<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
- --- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED September 30, 1999.
-------------------
- --- 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: 0-21145
COVALENT GROUP, INC.
(Name of small business issuer in its charter)
NEVADA 56-1668867
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
One Glenhardie Corporate Center, 1275 Drummers Lane
Wayne, Pennsylvania 19087
(address of principal executive offices)
Issuer's telephone number: 610-975-9533
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 September 30, 1999.
Common Stock, Par Value $.001 12,059,693
- ----------------------------- ----------
(Class) Outstanding
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
1
<PAGE>
COVALENT GROUP, INC.
INDEX
Page
----
PART I. Financial Information
Item 1. Financial Statements
Balance Sheet - September 30, 1999 (Unaudited) 3
Statements of Operations - Nine and Three Months Ended
September 30, 1999 and 1998 (Unaudited) 5
Statements of Cash Flows - Nine Months
Ended September 30, 1999 and 1998 (Unaudited) 6
Notes to Financial Statements (Unaudited) 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. Other Information 14
Signature Page 15
2
<PAGE>
Part I. Financial Information
Item 1. Financial Statements
COVALENT GROUP, INC.
BALANCE SHEET
SEPTEMBER 30, 1999
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $1,975,931
Restricted cash 534,626
Accounts receivable 2,341,075
Prepaid expenses and other 174,768
Costs and estimated earnings in excess of
related billings on uncompleted contracts 2,412,105
-----------------
Total Current Assets 7,438,505
-----------------
Property and Equipment
Equipment 1,643,141
Furniture and fixtures 266,989
Leasehold improvements 120,863
-----------------
2,030,993
Less - Accumulated depreciation (851,935)
-----------------
Net Property and Equipment 1,179,058
-----------------
Other Assets 59,290
-----------------
Total Assets $8,676,853
=================
See accompanying notes to financial statements
3
<PAGE>
Covalent Group, Inc.
Balance Sheet
September 30, 1999
(Unaudited)
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 2,509,845
Accrued expenses 110,851
Billings in excess of related costs and
estimated earnings on uncompleted contracts 95,569
Customer advances 1,496,507
------------------
Total Current Liabilities 4,212,772
------------------
Deferred Income Tax Liability 18,870
------------------
Stockholders' Equity
Common stock, $.001 par value,
25,000,000 shares authorized,
12,072,193 shares issued 12,072
Additional paid-in-capital 9,384,822
Accumulated deficit (4,891,992)
Unrealized loss on investment (9,375)
------------------
4,495,527
Less:
Treasury stock at cost, 12,500 shares (50,316)
------------------
Total Stockholders' Equity 4,445,211
------------------
Total Liabilities and Stockholders' Equity $ 8,676,853
==================
See accompanying notes to financial statements
4
<PAGE>
Covalent Group, Inc.
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 4,047,764 $ 2,708,762 $11,510,210 $ 7,491,582
Operating Expenses
Direct 2,462,189 1,715,548 6,950,924 5,207,675
Selling, general and administrative 978,891 1,045,936 2,772,220 2,795,586
----------------- ----------------- ----------------- ------------------
Total Operating Expenses 3,441,080 2,761,484 9,723,144 8,003,261
----------------- ----------------- ----------------- ------------------
Income (Loss) from Operations 606,684 (52,722) 1,787,066 (511,679)
Interest Income 42,847 20,587 90,806 78,052
----------------- ----------------- ------------------ ------------------
Income (Loss) before Income Taxes 649,531 (32,135) 1,877,872 (433,627)
Income Tax (Benefit) Provision 240,316 (12,333) 694,803 (147,556)
----------------- ----------------- ------------------ ------------------
Net Income (Loss) $ 409,215 $ (19,802) $ 1,183,069 $ (286,071)
================= ================= ================== ==================
Net Income (Loss) per Common Share
Net Income (Loss) - Basic $ .03 $ - $ .10 $ (.02)
Net Income (Loss) - Diluted $ .03 $ - $ .10 $ (.02)
Weighted Average Common and Common
Equivalent Shares Outstanding
Basic 12,059,302 11,759,299 12,058,898 11,748,332
Diluted 12,379,938 11,759,299 12,412,845 11,748,332
See accompanying notes to financial statements.
