<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, 1999
--------------------------------------------------
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: (949) 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
6, 1999 was 5,068,032.
<PAGE> 2
MEDSTONE INTERNATIONAL, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
Page No.
--------
<S> <C>
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
March 31, 1999 (Unaudited) and
December 31, 1998 3
Condensed Consolidated Statements of Income (Unaudited)
Three Months Ended March 31, 1999 and 1998 4
Condensed Consolidated Statement of Stockholders' Equity (Unaudited)
Three Months Ended March 31, 1999 5
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1999 and 1998 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>
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<PAGE> 3
MEDSTONE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 2,020,272 $ 1,128,463
Short-term investments 10,431,416 10,494,075
Accounts receivable, less allowance for doubtful accounts of
$565,667 and $602,564 in 1999 and 1998, respectively 3,682,264 3,535,581
Inventories 4,300,855 3,595,906
Deferred tax assets 1,139,903 1,139,903
Prepaid expenses and other current assets 368,177 719,598
------------ ------------
Total current assets 21,942,887 20,613,526
Property and equipment:
Lithotripters 9,242,970 9,054,296
Equipment 1,116,785 1,077,352
Furniture and fixtures 801,377 788,457
Leasehold improvements 147,200 145,007
------------ ------------
11,308,332 11,065,112
Less accumulated depreciation and amortization (6,823,033) (6.362,955)
------------ ------------
Net property and equipment 4,485,299 4,702,157
------------ ------------
Goodwill, net 3,161,079 3,182,096
Other assets, net 651,494 651,494
------------ ------------
$ 30,240,759 $ 29,149,273
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 526,558 $ 389,589
Accrued expenses 569,002 485,108
Accrued income taxes 455,113 183,593
Accrued payroll expenses 309,532 303,687
Customer deposits 164,425 86,125
Deferred revenue 726,071 733,889
------------ ------------
Total current liabilities 2,750,701 2,181,991
Deferred tax liabilities 714,737 714,737
Minority interest 281,190 319,868
Stockholders' equity:
Common stock - $.004 par value, 20,000,000 shares authorized, 5,655,132 and
5,650,505 shares issued and outstanding at
March 31, 1999 and 1998, respectively 22,621 22,602
Additional paid-in capital 19,103,990 19,076,104
Accumulated earnings 12,310,729 11,778,357
Accumulated other comprehensive loss -- (1,177)
Treasury stock 587,100 shares at cost at March 31, 1999
and December 31, 1998, respectively (4,943,209) (4,943,209)
------------ ------------
Total stockholders' equity 26,494,131 25,932,677
------------ ------------
$ 30,240,759 $ 29,149,273
============ ============
</TABLE>
See accompanying notes.
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<PAGE> 4
MEDSTONE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Revenues:
Net equipment sales ...................................... $ -- $ 697,000
Procedures, maintenance and management fees .............. 4,767,272 5,023,897
Interest income .......................................... 136,729 130,792
----------- -----------
Total revenues ....................................... 4,904,001 5,851,689
Costs and expenses:
Cost of equipment sales .................................. -- 626,543
Costs of procedures and maintenance fees ................. 2,467,272 2,261,179
Research and development ................................. 323,908 275,439
Selling .................................................. 351,614 521,290
General and administrative ............................... 733,405 552,760
Other (income) expense ................................... 12,896 (88,767)
----------- -----------
Total costs and expenses ................................. 3,889,095 4,148,444
----------- -----------
Income before provision for income taxes ...................... 1,014,906 1,703,245
Provision for income taxes .................................... 349,400 598,000
Minority interest in subsidiaries income ...................... 133,134 149,129
----------- -----------
Net income .................................................... $ 532,372 $ 956,116
=========== ===========
Earnings per share:
Basic ................................................ $ .11 $ .18
=========== ===========
Diluted .............................................. $ .10 $ .18
=========== ===========
Number of shares used in the computation of earnings per share:
Basic ................................................ 5,065,447 5,279,439
=========== ===========
Diluted .............................................. 5,201,191 5,436,896
=========== ===========
</TABLE>
See accompanying notes.
