Unaudited) and
December 31, 1994 3
Condensed Consolidated Statements of Income (Unaudited)
Three Months Ended March 31, 1995 and 1994 4
Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
Three Months Ended March 31, 1995 5
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1995 and 1994 6
Notes to Unaudited Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9
PART II. OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
</TABLE>
- 2 -
<PAGE> 3
CYTOCARE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1995 1994
----------- -----------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and equivalents . . . . . . . . . . . . . . . . . . . $ 166,556 $ 1,261,596
Short term investments . . . . . . . . . . . . . . . . . . 16,063,761 13,148,586
Accounts receivable, less allowance for doubtful
accounts of $257,000 and $257,000 at March
31, 1995 and December 31, 1994, respectively . . . . . . 1,613,149 1,825,150
Inventories . . . . . . . . . . . . . . . . . . . . . . . . 1,908,177 1,607,090
Deferred tax assets . . . . . . . . . . . . . . . . . . . . 1,005,000 1,005,000
Prepaid expenses and other current assets . . . . . . . . . 486,930 394,595
----------- -----------
Total current assets . . . . . . . . . . . . . . . . . . . . 21,243,573 19,242,017
Property and equipment, at cost . . . . . . . . . . . . . . . . . 5,955,273 6,722,721
Less accumulated depreciation and amortization . . . . . . . (3,236,902) (3,727,123)
----------- -----------
Net property and equipment . . . . . . . . . . . . . . . . . 2,718,371 2,995,598
Other assets, net . . . . . . . . . . . . . . . . . . . . . . . . 22,500 22,500
----------- -----------
$23,984,444 $22,260,115
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . $ 706,259 $ 521,496
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . 154,135 368,942
Accrued income taxes . . . . . . . . . . . . . . . . . . . . 1,135,931 601,776
Accrued payroll expenses . . . . . . . . . . . . . . . . . . 331,457 408,884
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . 591,257 642,551
Customer deposits . . . . . . . . . . . . . . . . . . . . . . 45,800 40,000
----------- -----------
Total current liabilities . . . . . . . . . . . . . . . 2,964,839 2,583,649
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . 225,000 225,000
Commitments and contingencies
Stockholders' equity:
Common stock - $.004 par value, 20,000,000
shares authorized, 5,177,133 and 4,944,603
shares issued and outstanding at March 31,
1995 and December 31, 1994, respectively . . . . . . . . . 20,709 19,778
Additional paid-in capital . . . . . . . . . . . . . . . . . 17,879,525 17,675,642
Unrealized loss on short-term investments . . . . . . . . . . (632) (46,279)
Accumulated earnings . . . . . . . . . . . . . . . . . . . . 2,895,003 1,802,325
----------- -----------
Total stockholders' equity . . . . . . . . . . . . . . . . 20,794,605 19,451,466
----------- -----------
$23,984,444 $22,260,115
=========== ===========
</TABLE>
See accompanying notes.
- 3 -
<PAGE> 4
CYTOCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Revenues:
Net equipment sales . . . . . . . . . . . . . . . . . . . . . . . $1,395,165 $1,535,000
Procedures and maintenance fees
and sale of laser catheters . . . . . . . . . . . . . . . . . . . 3,188,446 2,837,289
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . 230,241 119,400
---------- ----------
Total revenues . . . . . . . . . . . . . . . . . . . . . . . . 4,813,852 4,491,689
Costs and expenses:
Cost of equipment sales . . . . . . . . . . . . . . . . . . . . . 586,817 677,366
Costs of procedures and maintenance fees
and sale of laser catheters . . . . . . . . . . . . . . . . . . . 1,343,392 1,002,940
Research and development . . . . . . . . . . . . . . . . . . . . . 215,914 387,764
Selling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 516,922 656,794
General and administrative . . . . . . . . . . . . . . . . . . . . 457,133 613,147
Other expense . . . . . . . . . . . . . . . . . . . . . . . . . . 996 17,834
---------- ----------
Total costs and expenses . . . . . . . . . . . . . . . . . . . 3,121,174 3,355,845
---------- ----------
Income before provision for income taxes . . . . . . . . . . . . . 1,692,678 1,135,844
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . 600,000 171,000
---------- ----------
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,092,678 $ 964,844
========== ==========
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . $ .20 $ .18
========== ==========
Number of shares used in the computation of
earnings per share . . . . . . . . . . . . . . . . . . . . . . . . 5,437,539 5,350,582
========== ==========
</TABLE>
See accompanying notes.
