U.S.SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended: May 31, 1998
[ ] 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 0-18250
TMS, Inc.
(Exact name of small business issuer as specified in its charter)
OKLAHOMA 91-1098155
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
206 West Sixth Street
Post Office Box 1358
Stillwater, Oklahoma 74075
(Address of principal executive offices)
Issuer's telephone number, including area code: (405) 377-0880
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Title of Each Class Outstanding at May 31, 1998
Common stock, par value $.05 per share 13,303,966
Transitional Small Business Disclosure Format(check one):
Yes [ ] No [X]
<PAGE> 1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
TMS, Inc.
Condensed Balance Sheets
May 31, 1998 and August 31, 1997
<TABLE>
<CAPTION>
May 31, August 31,
1998 1997
---- ----
<S> <C> <C>
Cash $ 523,499 426,174
Trade accounts receivable, net 1,144,686 1,235,195
Contract service work in process 828,002 579,137
Other current assets 240,546 322,291
------------ -----------
Total current assets 2,736,733 2,562,797
------------ -----------
Property and equipment 3,143,560 2,714,181
Accumulated depreciation and
amortization (1,439,256) (1,167,738)
------------ -----------
Net property and equipment 1,704,304 1,546,443
------------ -----------
Capitalized software development
costs, net 559,390 499,444
Other assets 238,758 238,342
------------ -----------
Total assets 5,239,185 4,847,026
============ ===========
Note payable 0 78,000
Accounts payable 185,112 247,123
Other current liabilities 510,377 442,765
------------ -----------
Total current liabilities 695,489 767,888
Obligation under capital lease,
net of current installments 94,357 0
Long-term debt, net of current
installments 315,994 333,618
------------ -----------
Total liabilities 1,105,840 1,101,506
------------ -----------
Common stock 672,555 671,552
Additional paid-in capital 11,475,065 11,473,561
Unamortized deferred compensation (25,039) (30,048)
Accumulated deficit (7,910,351) (8,290,660)
Treasury stock (78,885) (78,885)
------------ -----------
Total shareholders' equity 4,133,345 3,745,520
------------ -----------
Total liabilities and
shareholders'equity $ 5,239,185 4,847,026
============ ===========
</TABLE>
See accompanying notes to condensed
financial statements.
<PAGE> 2
TMS, Inc.
Condensed Statements of Operations
Three and Nine Months Ended May 31, 1998 and 1997
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenue:
Licensing and royalties $ 1,036,067 1,041,376 3,459,939 2,609,058
Software development
services 260,155 164,373 999,412 1,010,639
Document conversion
services 420,413 244,123 1,308,589 503,121
------------ ---------- ---------- ----------
1,716,635 1,449,872 5,767,940 4,122,818
------------ ---------- ---------- ----------
Operating costs and expenses:
Cost of licensing and
royalties 245,901 255,954 685,819 768,390
Cost of software
development services 194,355 193,864 649,098 618,878
Cost of document
conversion services 303,878 122,823 944,917 314,464
Selling, general and
administrative 935,963 854,325 2,991,371 2,407,017
------------ ---------- ---------- ----------
1,680,097 1,426,966 5,271,205 4,108,749
------------ ---------- ---------- ----------
Operating income 36,538 22,906 496,735 14,069
Other (expense) income, net (6,648) 9,966 (27,165) 32,006
------------ ---------- ---------- ----------
Income before income taxes 29,890 32,872 469,570 46,075
Income tax expense 5,679 17,300 89,261 18,100
------------ ---------- ---------- ----------
Net income $ 24,211 15,572 380,309 27,975
============ ========== ========== ==========
Basic earnings per share $ 0.00 $ 0.00 $ 0.03 $ 0.00
============ ========== ========== ==========
Weighted average common shares 13,303,156 13,427,049 13,294,693 13,331,492
============ ========== ========== ==========
Diluted earnings per share $ 0.00 $ 0.00 $ 0.03 $ 0.00
============ ========== ========== ==========
Weighted average common and
common equivalent shares 13,619,269 14,053,463 13,751,598 14,100,888
============ ========== ========== ==========
</TABLE>
See accompanying notes to condensed
financial statements.