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<PAGE> 5
MEDSTONE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ACCUMULATED
------------------------- ADDITIONAL OTHER
NUMBER OF PAID-IN ACCUMULATED COMPREHENSIVE TREASURY
SHARES AMOUNT CAPITAL EARNINGS INCOME/(LOSS) STOCK TOTAL
----------- ----------- ----------- ----------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1998 5,063,405 $ 22,602 $19,076,104 $11,778,357 $ (1,177) $(4,943,209) $25,932,677
Common stock options exercised 4,627 19 27,886 -- -- -- 27,905
Unrealized gain on short-term
investments -- -- -- -- 1,177 -- 1,177
Net income -- -- -- 532,372 -- -- 532,372
----------- ----------- ----------- ----------- ----------- ----------- -----------
BALANCE AT MARCH 31, 1999
(UNAUDITED) 5,068,032 $ 22,621 $19,103,990 $12,310,729 $ 0 $(4,943,209) $26,494,131
=========== =========== =========== =========== =========== =========== ===========
</TABLE>
See accompanying notes.
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<PAGE> 6
MEDSTONE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income ..................................................... $ 532,372 $ 956,116
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation and amortization ............................... 481,095 416,154
Provision for bad debt ...................................... 5,000 45,000
Minority interest in partnerships ........................... 133,134 149,129
Changes in assets and liabilities:
Accounts receivable ...................................... (151,683) (288,146)
Inventories .............................................. (704,949) (96,284)
Prepaid expenses and other current assets ................ 351,421 (310,046)
Accounts payable and accrued expenses .................... 220,863 (287,987)
Accrued payroll expenses ................................. 5,845 95,329
Accrued income taxes ..................................... 271,520 554,510
Deferred revenue ......................................... (7,818) 76,945
Customer deposits ........................................ 78,300 (57,699)
Other, net ............................................... 188 (92,644)
----------- -----------
Net cash provided by operating activities .......................... 1,215,288 1,160,377
----------- -----------
Cash flows from investing activities:
Purchase of investments ........................................ (5,296,460) (5,342,733)
Sale of investments ............................................ 5,360,296 6,805,567
Purchase of subsidiary ......................................... --
Distribution of minority interest .............................. (172,000) (130,000)
Purchase of property and equipment ............................. (243,220) (390,272)
Disposals of property and equipment ............................ -- --
----------- -----------
Net cash provided by (used in) investing activities ............... (351,384) 942,562
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock ......................... 27,905 24,971
Purchase of treasury stock ..................................... -- (1,052,825)
----------- -----------
Net cash provided by (used in) financing activities ................ 27,905 (1,027,854)
Net increase in cash and equivalents ............................... 891,809 1,075,085
Cash and equivalents at beginning of period ........................ 1,128,463 1,125,009
----------- -----------
Cash and equivalents at end of period .............................. $ 2,020,272 $ 2,200,094
=========== ===========
Supplemental cash flow disclosures:
Cash paid during the period for:
Income taxes .................................................. $ 70,265 $ 71,450
</TABLE>
See accompanying notes.
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<PAGE> 7
MEDSTONE INTERNATIONAL, INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1999
A. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of Medstone International, Inc. and its subsidiaries (the Company). All
significant intercompany transactions and accounts have been eliminated.
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, 1998 and consolidated
results of operations and cash flows for the periods presented. 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.
These financial statements should be read in conjunction with the Company's
audited financial statements included in the Company's 1998 Annual Report on
Form 10-K filed with the Securities and Exchange Commission on March 26, 1999.
Results of operations for the three months ended March 31, 1999 are not
necessarily indicative of results to be expected for the full year.
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from these estimates.
B. COMPREHENSIVE INCOME
As of January 1, 1999, the Company classifies its securities as held to
maturity and does not reflect any difference between reported net income and
other comprehensive income.
C. BUSINESS SEGMENTS
The Company operates in two business segments, equipment sales and fees
for procedures, maintenance and management. The equipment sales segment is not
significant.
-7-
<PAGE> 8
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998
----------- -----------
<S> <C> <C>
Revenues for reportable segment $ 4,904,001 $ 5,154,689
=========== ===========
Operating income (loss)
Reportable segment 1,152,616 1,938,485
Nonreportable segment (137,711) (235,241)
----------- -----------
$ 1,014,905 $ 1,703,245
=========== ===========
</TABLE>
D. PER SHARE INFORMATION
The Company has adopted SFAS No. 128 "Earnings Per Share," and applied
this pronouncement to all periods presented. This statement requires the
presentation of both basic and diluted net income per share for financial
statement purposes. Basic net income per share is computed by dividing income
available to common stockholders by the weighted average number of common shares
outstanding. Diluted net income per share includes the effect of the potential
shares outstanding, including dilutive stock options and warrants using the
treasury stock method. All earnings per share amounts for all periods have been
restated to conform with the SFAS No. 128 requirements and the accounting rules
set forth in Staff Accounting Bulletin 98 issued by the Securities and Exchange
Commission on February 3, 1998.