- 4 -
<PAGE> 5
CYTOCARE, INC.
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED MARCH 31, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK
------------------------- ADDITIONAL UNREALIZED LOSS
NUMBER OF PAID-IN ACCUMULATED ON SHORT-TERM
SHARES AMOUNT CAPITAL (DEFICIT) INVESTMENTS TOTAL
---------- ---------- ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994 . 4,944,603 $19,778 $17,675,642 $1,802,325 $(46,279) $19,451,466
Common Stock options
exercised . . . . . . . . . . 232,530 931 203,883 --- --- 204,814
Unrealized loss on short-term
investments . . . . . . . . . --- --- --- --- 45,647 45,647
Net income . . . . . . . . . . --- --- --- 1,092,678 1,092,678
--------- ------- ----------- ---------- -------- ----------
Balance at March 31, 1995 . . . 5,177,133 $20,709 $17,879,525 $2,895,003 $ (632) $20,794,605
========= ======= =========== ========== ======== ===========
</TABLE>
See accompanying notes.
- 5 -
<PAGE> 6
CYTOCARE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1994 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,092,678 $ 964,844
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . 234,461 203,788
Provision for doubtful accounts . . . . . . . . . . . . . . . --- 15,000
Provision for related party loan . . . . . . . . . . . . . . 635 18,412
Unrealized losses/(gains) on short-term
investments . . . . . . . . . . . . . . . . . . . . . . . . --- (9,513)
Changes in assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . 212,001 (33,446)
Inventories . . . . . . . . . . . . . . . . . . . . . . . . (301,087) (39,463)
Prepaid expenses and other current assets . . . . . . . . . (92,335) 306,586
Accounts payable and accrued expenses . . . . . . . . . . . (30,044) (65,679)
Accrued payroll expenses . . . . . . . . . . . . . . . . . . (77,427) 117,562
Accrued income taxes . . . . . . . . . . . . . . . . . . . 534,155 162,800
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . (51,294) (35,057)
Customer deposits . . . . . . . . . . . . . . . . . . . . . 5,800 (130,750)
Other, net . . . . . . . . . . . . . . . . . . . . . . . . . --- 99,561
----------- ----------
Net cash provided by (used in) operating activities . . . . . . 1,527,543 1,574,645
----------- ----------
Cash flows from investing activities:
Purchase of investments available for sale . . . . . . . . . . . (8,009,036) (9,231,448)
Sale of investments available for sale . . . . . . . . . . . . . 5,139,508 9,161,192
Related party loan . . . . . . . . . . . . . . . . . . . . . . . (636) (18,412)
Purchase of property and equipment . . . . . . . . . . . . . . . (169,481) (474,872)
Disposals of property and equipment . . . . . . . . . . . . . . 212,248 8,396
----------- ----------
Net cash used in investing activities . . . . . . . . . . . . . (2,827,397) (555,144)
----------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock . . . . . . . . . . . . 204,814 41,374
----------- ----------
Net increase (decrease) in cash and equivalents . . . . . . . . . . (1,095,040) 1,060,875
Cash and equivalents at beginning of period . . . . . . . . . . . 1,261,596 2,410,363
----------- ----------
Cash and equivalents at end of period . . . . . . . . . . . . . . . $ 166,556 $3,471,238
=========== ==========
Supplemental cash flow disclosures:
Cash paid during the period for:
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . $ 65,490 $ 8,200
Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . $ --- ---
</TABLE>
See accompanying notes.
