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 quarterly period ended September 30, 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 number 0-17231
----------------------------------------------------------
AUTOMOBILE PROTECTION CORPORATION - APCO
(Exact name of registrant as specified in its charter)
Georgia 58-1582432
- --------------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
15 Dunwoody Park Drive, Suite 100
Atlanta, Georgia 30338
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(770) 394-7070
--------------
Registrant's telephone number, including area code
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 .
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 1997
- --------------------------------------- -------------------------------
Common stock, $.001 par value per share 10,931,492
1
<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
INDEX
Page
Part I. Financial Information
Item 1. Financial Statements.
Consolidated Balance Sheet at September 30, 1997 and
December 31, 1996........................................................ 3
Consolidated Statement of Income for the Three
Month Period Ended September 30, 1997 and 1996........................... 4
Consolidated Statement of Income for the Nine
Month Period Ended September 30, 1997 and 1996........................... 5
Consolidated Statement of Cash Flows for the Nine
Month Period Ended September 30, 1997 and 1996 .......................... 6
Notes to Consolidated Financial Statements .............................. 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...................................... 9
Part II. Other Information
Item 2. Changes in Securities
Item 6. Exhibits and Reports on Form 8-K
2
<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
September 30, * December 31,
1997 1996
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $10,716,769 $ 6,967,904
Trading securities, at fair value 6,713,672 5,721,730
Investment securities held to maturity 3,221,211 1,654,209
Accounts receivable, net of provision for doubtful
accounts of $40,000 and $30,000 3,881,816 2,160,236
Notes receivable 861,171 547,446
Officer and employee receivables 240,394 205,771
Income tax refund receivable 452,546
Prepaid expenses 579,309 658,074
Deferred tax asset 611,064 472,805
Restricted cash 10,536,258 8,330,106
----------- -----------
Total current assets 37,361,664 27,170,827
Property and equipment, net of accumulated
depreciation of $1,987,156 and $1,716,894 1,225,754 1,117,530
Investment securities held to maturity, non current 524,246 2,098,089
Deposits to secure licenses 745,910 730,276
Deferred tax asset 64,997 39,797
Other assets 33,690 104,304
----------- -----------
$39,956,261 $31,260,823
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Premiums, fees and taxes payable $10,536,258 $ 8,330,106
Accounts payable 1,627,543 1,156,118
Accrued liabilities 4,388,199 2,461,091
Current income taxes payable 493,244
----------- -----------
Total current liabilities 17,045,244 11,947,315
Deferred income taxes 345,284 103,160
Redeemable preferred stock 300 300
----------- -----------
17,390,828 12,050,775
----------- -----------
Shareholders' equity:
Common stock; $.001 par value, 40,000,000 authorized,
10,866,577 and 10,564,323 issued and outstanding 10,867 10,564
Additional paid-in capital 15,552,123 15,053,345
Retained earnings 7,002,443 4,146,139
----------- -----------
Total shareholders' equity 22,565,433 19,210,048
----------- -----------
$39,956,261 $31,260,823
=========== ===========
</TABLE>
* From audited financial statements contained in Registrant's Annual Report
on Form 10-K for the twelve months ended 12/31/96.
The accompanying notes are an integral part of
these consolidated financial statements.