The following table sets forth the computation of earnings per share:
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------
1999 1998
---------- ----------
<S> <C> <C>
Numerator: Net income $ 532,372 $ 956,116
========== ==========
Denominator for weighted
average shares outstanding 5,065,447 5,279,439
========== ==========
Basic earnings per share $ .11 $ .18
========== ==========
Effect of dilutive securities:
Weighted average shares
outstanding 5,065,447 5,279,439
Stock options 135,744 157,457
---------- ----------
Denominator for diluted earnings
per share 5,201,191 5,436,896
========== ==========
Diluted earnings per share $ .10 $ .18
========== ==========
</TABLE>
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<PAGE> 9
E. INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out) or
market and consist of the following:
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
------------ ------------
<S> <C> <C>
Raw materials $ 3,082,410 $ 2,449,877
Work in process 309,668 203,540
Finished goods 908,777 942,489
------------ ------------
$ 4,300,855 $ 3,595,906
============ ============
</TABLE>
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 material financial
impact on the Company or the consolidated financial statements.
G. SUBSEQUENT EVENTS
On April 16, 1999, a wholly-owned subsidiary of the Company, Medstone
International, Ltd., purchased certain assets of Creos Ltd. from its liquidator
for $165,600 in cash. Creos Ltd. was a supplier of equipment used in the
Company's STS-T lithotripter. The Company does not expect a significant impact
on revenue or profits due to this acquisition.
-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 1998 Annual Report on Form 10-K filed with the Securities and Exchange
Commission on March 26, 1999.
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. The Company also offers a line of urology
procedure tables as an additional equipment product line. This allows
opportunities for bundling the lithotripsy products and urological procedure
tables to potential customers. To date, the Company's consolidated revenues have
come primarily from Medstone's lithotripsy business.
It currently offers lithotripsy procedures using 15 mobile systems and
two fixed sites 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, 1999 Compared to Three Months Ended March 31, 1998
The Company recognized revenue of approximately $4.9 million in the
first quarter of 1999 or a 16% decrease compared to $5.9 million in the
corresponding period of 1998. Equipment revenues declined by 100% in the first
quarter of 1999 compared to the first quarter of 1998 as no units were shipped
in 1999, compared to two unit shipments in 1998. No equipment was shipped in the
three months ended March 31, 1999 due to delays associated with the introduction
of the Company's STS-T transportable lithotripter. The revenue from the
Company's maintenance, procedure and fee-for-service activities decreased by 5%,
or $257,000, in the first three months of 1999 when compared to the same period
of 1998. The decrease is due to declines in maintenance revenue and third party
procedure revenues only partially offset by a 2% increase in fee-for-service
revenue, even though patient volume increased by 20% in the first quarter of
1999 compared to the same period of the prior year. Pricing pressures for
fee-for-service continues to negatively impact revenue growth.
-10-
<PAGE> 11
Cost of sales on equipment sales decreased to 0% of sales in the three
months ended March 31, 1999, due to no equipment sales, compared to 90% of sales
in the comparable period of 1998. Recurring revenue costs of sales increased to
52% in the first quarter of 1999, compared to 45% in the same period in the
prior year due to decreasing per unit revenues and a fixed expense base. Overall
cost of sales, as a percentage of revenue (excluding interest), increased to 52%
in the first quarter of 1999 compared to 50% in the same period in the prior
year due to lower margins.
Research and development costs increased by 18%, or $48,000 in the first
quarter of 1999 compared to the same quarter of 1998 due to increased headcount
and materials in connection with completion of the Medstone STS-T transportable
lithotripter.
Sales expenses decreased by $170,000 or 33% in the first quarter of 1999
when compared to the same period of 1998 due to lower commission expenses,
travel expenses and lower expenses for focus groups conducted in 1998.
