<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, 1997
---------------------------------------------
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
-------
MEDSTONE INTERNATIONAL, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 66-0439440
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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 May
2, 1997 was 5,418,280.
<PAGE> 2
MEDSTONE INTERNATIONAL, INC.
INDEX TO FORM 10-Q
PART I. FINANCIAL INFORMATION
-----------------------------
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
March 31, 1997 (Unaudited) and December 31, 1996 3
Condensed Consolidated Statements of Income (Unaudited)
Three Months Ended March 31, 1997 and 1996 4
Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
Three Months Ended March 31, 1997 5
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1997 and 1996 6
Notes to Unaudited Condensed Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
PART II. OTHER INFORMATION
--------------------------
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Defaults Upon Senior Securities 13
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
</TABLE>
<PAGE> 3
MEDSTONE INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1997 1996
------------ ------------
(Unaudited)
ASSETS
------
<S> <C> <C>
Current assets:
Cash and equivalents $ 1,489,189 $ 3,906,961
Short-term investments 7,606,357 7,102,170
Accounts receivable, less allowance for doubtful accounts of
$180,000 and $220,000 in 1997 and 1996, respectively 3,312,212 2,686,985
Inventories 2,426,887 2,459,779
Deferred tax assets 621,000 1,061,000
Note receivable 1,125,000 1,250,000
Prepaid expenses and other current assets 210,604 243,271
------------ ------------
Total current assets 16,791,249 18,710,166
Property and equipment:
Lithotripters 7,520,442 7,289,845
Equipment 916,630 876,809
Furniture and fixtures 1,023,935 1,007,292
Leasehold improvements 89,764 89,764
------------ ------------
9,550,771 9,263,710
Less accumulated depreciation and amortization 4,106,932 3,740,973
------------ ------------
Net property and equipment 5,443,839 5,522,737
------------ ------------
Goodwill, net 3,329,212 1,118,583
Other assets, net 43,805 43,805
------------ ------------
$ 25,608,105 $ 25,395,291
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 1,259,257 $ 1,760,922
Accrued expenses 218,176 209,512
Accrued income taxes 241,438 376,172
Accrued payroll expenses 296,466 338,461
Deferred revenue 1,111,385 1,042,043
------------ ------------
Total current liabilities 3,126,722 3,727,110
Deferred tax liabilities 392,000 392,000
Minority interest 338,813 111,172
Commitments and contingencies (Note F)
Stockholders' equity:
Common stock - $.004 par value, 20,000,000
shares authorized, 5,587,280 and
5,578,403 shares issued and outstanding at
March 31, 1997 and December 31, 1996, respectively 22,349 22,314
Additional paid-in capital 18,755,518 18,715,068
Accumulated earnings 4,332,419 3,471,965
Stock purchase notes receivable (134,800) (134,800)
Unrealized gain (loss) on short-term investments (1,354) (1,168)
Treasury stock (150,400 shares at cost at March 31,
1997 and 112,800 shares at cost at December 31,
1996) (1,223,562) (908,370)
------------ ------------
Total stockholders' equity 21,750,570 21,165,009
------------ ------------
$ 25,608,105 $ 25,395,291
============ ============
</TABLE>
See accompanying notes
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<PAGE> 4
MEDSTONE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
Revenues:
Net equipment sales ....................... $ 776,900 $ 787,500
Procedures, maintenance and management fees 4,054,687 3,090,780
Interest income ........................... 130,541 224,054
---------- ----------
Total revenues ......................... 4,962,128 4,102,334
Costs and expenses:
Cost of equipment sales ................... 564,155 416,524
Costs of procedures and maintenance fees .. 1,706,324 1,416,328
Research and development .................. 194,165 122,863
Selling ................................... 558,270 495,114
General and administrative ................ 547,762 317,036
Legal and other expense ................... 12,074 367,155
---------- ----------
Total costs and expenses .................. 3,582,750 3,135,020
---------- ----------
Income before provision for income taxes ...... 1,379,378 967,314
Provision for income taxes .................... 440,000 350,000
Minority interest in subsidiaries income ...... 78,924 --
---------- ----------
Net income .................................... $ 860,454 $ 617,314
========== ==========
Earnings per share ............................ $ .16 $ .11
========== ==========
Number of shares used in the computation of
earnings per share ........................ 5,509,381 5,676,863
========== ==========
</TABLE>
See accompanying notes.