3
<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
------------------ ------------------
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Revenues $ 27,087,863 $ 18,642,959
Cost of sales:
Premiums and taxes 17,604,493 12,016,556
Commissions and other costs 3,956,858 2,607,863
------------ ------------
Total cost of sales 21,561,351 14,624,419
------------ ------------
5,526,512 4,018,540
Expenses:
Compensation, selling and administrative 3,565,656 2,952,983
Depreciation and amortization 111,000 121,500
Interest, dividend and other income (326,745) (212,657)
------------ ------------
3,349,911 2,861,826
------------ ------------
Income before provision for income taxes 2,176,601 1,156,714
Provision for income taxes 834,689 437,000
------------ ------------
Net income $ 1,341,912 $ 719,714
============ ============
Net income per share (primary and fully diluted) $ 0.11 $ 0.06
============ ============
Number of shares used in computing
net income per share:
Primary basis 11,777,000 11,495,000
Fully diluted basis 11,881,000 11,550,000
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
4
<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
----------------- -----------------
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Revenues $ 70,980,206 $ 50,721,885
Cost of sales:
Premiums and taxes 45,983,441 32,706,212
Commissions and other costs 10,349,247 7,106,418
------------ ------------
Total cost of sales 56,332,688 39,812,630
------------ ------------
14,647,518 10,909,255
Expenses:
Compensation, selling and administrative 10,520,976 8,401,337
Depreciation and amortization 325,500 327,794
Interest, dividend and other income (819,951) (545,434)
------------ ------------
10,026,525 8,183,697
------------ ------------
Income before provision for income taxes 4,620,993 2,725,558
Provision for income taxes 1,764,689 1,040,000
------------ ------------
Net income $ 2,856,304 $ 1,685,558
============ ============
Net income per share (primary and fully diluted) $ 0.24 $ 0.15
============ ============
Number of shares used in computing
net income per share:
Primary basis 11,665,000 11,027,000
Fully diluted basis 11,769,000 11,081,000
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended Nine Months Ended
September 30, 1997 September 30, 1996
------------------ ------------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,856,304 $ 1,685,558
------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 325,500 327,794
Deferred income taxes 78,665 302,547
Provision for doubtful accounts 10,000 15,650
Tax benefit from stock option exercise 634,000
Stock compensation expense 73,800
Change in operating assets and liabilities:
Restricted cash (2,206,152) (2,005,837)
Accounts receivable (1,731,580) (349,421)
Officer and employee receivables (34,623) 30,819
Notes receivable (313,725) (20,428)
Income tax refund receivable 452,546 (803,675)
Prepaid expenses and other assets 95,379 (406,010)
Premiums, fees and taxes payable 2,206,152 2,005,837
Accounts payable 471,425 470,698
Accrued liabilities 1,927,108 832,304
Income taxes payable 493,244 (51,000)
Purchases of trading securities (4,226,207) (6,265,990)
Sales of trading securities 3,234,265 4,647,193
------------ ------------
Total adjustments 781,997 (561,719)
------------ ------------
Net cash provided by operating activities 3,638,301 1,123,839
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (389,724) (617,622)
Proceeds from sales of property and equipment 10,000 10,999
Purchases of investment securities (386,467) (2,570,993)
Redemptions and maturities of investment securities 393,308 1,545,000
Increase in deposits to secure licenses (15,634) (8,904)
------------ ------------
Net cash used in investing activities (388,517) (1,641,520)
------------ ------------
Cash flows from financing activities:
Issuance of common stock 499,081 2,009,955
------------ ------------
Net cash provided by financing activities 499,081 2,009,955
------------ ------------
Net increase in cash and cash equivalents 3,748,865 1,492,274
Cash and cash equivalents at beginning of period 6,967,904 6,746,886
------------ ------------
Cash and cash equivalents at end of period $ 10,716,769 $ 8,239,160
============ ============
Supplemental disclosure of cash flow information:
Cash paid during the period for income taxes $ 715,370 $ 875,000
============ ============
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
6
<PAGE>
AUTOMOBILE PROTECTION CORPORATION - APCO
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments, consisting solely of normal recurring
adjustments which are, in the opinion of management, necessary for a fair
presentation of the periods indicated. The accompanying consolidated financial
statements include the accounts of Automobile Protection Corporation - APCO and
its wholly-owned subsidiaries (the "Company"). Certain information and footnote
disclosures normally included in financial statements prepared in conformity
with generally accepted accounting principles have been condensed or omitted
pursuant to the rules and regulations of the Securities and Exchange Commission.
These condensed financial statements should be read in conjunction with the
consolidated financial statements and related notes contained in the Company's
Annual Report on Form 10-K for the twelve months ended December 31, 1996.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
- ---------------------------
The accompanying consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
transactions and balances have been eliminated in consolidation.
Revenues
- --------
Revenues from the sale of extended vehicle service contracts and extended
warranty programs are recognized when the service contract or extended warranty
sold by the dealer is received and accepted by the Company. Revenues are
comprised of the Company's administration fee, underlying insurance premium and
tax.
Cash and Cash Equivalents
- -------------------------
Cash and cash equivalents include all funds with an original maturity of ninety
days or less.
Investment Securities
- ---------------------
The Company's investments consist of trading securities and of held-to-maturity
securities. Trading securities are stated at their fair value, which is based on
quoted market prices, and all unrealized gains and losses are recognized in
earnings as incurred. Gains and losses during the periods encompassed by these
financial statements were insignificant. Held to maturity securities are stated
at their amortized cost. The market value of the Company's held-to-maturity
securities at September 30, 1997 is $3,750,911.