</TABLE>
5
<PAGE>
Covalent Group, Inc.
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C>
Nine Months Ended
September 30,
-----------------
1999 1998
---- ----
Cash Flows From Operating Activities:
Net income (loss) $ 1,183,069 $ (286,071)
Adjustments to reconcile net income (loss) to
net cash provided by (used in) operating activities
Amortization and depreciation 251,932 167,196
(Increase) decrease deferred income taxes 494,109 (148,855)
Changes in assets and liabilities
(Increase) decrease in -
Accounts receivable 193,208 (42,746)
Restricted cash 465,374 -
Prepaid expenses and other 120,921 (68,527)
Costs and estimated earnings in excess
of related billings on uncompleted contracts (1,808,879) (799,998)
Other assets (9,500) (12,078)
Increase (decrease) in -
Accounts payable 447,281 349,825
Accrued expenses (184,601) (24,026)
Customer advances 1,496,507 -
Billings in excess of related costs and
estimated earnings on uncompleted contracts (1,194,401) (116,016)
------------------- ------------------
Net Cash Provided By (Used in) Operating Activities 1,455,020 (981,296)
------------------- ------------------
Investing Activities:
Purchases of property and equipment (688,733) (40,702)
Net Cash Used in Investing Activities (688,733) (40,702)
------------------- ------------------
Cash Flows Provided By Financing Activities
Proceeds from exercise of stock options 688 92,924
------------------- ------------------
Net Cash Provided By Financing Activities 688 92,924
------------------- ------------------
Net Increase (Decrease) in Cash and Cash Equivalents 766,975 (929,074)
Cash and Cash Equivalents, Beginning of Period 1,208,956 1,794,530
------------------- ------------------
Cash and Cash Equivalents, End of Period $ 1,975,931 $ 865,456
=================== ==================
</TABLE>
See accompanying notes to financial statements
6
<PAGE>
Covalent Group, Inc.
Notes To Financial Statements
(Unaudited)
1. DESCRIPTION OF BUSINESS
-----------------------
Covalent Group, Inc. (the "Company"), is a contractual research
organization, providing clinical research and development services to
pharmaceutical, biotechnology, medical services and managed care
organizations. The Company initiates, designs and monitors clinical
trials, manages and analyzes clinical data and offers other related
services and products.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that 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 period. Actual results could differ from those estimates.
Merger
------
Effective April 30, 1999, the Company's only subsidiary, Covalent Research
Alliance Corporation, was merged into its parent company, Covalent Group,
Inc. The purpose of the merger was to simplify administrative activities
between the two entities.
Basis of Presentation
---------------------
The financial statements for the nine and three months ended September 30,
1999 and 1998 have been prepared without audit and, in the opinion of
management, reflect all adjustments necessary (consisting only of normal
recurring adjustments) to present fairly the Company's financial position
at September 30, 1999 and the results of its operations and its cash flows
for the interim periods presented. Such financial statements do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. For further
information, refer to the financial statements and footnotes thereto
included in the Company's annual report on Form 10-KSB, for the year ended
December 31, 1998.
Operating results for the nine months ended September 30, 1999 may not
necessarily be indicative of the results for the year ending December 31,
1999.
7
<PAGE>
Revenue Recognition
-------------------
Fixed price contract revenue is recognized based on the status of the work
completed under the contract as of a given time using the percentage of
completion method. Revenue from other contracts is recognized as services
are provided. Revenue related to contract modifications is recognized when
realization is assured and the amounts are reasonably determinable.
Adjustments to contract cost estimates are made in the periods in which the
facts which require the revisions become known. When the revised estimate
indicates a loss, such loss is provided for currently in its entirety.