<PAGE> 3
TMS, Inc.
Condensed Statements of Cash Flows
Nine Months Ended May 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net cash flows provided by
operating activities $ 827,836 285,991
---------- ---------
Cash flows from investing activities:
Purchases of property and equipment (247,055) (229,375)
Capitalized software development costs (355,088) (235,240)
Patent costs (2,181) (6,223)
Proceeds from sale of equipment 0 7,245
---------- ---------
Net cash used in investing activities (604,324) (463,593)
---------- ---------
Cash flows from financing activities:
Repayment of long-term debt (18,300) (15,541)
Repayment of capital lease obligation (32,394) 0
Proceeds from short-term note payable 340,000 0
Repayments of short-term note payable (418,000) 0
Issuance of common stock 2,507 67,741
---------- ---------
Net cash (used in) provided by
financing activities (126,187) 52,200
---------- ---------
Net increase (decrease) in cash 97,325 (125,402)
Cash at beginning of period 426,174 546,745
---------- ---------
Cash at end of period $ 523,499 421,343
========== =========
</TABLE>
See accompanying notes to condensed
financial statements.
<PAGE> 4
TMS, Inc.
Notes to Condensed Financial Statements
Basis for Presentation
- ----------------------
The information included in the Condensed Financial Statements is unaudited,
but includes all adjustments which are, in the opinion of management, necessary
for a fair presentation of the interim periods presented. These Condensed
Financial Statements should be read in conjunction with the Company's 1997
Annual Report filed on Form 10-KSB.
Earnings Per Share
- ------------------
Statement of Financial Accounting Standards No. 128 (SFAS No. 128), "Earnings
per Share", supersedes APB Opinion 15 (APB No. 15), "Earnings per Share", and
is effective for interim and annual periods ending after December 15, 1997.
SFAS No. 128 replaces primary EPS with basic EPS and fully diluted EPS with
diluted EPS. Basic EPS is computed by dividing net income by the weighted-
average number of shares of common stock outstanding during the period. Diluted
EPS recognizes the potential dilutive effects of the future exercise of common
stock options utilizing the same computations that the Company currently uses
to compute primary EPS under APB No. 15. The Condensed Statements of
Operations reflect the adoption of SFAS No. 128 for all interim periods
presented.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The Company's actual results could differ
materially from those set forth in the forward-looking statements because of
certain risks and uncertainties, such as those inherent generally in the
computer software industries and the impact of competition, pricing, and
changing market conditions. As a result, the reader is cautioned not to place
reliance on these forward-looking statements.
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the attached
condensed financial statements and notes thereto and with the Company's audited
financial statements and notes thereto for the fiscal year ended August 31,
1997.
QUARTER ENDED MAY 31, 1998 COMPARED TO MAY 31, 1997
REVENUE - Total revenue for the third quarter of fiscal 1998 was $1,716,635
compared to $1,449,872 for the same quarter of fiscal 1997, an increase of
$266,763 or 19%.
Licensing and royalties revenue for the third quarter of fiscal 1998 was flat
as compared to the same quarter of fiscal 1997. Third quarter revenue from
imaging products decreased 4% to $618,895 compared to the $639,143 reported for
the third quarter last year. The decrease in imaging revenue primarily resulted
from a decline in ViewDirector royalties reported during the current quarter.
Third quarter revenue from image enhancement products (e.g. ScanFix, FormFix)
increased $7,223, or 3%, over the same quarter last year.
Software development service revenue for the third quarter of fiscal 1998 was
$260,155 compared to $164,373 for the third quarter of fiscal 1997, an increase
of $95,782 or 59%. The increase in software development service revenue
resulted from continued fulfillment of a significant service contract that was
secured in the fourth quarter of fiscal 1997. Revenue from that significant
contract represented $217,359, or 84%, of fiscal 1998 third quarter software
development services revenue.