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<PAGE> 5
MEDSTONE INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK STOCK UNREALIZED
------------------ ADDITIONAL ACCUMULATED PURCHASE LOSS ON
NUMBER OF PAID-IN EARNINGS NOTE SHORT-TERM TREASURY
SHARES AMOUNT CAPITAL (DEFICIT) RECEIVABLE INVESTMENTS STOCK TOTAL
--------- ------- ----------- ---------- ---------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1996 5,465,603 $22,314 $18,715,068 $3,471,965 $(134,800) $(1,168) $ (908,370) $21,165,009
Common stock options exercised 8,877 35 40,450 -- -- -- -- 40,485
Treasury stock repurchased (37,600) -- -- -- -- -- (315,192) (315,192)
Unrealized loss on short-term
investments -- -- -- -- -- (186) -- (186)
Net income -- -- -- 860,454 -- -- -- 860,454
--------- ------- ----------- ---------- --------- ------- ----------- -----------
BALANCE AT MARCH 31, 1997
(UNAUDITED) 5,436,880 $22,349 $18,755,518 $4,332,419 $(134,800) $(1,354) $(1,223,562) $21,750,570
========= ======= =========== ========== ========= ======= =========== ===========
</TABLE>
See accompanying notes
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<PAGE> 6
MEDSTONE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ...................................................... $ 860,454 $ 617,314
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization ................................ 378,038 236,806
Provision for bad debt ....................................... 20,000 --
Minority interest in partnerships ............................ 78,924 --
Changes in assets and liabilities:
Accounts receivable ........................................ (645,227) (541,363)
Inventories ................................................ 32,892 146,605
Deferred taxes ............................................. 440,000 --
Note receivable ............................................ 125,000 --
Prepaid expenses and other current assets .................. 32,667 90,837
Accounts payable and accrued expenses ...................... (493,001) 148,420
Accrued payroll expenses ................................... (41,995) 27,092
Accrued income taxes ....................................... (134,734) 361,048
Deferred revenue ........................................... 69,342 110,251
Other, net ................................................. -- (496,584)
----------- -----------
Net cash provided by (used in) operating activities ............. 722,360 700,426
----------- -----------
Cash flows from investing activities:
Purchase of investments available for sale ...................... (7,608,693) (6,657,067)
Sale of investments available for sale .......................... 7,104,320 6,466,508
Purchase of subsidiary .......................................... (2,300,000) --
Investment by minority in partnership ........................... 226,009 --
Purchase of property and equipment .............................. (287,061) (1,015,027)
Disposals of property and equipment ............................. -- --
----------- -----------
Net cash used in investing activities ........................... (2,865,425) (1,205,586)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock .......................... 40,485 64,862
Purchase of treasury stock ...................................... (315,192) --
Dividends paid .................................................. -- (1,000,000)
----------- -----------
Net cash used in financing activities ........................... (274,707) (935,138)
Net increase (decrease) in cash and equivalents ................. (2,417,772) (1,440,298)
Cash and equivalents at beginning of period ..................... 3,906,961 3,108,741
----------- -----------
Cash and equivalents at end of period .............................. $ 1,489,189 $ 1,668,443
=========== ===========
Supplemental cash flow disclosures:
Cash paid during the period for:
Income taxes ................................................... $ 134,625 $ 7,236
Interest ....................................................... $ -- $ --
Supplemental schedule of noncash investing and financing activities:
Dividends paid ................................................. $ -- $ 966,216
</TABLE>
See accompanying notes.
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<PAGE> 7
MEDSTONE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
A. ORGANIZATION AND OPERATIONS OF THE COMPANY
Medstone International, Inc. ("Medstone") was incorporated in Delaware
in October 1984. The Company designs, manufactures and markets the Medstone
STSTM Shockwave Therapy System (the "System") for the noninvasive disintegration
of kidney stones in human patients. In addition to sales of the System, Medstone
generates recurring revenue from procedure fees and fee for service arrangements
for use of the System and from repairs and maintenance of the Systems. 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
to customers in the United States on a "wholesale" fee-per-procedure basis,
which consolidated billings are rendered to providers. Medstone intends to
expand efforts to grow this medical service side of its business.
Northern Nevada Lithotripsy Associates, LLC ("Northern Nevada"), is
owned 60% by Medstone. Medstone acquired its 60% interest for $1.35 million as
of April 1, 1996. The operating results of Northern Nevada are included in the
consolidated financial statements of the Company as of the acquisition date.
United Physicians Resources, Inc. ("UPR") was incorporated in June
1996, to expand the Company's service orientation to the urologist practitioner.
UPR provides billing, practice management, and consulting services as an
additional service line once the initial physician relationship has been
established. UPR purchased the operations of Integrated HealthCare Systems, Inc.
in July 1996 for $30,000. The operating results of UPR are included in the
consolidated financial statements of the Company since its incorporation.
As of March 1, 1997, Medstone acquired a 60% interest in Southern Idaho
Lithotripsy Associates, LLC ("Southern Idaho") for $2.3 million in cash. The
operating results of Southern Idaho are included in the consolidated financial
statements of Medstone as of March 1, 1997.