Costs and estimated earnings in excess of related billings on uncompleted
contracts represent revenue recognized in excess of amounts billed.
Billings in excess of related costs and estimated earnings on uncompleted
contracts represent amounts billed in excess of revenue recognized.
Restricted Cash
---------------
The Company received an advance payment from one of its customers as part
of a long term contract, which includes a separate restricted cash account
to be utilized for payment of investigator fees. As of September 30, 1999,
this restricted cash amount was $534,626 and this amount is also included
in customer advances.
Reclassifications
-----------------
Certain prior year balances have been reclassified to conform to the
current year presentation.
Net Income (Loss) Per Common and Common Equivalent Share
--------------------------------------------------------
Basic net income (loss) per common share was computed by dividing net
income (loss) by the weighted average number of shares of common stock
outstanding during the period. Diluted net income per common share for the
nine and three months ended September 30, 1999 reflects the potential
dilution from the exercise of outstanding stock options and warrants into
common stock. Inclusion of shares of common stock potentially issuable
upon the exercise of stock options and warrants in calculating diluted net
loss per common share for the nine and three months ended September 30,
1998, would have been anti-dilutive, and therefore such shares were not
included in the calculation.
The net income (loss) and weighted average common and common equivalent
shares outstanding for purposes of calculating net income (loss) per common
share are computed as follows:
8
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------------------------- --------------------------------------
1999 1998 1999 1998
--------------- ----------------- -------------- -----------------
<S> <C> <C> <C> <C>
Net income (loss) used for basic
and diluted net income (loss)
per common share $ 409,215 $ (19,802) $ 1,183,069 $ (286,071)
================= ================== ================ ==================
Weighted average common shares
outstanding used for basic net income (loss)
per common share 12,059,302 11,759,299 12,058,898 11,748,332
Dilutive effect of common stock
options and warrants outstanding 320,636 - 353,947 -
----------------- ------------------ ---------------- ------------------
Weighted average common and
common equivalent shares outstanding used for
diluted net income (loss) per common share
12,379,938 11,759,299 12,412,845 11,748,332
================= ================== ================ ==================
</TABLE>
Comprehensive Income (Loss)
- ---------------------------
A reconciliation of comprehensive income (loss) in accordance with
Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income" is as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------- ----------------------------------
1999 1998 1999 1998
------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net Income (Loss) $409,215 $(19,802) $1,183,069 $(286,071)
Unrealized Loss on Investment - (64,993) (9,375) (416,211)
--------------- --------------- --------------- ---------------
Comprehensive Income (Loss) $409,215 $(84,795) $1,173,694 $(702,282)
=============== =============== =============== ===============
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
When used in this Report on Form 10-QSB and in other public statements, both
oral and written, by Covalent Group, Inc. (the "Company") and Company officers,
the words "estimate," "project," "intend," "believe," "anticipate" and similar
expressions are intended to identify forward-looking statements regarding events
and financial trends that may affect the Company's future operating results and
financial position. Such statements are subject to risks and uncertainties that
could cause the Company's actual results and financial position to differ
materially. Such factors include, among others: (i) the Company's success in
attracting new business; (ii) the size, duration and timing of clinical trials;
(iii) the termination, delay or cancellation of clinical trials; (iv) the
intense competition in the industry in which the Company competes; (v) the
Company's ability to obtain financing on satisfactory terms; (vi) the
sensitivity of the Company's business to general economic conditions; and (vii)
other economic, competitive, governmental and technological factors affecting
the Company's operations, markets, products, services and prices. The Company
undertakes no obligation to publicly release the result of any revision of these
forward-looking statements to reflect events or circumstances after the date
they are made or to reflect the occurrence of unanticipated events.
9
<PAGE>
The information set forth and discussed below for the nine and three months
ended September 30, 1999 and 1998 is derived from the Financial Statements
included elsewhere herein. The financial information set forth and discussed
below is unaudited but, in the opinion of management, reflects all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of such information. The results of operations of the Company for a particular
quarter may not be indicative of results expected during the other quarters or
for the entire year.