<PAGE> 5
Document conversion service revenue for the third quarter of fiscal 1998 was
$420,413 compared to $244,123 for the third quarter of fiscal 1997, an increase
of $176,290 or 73%. Approximately 47%, or $197,951, of the third quarter
document conversion service revenue came from one customer. This customer
contract was substantially completed during the current quarter. The company
expects that revenue from document conversion will significantly decline during
the fourth quarter of the current year. The expected decline is a direct
result of the Company's recent decision to discontinue pursuit of backfile
document conversion projects. During the current year third quarter, revenue
from backfile related conversion projects represented approximately 55%, or
$232,000, of total document conversion revenue. See the discussion of document
conversion under the "OPERATING COSTS AND EXPENSES" section below for
additional information related to backfile conversion.
OPERATING COSTS AND EXPENSES - Total operating costs and expenses for the
quarter ended May 31, 1998 were $1,680,097 compared to $1,426,966 for the same
quarter in fiscal 1997, an increase of $253,131 or 18%.
The cost of licensing and royalties decreased $10,053, or 4%, for the third
quarter of fiscal 1998, compared to the same period a year ago. The gross
profit margin for licensing and royalties was 77% and 76% for the three months
ended May 31, 1998 and 1997, respectively.
The cost of software development services for the third quarter of fiscal 1998
was flat, compared to the same period a year ago. The gross profit margin for
software development services was 26% and a negative 18% for the three months
ended May 31, 1998 and 1997, respectively. The 59% increase in software
development services revenue had the most significant impact on improved gross
margins over the same quarter last year. During the current year third
quarter, the Company continued to carry technical resource capacity at a higher
level than was necessary to fulfill contract requirements. In an effort to
increase the opportunities to secure additional service contracts and better
match technical capacity, the Company recently hired two experienced
salespersons. The Company is in the process of negotiating additional software
development opportunities and has secured new contracts for the fourth quarter.
Accordingly, the Company believes that gross margins will continue to improve
in the fourth quarter, but can give no assurances that this will be the case.
The cost of document conversion services increased $181,055, or 148%, for the
third quarter of fiscal 1998, compared to the same period a year ago. The gross
profit margin for document conversion services was 28% and 50% for the three
months ended May 31, 1998 and 1997, respectively. The increase in cost
represents the hiring of additional personnel to meet service contract
requirements. The decrease in gross profit margins resulted from a combination
of several factors. In the prior year third quarter, and historically for
document conversion, services have focused on electronic publishing of
documents for several large corporations. Within the last nine months, the
majority of document conversion services have come from contracts associated
with backfile conversion of documents for imaging and database management.
The technical complexity associated with backfile conversion is much lower than
that of electronic publishing; accordingly, the Company faces more competition
in securing backfile conversion contracts which effects pricing downward. In
addition to external competition and pricing pressures, the document conversion
group has faced internal productivity challenges that have negatively impacted
gross margins for the third quarter. Rapid growth has hindered productivity
because of the number of new employees and contract workers that were hired to
meet service requirements. The contract that accounted for 47% of document
conversion revenue in the third quarter (see the discussion of revenue above)
is being performed at a customer site, which has increased costs, and has
required many more labor resources than was originally expected. This contract
was substantially completed in the third quarter. As mentioned in the
<PAGE> 6
discussion of document conversion revenue above, the Company made a decision in
the third quarter to discontinue pursuit of backfile conversion contracts.
Accordingly, the Company expects to see a significant decline in document
conversion costs during the fourth quarter due to a reduction in the direct
labor force that was required to fulfill backfile contract obligations. The
Company continues to fulfill contract obligations associated with electronic
publishing of documents. The electronic publishing conversion work is in line
with the Company's core competencies and has historically resulted in much
higher margins, but lower revenue as compared to backfile related projects. The
Company is the in the process of analyzing the need for certain non direct
labor personnel, facilities and equipment for the ongoing electronic publishing
operations of document conversion. It is possible that in the fourth quarter
the Company may record a one-time restructuring charge for employee severance,
equipment and other transition costs, but can not reasonably estimate such
costs, if any, at the present time.