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, 1997 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
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<PAGE> 8
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 1996 Annual Report on Form 10-K
filed with the Securities and Exchange Commission on March 27, 1997. Results of
operations for the three months ended March 31, 1997 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 income 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.
D. INVENTORIES
At March 31, 1997 and December 31, 1996, inventories consisted of the
following:
<TABLE>
<CAPTION>
March 31, DECEMBER 31,
1997 1996
----------- ------------
<S> <C> <C>
Raw materials $ 1,424,252 $ 1,353,993
Work in process 114,771 255,776
Finished goods 887,864 850,010
----------- -----------
$ 2,426,887 $ 2,459,779
=========== ===========
</TABLE>
E. SHORT-TERM INVESTMENTS
Effective January 1, 1995, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." The adoption did not have a
significant impact on the Company's consolidated financial statements.
Management determines the appropriate classification of such securities at the
time of purchase and reevaluates such classification as of each balance sheet
date. Based on its intent, the Company's investments are classified as
available-for-sale and are carried at fair value, with unrealized gains and
losses, net of tax, reported as a separate component of stockholders' equity.
The investments are adjusted for amortization of premiums and discounts to
maturity and such amortization is included in interest income. Realized gains
and losses and declines in value judged to be other than temporary are
determined based on the specific identification method and are reported in the
consolidated statements of operations.
F. CONTINGENCIES
From time to time, the Company is subject to legal actions and claims
for personal injuries or property damage related to patients who use its
products. The Company has obtained a liability insurance policy providing
coverage for product liability and other claims. Management does not believe
that the resolution of any current proceedings will have a
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<PAGE> 9
material financial impact on the Company or the consolidated financial
statements.
G. STOCK REPURCHASE PLAN
On March 29, 1996 the Company announced a stock repurchase program of
up to 500,000 shares of its Common Stock. For the quarter ended March 31, 1997,
the Company has repurchased 37,600 shares at a cost of $315,192. Since inception
of the repurchase program, the Company has repurchased a total of 150,400 shares
at a cost of $1,223,562.
- 9 -
<PAGE> 10
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 1996 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 27, 1997.
RESULTS OF CONSOLIDATED OPERATIONS
- ----------------------------------
GENERAL
Medstone manufactures, markets and maintains lithotripters, and
continues to expand its Fee-for-Service Program to supply lithotripsy equipment
to providers on a per procedure basis. To date, the Company's consolidated
revenues have come primarily 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. It
currently offers lithotripsy procedures using 13 mobile systems and two fixed
site in the United States on a per procedure basis. With the ability to offer
quality equipment at reasonable prices, Medstone intends to continue the growth
of this manufacturer direct business.
In 1996, the Company acquired a 60% interest in Northern Nevada, a
lithotripsy partnership which deals directly with patient and insurers and also
founded UPR as a majority-owned subsidiary of the Company, to expand the
Company's service orientation to the urologist practitioner. In March 1997 the
Company acquired a 60% interest in Southern Idaho Lithotripsy Associates, LLC,
another provider of lithotripsy services.
Three Months Ended March 31, 1997 Compared to Three Months Ended March 31, 1996
- -------------------------------------------------------------------------------
The Company recognized revenue of approximately $5.0 million in the
first quarter of 1997 or a 21% increase compared to $4.1 million in the
corresponding period of 1996. Equipment revenues remained flat in the first
quarter of 1997 compared to the first quarter of 1996 as two equipment units
were shipped in both periods. With the equipment sales remaining flat, the
revenue from the Company's maintenance, procedure and fee-for-service activities
increased by 31%, or $964,000, in the first quarter of 1997 when compared to the
same period of the prior year. This is due primarily to the increase in the fee
for service revenue as the number of patient treated on Company owned
lithotripters increased and additional revenue from the Northern Nevada and
Southern Idaho operations.
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<PAGE> 11
Interest income decreased by 42% in the first quarter of 1997 compared
to the same period in 1996 due to decreased market rates and substantially lower
average invested balances as the Company settled the class action litigation in
mid-1996 and capital is devoted to acquisitions.
Cost of sales on equipment sales increased to 73% of sales in the three
months ended March 31, 1997, compared to 53% of sales in the comparable period
of the prior year due to equipment option mix and increased overhead expense
levels due to a higher production capacity. Recurring revenue costs of sales
decreased to 42% in the three months ended March 31, 1997, compared to 46% in
the same period in the prior year due to the higher revenue base for the mobile
lithotripsy services. Overall cost of sales, as a percentage of revenue
(excluding interest), remained level at 47% in the first quarter of 1997
compared to the first quarter of 1996.
Research and development costs increased by 58%, or $71,000 in the
first quarter of 1997 compared to the same quarter of 1996 due to increased
headcount and related expenses in connection with development of the new
lithotripsy products under development by the Company.