General
- -------
The Company, is a research management organization that designs, coordinates and
monitors clinical trials in drug development for some of the world's leading
pharmaceutical firms. In addition, using advanced technologies, the Company
works extensively in managed care, medical outcomes research and health
management programs that focus on compliance and provider/patient behavior
modification. Revenue is derived principally from the identification,
placement, monitoring and management of clinical development studies in the
traditional pharmaceutical, as well as managed care environment.
The Company's quarterly results can fluctuate as a result of a number of
factors, including the Company's success in attracting new business, the size
and duration of the clinical trials, the timing of client decisions to conduct
new clinical trials or possible cancellation or delays of ongoing trials, and
other factors, many of which are beyond the Company's control. Clinical
research service contracts generally have terms ranging from several months to
several years. A portion of the contract fee is generally payable upon
execution of the contract, with the balance payable in installments over the
life of the contract. Revenue and related cost of revenue are recognized as
specific contract terms are fulfilled under the percentage of completion method.
Contracts generally may be terminated by clients with or without cause.
Clinical trials may be terminated or delayed for several reasons, including
unexpected results or adverse patient reactions to the drug, inadequate patient
enrollment or investigator recruitment, manufacturing problems resulting in
shortages of the drug or decisions by the client to de-emphasize or terminate a
particular trial or development efforts on a particular drug. Depending on the
size of the trial in question, a client's decision to terminate or delay a trial
in which the Company participates could have a materially adverse effect on the
Company's backlog, future revenue and profitability.
The Company's backlog, which consists of anticipated revenues from signed
contracts, is $23 million at September 30, 1999. The Company believes that its
backlog as of any date is not necessarily a meaningful predictor of future
results.
Three Months Ended September 30, 1999 Compared To Three Months Ended September
- ------------------------------------------------------------------------------
30, 1998
- --------
Revenues for the three months ended September 30, 1999 increased 49% to
$4,048,000 as compared to $2,709,000 for the three month period ended September
30, 1998. The increase of $1,339,000 results from the larger scale and dollar
value of the individual clinical studies being conducted in the most recent
quarter as compared to the same quarter last year.
Direct expenses include compensation and other expenses directly related to
conducting clinical studies. These expenses increased by $746,000 from
$1,716,000 to $2,462,000 for the three months
10
<PAGE>
ended September 30, 1998 and 1999, respectively. The increase in expenses
results principally from the cost of additional personnel and related expenses
associated with conducting larger scale clinical studies. Direct expenses as a
percentage of revenues were 61% for the three months ended September 30, 1999 as
compared to 63% for the same period last year. The decrease in relative percent
is due to the different cost structures of the studies and is based on different
types of services requested by the Company's clients.
Selling, general and administrative expenses include all administrative and
business development personnel, and all other support expenses not directly
related to specific contracts. Selling, general and administrative expenses for
the three months ended September 30, 1999 amounted to $979,000 or 24% of
revenues, as compared to $1,046,000 or 39% of revenues for the same period last
year. The decrease of $67,000 or 6% reflects increased efficiencies resulting
from consolidation within the Company's operating structure and the decrease as
a percent of revenues of 15 percentage points is attributable to a larger
revenue base.
Interest income increased $22,000 from $21,000 for the three months ended
September 30, 1998 to $43,000 for the three months ended September 30, 1999.
The income tax provision for the three months ended September 30, 1999 amounted
to $240,000 or an effective tax rate of 37%.
Nine Months Ended September 30, 1999 Compared to Nine Months Ended September 30,
- --------------------------------------------------------------------------------
1998
- ----
Revenues for the nine months ended September 30, 1999 increased 54% to
$11,510,000 as compared to $7,492,000 for the nine months ended September 30,
1998. The increase of $4,018,000 results from the larger scale and dollar value
of the individual clinical studies being conducted in the most recent period as
compared to the same period last year.