7
<PAGE>
Property and Equipment
- ----------------------
Property and equipment is stated at cost less accumulated depreciation and
amortization. Depreciation and amortization are calculated using the
straight-line method for financial reporting purposes and accelerated methods
for income tax purposes over the estimated useful lives of the assets ranging
from three to seven years. Maintenance and repair costs are charged to expense
as incurred, and major renewals and betterments are capitalized. When property
and equipment is retired or sold, the related carrying value and accumulated
depreciation are removed from the accounts and any resulting gain or loss is
reflected in income.
Premiums and Taxes Payable
- --------------------------
Premiums and taxes payable includes premiums due to the insurers or their
agents, taxes payable to various states and amounts advanced to the Company by
the insurers for payment of claims.
Advertising costs
- -----------------
The Company sponsors motorsport activities to advertise its products. The
Company has entered into an annual associate sponsorship agreement with Joe
Gibbs Racing, Inc. and separate agreements with race track owners to sponsor
race events. Direct costs associated with the Joe Gibbs Racing, Inc. associate
sponsorship are expensed evenly during the year, while costs associated with
race events are expensed in the month the event takes place.
Income Taxes
- ------------
The Company provides income taxes on income reported for financial statement
purposes. Deferred income taxes are recorded for differences in the recognition
of various items for financial reporting and income tax purposes. The Company
files a consolidated income tax return with its subsidiaries.
Net Income per Common Share
- ---------------------------
Net income per share has been calculated based on the weighted average number of
common shares and common share equivalents outstanding during each period
presented. Primary and fully diluted net income per share are the same during
the periods presented herein.
Reclassifications
- -----------------
Certain comparative amounts have been reclassified to conform with current year
presentation.
3. OTHER ITEM
The Company filed a complaint against Everest Reinsurance Company (formerly
Prudential Reinsurance Company, hereinafter "Everest") in September 1996 in the
United States District Court, Northern District of Georgia, Atlanta division.
The complaint arises from the improper denial of valid claims under various
assumption of liability endorsements issued by Everest to participating dealers
in 1991. In October 1996, Everest filed a motion to dismiss, asserting that the
liquidation order in the insolvency of National Colonial Insurance Company
("NCIC") enjoins Everest from making a payment under the reinsurance agreement
to anyone, other than the liquidator of NCIC. On August 12, 1997, the U.S. judge
8
<PAGE>
issued an order which denied Everest's motion to dismiss. The Company is funding
the claims submitted by dealers and has paid $460,000 through September 30,
1997. The Company is vigorously pursuing this action against Everest; however,
in view of the length of time that it may take to resolve the litigation and the
uncertain outcome, the Company recorded the total amount it has paid and expects
to pay, equal to $875,000, in the consolidated statement of income for the year
ended December 31, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations
-------------
The following discussion and analysis of financial condition and results of
operations presents the more significant factors affecting the Company during
the three and nine months ended September 30, 1997. The discussion and analysis
should be read in conjunction with the unaudited consolidated financial
statements and related notes appearing elsewhere herein and the Company's Annual
Report on Form 10-K for the twelve months ended December 31, 1996.
FORWARD-LOOKING STATEMENTS
When used herein and in future filings by the Company with the Securities and
Exchange Commission, the words or phrases "will likely result", "management
expects" or "the Company expects", "will continue", "is expected", "is
anticipated", "estimated" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Readers are cautioned not to place undue reliance
on any such forward-looking statements, each of which speak only as of the date
made. Such statements are subject to certain risks and uncertainties that could
cause actual results to differ materially from historical earnings and those
presently anticipated or projected. The Company has no obligation to publicly
release the result of any revisions which may be made to any forward-looking
statements to reflect anticipated or unanticipated events or circumstances
occurring after the date of such statements.
Certain of these risks and uncertainties are discussed herein. The industry in
which the Company operates is highly competitive, with some competitors having
significantly greater financial resources and name recognition than the Company.
The Company depends on independent sales representatives, automobile
dealers/retailers and a major automobile manufacturer to market its products.
The distribution of automobiles has been subject to cyclical economic conditions
in the past and could be subject to such conditions in the future, which could
adversely impact the Company. A trend towards consolidation in the distribution
of automobiles has commenced, which could reduce the number of franchised and
independent dealers and consequently the Company's distribution. Additional
risks related to insurance carriers are discussed in the "Overview" section.