- 6 -
<PAGE> 7
CYTOCARE, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1995
A. ORGANIZATION AND OPERATIONS OF THE COMPANY
Cytocare, Inc. (the "Company" or "Cytocare"), a Delaware corporation
formed in October 1984, develops, manufactures and markets medical devices and
therapeutics to treat urological diseases. Medstone, a wholly-owned
subsidiary, manufactures, markets and maintains lithotripters, and is expanding
its Fee-for-Service Program that supplies lithotripsy equipment to providers on
per procedure basis. Endocare, the Company's endourology subsidiary,
manufactures equipment and devices to treat urologic soft tissue diseases. A
majority of the Company's consolidated revenues come from Medstone's
lithotripsy business.
The Company, as a manufacturer of capital medical devices, has been
vertically integrating by offering its medical devices directly to providers on
a fee-per-procedure basis. Medstone currently offers mobile lithotripsy
services using five mobile systems in the Western United States on a
fee-per-procedure basis. Medstone intends to expand effor ts to grow this
medical service side of its business.
The Company's tentative business plan is to separate its operating
business units and revenue streams into independent operations. Management
hopes that such a restructuring will benefit shareholders by bringing about
operational advantages as well as more discriminating and favorable valuations
of Cytocare's units.
B. BASIS OF PRESENTATION
In the opinion of the Company's management, the accompanying unaudited
condensed consolidated financial statements include all adjustments (which
consist only of normal recurring adjustments) necessary for a fair presentation
of its consolidated financial position at March 31, 1995 and consolidated
results of operations and cash flows for the periods presented. Certain prior
period balances have been reclassified to conform with current period
presentation. Although the Company believes that the disclosures in these
financial statements are adequate to make the information presented not
misleading, certain information and disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted and should be read in conjunction with the
Company's audited financial statements included in the Company's 1994 Annual
Report on Form 10-K filed with the Securities and Exchange Commission on March
28, 1995. Results of operations for the three months ended March 31, 1995 are
not necessarily indicative of results to be expected for the full year.
C. PER SHARE INFORMATION
Per share information is presented in the accompanying consolidated
statements of operations based upon the weighted average number of common and
common equivalent shares outstanding. Common equivalent shares result from the
assumed exercise of outstanding dilutive securities when applying the treasury
stock method. Fully diluted per share information is not presented for periods
in which the effect is antidilutive.
- 7 -
<PAGE> 8
D. INVENTORIES
At March 31, 1995 and December 31, 1994, inventories consisted of the
following:
<TABLE>
<CAPTION>
March 31, 1995 December 31, 1994
-------------- -----------------
<S> <C> <C>
Raw materials . . . . . . $1,321,814 $1,194,369
Work in process . . . . . 162,289 181,416
Finished goods . . . . . 424,074 231,305
---------- ----------
$1,908,177 $1,607,090
========== ==========
</TABLE>
E. INCOME TAXES
The Company adopted Financial Accounting Standards Board Statement No.
109 in 1991. The effect of the adoption was to permit the Company to reduce
its income tax expense by the utilization of the net operating loss
carryforward rather than treating the realization of the net operating loss
carryforward as an extraordinary credit.
F. SHORT-TERM INVESTMENTS
The Company adopted Financial Accounting Standards Board Statement No.
115 as of January 1, 1994. The effect of the adoption is that the Company
classifies its entire investment portfolio as available-for-sale. Accordingly,
unrealized holding gains and losses on short-term investments are carried as a
separate component of stockholder's equity.