Direct expenses include compensation and other expenses directly related to
conducting clinical studies. These expenses increased by $1,743,000 from
$5,208,000 to $6,951,000 for the nine months ended September 30, 1998 and 1999
respectively. The increase in expenses results principally from the cost of
additional personnel and related expenses associated with conducting larger
scale clinical studies. Direct expenses as a percentage of revenues were 60%
for the nine months ended September 30, 1999 as compared to 70% for the same
period last year. The decrease in relative percent is due to the different cost
structures of the studies and is based on different types of services requested
by the Company's clients.
Selling, general and administrative expenses include all administrative and
business development personnel, and all other support expenses not related to
specific contracts. Also included are expenses associated with the development
of an interactive voice recognition ("IVR") system, the platform development of
which was essentially completed in 1998. Selling, general and administrative
expenses for the nine months ended September 30, 1999 amounted to $2,772,000 as
compared to $2,796,000 for the same period last year. Included in this category
for the nine months ended September 30, 1998 and 1999 are IVR development and
systems maintenance expenses of $254,000 and $21,000, respectively. The
increase in the level of expenses, excluding IVR related expenses for both
periods, is due to costs associated with building the necessary support
infrastructure for the overall business, including human resources, marketing
and business
11
<PAGE>
development personnel. As a percentage of revenues, selling, general and
administrative expenses decreased from 37% to 24% for the nine months ended
September 30, 1998 and 1999, respectively. The decrease in expenses as a
percentage of revenues results from the increase in clinical study revenues.
Interest income increased $13,000 from $78,000 for the nine months ended
September 30, 1998 to $91,000 for the nine months ended September 30, 1999.
The effective income tax rate for the nine months ended September 30, 1999 was
37% as compared to 34% for the nine months ended September 30, 1998. The change
in the effective income tax rate is primarily due to the impact of certain non-
tax deductible expenses.
Liquidity and Capital Resources
- -------------------------------
The Company's contracts usually require a portion of the contract amount to be
paid at the time the contract is initiated. Additional payments are generally
made upon completion of negotiated performance requirements throughout the life
of the contract. Cash receipts do not necessarily correspond to costs incurred
and revenue recognized (revenue recognition is based on the percentage of
completion accounting method). The Company typically receives a low volume of
large-dollar receipts. As a result, the number of days outstanding in accounts
receivable will fluctuate due to the timing and size of cash receipts. Compared
to December 31, 1998, accounts receivable decreased $193,000 to $2,341,000 at
September 30, 1999 primarily due to the timing of progress payments for clinical
trials. Costs and estimated earnings in excess of related billings on
uncompleted contracts increased $1,809,000 to $2,412,000 at September 30, 1999.
This increase was attributable to nine clinical trials, for which revenues have
been recognized in excess of progress billings made to date on those contracts.
The Company's cash and cash equivalents balance at September 30, 1999 was
$1,976,000 as compared to $1,209,000 at December 31, 1998. The increase in cash
was primarily due to operating results for the nine months ended September 30,
1999 including the above mentioned decrease in accounts receivable and increase
in costs and estimated earnings in excess of related billings on uncompleted
contracts.
The Company purchased $689,000 of equipment in 1999. The Company anticipates
the need for capital expenditures during the remainder of 1999 for computer
equipment of $50,000.
The Company has a line of credit with a commercial bank providing a maximum
credit facility of $1 million which bears interest at a rate not to exceed 1%
point above the bank's prime rate. Borrowings outstanding under the credit line
are secured by substantially all of the assets of the Company. No borrowings
were outstanding under the credit line at September 30, 1999.
The Company's principal cash needs on both a short and long-term basis are for
the funding of its operations, and capital expenditure requirements. The
Company expects to continue expanding its operations through internal growth,
expansion of its existing services, and the development of new service products
for clinical research and the healthcare industry. The Company expects such
activities to be funded from existing cash and cash equivalents and cash flow
from operations.
