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 JUNE 30, 1996
OR
[ ] Transition Report Under Section 13 or 15(d)
of the Exchange Act
For the Transition Period From to
Commission File Number 1-10185
DOCUCON, INCORPORATED
(Exact name of small business issuer as specified in its charter)
Delaware 74-2418590
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7461 Callaghan Road
San Antonio, Texas 78229
(Address of principal executive offices)
(210) 525-9221
(Issuer's telephone number)
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 July 31, 1996. 11,940,136
-1-
DOCUCON, INCORPORATED
---------------------
INDEX
-----
Page
----
PART I. FINANCIAL INFORMATION
Item 1: Balance Sheets - June 30, 1996, and December 31, 1995 3
Statements of Operations - For the Six Months Ended
June 30, 1996 and 1995 5
Statements of Cash Flows - For the Six Months Ended
June 30, 1996 and 1995 6
Notes to Financial Statements 7
Item 2: Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION 12
SIGNATURES 13
-2-
DOCUCON, INCORPORATED
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30,
1996 December 31,
ASSETS (UNAUDITED) 1995
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash and temporary cash investments .................... $ 275,477 $ 139,167
Accounts receivable-trade, net of allowance for doubtful
accounts of $4,444 and $7,683 in 1996 and 1995,
respectively-
U.S. Government .................................... 755,017 594,090
Commercial ......................................... 722,743 1,278,796
Unbilled revenues ...................................... 1,237,248 579,821
Other receivables ...................................... 2,279 1,648
Prepaid expenses and other ............................. 260,785 69,634
---------- ----------
Total current assets ............. 3,253,549 2,663,156
---------- ----------
PROPERTY AND EQUIPMENT:
Conversion systems ..................................... 4,935,955 4,540,302
Building and improvements .............................. 1,542,111 1,515,608
Land ................................................... 230,000 230,000
Furniture and fixtures ................................. 285,848 278,805
---------- ----------
Total property and equipment ..... 6,993,914 6,564,715
Less- Accumulated depreciation ......................... 4,501,061 4,182,671
---------- ----------
Net property and equipment ....... 2,492,853 2,382,044
---------- ----------
SOFTWARE DEVELOPMENT COSTS, net .......................... 435,803 358,879
---------- ----------
GOODWILL, net ............................................ 329,519 338,824
---------- ----------
Total assets ..................... $6,511,724 $5,742,903
========== ==========
</TABLE>
See Notes to Financial Statements.
-3-
DOCUCON, INCORPORATED
BALANCE SHEETS (Continued)
<TABLE>
<CAPTION>
June 30,
1996 December 31,
LIABILITIES AND STOCKHOLDERS' EQUITY (UNAUDITED) 1995
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable ........................................................... $ 1,038,393 $ 697,980
Accrued liabilities ........................................................ 996,719 774,955
Line of credit ............................................................. 225,000 400,000
Note payable ............................................................... 49,077 --
Current maturities of capital lease obligations ............................ 530 3,107
Deferred revenues .......................................................... 421,580 339,558
Current maturities of long-term debt ....................................... 1,500,000 1,500,000
----------- -----------
Total current liabilities ............................ 4,231,299 3,715,600
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, $1.00 par value, 10,000,000 shares authorized- Series A, 60
shares authorized, 21 shares outstanding as of
June 30, 1996, and December 31, 1995 ................................... 21 21
Common Stock, $.01 par value, 25,000,000 shares authorized;
11,894,477 and 11,771,228 shares outstanding as of June 30,
1996, and December 31, 1995 .............................................. 118,945 117,712
Additional paid-in capital ................................................. 9,525,777 9,506,553
Accumulated deficit ........................................................ (7,364,318) (7,596,983)
----------- -----------
Total stockholders' equity ........................... 2,280,425 2,027,303
----------- -----------
Total liabilities and stockholders' equity ........... $ 6,511,724 $ 5,742,903
=========== ===========
</TABLE>
See Notes to Financial Statements.