Selling, general and administrative expenses for the third quarter of fiscal
1998 increased $81,638, or 9%, when compared to the third quarter of fiscal
1997. The increase is primarily related to additional personnel costs in
the form of merit and cost of living increases and additional resources to
support the overall growth of the Company.
Income Taxes
- ------------
Deferred tax expense of $11,579 for the quarter ended May 31, 1998, was offset
by deferred tax benefit of approximately $5,900 attributable to the decrease in
the valuation allowance for deferred tax assets. The Company assesses the
realizability of deferred tax assets at least quarterly, and adjusts the
valuation allowance to reflect the future benefits that will more likely than
not be realized from those deferred tax assets.
Net Income/Loss
- ---------------
Net income for the third quarter of fiscal 1998 was $24,211 compared to 15,572
for the third quarter of fiscal 1997. The Company's net income for the third
quarter was essentially flat compared to the same period last year even though
revenue increased 18%. This is primarily due to the mix of the Company's third
quarter revenue being more heavily weighted to document conversion backfile
activities which affects overall company margins downward.
NINE-MONTHS ENDED MAY 31, 1998 COMPARED TO MAY 31, 1997
REVENUE - Total revenue for the first nine-months of fiscal 1998 was $5,767,940
compared to $4,122,818 for the same period in fiscal 1997, an increase of
$1,645,122 or 40%.
Licensing and royalties revenue for the first nine-months of fiscal 1998
increased $850,881, or 33%, over licensing and royalties revenue for the same
period in fiscal 1997. Nine-month revenue from imaging products increased 34%
to $2,052,442 compared to the $1,534,549 reported for the same nine-month
period last year. Approximately 91% of the imaging revenue growth came from
sales of the Company's Prizm Plug-in product. Prizm Plug-in revenue represented
approximately 42% and 26% of imaging revenue for the first nine months of
fiscal 1998 and 1997, respectively. Revenue from image enhancement products
increased $216,853, or 28%, for the first nine months of the current year as
compared to the same period last year. Approximately 59% of the increase in
image enhancement revenue came from the Company's ScanFix product that may be
used in conjunction with Caere's Omnipage product. The Company secured a co-
marketing agreement with Caere, a leader in OCR technology, early in the
current fiscal year. Additional sales focus from two additional sales staff
for image enhancement products also contributed to growth for the first nine
months of the current year.
Software development service revenue for the first nine months of fiscal 1998
was $999,412 compared to $1,010,639 for the same period in fiscal 1997, a
decrease of $11,227, or 1%. Revenue from one customer represented $660,982, or
66%, of software development services revenue for the first nine months of
fiscal 1998.
<PAGE> 7
Document conversion service revenue for the first nine months of fiscal 1998
was $1,308,589 compared to $503,121 for the same period in fiscal 1997, an
increase of $805,468 or 160%. The Company secured two large back-file
conversion contracts during the first nine months of the current fiscal year.
Revenue from those two contracts represented approximately 53%, or $698,632, of
document conversion service revenue for the first nine months of the current
fiscal year. One of the significant contracts was substantially completed early
in the second fiscal quarter, but may require some follow-up work through the
remainder of the fiscal year. The second significant contract was
substantially completed during the current quarter. The Company recently
decided to discontinue pursuit of additional backfile conversion projects.
This will have a downward impact on both revenue and expenses in the fourth
quarter. See the discussion of document conversion revenue and costs in the
analysis of the third quarter above for a more detailed discussion of backfile
conversion.
OPERATING COSTS AND EXPENSES - Total operating costs and expenses for the nine
months ended May 31, 1998 were $5,271,205 compared to $4,108,749 for the same
period in fiscal 1997, an increase of $1,162,456 or 28%.