12
<PAGE>
Management believes that the Company's operations and financial results are not
materially affected by inflation.
Year 2000 Compliance
- --------------------
The Company is taking the required steps to make its existing systems Year 2000
ready at a total estimated cost of $60,000, $40,000 of which has already been
incurred through September 30, 1999 and $20,000 of which is expected to be
incurred by November 1999. The Company believes it is on schedule to complete
its remediation efforts by November 1999. If such efforts are not completed
timely, the Year 2000 issue could have a material impact on the operations of
the Company.
The Company's efforts are focused on Year 2000 compliance in the following four
principal areas:
1. Application software, including operating systems and applications for
network servers, midranges and PCs;
2. Network and communication software, including business offices, home
offices and field locations;
3. Computer equipment, including network servers, midranges and PCs; and
4. Telecommunications equipment, including telephone and voice mail.
These activities are intended to encompass all major categories of systems in
use by the Company, including sales, research and trial conduct and operations
and human resources.
In addition to making its own systems Year 2000 ready, the Company's Year 2000
team has and will continue to survey its key suppliers and customers to
determine the extent to which the systems of such suppliers and customers are
Year 2000 compliant and the extent to which the Company could be affected by the
failure of such third parties to be Year 2000 compliant. The Company cannot
presently estimate the impact of the failure of such third parties to be Year
2000 compliant.
The general phases of the Year 2000 Project are: (1) Year 2000 methodology
training for key IT personnel, (2) inventorying Year 2000 items, internally and
externally; (3) assigning priorities to identified items; (4) assessing the Year
2000 compliance of items determined to be material to the Company; (5)
remediating or replacing material items that are determined not to be Year 2000
compliant; (6) testing material items; and (7) designing and implementing
contingency plans to the extent deemed necessary. The Company has completed
phases one through seven.
The failure to correct a material Year 2000 problem could result in an
interruption in, or a failure of, certain normal business activities or
operations such as the Company's ability to properly conduct a particular trial
or otherwise provide necessary service to its customers. Such failures could
materially and adversely affect the Company's results of operations, liquidity
and financial condition. Due to the general uncertainty inherent in the Year
2000 problem, resulting in part from the uncertainty of the Year 2000 readiness
of third-party supplies and customers, the Company is unable to determine at
this time whether the consequences of Year 2000 failures will have a material
impact on the Company's results of operations, liquidity or financial condition.
The Year 2000 assessment being conducted by the Company is expected to
significantly reduce the Company's
13
<PAGE>
level of uncertainty about the Year 2000 problem and, in particular, about the
Year 2000 compliance and readiness of its material suppliers and customers.
COVALENT GROUP, INC.
Part II. Other Information
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
None.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule (in electronic format only)
(b) Reports on Form 8-K
None.
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
COVALENT GROUP, INC.
Dated: November 8, 1999 By: /s/Bruce LaMont
---------------- -----------------------------
Bruce LaMont
Chief Executive Officer
Dated: November 8, 1999 By: /s/William K. Robinson
---------------- -----------------------------
William K. Robinson
Chief Financial Officer
15
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,510,557
<SECURITIES> 0
<RECEIVABLES> 2,341,075
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,438,505
<PP&E> 2,030,993
<DEPRECIATION> 851,935
<TOTAL-ASSETS> 8,676,853
<CURRENT-LIABILITIES> 4,212,772
<BONDS> 0
0
0
<COMMON> 12,072
<OTHER-SE> 4,433,139
<TOTAL-LIABILITY-AND-EQUITY> 8,676,853
<SALES> 11,510,210
<TOTAL-REVENUES> 11,510,210
<CGS> 6,950,924
<TOTAL-COSTS> 6,950,924
<OTHER-EXPENSES> 2,681,414
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,877,872
<INCOME-TAX> 694,803
<INCOME-CONTINUING> 1,183,069
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,183,069
<EPS-BASIC> 0.10
<EPS-DILUTED> 0.10
</TABLE>