-4-
DOCUCON, INCORPORATED
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
ENDED JUNE 30 ENDED JUNE 30
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATING REVENUES ................................ $ 3,351,968 $ 3,267,566 $ 5,685,621 $ 5,886,507
------------ ------------ ------------ ------------
COSTS AND EXPENSES:
Production ...................................... 1,845,870 2,228,911 3,121,663 3,904,657
Research and development ........................ 210,981 171,067 320,882 343,109
General and administrative ...................... 305,663 220,078 557,817 466,620
Marketing ....................................... 562,387 641,928 1,007,066 1,289,402
Depreciation and amortization ................... 176,523 252,633 374,510 532,952
------------ ------------ ------------ ------------
3,101,424 3,514,617 5,381,938 6,536,740
------------ ------------ ------------ ------------
OPERATING INCOME (LOSS) ........................... 250,544 (247,051) 303,683 (650,233)
OTHER INCOME (EXPENSE):
Interest expense ................................ (37,477) (37,403) (77,316) (69,834)
Other, net ...................................... 336 11,578 6,298 13,125
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES ................. 213,403 (272,876) 232,665 (706,942)
INCOME TAX EXPENSE ................................ -- -- -- --
NET INCOME (LOSS) ................................. 213,403 (272,876) 232,665 (706,942)
PREFERRED STOCK DIVIDEND REQUIREMENTS ............. 14,438 15,408 28,876 31,221
------------ ------------ ------------ ------------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCKHOLDERS $ 198,965 $ (288,284) $ 203,789 $ (738,163)
============ ============ ============ ============
PRIMARY INCOME (LOSS) PER COMMON SHARE AND COMMON
SHARE EQUIVALENTS ............................... $ .02 $ (.02) $ .02 $ (.06)
============ ============ ============ ============
WEIGHTED AVERAGE COMMON SHARES AND COMMON SHARE
EQUIVALENTS ..................................... 12,599,885 11,651,838 12,471,998 11,632,474
============ ============ ============ ============
</TABLE>
See Notes to Financial Statements.
-5-
DOCUCON, INCORPORATED
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months
ENDED JUNE 30
------------------------
1996 1995
--------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ............................................. $ 232,665 $ (706,942)
Adjustments to reconcile net income (loss) to net cash provided
by (used in) operating activities-
Depreciation and amortization ............................. 374,510 532,952
Other noncash expenses .................................... 7,787 --
Changes in current assets and current liabilities-
Increase in receivables ................................. (262,932) (1,091,835)
(Increase) decrease in prepaid expenses ................. (191,151) 25,926
Increase in accounts payable and accrued liabilities .... 562,177 804,238
Increase in deferred revenues ........................... 82,022 101,707
--------- -----------
Net cash provided by (used in) operating activities .. 805,078 (333,954)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures .......................................... (432,406) (388,684)
Capitalized software development costs ........................ (120,532) --
Net cash used in investing activities ............. (552,938) (388,684)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances (payments) under line of credit ...................... (175,000) 350,000
Principal payments under capital lease obligations ............ (2,577) (11,605)
Net proceeds from exercise of stock options ................... 12,669 20,099
Proceeds from issuing note payable ............................ 87,054 --
Principal payments on notes payable ........................... (37,976) (10,560)
--------- -----------
Net cash provided by (used in) financing activities (115,830) 347,934
--------- -----------
NET INCREASE (DECREASE) IN CASH AND TEMPORARY CASH INVESTMENTS .. 136,310 (374,704)
CASH AND TEMPORARY CASH INVESTMENTS, beginning of period ........ 139,167 376,798
--------- -----------
CASH AND TEMPORARY CASH INVESTMENTS, end of period .............. $ 275,477 $ 2,094
========= ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for-
Interest .................................................... $ 47,329 $ 39,751
Income taxes ................................................ -- --
--------- -----------
$ 47,329 $ 39,751
========= ===========
</TABLE>
DISCLOSURE OF ACCOUNTING POLICY:
The Company considers funds invested in highly liquid investments having a
maturity of 90 days or less to be temporary cash investments.
See Notes to Financial Statements.
-6-
DOCUCON, INCORPORATED
NOTES TO FINANCIAL STATEMENTS
NOTE 1
The financial statements included herein have been prepared by Docucon,
Incorporated (the Company), without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. However, all adjustments have been
made which are, in the opinion of the Company, necessary for a fair presentation
of the results of operations for the periods covered. Certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations, although the Company believes
that the disclosures are adequate to make the information presented not
misleading. It is recommended that these financial statements be read in
conjunction with the financial statements and the notes thereto included in the
Company's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1995.
Since its inception, the Company has incurred losses of approximately $7.4
million which have been funded primarily through the Company's public offering,
issuances of preferred stock, the exercise of warrants and debt financing. The
Company has taken steps to improve its operating results. The steps taken
include exiting the litigation support services market and focusing on the
Company's core higher margined businesses. The Company also intends to refinance
its $1,500,000 note payable which is currently due in December 1996. The note
payable is secured by the Company's building and is nonrecourse to the Company.