The cost of licensing and royalties decreased $82,571, or 11%, for the first
nine months of fiscal 1998, compared to the same period a year ago. Lower costs
may be primarily attributed to an approximate $120,000 increase in capitalized
development costs for new and significantly enhanced products. The gross
profit margin for licensing and royalties was 80% and 71% for the nine months
ended May 31, 1998 and 1997, respectively. The increase in gross profit margin
is primarily attributable to the $196,424 or 15%, increase in royalty revenue,
which results in little or no cost to the Company. Additionally, the sale of
multiple licenses of the Company's complete software applications has had a
significant impact on improved gross margins, because revenue from multiple
licenses does not result in a proportional increase in unit costs. For the
first nine months of the current year, revenue from the Company's complete
software applications has increased $618,246 or 90%, compared to the same
period last year. The Prizm Plug-in product accounts for 77% of the growth in
complete software applications.
The cost of software development services increased $30,220, or 5%, for the
first nine months of fiscal 1998, compared to the same period a year ago. The
gross profit margin for software development services was 35% and 39% for the
nine months ended May 31, 1998 and 1997, respectively. The excess technical
resource capacity caused gross margins to drop for the first nine months of the
current fiscal year, as compared to the same period last year. As mentioned in
the discussion of software development costs for the current quarter, the
Company recently hired two additional experienced sales staff in an effort to
improve the ability to better match service opportunities with technical
capacity. As the software development services group continues to re-build its
revenue backlog, the Company has decided to retain its current capacity of
technical resources. The Company is prepared to make the necessary adjustments
by the end of the current fiscal year to improve profitability of software
development services.
The cost of document conversion services increased $630,453, or 200%, for the
first nine months of fiscal 1998, compared to the same period a year ago. The
gross profit margins for document conversion services were 28% and 37% for the
nine months ended May 31, 1998 and 1997, respectively. The increase in cost
represents the hiring of additional personnel to meet service contract
requirements. The low gross profit margins for the first nine months in the
prior year reflect a certain level of labor and overhead cost that were
required to be maintained to support future growth. The low margins for the
first nine months of the current year primarily result from a significant
increase in the amount of backfile conversion jobs, lower productivity
resulting from a significant number of new employees, and a miss-match in the
amount of revenue and labor resources for a significant contract. For a more
detail explanation of operational issues within document conversion, refer to
the "OPERATING COSTS AND EXPENSES" section in the discussion of the fiscal 1998
third quarter above.
<PAGE> 8
Selling, general and administrative expenses for the first nine months of
fiscal 1998 increased $584,354 or 24%, when compared to the same period in
fiscal 1997. The increase in costs is almost entirely due to personnel related
expenses. As mentioned in the company's 10-KSB for the fiscal year ending
August 31, 1997, the company made several market adjustments to salaries in
addition to regular merit and cost of living increases. The company also
improved employee benefit offerings by implementing a 401(k)-retirement plan
matching program and absorbing 25% more of the cost of employee medical
insurance premiums. The majority of these changes occurred at the beginning of
the fiscal 1997 third quarter. During the first quarter of fiscal 1998, the
Company also adopted an incentive compensation plan that provides cash rewards
to all employees if certain revenue and profit goals are achieved. The Company
recognized approximately $63,000 of incentive expense for the first nine months
of the fiscal year.
Income Taxes
- ------------
Deferred tax expense of $178,437 for the nine months ended May 31, 1998, was
offset by a deferred tax benefit of approximately $89,176 attributable to the
decrease in the valuation allowance for deferred tax assets. The Company
assesses the realizability of deferred tax assets at least quarterly, and
adjusts the valuation allowance to reflect the future benefits that will more
likely than not be realized from those deferred tax assets.
Net Income
- ----------
Net income for the first nine months of fiscal 1998 was $380,309 or $.03 per
share, compared to $27,975, or $.00 per share, for the first nine months of
fiscal 1997. Revenue growth and increased gross profit margins for licensing
and royalties were the primary factors that contributed to improved net income
over the prior year.