General and administrative expenses increased by 33%, or $181,000, in
the first quarter of 1999 when compared to the first quarter of 1998 due to
increased legal expenses associated with the Company's strategic evaluation
plan.
Other (income) expense increased by $102,000 in the three months ended
March 31, 1999 when compared to the same period of 1998 as the Company
recognized a one-time gain in 1998 from the transaction with joint venture
partners to place a unit on the Asian continent.
Provision for income taxes for the first quarter of 1999 decreased by
$249,000, or 42%, representing a lower taxable income and a slightly higher tax
rate in the current year compared to the same period in the prior year.
Minority interest in subsidiaries' income decreased to $133,000 in the
three months ended March 31, 1999, compared to $149,000 in the three months
ended March 31, 1998 due to lower activity in the Northern Nevada and Southern
Idaho operations.
Liquidity and Capital Resources
At March 31, 1999, the Company had cash and short-term investments of
approximately $12.5 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
-11-
<PAGE> 12
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 1999.
YEAR 2000 UPDATE
To date, the Company has transitioned its accounting systems to Year
2000 compliant software and continues to transition additional systems related
to manufacturing throughout the second and third quarters of 1999. The Company
plans to have all systems implemented and operational by September 30, 1999.
The Company continues its assessment of customer and vendor compliance
to Year 2000 requirements. Questionnaires planned for delivery to customers,
vendors and other third parties will be circulated in the second quarter of
1999. The Company plans to complete this process by June 30, 1999, and complete
assessment of third parties' Year 2000 state of readiness after receipt of
requested responses. No further estimated timetable of remediation is available
until responses are given to the Company from these third parties and no
assurances can be given that remediation will be completed either on a timely
basis or at all.
All costs of Year 2000 issues have been immaterial to the Company's
overall financial position but it is possible future costs of delays and
unforseen compliance issues may be material to the future financial condition
and results of operations of the Company.
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.
-12-
<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. Exhibit and Reports on Form 8-K
(a) The following exhibits are included herein:
(3.3) Amendment of By-Laws
(27) Financial Data Schedule
(b) Reports on Form 8-K.
None.
-13-
<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 13, 1999
/s/ Mark Selawski
-----------------------------------------
Mark Selawski
Chief Financial Officer
(Principal financial and
accounting officer)
-14-
<PAGE> 15
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
3.3 Amendment of By-Laws
27 Financial Data Schedule
-15-
<PAGE> 1
EXHIBIT 3.3
AMENDED ARTICLE III OF THE CORPORATION'S BYLAWS,
IN EFFECT AS OF MARCH 22, 1999:
ARTICLE III
SHAREHOLDERS MEETINGS
SECTION 4. NOTICE OF MEETINGS: RECORD DATES: Notice of the time and place of
all annual and special meetings shall be mailed by the Secretary to each
shareholder at least ten (10) days before the date thereof. The Board of
Directors may set, in advance, a "record date" which shall not be more than
sixty (60) days prior to the date set for the shareholders' meeting, upon which
the Transfer Agent will take a record of all shareholders entitled to notice of
or to vote at such shareholders' meeting, without actually closing the books for
transfers of stock. When a determination of shareholders entitled to vote at any
meeting of shareholders has been made as provided in this Section, such
determination shall apply to any adjournment thereof.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 2,020,272
<SECURITIES> 10,431,416
<RECEIVABLES> 3,682,264
<ALLOWANCES> 565,667
<INVENTORY> 4,300,855
<CURRENT-ASSETS> 21,942,970
<PP&E> 11,308,332
<DEPRECIATION> 6,823,033
<TOTAL-ASSETS> 30,240,759
<CURRENT-LIABILITIES> 2,750,701
<BONDS> 0
22,621
0
<COMMON> 0
<OTHER-SE> 26,471,510
<TOTAL-LIABILITY-AND-EQUITY> 30,240,759
<SALES> 4,767,272
<TOTAL-REVENUES> 4,904,001
<CGS> 2,467,272
<TOTAL-COSTS> 1,408,927
<OTHER-EXPENSES> 12,896
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 882,132
<INCOME-TAX> 349,400
<INCOME-CONTINUING> 532,372
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 532,372
<EPS-PRIMARY> .11<F1>
<EPS-DILUTED> .10
<FN>
<F1>FOR PURPOSES OF THIS EXHIBIT, PRIMARY MEANS BASIC.
</FN>
</TABLE>