(See Note 5.) The Company's management believes that it is likely that the
Company's operating results for 1996 will continue to improve over 1995 and will
generate sufficient working capital to sustain its operations throughout the
year. However, if operating results do not improve, the Company will be unable
to ensure its continuing operations independent of additional capital infusions.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."
NOTE 2
Organization and description of the Company-
Docucon, Incorporated, was incorporated in June 1986 to engage in the business
of providing technical services to its customers for the conversion of paper and
microform documents to computer-accessible media. Paper or microform documents
are scanned by sophisticated computer equipment and stored and indexed on
optical disks or magnetic media. The Company also sells software products to the
legal market. Substantially all of the Company's customers are located in the
U.S.
NOTE 3
Summary of significant accounting policies-
Property and equipment-
Property and equipment are recorded at original cost or the present value of the
capital lease payments for assets under capital lease arrangements. Maintenance
and repairs are charged to expense as incurred and betterments which increase
the value or extend the useful life of the property are capitalized. Gains or
losses on sales or other dispositions of property and equipment are credited or
charged to income.
-7-
DOCUCON, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (Continued)
Depreciation is provided using the straight-line method over the lesser of the
capital lease term or estimated useful lives of the related assets. The
Company's fixed assets are currently depreciated over periods ranging from two
to five years beginning in the month the property is placed in service. The
Company's building is being depreciated over 40 years.
Revenue recognition-
Revenues from conversion service contracts are recognized at the time services
are provided and are based upon the number of documents converted and the
conversion rates established in the contracts.
Revenues from software licensing fees are recognized upon delivery of the
software. Revenues from maintenance and telephone support contracts are
recognized ratably over the term of the contract, typically one year.
Software development costs-
Included in software development costs is $250,000 for the Company's advanced
work group product (Litigator's Notebook(TM)) which was acquired in 1994. Also
included in software development costs is approximately $266,000 of costs which
were incurred during 1995 and 1996 to develop software which will support and
complement Litigator's Notebook. These costs are being amortized over periods
ranging from three to five years.
Goodwill-
In connection with an acquisition in 1994, the Company recognized goodwill of
approximately $372,000. This goodwill is being amortized on a straight-line
basis over 20 years.
Use of estimates-
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make certain estimates and
assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
NOTE 4
Preferred stock-
Each share of the Company's Preferred Stock ($25,000 stated value) is
convertible into 33,333 shares of Common Stock and earns cash dividends of 11
percent per annum. As of June 30, 1996, cumulative undeclared dividends on the
Preferred Stock approximated $346,000. As these dividends are undeclared, they
have not been recorded as a reduction of the Company's equity.
-8-
DOCUCON, INCORPORATED
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 5
Long-term debt-
In December 1992, financing for the Company's office building was obtained from
a venture capital company. In connection with such financing, the Company issued
a four-year, 8 percent promissory note in the principal amount of $1,500,000 and
issued 900,000 warrants to purchase an equivalent number of shares of Common
Stock at an exercise price of $2.00 per share. As the exercise price exceeded
the current market price and the financing terms of the debt were at market, no
value was recorded for the warrants issued. The warrants expire in December
1999. The principal balance of the promissory note matures December 15, 1996,
and interest is due quarterly. The promissory note is secured by the Company's
office building.
Line of credit-
The Company's bank credit agreement consists of a $400,000 revolving line of
credit which bears interest at prime plus 1.25 percent. The line is due on
demand, or if no demand is made, payment of principal and accrued interest is
due in August 1996, although the Company's management believes that the line of
credit will be extended for an additional six months. Borrowings pursuant to the
revolving line of credit are secured by the Company's accounts receivable. As of
June 30, 1996, $225,000 was outstanding under this line.
-9-
DOCUCON, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's operations during the quarter and six months ended June 30, 1996,
resulted in net income applicable to common stockholders of $198,965 and
$203,789, respectively, compared to a net loss applicable to common shareholders
of $288,284 and $738,163 for the respective 1995 periods.