G. CONTINGENCIES
The Company is a defendant in two related class action lawsuits filed
by two shareholders of the Company alleging that adverse material information
was not disclosed at the time of the initial public offering and in subsequent
periods. On May 4, 1992, the district court granted summary judgment in one of
the actions in favor of the Company on all claims. On July 9, 1992, the
district court granted the Company's motion to dismiss the second action. In
October 1994, the Company received the opinion of the Ninth Circuit of Appeals
affirming in part and reversing in part the United States District Court's
decision granting summary judgment in favor of the Company and several
officers. The complaints allege principally that adverse material information
was not disclosed at the time of the initial public offering in June 1988. The
Company intends to proceed to trial on any remaining matters. The ultimate
outcome of the litigation cannot presently be determined. Accordingly, no
provision for any liability that may result, has been made in the financial
statements.
- 8 -
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The following discussion and analysis should be read in conjunction
with the Company's audited financial statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations included in the
Company's 1993 Annual Report on Form 10-K filed with the Securities and
Exchange Commission on March 28, 1995.
RESULTS OF CONSOLIDATED OPERATIONS
GENERAL
As previously announced, the Company plans to spin out its business
units into independent companies in hopes of achieving a fairer market
valuation for our shareholders and providing operational focus. We are making
progress on this unbundling plan. To date, the Company's consolidated revenues
have come primarily from Medstone's lithotripsy business. The Company also
realized revenue from sales of its disposable laser catheters that is included
with procedures and maintenance fees.
The Company began the year with approximately $14.4 million in cash and
marketable securities, no debt, inventories of $1.6 million, and total assets
of $22.3 million. The Company ended the quarter with approximately $16.2
million in cash and marketable securities, no debt, inventories of $1.9
million, and total assets of $24.0 million.
RESULTS OF OPERATIONS
Three Months Ended March 31, 1995 Compared to Three Months Ended March 31, 1994
The Company recognized revenue of $4.8 million for the first quarter of
1995, or a 7% increase, compared to $4.5 million during the first quarter of
1994. Equipment revenues remained approximately equal on an equal number of
units shipped for both periods. Equipment upgrade revenues decreased by 67% in
the first quarter of 1995 compared to the first quarter of 1994 due to the
decrease in the number of customer units for which the upgrades are available.
The recurring revenue stream from procedure and maintenance revenues increased
by 35% in the current period from the comparable period in the prior year as
the number of patients treated on the Medstone lithotripters in the United
States increased by 29%. Offsetting this increase is a 59% revenue decrease in
the ProLase II, the Company's laser catheter product, as both number of units
shipped and per unit revenue declined as lower cost competition has forced
market changes.
Interest income increased by 93% in the three months ended March 31,
1995 compared to the same period in 1994 due to a marked increase in investment
yield from upward market pressures and a $3,240,000 higher invested balance.
Cost of sales on equipment sales and equipment upgrades decreased to
42% of sales in the first
- 9 -
<PAGE> 10
quarter of 1995 compared to 44% of sales in the comparable quarter in 1994 due
to the mix of lithotripter units and less equipment upgrades. The cost of
sales related to recurring revenue increased to 42% of revenues in the first
quarter of 1995 from 35% of revenues in the first quarter of 1994 due to
increased expenses to support the expanding mobile lithotripsy routes. As a
percentage of sales revenue (excluding interest), the cost of equipment,
procedures, maintenance and laser catheters increased to 42% for the first
quarter of 1995 compared to 38% for the first quarter of 1994.
Research and development expenses decreased by 44% during the three
months ended March 31, 1995 compared to the corresponding period of 1994,
primarily due to a reduction in headcount and supplies expenses as the Company
redefines its efforts associated with prostate diseases.
Selling expenses decreased by 21% in the first quarter of 1994 when
compared to 1994 primarily due to the decreased consulting expenses and lower
bad debt expense.
General and administrative expenses decreased by 25% in the first
quarter of 1995 compared to the same quarter in the prior year due to lower
headcount in the Company's divisional structure, lower occupancy costs due to
the Company's lower cost facility, and lower legal costs due to 1994's legal
actions.