Impact of Year 2000 Issue
- -------------------------
The Company is addressing the need to ensure that its operations will not be
adversely impacted by software or other system failures related to year 2000.
The Company's director of corporate systems has developed a plan to coordinate
identification, evaluation and implementation of any necessary changes to
internal computer systems, applications and business processes. The costs
associated with this effort are expected to be incurred through 1999 and are
not expected to have a material impact on the results of operations, cash flows
or financial condition in any given year. However, no assurances can be given
that the Company will be able to completely identify or address all year 2000
compliance issues, or that third parties with whom the Company does business
will not experience system failures as a result of the year 2000 issues, nor
can the Company fully predict the consequences of noncompliance. The Company
has reviewed all of its software products for sale and determined them to be
year 2000 compliant and accordingly does not believe it will be adversely
impacted by year 2000 issues as it relates to its own products for sale.
<PAGE> 9
FINANCIAL CONDITION
Working capital, at May 31, 1998 was $2,041,244 with a current ratio of 3.9:1
compared to $1,794,909 with a current ratio of 3.3:1, at August 31, 1997. Net
cash provided by operations for the nine months ended May 31, 1998 and 1997 was
$827,836 and 285,991, respectively. Improved collections and a higher
profitability were the primary factors resulting in improved operating cash
flow. Net cash used in investing activities for the first nine months of
fiscal 1998 was $604,324 compared to $463,593 for the same period in fiscal
1997. Capitalized software development costs for new products and significant
enhancement to existing products accounted for 59% and 51% of the cash used for
investing activities in 1998 and 1997, respectively.
During the first quarter of the current year, the Company borrowed $185,000
against its $800,000 line of credit for general operating purposes. The Company
repaid $418,000 against the line of credit using cash from operations during
the first six months of the current fiscal year. No borrowing was required
during the current third quarter and at May 31, 1998, there was no balance
outstanding against the line of credit. During the first nine months the
Company entered into approximately $187,000 of capital lease obligations to
obtain the necessary scanners to meet requirements under document conversion
contracts.
The Company believes that operating cash flow and the $800,000 operating line
of credit will be adequate to meet its current obligations and current
operating and capital requirements. The funding of long-term needs is dependent
upon increased revenue and profitability and obtaining funds through outside
debt and equity sources. The funding for long-term needs includes funding for
increased product development, expanded sales and technical staff and adequate
promotion of the Company and its products.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K
- -------------------
None
Exhibits
- --------
Exhibit No. Name of Exhibit
27 Financial Data Schedule as of and for the nine month period
ending May 31, 1998.
<PAGE> 10
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
the report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TMS, Inc.
June 29, 1998 /s/ Arthur D. Crotzer
Date: ____________________ _______________________
Chief Executive Officer
June 29, 1998 /s/ Deborah D. Mosier
Date: ____________________ _______________________
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the third
quarter 10-QSB for the fiscal year ending August 31, 1998 and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000835412
<NAME> TMS, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> AUG-31-1998
<PERIOD-END> MAY-31-1998
<CASH> 523,499
<SECURITIES> 0
<RECEIVABLES> 1,230,651
<ALLOWANCES> 100,000
<INVENTORY> 0
<CURRENT-ASSETS> 2,736,733
<PP&E> 3,143,560
<DEPRECIATION> 1,439,256
<TOTAL-ASSETS> 5,239,185
<CURRENT-LIABILITIES> 695,489
<BONDS> 0
0
0
<COMMON> 672,555
<OTHER-SE> 3,460,790
<TOTAL-LIABILITY-AND-EQUITY> 5,239,185
<SALES> 5,767,940
<TOTAL-REVENUES> 5,767,940
<CGS> 2,279,834
<TOTAL-COSTS> 2,279,834
<OTHER-EXPENSES> 2,991,371
<LOSS-PROVISION> 41,565
<INTEREST-EXPENSE> 32,638
<INCOME-PRETAX> 469,570
<INCOME-TAX> 89,261
<INCOME-CONTINUING> 380,309
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 380,309
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