Revenues increased slightly for the three months ended June 30, 1996, as
compared to the same period in 1995. Revenues decreased slightly for the 1996
six-month period as compared to the 1995 period. Conversion service revenues
earned under the Department of Defense (DOD) and commercial contracts increased
by 23 percent and 27 percent for the three- and six-month periods. The Company
discontinued providing litigation support services in late 1995. Revenues for
the second quarter and first half of 1995 included approximately $900,000 and
$1,700,000, respectively, from litigation support services. The absence of these
revenues in the 1996 periods resulted in the overall small increase and decrease
when compared to the respective 1995 periods. Revenues earned from sales of the
Company's software products, JFS Litigator's Notebook, and the related product
lines increased 135 percent and 70 percent for the quarter and six months ended
June 30, 1996, as compared to the comparable 1995 periods. The increase in the
1996 quarter included revenues realized from a large order from a third-party
reseller.
Production costs decreased 17 percent and 20 percent for the quarter and six
months ended June 30, 1996, as compared to the comparable 1995 periods. The
increase in product revenues, which have a lower percentage of production costs
contributed to this decrease. Additionally, termination of unprofitable
litigation support services in late 1995 has resulted in lower production costs
as a percentage of revenue.
Research and development costs increased 23 percent for the quarter ended June
30, 1996, compared to the same period in 1995. The Company devoted increased
resources to the development of new conversion applications and capabilities and
to the expansion of its JFS Litigator's Notebook product line. Research and
development costs decreased 6 percent for the 1996 six-month period as compared
to the 1995 period.
Marketing expenses decreased 12 percent and 22 percent during the second quarter
and first six months of 1996 as compared to the same periods in 1995. While the
Company continues to aggressively market its conversion services and software
products, marketing efforts directed at litigation support services were
discontinued in the second quarter of 1995, leading to the decrease in expense.
Depreciation and amortization expenses decreased 30 percent in the second
quarter and first six months of 1996 as compared to the 1995 periods. The
decrease in depreciation and amortization charges is due to previous large
additions of equipment that are now fully depreciated.
LIQUIDITY AND CAPITAL RESOURCES
Since its inception, the Company's operations have been supplemented through
bank borrowings, capital contributions, borrowings from affiliated and
unaffiliated lenders, capital lease agreements, an initial public offering of
the Company's Common Stock in 1989, the conversion of warrants into Common Stock
and preferred stock placements.
-10-
DOCUCON, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
In February of 1996, the Defense Printing Services Office awarded a contract to
the Company that allows the Company to provide up to $14.8 million of document
conversion services to DOD agencies through August 1997. The Company has also
been the recipient of various other smaller contract awards from the DOD and
other governmental and commercial entities. These contract awards include a
contract in excess of $600,000 for conversion services from Lucent Technologies,
formerly AT&T's systems and technology business. Additionally, the Company
received a contract award from CACI, an international information technology and
services corporation, for JFS Litigator's Notebook systems for 30 law firm
installations.
The Company is currently negotiating long-term financing on its $1,500,000, 8
percent promissory note due in December 1996. The Company's management believes
that such negotiations will be successful. This note is secured by the Company's
office building. In connection with the purchase of the Company's office
building in 1992, the Company issued 900,000 warrants to purchase an equivalent
number of shares of Common Stock at an exercise price of $2.00 per share. The
Company occupies most of the building and leases a small portion of the building
to third-party tenants. The Company believes that the building will fulfill its
needs for the foreseeable future.
The Company expects to fund its operations and marketing activities through
utilization of cash on hand and cash generated from operations and, to the
extent required, draws under the Company's line of credit. At June 30, 1996,
$225,000 was outstanding under the Company's bank line of credit. The line of
credit has a current maturity date of August 1996, but the Company's management
believes that the line will be extended for an additional six months. These
funds are expected to be adequate for the Company's needs for at least the next
12 months. While the Company may consider and evaluate, from time to time,
acquisitions and opportunities for future growth, the Company has not entered
into any agreements with respect to future acquisitions. Should the Company
enter into any such agreements, the Company would, in all likelihood, be
required to raise outside capital to consummate such transactions.
-11-
PART II - OTHER INFORMATION (Continued)
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders
(a)The Annual Meeting of Shareholders was held on May 21, 1996.
(b)The following directors were elected to serve until the next Annual
Meeting of Shareholders, and until their successors are elected and
qualified:
Ralph Brown Edward P. Gistaro
Allan H. Hobgood Al Ireton
Philip Romano Chauncey Schmidt
(c)None.
(d)None.