Other expense decreased during the first quarter of 1995 due to the
decrease in legal costs incurred in connection with the class action lawsuit
filed against the Company.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1995, the Company had approximately $16.2 million in cash
and equivalents. These funds were generated from the initial public offering
of the Company's common stock in June 1988 and from earnings, although funds
generated from operations in the first quarter of 1995 are not necessarily
indicative of results to be expected for the full year. Currently, the
Company's short-term capital requirements are considered by management to be
minor, with the funding of current operations and building of additional
possible mobile vans being supported by the current revenue cash flow. With
the Company's move into its new lower cost facility, operating overhead is
significantly reduced, with a corresponding reduction in funds required for
operations.
The Company's long-term capital expenditure requirements will depend
upon numerous factors, including the progress of the Company's research and
development programs, the time required to obtain regulatory approvals, the
resources that the Company devotes to the development of self- funded products,
proprietary manufacturing methods and advanced technologies, the ability of the
Company to obtain additional licensing arrangements and to manufacture products
under those arrangements, and the demand for its products if and when approved
and possible acquisitions of products, technologies and companies.
The Company believes that its existing working capital and funds
anticipated to be generated from operations will be sufficient to meet the cash
needs for continuation of its present operations during 1995.
- 10 -
<PAGE> 11
CYTOCARE, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Previously reported.
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
--------------------------------
(a) The following exhibits are included herein:
(11.1) Statements re: Computation of Per Share Information
(27) Financial Data Schedule
(b) There were no reports on Form 8-K filed with the
Commission during the quarter ended March 31, 1995.
- 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 hereunto duly authorized.
CYTOCARE, INC.
Date: May 10, 1995 DAVID V. RADLINSKI
------------------------
David V. Radlinski,
Chief Financial Officer,
(Principal financial and
accounting officer)
- 12 -
<PAGE> 1
Exhibit 11.1
CYTOCARE, INC.
COMPUTATION OF PER SHARE INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Earnings:
Net income . . . . . . . . . . . . . . $1,092,678 $ 964,844
========== ==========
Computation of primary per share
information:
Shares:
Weighted average number of
shares outstanding . . . . . . . 5,156,982 4,888,072
Add effect of outstanding
options and warrants (a) . . . . 280,557 462,510
---------- ----------
Number of shares outstanding, as
adjusted . . . . . . . . . . . . 5,437,539 5,350,582
========== ==========
Primary earnings per share:
Net income . . . . . . . . . . . . $ .20 $ .18
========== ==========
Computation of fully diluted per
share information:
Shares:
Weighted average number of
shares outstanding . . . . . . . 5,156,982 4,888,072
Add effect of outstanding
options and warrants (a) . . . . 283,201 472,223
---------- ----------
Number of shares outstanding as
adjusted . . . . . . . . . . . . 5,440,183 5,360,295
========== ==========
Fully diluted earnings per share:
Net income . . . . . . . . . . . . $ .20 $ .18
========== ==========
</TABLE>
- ---------------
(a) As determined by the application of the treasury stock method.
- 13 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 166,556
<SECURITIES> 16,063,761
<RECEIVABLES> 1,613,149
<ALLOWANCES> 257,000
<INVENTORY> 1,908,177
<CURRENT-ASSETS> 21,243,573
<PP&E> 5,955,273
<DEPRECIATION> 3,236,902
<TOTAL-ASSETS> 23,984,444
<CURRENT-LIABILITIES> 2,964,839
<BONDS> 0
<COMMON> 20,709
0
0
<OTHER-SE> 20,773,896
<TOTAL-LIABILITY-AND-EQUITY> 23,984,444
<SALES> 4,583,611
<TOTAL-REVENUES> 4,813,852
<CGS> 1,930,209
<TOTAL-COSTS> 1,189,969
<OTHER-EXPENSES> 996
<LOSS-PROVISION> 635
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,692,678
<INCOME-TAX> 600,000
<INCOME-CONTINUING> 1,092,678
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,092,678
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