9
<PAGE>
OVERVIEW
The Company's primary business is the marketing and administration of extended
vehicle service contracts (hereinafter referred to as "VSCs") for automobile
dealers. Dealers often engage a third party administrator, such as the Company,
to design a VSC program, arrange for insurance to limit their financial risk,
and to perform all of the related administrative functions associated therewith.
A function of the Company is to arrange for insurance to cover obligations to
pay all future claims. The Company has arranged for insurance coverage to be
provided by certain Underwriters at Lloyd's of London ("Lloyd's"), Greenwich
Insurance Company ("Greenwich"), Indian Harbor Insurance Company ("Indian
Harbor") and Illinois Union Insurance Company, a subsidiary of CIGNA Property
and Casualty Company (collectively "CIGNA"). Greenwich and Indian Harbor are
wholly-owned subsidiaries of NAC Re Corporation. Greenwich, Indian Harbor and
CIGNA may choose to purchase reinsurance from Lloyd's and other reinsurers,
including NAC Re Corporation. Most of the VSC's accepted by the Company for
administration between 1991 and 1996 are insured by Lloyd's. The availability of
insurance coverage at competitive rates and of insurance funds to make claims
payments, including the financial condition of the insurance carriers, is
critical to the Company and any disruption could have a material adverse effect
on the Company.
The Company's reported revenues represent the amount it bills to automobile
dealers, which is based on rate schedules developed by the Company. The amounts
billed consider insurance, taxes, commissions and other costs and profit. The
Company's reported cost of sales represents the amounts it pays to the insurers
for insurance, state insurance taxes and commissions to its sales
representatives.
LIQUIDITY AND CAPITAL RESOURCES
The Company believes that its current working capital and anticipated levels of
internally generated funds will be sufficient to fund its operating and capital
expenditure requirements for the next twenty four months. This estimate is based
on the Company's current level of operations and certain assumptions relating to
the Company's business and planned growth. At September 30, 1997, the Company
had working capital of $20,316,420 (compared to $15,223,512 at December 31,
1996) and investment securities with maturities greater than twelve months of
$524,246 (compared to $2,098,089 at December 31, 1996). The net increase in
working capital and investment securities of $3,519,065 is attributable to
operations ($3,019,984) and the exercise of stock options ($499,081). The
Company invests its funds in treasury securities, municipal bonds and financial
instruments with maturities of less than five years and money market accounts.
There is no plan to distribute funds to shareholders through a dividend or to
repurchase shares.
10
<PAGE>
RESULTS OF OPERATIONS
Three months ended September 30, 1997 ("1997") compared to the three months
- --------------------------------------------------------------------------------
ended September 30, 1996 ("1996").
- ----------------------------------
Revenues for 1997 increased by 45% or $8,444,904 to $27,087,863 over 1996. The
Company's largest revenue source is from the marketing and administration of
extended vehicle service contracts ("VSCs") under the EasyCare(R) name, which
provided 99% of revenues. EasyCare(R) revenues increased due to production under
the EasyCare(R) Certified Pre-Owned Vehicle Program, the signing of additional
automobile dealers to EasyCare(R) by the Company's independent sales
representatives and from 77% unit growth under the contract with American Honda
Finance Corporation.
The Company's gross margin was 20.4% of revenues in 1997 compared to 21.6% of
revenues in 1996. Gross margin is impacted by the mix of new and used, makes and
models of vehicles and the types of coverage sold. The overall gross margin for
1997 reflects production from the EasyCare(R) Certified Pre-Owned Vehicle
program, which has a different margin structure to the standard EasyCare(R)
service contract and offers additional benefits to the dealer and consumer, such
as service recapture. Additionally, the volume of business under the contract
with American Honda Finance Corporation, which has a lower margin than the core
business, increased at a faster rate than the core business.
Compensation, selling and administrative expenses for 1997 increased by 20.7% or
$612,673 to $3,565,656 over 1996. The increase for 1997 is primarily
attributable to compensation, printing and marketing costs. Compensation cost
increased by $400,000 in 1997 to support the growth of the business. The
Company's printing/fulfillment costs increased by $96,000 due to costs incurred
in connection with higher sales volumes and new programs. Marketing costs
increased by $121,000 due to additional promotional events (including
motorsports) in the current quarter.
Interest, dividend and other income for 1997 increased by 53.6% or $114,088 to
$326,745 over 1996. The increase is due to the larger cash and investment
securities balances on hand.