Item 5. Other Matters - None
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits
Exhibit 11 - Computation of Earnings Per Share
(b)Reports on Form 8-K - None
-12-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
DOCUCON, INCORPORATED
(Registrant)
By ___________________________
Edward P. Gistaro,
Chief Executive Officer and
Principal Financial Officer
By ___________________________
Lori Turner,
Vice President of Finance
and Treasurer
Dated: August 12, 1996
-13-
EXHIBIT 11
DOCUCON, INCORPORATED
COMPUTATION OF EARNINGS PER SHARE
(Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------------------------- -------------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
COMPUTATION OF PRIMARY EARNINGS PER SHARE:
Net income (loss) .................................. $ 213,403 $ (272,876) $ 232,665 $ (706,942)
Less- Preferred stock dividend requirements ...... (14,438) (15,408) (28,876) (31,221)
------------ ------------ ------------ ------------
Net income (loss) applicable to common
stockholders used for computation .............. $ 198,965 $ (288,284) $ 203,789 $ (738,163)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING ........................................ 11,893,168 11,651,838 11,885,102 11,632,474
WEIGHTED AVERAGE INCREMENTAL SHARES OUTSTANDING UPON
ASSUMED CONVERSION OF OPTIONS AND WARRANTS ......... 706,717 -- 586,896 --
------------ ------------ ------------ ------------
WEIGHTED AVERAGE COMMON SHARES AND COMMON SHARE
EQUIVALENTS USED FOR COMPUTATION ................... 12,599,885 11,651,838 12,471,998 11,632,474
============ ============ ============ ============
PRIMARY INCOME (LOSS) PER COMMON SHARE AND COMMON
SHARE EQUIVALENT ................................... $ .02 $ (.02) $ .02 $ (.06)
============ ============ ============ ============
COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE:
Net income (loss) ................................ $ 213,403 $ (272,876) $ 232,665 $ (706,942)
Preferred stock dividend requirements ............ (14,438) (15,408) (28,876) (31,221)
Decrease in net income (loss) applicable to common
stock for-
Preferred stock dividends not incurred upon
assumed conversion of preferred stock ........ 14,438 15,408 28,876 31,221
------------ ------------ ------------ ------------
Net income (loss) available to common stockholders
used for computation ........................... $ 213,403 $ (272,876) $ 232,665 $ (706,942)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK
OUTSTANDING ........................................ 11,893,168 11,651,838 11,885,102 11,632,474
WEIGHTED AVERAGE INCREMENTAL SHARES OUTSTANDING UPON
ASSUMED CONVERSION OF OPTIONS AND WARRANTS ......... 706,717 -- 586,896 --
WEIGHTED AVERAGE INCREMENTAL SHARES OUTSTANDING UPON
ASSUMED CONVERSION OF THE PREFERRED STOCK .......... 699,993 747,245 699,993 756,899
------------ ------------ ------------ ------------
WEIGHTED AVERAGE SHARES USED FOR COMPUTATION ......... 13,299,878 12,399,083 13,171,991 12,389,373
============ ============ ============ ============
INCOME (LOSS) PER COMMON SHARE AND COMMON SHARE
EQUIVALENT ASSUMING FULL DILUTION .................. $ .02(a) $ (.02)(a) ($ .02(a) $ (.06)(a)
============ ============ ============ ============
</TABLE>
(a) This calculation is submitted in accordance with Item 601(b)(11) of
Regulation S-K although it is not required by APB Opinion No. 15 because
it results in dilution of less than 3 percent.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DOCUCON,
INC.'S FINANCIAL STATEMENTS AS OF AND FOR THE THREE MONTH PERIOD ENDED JUNE 30,
1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 275,477
<SECURITIES> 0
<RECEIVABLES> 1,477,760
<ALLOWANCES> 4,444
<INVENTORY> 69,518
<CURRENT-ASSETS> 3,253,549
<PP&E> 6,993,914
<DEPRECIATION> 4,501,061
<TOTAL-ASSETS> 6,511,724
<CURRENT-LIABILITIES> 4,231,299
<BONDS> 0
0
21
<COMMON> 118,945
<OTHER-SE> 2,161,459
<TOTAL-LIABILITY-AND-EQUITY> 6,511,724
<SALES> 3,351,968
<TOTAL-REVENUES> 3,351,968
<CGS> 1,854,870
<TOTAL-COSTS> 3,101,424
<OTHER-EXPENSES> (336)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 37,477
<INCOME-PRETAX> 213,403
<INCOME-TAX> 0
<INCOME-CONTINUING> 213,403
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 213,403
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