Sales expenses increased by $63,000 or 13% in the first quarter of 1997
when compared to the same period of 1996 due to higher commission expense
resulting from higher revenues and also higher travel expenses as the Company
pursues more international lithotripsy opportunities.
General and administrative expenses increased by $231,000, or 73% in
the first quarter of 1997 when compared to the first quarter of 1996 due to
additional payroll expenses for the United Physicians Resources subsidiary.
Legal and other expenses decreased by $355,000 in the three months
ended March 31, 1997 when compared to the same period of 1996 as legal expenses
are no longer being incurred in connection with the class action securities suit
against the Company and current and former officers settled in the second
quarter of 1996.
Provision for income taxes for the first quarter of 1997 increased by
$90,000, or 26%, representing a higher taxable income in the current year
compared to the same period in the prior year.
Minority interest in subsidiaries' income increased to $78,000 in the
three months ended March 31, 1997, due to the acquisition of the 60% interest in
the Northern Nevada and Southern Idaho operations.
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<PAGE> 12
Liquidity and Capital Resources
- -------------------------------
At March 31, 1997, the Company had cash and short-term investments of
approximately $9.1 million. These funds were generated from continuing operating
activities and from the Company's initial public offering in June 1988.
The Company's long-term capital expenditure requirements will depend on
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 costs of
acquisitions and/or new revenue opportunities, 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 1997.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
Forward-looking statements in this report, including without
limitation, statements relating to the Company's plans, strategies, objectives,
expectations, intentions and adequacy of resources, are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Investors are cautioned that such forward-looking statements involve risks and
uncertainties including without limitation the following: (i) the Company's
plans, strategies, objections, expectations and intentions are subject to change
at any time at the discretion of the Company, (ii) the Company's plans and
results of operations will be affected by the Company's ability to manage its
growth; (iii) the Company's businesses are highly competitive and the entrance
of new competitors into or the expansion of the operations by existing
competitors in the Company's markets and other changes could adversely affect
the Company's plans and results of operations; and (iv) other risks and
uncertainties indicated from time to time in the Company's filings with the
Securities and Exchange Commission.
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<PAGE> 13
MEDSTONE INTERNATIONAL, 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) Reports on Form 8-K.
None.
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<PAGE> 14
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.
MEDSTONE INTERNATIONAL, INC.
-------------------------------------
A Delaware corporation
Date: May 9, 1997 MARK SELAWSKI
-------------------------------------
Mark Selawski
Chief Financial Officer
(Principal financial and
accounting officer)
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<PAGE> 1
EXHIBIT 11.1
MEDSTONE INTERNATIONAL, INC.
COMPUTATION OF PER SHARE INFORMATION
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
1997 1996
---------- ----------
<S> <C> <C>
Earnings:
Net income ............................... $ 860,454 $ 617,314
========== ==========
Computation of primary per share information:
Shares:
Weighted average number of
shares outstanding ................... 5,440,304 5,534,173
Add effect of outstanding options
and warrants (a) ..................... 69,077 142,690
---------- ----------
Number of shares outstanding, as
adjusted ............................. 5,509,381 5,676,863
========== ==========
Primary earnings per share:
Net income ............................ $ .16 $ .11
========== ==========
Computation of fully diluted per share
information:
Shares:
Weighted average number of
shares outstanding ................... 5,440,304 5,534,173
Add effect of outstanding
options and warrants (a) ............. 71,492 147,772
---------- ----------
Number of shares outstanding as
adjusted ............................. 5,511,796 5,681,945
========== ==========
Fully diluted earnings per share:
Net income ............................ $ .16 $ .11
========== ==========
</TABLE>
- -----------
(a) As determined by the application of the treasury stock method.
- 15 -
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,489,189
<SECURITIES> 7,606,357
<RECEIVABLES> 3,312,212
<ALLOWANCES> 180,000
<INVENTORY> 2,426,887
<CURRENT-ASSETS> 16,791,249
<PP&E> 9,550,771
<DEPRECIATION> 4,106,932
<TOTAL-ASSETS> 25,608,105
<CURRENT-LIABILITIES> 3,126,722
<BONDS> 0
0
0
<COMMON> 22,349
<OTHER-SE> 21,728,221
<TOTAL-LIABILITY-AND-EQUITY> 25,608,105
<SALES> 4,831,586
<TOTAL-REVENUES> 4,962,128
<CGS> 2,270,479
<TOTAL-COSTS> 1,300,197
<OTHER-EXPENSES> 90,998
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,300,454
<INCOME-TAX> 440,000
<INCOME-CONTINUING> 860,454
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 860,454
<EPS-PRIMARY> .16
<EPS-DILUTED> .16
</TABLE>