The Company recorded a provision for income taxes in 1997 of $834,689 compared
to $437,000 for 1996. The increase is primarily due to higher pretax income.
Nine months ended September 30, 1997 ("1997") compared to the nine months ended
- --------------------------------------------------------------------------------
September 30, 1996 ("1996").
- ----------------------------
Revenues for 1997 increased by 40% or $20,258,321 to $70,980,206 over 1996. The
Company's largest revenue source is from the marketing and administration of
extended vehicle service contracts ("VSCs") under the EasyCare(R) name, which
provided 99% of revenues for 1996. EasyCare(R) revenues increased due to
production under the EasyCare(R) Certified Pre-Owned Vehicle Program, the
signing of additional automobile dealers to EasyCare(R) by the Company's
independent sales representatives and from 73% unit growth under the contract
with American Honda Finance Corporation.
11
<PAGE>
The Company's gross margin was 20.6% of revenues in 1997 compared to 21.5% of
revenues in 1996. Gross margin is impacted by the mix of new and used, makes and
models of vehicles and the types of coverage sold. The overall gross margin for
1997 reflects production from the EasyCare(R) Certified Pre-Owned Vehicle
program, which has a different margin structure to the standard EasyCare(R)
service contract and offers additional benefits to the dealer and consumer, such
as service recapture. Additionally, the volume of business under the contract
with American Honda Finance Corporation, which has a lower margin than the core
business, increased at a faster rate than the core business.
Compensation, selling and administrative expenses for 1997 increased by 25.2% or
$2,119,639 to $10,520,976 over 1996. The increase for 1997 is primarily
attributable to compensation, printing/fulfillment and marketing costs.
Compensation cost increased by $1,297,000 in 1997 to support the growth of the
business. The Company's printing/fulfillment costs increased by $426,000 due to
costs incurred in connection with higher sales volumes and new programs.
Marketing costs increased by $347,000 due to additional promotional events
(including motorsports) and the EasyCare(R) Certified Pre-Owned Vehicle program
in the current year.
Interest, dividend and other income for 1997 increased by 50.3% or $274,517 to
$819,951 over 1996. The increase is due to the larger cash and investment
securities balances on hand.
The Company recorded a provision for income taxes in 1997 of $1,764,689 compared
to $1,040,000 for 1996. The increase is primarily due to higher pretax income.
II. OTHER INFORMATION
Item 2. Changes in Securities
- -----------------------------
During the third quarter of 1997, the Company issued the following securities:
<TABLE>
<CAPTION>
Exemption
Consideration from
Date of sale Title of security Number sold received registration Option terms
- --------------- ----------------- ----------- -------- ------------ ------------
<S> <C> <C> <C> <C>
8/97-9/97 Common stock 109,000 $121,960 4 (2)
issued upon
exercise of options
granted to
consultants
</TABLE>
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) Exhibits: None
(b) Reports on Form 8-K: None
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AUTOMOBILE PROTECTION CORPORATION - APCO
/s/ Martin J. Blank November 12, 1997
- ----------------------------------- ------------------
Martin J. Blank Date
Secretary (Duly Authorized Officer)
/s/ Anthony R. Levinson November 12, 1997
- ----------------------------------- ------------------
Anthony R. Levinson Date
Chief Financial Officer (Principal
Financial and Accounting Officer,
Duly Authorized Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF AUTOMOBILE PROTECTION CORPORATION - APCO FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 10,716,769
<SECURITIES> 6,713,672
<RECEIVABLES> 3,921,816
<ALLOWANCES> 40,000
<INVENTORY> 0
<CURRENT-ASSETS> 37,361,664
<PP&E> 3,212,910
<DEPRECIATION> 1,987,156
<TOTAL-ASSETS> 39,956,261
<CURRENT-LIABILITIES> 17,045,244
<BONDS> 0
0
300
<COMMON> 10,867
<OTHER-SE> 22,554,566
<TOTAL-LIABILITY-AND-EQUITY> 39,956,261
<SALES> 70,980,206
<TOTAL-REVENUES> 70,980,206
<CGS> 56,332,688
<TOTAL-COSTS> 56,332,688
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 4,620,993
<INCOME-TAX> 1,764,689
<INCOME-CONTINUING> 2,856,304
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,856,304
<EPS-PRIMARY> .24
<EPS-DILUTED> .24
</TABLE>
